EAXR 10-K Annual Report June 30, 2010

EALIXIR, INC.

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PROXIES

DEF 14A

Filed on July 19, 2010

10-K 1 form10_k.htm form10_k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10 –K

[ x ]

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

For The Fiscal Year Ended June 30, 2010

[ ]

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

For the transition period from to

Commission File Number 001-15569

FLINT TELECOM GROUP, INC .

(Exact Name of Registrant As Specified in Charter)

NEVADA	36-3574355
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

7500 College Blvd., Suite 500, Overland Park, KS 66210

(Address of Principal Executive Offices) (Zip Code)

(913) 815-1570

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

None

(Title of Class)

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	OTCBB

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by a 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 a check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T

(232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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:

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (do not check if a smaller reporting company	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |_|• No |X|•

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter $3,329,138 .

The number of shares outstanding of the registrant’s common stock as of October 12, 2010, is as follows:

Title of Each Class	Number of Shares Outstanding
Common Stock, $0.01 par value	352,509,947

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to 424(b) or (c) under the Securities Act of 1933.

None

TABLE OF CONTENTS

	Page
PART I
ITEM 1. BUSINESS		4
ITEM 1A. RISK FACTORS		10
ITEM 1B. UNRESOLVED STAFF COMMENTS		10
ITEM 2. PROPERTIES		10
ITEM 3. LEGAL PROCEEDINGS		11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		11

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		11
ITEM 6. SELECTED FINANCIAL DATA		13
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION		13
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		18
ITEM 9A(T). CONTROLS AND PROCEDURES		19
ITEM 9B. OTHER INFORMATION		19

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		20
ITEM 11. EXECUTIVE COMPENSATION		22
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		24
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		26
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES		28

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES		29
SIGNATURES		37
INDEX TO FINANCIAL STATEMENTS		38

PART 1

Item 1 Business

Overview

Organization and Formation

Flint Telecom Group, Inc. (“Flint”, “We” or the “Company”), is a Nevada Corporation. We were originally formed in 2005 as Flint Telecom, Inc., a Delaware Corporation, and started operations in April 2006 as a wholly owned subsidiary of Flint Telecom Limited, headquartered in Dublin, Ireland. Flint Telecom Limited is a holding company whose sole operating business in the United States was Flint Telecom, Inc. Flint Telecom Limited was a vehicle for the initial funding of Flint and for the development of proprietary intellectual property.

On October 1, 2008, Semotus Solutions, Inc. (“Semotus”) acquired substantially all of the assets and liabilities of Flint Telecom, Inc. in exchange for 28,460,094 shares of restricted common stock pursuant to a definitive Contribution Agreement dated April 23, 2008. Although Semotus is the legal acquirer, for accounting purposes Flint is the accounting acquirer. The name was changed to Flint Telecom Group, Inc. The existing Semotus operations became a division of Flint, and were subsequently sold in January 2009.

We are headquartered at 7500 College Blvd., Suite 500, Overland Park, Kansas 66210, and our telephone number is 913-815-1570. The address of our website is www.flinttelecomgroup.com . Information on our website is not part of this prospectus.

We operate our business through four wholly-owned subsidiaries, Cable and Voice Corporation, Phone House, Inc., Flint Prepaid, Inc. (previously named Wize Communications, Inc.), and Digital Phone Solutions, Inc., as further described below. We provide next generation turnkey voice, data and wireless services through partner channels primarily in the United States. We distribute telecommunications services and products through our distribution channels.

The subsidiaries provide the following telecom services and / or distribute the following telecom products:

- Cable and Voice Corporation was established on June 1, 2008 and is located in Tampa, Florida. The Company is a leading value-added master distributor of advanced broadband products and services to Cable, Telecommunications, Enterprise and Service Provider customers throughout the United States. The Company offers a wide range of products and services which include cable modems, cables, UPS units, AV Powerline and Homeplug adapters, Wi-Fi and cellular wireless hardware and software applications, Intelligent Telephone Adapters (ITA) and IP Telephones for VoIP services and other customer premise equipment.

- Phone House, Inc. was established on June 12, 2001 and is located in Artesia, California. Phone House is a Master Distribution for discount calling products that enable users who purchase cards in the United States to call China, India, Mexico, Africa, South America, Brazil, Bangladesh, and other countries throughout the world at significant savings. The International calling cards may be used to call from the United States to other countries, to call from other countries to the United States, or to call between countries outside the United States.

These products are currently sold through a network of over 90 private distributors. Through this network, the Company estimates that its calling products are sold through over 10,000 retail outlets in the United States, of which more than 5,000 retail outlets are located in Southern California.

- Digital Phone Solutions, Inc. was established on January 29, 2009, and is located in Overland Park, Kansas. The Company provides a suite of Enhanced IP Telephony solutions aimed primarily at Small and Medium sized enterprises in the United States. DPS delivers all the value added services that manage the entire value-chain including billing, customer care, call routing, service provisioning. Advanced features such as voicemail-delivered-to-email, free inter-office calling, and virtual phone numbers provide additional revenue opportunities. DPS enables its customers to establish reliable, feature rich and cost effective digital phone services very quickly with zero capital investment.

- Flint Prepaid, Inc. (previously named Wize Communications, Inc.) was established on March 30, 2009, and is located in Overland Park, Kansas. Flint Prepaid is a retail focused company selling directly to end-users through Master Distributers and Retailers. It provides Flint Telecom's own branded pre-paid calling services primarily to immigrant customers wanting to make inexpensive quality calls to their home countries.. These Flint Telecom value-based calling cards are regionalized and selectively marketed depending on the geographical area and user community.

As part of our ongoing emphasis on streamlining our operations and reaching sustainable profitability, during the fiscal year ended June 30, 2010 we shut down and disposed of four of our other wholly owned subsidiaries: CVC Int’l, Phone House Inc. of Florida, Dial-Tone Communications and Starcom Alliance. Consequently, we recognized a loss in the form of a one-time impairment charge of goodwill and other intangibles in the amount of $12,215,200.

Following the corporate restructuring during the financial year ended June 30, 2010, the Company’s management decided to structure the business into three separate operating segments. These segments are (1) the sale of third-party telecoms and networking equipment and software services (collectively referred to as equipment as “telecom software, services & equipment”), (2) the sale of Company produced and third-party prepaid calling products (collectively referred to as “prepaid telecom services”) (3) the delivery of wholesale and VoIP telecom services to other operators and direct to end users (collectively referred to as “telecom services”). Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment are reflected in the table below as “corporate activities”. See Note 24, Segment Information, for more details.

Products and Services

Through our existing operating companies, we operate in 3 key business areas:

Telecom Software, Services & Equipment: Wireless IP and telecom expense management applications to large multinational enterprises and telecom operators worldwide. Modem, cable and other telecom equipment supplies to leading cable and rural telecom operators in the United States. This area of the business focuses on the development, acquisition or licensing of VoIP technologies in both land-line and wireless environments to address the growing market in this space. This technology is aimed at both retail customers & telecom operators and focuses on specific applications that address convergent wireless IP and cellular products and services. The technology developed, acquired or licensed by this segment of the organization also supplies the rest of the business with innovative retail products, for distribution through our large network of distributors, and cost-saving expense management services provided directly to operators.

Prepaid Telecom Services: Provision and Distribution of ‘Integrated' prepaid calling and cellular products in the United States and internationally. These calling products enable users who purchase cards in the United States to call China, India, Mexico, Africa, South America, Brazil, Bangladesh, and other countries throughout the world at significant savings. The International calling cards may be used to call from the United States to other countries, to call from other countries to the United States, or to call between countries outside the United States.

Subscriber Based Telecom Services: The provision of VoIP (Voice over Internet Protocol) and Cellular services aimed primarily at the Small and Medium Enterprises in the United States and internationally. We also enable Independent Cable Companies & ISPs, VARs and other service providers to deliver "own brand" white label convergent telecom services (voice, data & wireless) to their customers in addition to their existing service offerings by providing an outsourced - full service, full feature - telecom solution based on leading telecom technologies and

also delivering value added services that manage the entire voice value chain for the partner such as billing, customer care, call routing, service provisioning and marketing support. Direct subscriber revenues in both landline and cellular will be achieved from both organic growth and future acquisitions.

Strategy

Our strategy is to accelerate our current growth both organically, through the development of new products to be driven through our existing distribution channels, and through a focused acquisition strategy of acquiring new products and technology from companies who have been unable to build sufficient distribution for their own technology.

Strengths

In executing our strategy, we believe that we will benefit from the following strengths:

Position for Cash Generation:

As Master Distributors, our companies directly control the downstream distribution of the products we sell.

The loyalty of customers is not just to the individual card brands but also to the stores they buy from, and control of, the retail points is the key advantage in these markets.

Substituting third party products with Flint’s “own brand” higher margin and competitive products into these channels generating greater gross margins from the same revenues.

Flint will accelerate current growth from acquisition of new products and technology from companies that have been unable to build sufficient distribution for their own technology.

Combination of higher margin products into existing and additional channels drives cash generation.

Position for Value Creation:

The U.S. telecommunication market is at the beginning of a new disruptive cycle similar to that seen when deregulation of the market happened in the early nineties.

This current disruption is being driven by the mass market adoption of Voice over IP (VoIP) technology that allows voice calls to travel as data packets across the internet instead of over traditional phone lines or mobile phones.

The advances in technology now mean excellent call quality on VoIP. End users experience the very same telecom service as with standard phone networks; they use the same phones and experience the same quality as before. The only difference is cost savings.

We provide an outsourced - full service, full feature - telecom solution based on leading telecom technologies including VoIP and Wireless services.

We also deliver value added services that manage the entire voice value chain for the partner such as billing, customer care, call routing, service provisioning and marketing support.

Sales and Marketing

We generally focus our marketing efforts on support of our direct and partner sales efforts. In particular, we focus on sales collateral, trade shows, and events for prospective customers. Our use of advertising is minimal.

Competition

The communications industry is highly competitive and significantly affected by regulatory changes, technology evolution, marketing strategies, and pricing decisions of the larger industry participants. In addition, many companies offering Internet, voice, and data communications services are consolidating. Service providers generally compete on the basis of price, customer service, product quality, brand recognition, and breadth of services offered. Additionally, carriers may compete on the basis of technology. Recently, the ability to provide VoIP services has been a key differentiator. As technology evolves and legacy systems become an encumbrance, we expect carriers to compete on the basis of technological agility, and their ability to rapidly deliver new services.

We are subject to significant competition that could impact our ability to gain market share, win business and increase the price pressure on our products. We face strong competition from a wide variety of firms, including large, national and international telecommunications companies. Many of our competitors have considerably greater financial, marketing and technological resources, which may make it difficult to win new contracts and compete successfully. Certain competitors operate larger facilities and have longer operating histories and presence in key markets, greater name recognition, larger customer bases and significantly greater financial, sales and marketing, manufacturing, distribution, technical and other resources. As a result, these competitors maybe able to adapt more quickly to new or emerging technologies and changes in customer requirements. They may also be able to devote greater resources to the promotion and sale of their products. Moreover, we may not have sufficient resources to undertake the continuing research and development necessary to remain competitive.

We have different competition in each of our subsidiary companies. The primary competitors for Cable and Voice Corporation are Motorola, Arris, Telewire, Westel, Comtrends, VoIP Supply, Scott Cable, Adams Global, and SMC. In addition, some of Cable and Voice Corporation's suppliers have the ability to make direct sales to our customers. DPS’s primary competitors are 8x8, Net2phone, Vox Communications, Singlepipe and Momentum. Flint Prepaid competes with all telecommunications carriers and suppliers that are in the prepaid calling card and wireless business.

Government Regulation

The telecommunications industry is subject to significant regulation at the national, state, local and international levels. These regulations affect our business. Generally, in the United States, some of our products and services are subject to varying degrees of federal, state, and local regulation, including regulation by the Federal Communications Commission (FCC) and various state public utility commissions. We may also be subject to similar regulation by foreign governments and their telecommunications/regulatory agencies. While these regulatory agencies grant us the authority to operate our business, they typically exercise minimal control over our services and pricing. However, they do require the filing of various reports, compliance with public safety and consumer protection standards, and the payment of certain regulatory fees and assessments.

We cannot assure that the applicable U.S. and foreign regulatory agencies will grant us the required authority to operate, will allow us to maintain existing authority so we can continue to operate, or will refrain from taking action against us if we are found to have provided services without obtaining the necessary authority. Similarly, if our pricing, and/or terms or conditions of service, are not properly filed or updated with the applicable agencies, or if we are otherwise not fully compliant with the rules of the various regulatory agencies, regulators or other third parties could challenge our actions and we could be subject to forfeiture of our authority to provide service, or to penalties, fines, fees, or other costs. We have been delinquent in certain filing and reporting obligations in the past including, but not limited to, filings with the FCC and Universal Service Fund (USF) reports and payments. As of June 30, 2010 we believe we are current with our filing and reporting obligations.

To date, the FCC has declined to classify VoIP providers as telecommunications carriers for regulatory purposes. However, the FCC has ruled that certain traffic carried in part utilizing the Internet protocol format was nonetheless regulated telecommunications for which certain regulatory obligations applied. The FCC has considered whether to impose surcharges or other common carrier regulations upon certain providers of Internet telephony, primarily those which, unlike us, provide Internet telephony services directly to end users. The FCC ruled that interconnected VoIP service providers must make contributions to the Universal Service Fund. Additionally, the FCC has a pending

proceeding to further examine the question of whether certain forms of VoIP services are information services or telecommunications services. The two are treated differently in several respects, with certain information services being regulated to a lesser degree. The FCC has noted that certain forms of phone-to-phone VoIP services bear many of the same characteristics as more traditional voice telecommunications services and lack the characteristics that would render them information services. The FCC has indicated that the issues as to applicability of access charges and other matters will be considered in that context. Adverse rulings or rulemakings could subject us to licensing requirements and additional fees and subsidies.

While we believe VoIP services may be subject to additional federal, state, local, or international regulation in the future, it is uncertain when or how the effects of such regulation could affect us. If additional regulation does occur, it is possible that such regulatory agencies may impose surcharges, taxes or regulatory fees on VoIP service providers. The imposition of any such surcharges, taxes, or regulatory fees could increase our costs and thus reduce or eliminate any competitive advantage that we might enjoy today.

If the FCC were to determine that certain Internet-related services including Internet telephony services are subject to FCC regulations as telecommunications services, the FCC could subject providers of such services to traditional common carrier regulation, including payment of access charges to local telephone companies. A decision to impose such charges could also have retroactive effect. It is also possible that the FCC may adopt a regulatory framework other than traditional common carrier regulation that would apply to Internet telephony providers. Any such determinations could materially adversely affect our business, financial condition, operating results and future prospects to the extent that any such determinations negatively affect the cost of doing business over the Internet or otherwise slow the growth of the Internet.

We are monitoring the actions of the federal and various state regulatory agencies, and doing our best to see that we are in compliance with the applicable regulations, including any new regulations that may be passed. However, there can be no assurance that we are fully aware of all applicable requirements or that we will always be fully compliant. Should we fail at any time to be compliant with applicable federal or state regulations, or to file required reports to federal or state regulatory agencies, we could be subject to fines or other penalties.

Intellectual Property and Trademarks

Our success and ability to compete effectively are dependent in part upon our proprietary technology. We rely on a combination of copyright, trademark and trade secret laws, as well as nondisclosure agreements and other contractual restrictions, to establish and protect our proprietary rights. Employees are required to execute confidentiality and non-use agreements that transfer any rights they may have in copyrightable works or patentable technologies to us. In addition, prior to entering into discussions with potential business partners or customers regarding our business and technologies, we generally require that such parties enter into nondisclosure agreements with us. If these discussions result in a license or other business relationship, we also generally require that the agreement setting forth the parties' respective rights and obligations include provisions for the protection of our intellectual property rights. The steps taken by us may not, however, be adequate to prevent the misappropriation of our proprietary rights or technology.

To date, we do not have any federally registered trademarks. However, we are currently in the process of applying for federal registration of some of our marks.

We do not currently have any patents or patent applications in process. Any future patent applications with respect to our technology may not be granted, and, if granted, patents may be challenged or invalidated. In addition, issued patents may not provide us with any competitive advantages and may be challenged by third parties. Our practice is to affix copyright notices on our product literature in order to assert copyright protection for these works.

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to duplicate aspects of our products or to obtain and use information that we regard as proprietary. Our steps to protect our proprietary technology may not be adequate to prevent misappropriation of such technology, and may not preclude competitors

from independently developing products with functionality or features similar to our products. If we fail to protect our proprietary technology, our business, financial condition and results of operations could be harmed significantly.

The telecommunications markets have been characterized by substantial litigation regarding patent and other intellectual property rights. Litigation, which could result in substantial cost to and diversion of our efforts, may be necessary to enforce trademarks issued to us or to determine the enforceability, scope and validity of the proprietary rights of others. Adverse determinations in any litigation or interference proceeding could subject us to costs related to changing names and a loss of established brand recognition.

Employees

As of June 30, 2010, we had 7 full time employees, none of whom are represented by a labor union. We consider our employee relations to be good, and we have never experienced a work stoppage.

Confidentiality Agreements

All our employees have signed confidentiality agreements, and it is our standard practice to require newly hired employees and, when appropriate, independent consultants, to execute confidentiality agreements. These agreements provide that the employee or consultant may not use or disclose confidential information except in the performance of his or her duties for the company, or in other limited circumstances. The steps taken by us may not, however, be adequate to prevent the misappropriation of our proprietary rights or technology.

Revenues and Assets by Geographic Area

During the years ended June 30, 2010 and 2009, 100% and 92%, respectively, of our revenue was derived from customers in the United States and 0% and 8%, respectively, from international customers. As of June 30, 2010 and 2009, none of our long-lived assets were located outside of the United States.

Available Information

We are subject to the informational requirements of the Securities Exchange Commission and in accordance with those requirements file reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy the reports, proxy statements and other information that we file with the Commission under the informational requirements of the Securities Exchange Act at the Commission’s Public Reference Room at 450 Fifth Street N.W., Washington, DC 20549. Please call 1-800-SEC-0339 for information about the Commission’s Public Reference Room. The Commission also maintains a web site that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the Commission. The address of the commission’s web site is http://www.sec.gov. Our web site is http://www.flinttelecomgroup.com. The information on our website is neither a part of nor incorporated by reference into this report. We make available on our web site our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, through a link to our reports filed on the commission’s web site from our web site. Information contained on our web site is not a part of this report.

Forward Looking Statements

Certain statements contained in this annual report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could be,” and other words of similar meaning, are forward-looking statements. These statements are based on management’s expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, risks associated with the integration of businesses following an acquisition, concentration of revenue from one source, competitors with broader product lines and greater resources, emergence into new markets, the termination of any of our significant contracts or partnerships, our inability to maintain working capital requirements to fund future operations or our inability to attract and retain

highly qualified management, technical and sales personnel, changes in laws regulating telecommunications providers, changes in laws affecting the telecommunications products and services we provide. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 1A. Risk Factors

Not applicable to a smaller reporting company.

Item 1B. Unresolved Staff Comments

Not applicable to a smaller reporting company.

Item 2. Properties

We are headquartered in Overland Park, Kansas and lease offices and space in a number of locations. Below is a list of our leased offices and space as of June 30, 2010.

Location	Lease Expiration	Annual Rent			Purpose	Approx. Sq. Ft

17918 Pioneer Blvd. #209 Artesia, CA 90701	September 1, 2010	$	47,400	(1)	Phone House, Inc. office space		1,750
3507 East Frontage Rd., Ste 190 Tampa, Fl 33607	December 31, 2012	$	20,758	(2 )	Cable & Voice Corp. office space		1,750

(1) This lease is subject to increase by a maximum of 3% on September 1, 2010.

(2) This lease is subject to increase to $21,484 in year 2011 and $22,232 in year 2012.

We believe that our leased facilities are adequate to meet our current needs and that additional facilities are available to meet our development and expansion needs in existing and projected target markets.

Item 3. Legal Proceedings

A judgment was entered against us on October 26, 2009 in the amount of $72,852, plus accruing interest from that date at the rate of $20 per day and post judgment costs incurred in enforcing the judgment. A stipulation for judgment was filed by Carmel Solutions, Inc. (Carmel) in the Superior Court of California, Orange County, in accordance with, and upon our default of, a settlement agreement we entered into with Carmel on May 5, 2009.

the amount owed to AT&T, and that we failed to make any payments due under such settlement agreement. AT&T seeks an automatic entry of judgment against us in the amount of $440,672 plus interest, attorney’s fees and costs.

We are also one of a number of defendants in a pending legal proceeding filed by First Citizens Bank & Trust, Inc. on June 17, 2010 in the Superior Court of Fulton County, Georgia. This suit alleges five causes of action, three of which relate to the breach of Flint’s loan agreement entered into with the Georgian Bank in the principal amount of $199,000 plus interest, attorney’s fees and costs. We did not respond within the time period allowed.

We are a party to other legal proceedings filed after June 30, 2010 (See Note 24 Subsequent Events: Legal Proceedings).

Because Thermocredit has a first priority secured interest against all of Flint’s assets, Flint expects that Thermocredit will stop the actual collection on any of these judgments, and management hopes to be able to negotiate further with these plaintiffs and come to a reasonable settlement.

We are also a party to other legal proceedings in the normal course of business. Based on evaluation of these matters and discussions with counsel, we believe that liabilities arising from these matters will not have a material adverse effect on the consolidated results of our operations or financial position.

Due to the regulatory nature of the industry, the Company periodically receives and responds to various correspondence and inquiries from state and federal regulatory agencies. Management does not expect the outcome on these inquiries to have a material impact on our operations or financial condition.

Item 4. Submission of Matters to a Vote of Security Holders

None during the quarter ended June 30, 2010.

See Subsequent Events Note 25 for the description and results of a special meeting of shareholders held on August 10, 2010.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is currently traded on the OTC Bulletin Board (OTCBB) under the symbol “FLTT”. From March 4, 2008 to October 2008, our common stock was traded on the OTCBB under the symbol “SMOA”.

The following tables list the high and low sales prices for our common stock for each fiscal quarter during the two preceding fiscal years.

Common Stock

Year Ended June 30, 2009	High		Low
First Quarter	$	0.85	$	0.40
Second Quarter	$	0.65	$	0.15
Third Quarter	$	0.45	$	0.12
Fourth Quarter	$	0.55	$	0.12

Year Ended June 30, 2010	High		Low
First Quarter	$	0.2200	$	0.1200
Second Quarter	$	0.1650	$	0.0900
Third Quarter	$	0.0300	$	0.0230
Fourth Quarter	$	0.0072	$	0.0038

On October 18, 2010, the last reported sale price for our Common Stock on the OTCBB was $0.0055 per share. The market price for our stock is highly volatile and fluctuates in response to a wide variety of factors.

Holders

As of October 18, 2010, we had approximately 250 holders of record of our Common Stock. This does not reflect beneficial ownership by individuals or entities that hold their stock in nominee or “street” name through various brokerage firms.

Dividend Policy

We have never declared or paid any cash dividends on our common stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Our Series E Preferred Shares have a fourteen percent (14%) dividend payment, payable monthly the first payment of which was February 28, 2010. These dividend payments have not been made to date, and therefore a penalty rate of one half of one percent (0.5%) per month on the total amount outstanding applies for dividend payments that are more than ten (10) business days late, and will continue to apply and accrue until default payments are caught up in full. Additionally, the Holders of our Series F Preferred shall be entitled to receive a fourteen percent (14%) per annum dividend payment calculated based on the Liquidation Value, payable annually, the first payment of which will be June 17, 2011.

We currently intend to retain future earnings, if any, to finance our operations, and to expand our business. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, operating results, capital requirements and other factors that our Board of Directors considers appropriate.

Issuer Purchases of Equity Securities

There have been no purchases of equity securities by the Company required to be disclosed herein.

Securities Authorized For Issuance Under Equity Compensation Plans

We currently have one authorized stock option plan, the 2005 Stock Option Plan, which will terminate in July of 2015, and one restricted stock plan, the 2009 Restricted Stock Plan. Descriptions of the Stock Plans are located under Footnote 17.

Summary Information Concerning Stock Plans

The following table sets forth certain information relating to our stock plans as of June 30, 2010:

Equity Compensation Plan Information

Plan Category

Plan Name

Number of securities to be issued upon exercise of outstanding options

(a)

Weighted-average exercise price of outstanding options

(b)

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

(c)

Equity Compensation plans approved by security holders

The 2005 Stock Option Plan

1,163,750

0.39

931,275

The following table sets forth certain information relating to our 2009 Restricted Stock Plan:

Plan Category

Plan Name

Number of securities granted but unvested

Number of securities granted and vested

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in columns (a) and (b))

Equity Compensation plans approved by security holders

The 2009

Restricted Stock Plan

10,375,000

19,135,000

5,490,000

Recent Sales of Unregistered Securities

During the quarter ended June 30, 2010 we issued a total of 60,340,306 shares of unregistered securities, broken down as follows: 22,000,000 shares of common stock to various consultants for services rendered, 27,051,606 shares of common stock issued to various debt holders upon conversion of convertible notes payable and 11,288,700 to AGS Capital Group, LLC. We also issued 60,000 shares of Series D convertible preferred stock, automatically convertible into a total of 6,000,000 shares of common stock in August 2010, 153,000 shares of Series F convertible preferred stock, convertible into a total of 30,600,000 shares of common stock, and 153,779.66 shares of Series G convertible preferred stock, convertible into a total of 15,377,966 shares of common stock.

We believe our offering and sale of the securities in the above transaction, made to accredited investors and certain persons outside of the United States, was exempt from registration under Section 4(2) of the Securities Act and Regulation D and Regulation S, promulgated thereunder.

Item 6. Selected Financial Data

This item is not applicable to Smaller Reporting Companies

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes thereto included in another part of this Annual Report. This discussion contains certain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve substantial risks and uncertainties. When used in this report the words “anticipate,” “believe,” “estimate,” “expect” and similar expressions as they relate to our management or us are intended to identify such forward-looking statements. Our actual results, performance, or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. Historical operating results are not necessarily indicative of the trends in operating results for any future period.

Overview

Management’s objectives for the fiscal year ended June 30, 2010 was to consolidate operations, to increase gross margins from existing revenue streams and ensure that we had sufficient capital to execute the business plan in an extremely difficult economic and financial environment. In our third quarter ending March 31, 2010 we undertook a fundamental review of our operations and decided to cease non-profit making businesses and reduced our corporate overhead costs by approximately 66%. These closures resulted in lower gross revenues but higher gross margins and lower operating costs. We recorded one-time expenses of $12,215,200 and an equity contribution of $5,285,327 in relation to this restructuring. Throughout the financial year, we also restructured our debt resulting in a reduction of $8,854,345 in overall debt levels. We incurred a one-time charge of $5,007,702 as part of this restructuring.

In June of 2010, we entered into a $10 million reserve equity financing agreement with AGS Capital Group, LLC (AGS) that allows us to sell registered common shares in return for cash over a two year period. Our ability to require AGS to purchase our common stock is subject to various conditions and limitations, including but not limited to, the filing and declaration of effectiveness by the SEC of a registration statement covering the possible resale of the shares issued to AGS. (See Note 23 for more details). In the meantime, given the continued financial market difficulties, we have had very limited access to capital and have been drawing funds on an as needed basis from various institutions and individuals in order to operate. These financings are predominantly in the form of convertible loans that convert into our common stock at varying discounts to the market price at the time of conversion. Given the low per share trading price of our stock during 2010, these conversions have introduced additional shares into the market place and resulted in an increase in our total issued and outstanding shares in recent times.

It is management’s aim to continue to build a sustainable, profitable business over the long term which we believe will ultimately reflect in our share price and reduce the dilution levels from ongoing funding needs. Throughout the fiscal year we have been actively engaged in seeking other potential acquisition targets to further enhance the scale, depth and profitability of the business, and we continue to work towards improving our overall operations to reduce our need for external financing.

In the fiscal year ended June 30, 2010, we had a net loss of $28,865,778 ($0.35 per share basic and diluted), as compared to a net loss of $14,562,263 ($0.31 per share basic and diluted) in the fiscal year ended June 30, 2009. The increase in our net loss was a result of the corporate and debt restructuring totaling $19,900,660. Our overall cash decreased by $1,317,583 in the twelve months ended June 30, 2010, compared to a decrease in cash of $150,019 in the fiscal year ended June 30, 2009.

Sources of Revenue and Operating Expenses

Sources of Revenue .

Our subsidiaries produce the following telecom revenues:

Digital Phone Solutions, Inc. provides a suite of Enhanced Services solutions for IP Telephony Service Providers facilitated by the Flint network. Cable and Voice Corporation delivers quality broadband, VoIP/ digital phone and wireless products to the cable industry and service provider customers throughout the world. Phonehouse U.S.A., Inc. provides prepaid calling cards that enable users in the United States to call internationally at significant savings. Flint Prepaid sells prepaid calling cards directly to end-users through master distributors and retailers.

Operating Expenses .

Sales and marketing expenses consist of costs incurred to develop and implement marketing and sales programs for our product lines. These include costs required to staff the marketing department and develop a sales and marketing strategy, participation in trade shows, media development and advertising, and web site development and maintenance. These costs also include the expenses of hiring sales personnel and maintaining a customer support activities.

General and administrative expenses include senior management, accounting, legal, business development consulting, rent, administrative personnel, and other overhead related costs. This category also includes stock compensation and option expense, the costs associated with being a publicly traded company, including the costs of SEC filings, a management fee payable to Flint Telecom, Ltd., investor relations and public relations. These costs have increased during the year ended June 30, 2009 versus 2008 due to the costs associated with becoming a publicly traded company and the stock compensation and option expense from the stock and options issued to directors, officers and employees. These costs also increased due to the acquisition of the six subsidiaries of China Voice Holding, Corp. (CHVC) that closed in January 2009.

Fiscal Year Ended June 30, 2010 Compared with Fiscal Year Ended June 30, 2009.

Revenues

Revenues for the year ended June 30, 2010 decreased 0.8% to $34,060,505 as compared $34,337,063 for the year ended June 30, 2009. This decrease is primarily due to the closure and disposal of unprofitable operations during the year. Without these disposals, revenues would have increased year on year.

Cost of Revenues and Gross Margin

The overall gross margin improved in the year ended June 30, 2010 versus 2009, from a gross loss of $658,629 in 2009 to a gross profit of $1,563,486 at June 30, 2010 on the same revenue base, an improvement of 237%. This change is primarily due to managements focus on improving margins generated from existing revenues and substituting higher margin products.

Operating Expenses

Operating expenses decreased 18% to $8,270,047 in the year ended June 30, 2010 versus $10,126,607 for the last fiscal year. This decrease is mainly due to managements focus on cost control throughout the year and also includes some one-time restructuring costs resulting from the organizational restructuring in the quarter ending March 31, 2010. Operating expenses consists entirely of general and administrative.

Interest Expense and Foreign Exchange

The $3,457,600 for the year ended June 30, 2010 in interest expense is related to accrued interest on the convertible and promissory notes, as well as the amortization of the debt discounts related to those notes. The Company recorded a gain of $158,469 from currency transactions in the Euro and UK Pound and U.S. dollar.

Impairment of Goodwill and Intangible Assets

During the year ended June 30, 2010, we ceased operations and disposed of four operating companies. As a result of this discontinuation, we recorded one-time impairment of goodwill and intangible assets of $12,215,200, impairment

of fixed assets of $1,305,735, a loss on disposal of certain fixed assets of $332,023 and accelerated stock vesting costs of $1,040,000 net of tax for the year ended June 30, 2010.

Debt Settlement Costs

As a result of the debt restructuring activities throughout the year ending June 30, 2010, debt settlement costs of $2,757,702 relating to the conversion of certain loans to Preferred Stock.

Liquidity and Capital Resources

Overall cash decreased by $1,317,583 for the year ended June 30, 2010 due to ongoing challenges in raising new capital in very difficult financial markets. We were able to cover some of the cash loss through proceeds from convertible and promissory note issuances. The sources and uses of cash are summarized as follows:

	Year Ended June 30,
	2010			2009
Net cash used in operating activities	$	(2,204,283	)	$	(4,689,451	)
Net cash used in investing activities		(126,994	)		(1,724,477	)
Net cash provided by financing activities		1,172,163			6,335,128
Net cash used in foreign currency activities		(158,469	)		(71,109	)
		--------------------			--------------------
Net increase (decrease) in cash and cash equivalents	$	(1,317,583	)	$	(150,019	)

During the year ended June 30, 2010, cash used in operating activities was $2,204,283 resulting from a gross profit of $1,563,486, operating expenses of $8,270,048 and non-operating expenses of $22,159,216. The loss included non-cash charges for stock and option compensation of $3,100,916. Other non-cash expenses were depreciation and amortization of $1,315,924 and bad debt expense of $510,572 and impairment of Goodwill and Intangible Assets of $12,215,200.

Other operating activities that increased cash were a decrease in receivables of $1,170,445, decrease in inventories of $524,728, increase of accrued liabilities of $457,306, and accrued interest of $750,372, and a decrease in prepaid expense of $8,724, which was offset by the decrease in accounts payable of $2,136,931 and cash overdraft $174,834.

During the year ended June 30, 2009, cash used in operating activities was $4,689,451 resulting from a gross loss of $658,629 and operating expenses of $10,126,607. The loss included non-cash charges for stock and option compensation and impairment of goodwill of $4,363,951 and $2,538,148, respectively. Other non-cash expenses were depreciation and amortization of $1,583,406 and bad debt expense of $188,707. Other operating activities that increased cash were an increase in accounts payable of $1,857,473, of accrued liabilities of $144,497, and accrued interest of $1,144,499, and a decrease in prepaid expense of $97,473, which was offset by the increase in accounts receivable of $271,184 and inventories of $597,262.

During the year ended June 30, 2010, cash used in investing activities consisted of $125,000 for an investment in a note receivable. During the year ended June 30, 2009, cash used in investing activities consisted of $353,703 of purchases of telephony equipment, $125,000 for an increase of notes receivable, $1,200,000 cash consideration payment for the acquisition of the six CHVC subsidiaries, and $45,774 cash disposed of as part of the Semotus business disposition.

Cash provided by financing activities for the year ended June 30, 2010 consisted primarily of the sale of short term promissory notes, which provided $1,105,000 in cash, debt from related parties $370,550 which was offset by the repayment of related party debt in the amount of $50,279, the repayment of other debt in the amount of $175,000, and payments of $6,088 on certain lease obligations.

Cash provided by financing activities for the year ended June 30, 2009 consisted primarily of the sale of short term promissory notes, which provided $5,195,743 in cash, cash proceeds from a private offering of $440,000, and proceeds from a line of credit of $2,020,121, which was offset by the repayment of related party debt in the amount of $249,000, the repayment of other debt in the amount of $423,583, redemption of preferred stock in the amount of $550,000, and payments of $98,263 on certain lease obligations.

$158,469 of was used in foreign currency transactions related to exchange losses on convertible notes payable during the year ended June 30, 2010. $71,109 of cash was used in foreign currency transactions related to exchange losses on convertible notes payable during the year ended June 30, 2010

As of June 30, 2010, we had cash and cash equivalents of $19,419, a decrease of $1,317,583 from the balance at June 30, 2009, which was $ 1,337,002. Our working capital deficit increased as of June 30, 2010 to ($10,630,231) as compared to a working capital deficit of ($10,221,599) at June 30, 2009 . We have not yet generated sufficient revenues to cover the costs of continued product and service development and support, sales and marketing efforts and general and administrative expenses.

We are still largely dependent on financing in order to generate cash to maintain its operations. We are currently investigating the capital markets for additional financings. However, there is no assurance that any additional capital will be raised. We closely monitor our cash balances and our operating costs in order to maintain an adequate level of cash.

As of June 30, 2010, the following table sets forth our long term known contractual obligations, aggregated by type of contractual obligation:

Contractual Obligations			Payments due by period
	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Debt Obligations	$	7,249,182	$	6,650,185	$	598,997		--		--
Capital Leases		781,309		375,371		405,938		--		--
Operating Leases		--		--		--		--		--
Purchase Obligations		--		--		--		--		--
Other Long Term Liabilities Reflected on our Balance Sheet under GAAP		--		--		--		--		--
Total	$	8,030,491	$	7,025,556	$	1,004,935		--		--

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements. This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers. Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In February 2010, the FASB issued ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU, a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our consolidated financial statements.

In April 2010, the FASB issued ASU No. 2010-18 regarding improving comparability by eliminating diversity in practice about the treatment of modifications of loans accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt Securities Acquired with Deteriorated Credit Quality (“Subtopic 310-30”). Furthermore, the amendments clarify guidance about maintaining the integrity of a pool as the unit of accounting for acquired loans with credit deterioration. Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors. The amendments in this Update are effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early adoption is permitted. We are currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In September 2009, in accordance with accounting pronouncements that applies to arrangements with multiple deliverables and provides another alternative for determining the selling price of deliverables. In addition, the residual method of allocating arrangement consideration is no longer permitted under this guidance. The guidance is effective for fiscal years beginning on or after July 15, 2010. We are currently evaluating the potential impact, if any, of the adoption of this guidance on our consolidated financial statements.

In September 2009, in accordance with accounting pronouncements which removes non-software components of tangible products and certain software components of tangible products from the scope of existing software revenue guidance, resulting in the recognition of revenue similar to that for other tangible products. It also requires expanded qualitative and quantitative disclosures. The guidance is effective for fiscal years beginning on or after June 15, 2010. We are currently evaluating the potential impact, if any, of the adoption of this guidance on our consolidated financial statements.

In June 2009, in accordance with accounting pronouncements for determining whether an entity is a variable interest entity (“VIE”) and requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a VIE. Under this guidance, an enterprise has a controlling financial interest when it has a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The guidance also requires an enterprise to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has power to direct the activities of the VIE that most significantly impact the entity’s economic performance. The guidance also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE, requires enhanced disclosures and eliminates the scope exclusion for qualifying special-purpose entities. The guidance is effective for fiscal years beginning after November 15, 2009. We are currently evaluating the potential impact, if any, of the adoption of this guidance on our consolidated financial statements.

Management does not believe that there are any recently-issued, but not yet effective, accounting standards that could have a material effect on the accompanying financial statements.

Off Balance Sheet Arrangements

Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:

Any obligation under certain guarantee contracts;

Any retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets;

Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in stockholder’s equity in our statement of financial position; and

Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

As of June 30, 2010, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 7A. Quantitative and Qualitative Disclosures about Market Risks

Not Applicable to Smaller Reporting Companies.

Item 8. Consolidated Financial Statements and Supplementary Data

Our Consolidated Financial Statements required by this Item are included in Item 15 of this report on pages F-1 through F-30.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A (T). Controls and Procedure

(a) Evaluation of disclosure controls and procedures . We conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer/Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report. Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s Report on Internal Control over Financial Reporting

Management assessed the effectiveness of Flint’s internal control over financial reporting as of June 30, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on this evaluation, our chief executive officer identified the following material weaknesses as of June 30, 2010.

The Company did not have adequate oversight of its disclosure controls and procedures to ensure timely and effective review of its financial accounts. These deficiencies resulted in the delay of the filing of the Company’s Annual Report on Form 10-K for the years ended June 30, 2009 and 2010. As a result of the material weaknesses described herein, management concluded that Flint’s internal control over financial reporting was not effective as of June 30, 2010, based on the criteria identified above.

We have implemented certain steps in furtherance of this objective and believe, subject to our continuing evaluation and review of these further steps, that additional steps are warranted. Additional steps that we believe we must undertake are to further design and implement adequate systems of accounting and financial statement disclosure controls for our operations during the current fiscal year to comply with the requirements of the SEC. We believe that the ultimate success of our plan to improve our internal controls over financial reporting and disclosure controls and procedures for our operations will require a combination of additional financial resources, outside consulting services, legal advice, additional personnel, further reallocation of responsibility among various persons, and

substantial additional training of those of our officers, personnel and others, including certain of our newly appointed directors, who are charged with implementing and/or carrying out our plan.

It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

(b) Changes in internal control over financial reporting. There were changes in our internal control over financial reporting that occurred during the period covered by this Annual Report on Form 10-K that has materially affected our internal control over financial reporting. These changes occurred in the year ended June 30, 2009 and were due to the reverse merger with Semotus and the acquisition of six subsidiary companies previously owned by CHVC, which resulted in additional accounting personnel and financial reporting procedures to be assimilated, combined and/or consolidated together with Flint’s accounting personnel and financial reporting procedures.

In future filings we will disclose any further change that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information relating to the nominees for directors and executive officers who would continue to serve after the Annual Meeting:

Name	Age	Position
Vincent Browne	42	Chief Executive Officer, Chairman of the Board, Chief Financial Officer and Corporate Secretary
Bernard A. Fried	64	President, Chief Operating Officer and Director

_____________

There is no family relationship between any director or executive officer. There are no known arrangements or understandings between any director or executive officer and any other person pursuant to which any of the above-named executive officers or directors was selected as an officer or director.

Biographies:

Vincent Browne, age 42. Mr. Browne founded Flint Telecom, Ltd, Flint Telecom, Inc.’s parent company, in December of 2004, and Flint Telecom, Inc. was incorporated in July of 2005. Mr. Browne has been CEO of Flint Telecom, Ltd., Flint Telecom, Inc. and Flint Telecom Group, Inc. since each of their inceptions. Mr. Browne became Chairman, CFO and Corporate Secretary in February of 2010. Mr. Browne has over 15 years experience in the ICT sector. Prior to joining Flint, Mr. Browne founded Prime Carrier Limited (PCL) in 2000 and was its CEO. PCL provides advanced Least Cost Routing software and systems to Tier 1 operators across the globe. During his time as founding CEO at PCL, he raised over €12m in various funding rounds and successfully negotiated several

multi-million dollar contracts with international customers. Prior to that, Mr. Browne worked with Siemens and Esat BT. Mr. Browne holds a BComm degree from University College Dublin.

Bernard A. Fried, age 64. Mr. Fried became our President, Chief Operating Officer and a member of the board of directors in February of 2010. He currently also serves as managing member of FCI Companies, LLC, a successor company to Fried Consulting, Inc. Previously, he served as Vice President and Managing Director of Condado Group, Inc., a customer relationship management and call center consulting firm. Prior to joining Condado Group, Mr. Fried was President of Fried Consulting, Inc, a call center and telecommunications consulting firm. During his career, he has held numerous executive positions in the call center, telecommunications, and biometric industries. Mr. Fried currently also serves on the Board of Directors of the United States Internet Industry Association, and is a former board member of Ascent (which merged into Comptel), one of the primary associations for the wholesale telecommunications industry. Mr. Fried also currently teaches management and leadership courses in the School of Professional and Graduate Studies at Baker University in Kansas. Mr. Fried filed a Chapter 7 petition under the federal bankruptcy laws on April 30, 2008, which was discharged on July 22, 2008. Mr. Fried received his MBA, with distinction, from Pace University in New York.

CORPORATE GOVERNANCE INFORMATION

Code of Ethics

We have adopted a code of ethics that applies to all of our officers, directors and employees, including our Chief Executive Officer and Chief Financial Officer. We have also adopted a code of ethics that applies specifically to our principal executive officer and senior financial officers. Copies of our two codes of ethics are available on our website at www.flinttelecomgroup.com, the content of which website is not incorporated by reference into, or considered a part of, this document.

Stockholders can access our corporate governance information, including our Code of Ethics for Principal Executive Officers and Senior Financial Officers and the charters of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, at our website, www.flinttelecomgroup.com, the content of which website is not incorporated by, referenced into, or considered a part of, this document. However, due to the fact that none of our board members are considered independent, our compensation committee, nominating and corporate governance committees were not continued are not currently active; instead, the full board has taken on the responsibilities of these committees.

Meetings of the Board of Directors and Board Committees

The Board currently consists of two members. The Board held four (4) meetings during fiscal year 2010, and executed 24 unanimous consents in lieu of holding directors' meetings. Each of the directors appointed at that time attended the meeting of the Board. During the fiscal year, as required from time to time, the non-management directors met in executive sessions without the presence of management.

Our Board has not adopted a formal policy regarding directors’ attendance at our annual meeting of the stockholders. However, our directors are strongly encouraged to attend the Annual Meeting. Vincent Browne and Bill Burbank attended our 2009 Annual Meeting.

The Audit Committee was active until September of 2009. The following committees, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee are not currently active and the responsibilities of these committees have been assumed by the entire board. This was done because none of the members of the Company’s Board is considered an “independent director” as defined by the Nasdaq Stock Market and the SEC, and therefore the Board determined that it would be in the best interests of the Company for the entire Board to assume the responsibilities of these committees instead.

Board of Directors Report

At the time of this Report, the responsibilities of the Audit Committee were assumed by the entire Board of Directors. The Board consists of two directors who are both employees of the Company and are therefore not “independent directors” as defined under any applicable listing standards.

However, the Board has met and held discussions with management and the independent auditors, LL Bradford & Company, LLC. As a part of this process, we have:

• reviewed and discussed the audited financial statements with management,

• discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 114 (The Auditor’s Communication with Those Changes with Governance), and

• received the written disclosures and the letter from the independent auditors required by PCAOB Ethics and Independence Rule 3526 (Communication with Audit Committees Concerning Independence), and discussed with the independent auditors their independence.

Based on the review and discussions referred to above, the Board recommended that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2010, for filing with the SEC.

The Board of Directors

		October 18, 2010
		/s/ Vincent Browne	/s/ Bernard A. Fried
		Vincent Browne	Bernard A. Fried
		Chairman	Director

Item 11. Executive Compensation

The following table summarizes the total compensation paid to, earned or received by our Named Executive Officers, who are the Chief Executive Officer and the three other executive officers who received annual remuneration in excess of $100,000 during the last two fiscal years ending June 30, 2010 and 2009.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)			Bonus ($)		Stock Awards ($)			Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)			Total ($)
Vincent Browne, Chief Exec. Officer	2010		60,000	(1)		--		468,750	(2)		--		--		--		--			528,750
	2009		146,588	(1)		--		351,563	(2)		--		--		--		--			498,151
Bill Burbank, President	2010		62,715	(3)		--		760,000	(4)								320,000	(5)		1,142,715
	2009		77,262	(3)		--		95,000	(4)		--		--		--		--			172,262
Stephen Keaveney, Chief Financial Officer	2010		60,000	(6)		--		109,375	(7)											169,375
	2009		60,000	(6)		--		109,375	(7)		--		--		--		--			169,375
Anthony LaPine, Executive Director	2010		40,000			--		--			--		--		--		--			40,000
	2009		115,000	(8)		--		2,631,000	(9)		--		--		--		--			2,746,000

(1)	Actual annual salary as of October 6, 2008, per Mr. Browne’s employment agreement, is $180,000.

(2)	Represents the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year 2010 and 2009, respectively, in accordance with FAS 123R, relating to 2,500,000 shares of restricted common stock granted on October 6, 2008 and vesting over a period of four years.

(3)

Actual annual salary, per Mr. Burbank’s employment agreement, was $186,000. Mr. Burbank’s start date with the Company was January 29, 2009. On February 4, 2010, Mr. Burbank resigned from his respective executive officer positions and from the board of directors of the Company. See Item 13, “Separation Agreement with Bill Burbank” for more details.

(4)	Represents the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year 2010 and 2009, respectively, in accordance with FAS 123R, relating to 2,000,000 shares of restricted common stock granted on January 29, 2009, vesting over a period of four years.

(5)	Represents the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year 2010 relating to 4,000,000 shares of restricted common stock granted on February 4, 2010 as part of Mr. Burbank’s separation.

(6)	Actual annual salary, per Mr. Keaveney’s employment agreement that went effective as of March 1, 2009, is $180,000 per year. On February 4, 2010, Mr. Keaveney resigned from his respective executive officer positions and from the board of directors of the Company.

(7)	Represents the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year 2010 and 2009, respectively, in accordance with FAS 123R, relating to 3,500,000 shares of restricted common stock granted on March 1, 2009 and vesting over a period of four years.

(8)	Represents the actual amount paid under Mr. LaPine’s employment agreement that we assumed on October 1, 2008 as part of the reverse merger with Semotus. On February 17, 2010, Mr. LaPine resigned from his respective executive officer positions and from the board of directors of the Company.

(9)

Represents the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year 2009 in accordance with FAS 123R, relating to 3,508,000 shares of restricted common stock granted and immediately vested on October 1, 2008. These shares were subsequently returned to the Company on January 29, 2009 as part of the sale of Semotus Solutions, Inc. to Mr. LaPine (See FN 5: Acquisition and Subsequent Disposition of Semotus).

Narrative Disclosure to Summary Compensation Table

Vincent Browne:

Mr. Browne has a four year employment agreement that went effective on October 6, 2008. Mr. Browne receives salary in the amount of $180,000 per year, which shall immediately increase to $240,000 when the Company achieves sustainable profitability for one quarter, and Mr. Browne was issued 2,500,000 shares of restricted common stock vesting over a period of four years, such that ¼ of the shares shall vest at his first annual anniversary date, and quarterly thereafter so that 100% of the shares shall be fully vested at his four year anniversary with the Company. If Mr. Browne’s employment is terminated by the Company without cause or by Mr. Browne for good reason as provided in the Agreement, or if the Company is acquired or dissolves and a new employment agreement satisfactory to Mr. Browne cannot be reached (a “Severance Event”), all stock of the Company then owned by Mr. Browne which are unvested shall become immediately fully vested, and the Company shall pay to Mr. Browne severance pay equal to the remaining years and/or months of his then current base salary that are due, based on a four year agreement term. If a Severance Event occurs, Mr. Browne would receive between $480,000 (using a Severance Event date of October 6, 2010 and the maximum potential base salary of $240,000) and $0 (using a Severance Event date of October 6, 2012), depending on the actual date the Severance Event actually occurs.

Outstanding Equity Awards at 2010 Fiscal Year-End :

	Option Awards							Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)	Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)		Number of Shares or Units of Stock That Have Vested (#)	Market Value of Shares or Units of Stock That Have Vested ($)

Vincent Browne		--	--		--	--	--			1,562,500	(1)	6,250	(4)	937,500	3,750(4)

Bill Burbank		--	--		--	--	--			--		--		6,000,000 (2)	24,000(4)

Bernard A. Fried		--	--		--	--	--			6,000,000	(3)	24,000	(4)	--	--

(1)	These shares vest annually over a period of four years starting October 6, 2008, provided the executive is employed with the Company at the time of vesting, such that ¼ vest at the first annual anniversary and quarterly each year thereafter so that all shares are vested as of October 6, 2012.

(2)

On February 4, 2010, Mr. Burbank resigned from his respective executive officer positions and from the board of directors of the Company. As part of Mr. Burbank’s separation, we accelerated 1,500,000 shares of his unvested restricted stock and granted and issued 4,000,000 additional shares of immediately vested restricted common stock, for a total of 5,500,000 shares of restricted common stock. Additionally, 500,000 vested on January 29, 2010.

(3)	These shares vest annually over a period of four years starting February 23, 2010, provided the executive is employed with the Company at the time of vesting, such that ¼ vest at the first annual anniversary and quarterly each year thereafter so that all shares are vested as of February 23, 2014.

(4)	The Market Value is based on $0.004 per share, which was the closing price of the common stock on June 30, 2010.

DIRECTOR COMPENSATION

Except for discretionary grants of stock or stock options, our directors are usually not compensated for their services as directors. Directors who are employees are eligible to participate in our equity incentive plan. The following table summarizes data concerning the compensation of our directors for the fiscal year ended June 30, 2010.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)	Option Awards ($)			Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)	Total ($)
Robert Lanz		--	16,000		--	(1)	--		--	--	16,000

Michael Butler (2)		--	140,625		--	(2)	--		--	--	140,625

(1)	Represents the dollar amount recognized for financial statement reporting purposes with respect to 200,000 shares of restricted common stock granted to Mr. Lanz on February 4, 2010. On February 4, 2010, Mr. Lanz resigned from his position on the board of directors of the Company.

(2)	Represents the dollar amount recognized for financial statement reporting purposes, relating to 375,000 shares of restricted common stock which vested during the fiscal year ended June 30, 2010. On May 14, 2010 Mr. Butler resigned from his position on the board of directors of the Company.

Indebtedness of Directors, Officers and Others

Our directors, senior officers, and their associates were not indebted to us or to any of our subsidiaries at any time since the beginning of our last completed fiscal year.

Directors’ and Officers’ Liability Insurance

We currently do not have directors’ and officers’ liability insurance insuring our directors and officers against liability for acts or omissions in their capacities as directors or officers, subject to certain exclusions. We do have a corporate indemnification agreement in place with our executive officers and directors, and such persons shall also have indemnification rights under applicable laws, as well as our certificate of incorporation and bylaws.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the beneficial ownership of our common stock as of June 30, 2010, by (i) each person who is known by us to be the beneficial owner of more than five percent (5%) of our issued and outstanding shares of common stock, (ii) each of our directors and executive officers, and (iii) all directors and officers as a group.

For the purposes of the information provided below, shares that may be issued upon the exercise or conversion of options, warrants and other rights to acquire shares of our common stock that are exercisable or convertible within 60 days following June 30, 2010, are deemed to be outstanding and beneficially owned by the holder for the purpose of computing the number of shares and percentage ownership of that holder, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

Title of Class	Name And Address of Beneficial Owners* (1)	Number of Shares		Percent of Class

Common	Flint Telecom, Ltd. (2) Carrick House 49 Fitzwilliam Square Dublin 2 Ireland		21,003,139		15.61	%

Common	Michael Butler (3) Carrick House 49 Fitzwilliam Square Dublin 2 Ireland		17,213,818		12.79	%

Common	AGS Capital Group, LLC 2 Water St., Ste. 17G New York, NY 10004		11,744,480		8.73	%

	Named Executives

Common	Vincent Browne (4)		17,552,821		13.04	%

Common	Bernard A. Fried		--		--

	All Officers and Directors as a Group (2 Persons) (5)		17,552,821		13.04	%

* Unless otherwise indicated, all addresses are c/o Flint Telecom Group, Inc., 7500 College Blvd., Suite 500, Overland Park, KS 66210

(1)

This table is based upon information supplied by the named executive officers, directors and 5% stockholders, including filings with the Securities and Exchange Commission (the “SEC”) and information supplied from Computershare, our transfer agent. Unless otherwise indicated in these notes and subject to the community property laws where applicable, each of the listed stockholders has sole and investment power with respect to the shares shown as beneficially owned by such stockholder. The number of shares and percentage of beneficial ownership includes shares of common stock issuable pursuant to convertible promissory notes, convertible preferred stock and warrants held by the person or group in question, which may be exercised or converted on June 30, 2010 or within 60 days thereafter.

(2)	Vincent Browne, our CEO, is an executive officer, director and majority shareholder of Flint Telecom, Ltd..

(3)	Includes 6,232,000 common shares held directly and 89,240 common shares held indirectly through his wife. Also includes 302,000 shares of Series E preferred stock that are currently convertible into 10,981,818 common shares.

(4)

Includes 2,597,000 shares held directly, 1,093,7500 shares that have vested out of the 2,500,000 shares that vest quarterly at each annual anniversary over a period of four years from October 1, 2008, and 13,862,071 shares held indirectly through Mr. Browne’s ownership in Flint Telecom, Ltd. The 2,597,000 shares held directly have been pledged as security.

(5)	Includes the shares listed above as beneficially owned by the above listed Named Executive Officers.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended requires our officers (as defined in regulations issued by the SEC) and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of copies of such reports of ownership furnished to us and certifications from executive officers and directors, we believe that during the past fiscal year all filing requirements applicable to our directors, officers and beneficial owners of more than 10% of a registered class of our equity securities were complied with, except that Mr. Butler and Mr. Browne did not timely file a Form 4 with the SEC.

Item 13. Certain Relationships and Related Transactions, and Director Independence

All related party transactions are reviewed and approved by our board of directors. All of the related party transactions described below were reviewed and approved through unanimous written consent in lieu of holding a board meeting.

Flint, Ltd. :

Flint Telecom Ltd, which is controlled by Mr. Browne, Flint’s CEO, has a loan balance of $156,043 at June 30, 2010. During the year ended June 30, 2010, Flint Telecom Ltd. assigned a portion, $200,000, of its $202,500 promissory note to a number of unrelated third parties. This note has a 15% interest rate and originally matured on March 30, 2009 but was extended to September 30, 2011. The loan does not include charges for management fees earned by Flint Telecom, Ltd., which during the year ended June 30, 2010 and 2009 were $570,000 and $286,205, respectively. $227,175 of these management fees were reclassified as note payables and assigned to third parties. See Note 13 for more details on these transactions. The management fees are for the executive, operating and financial services provided by Flint Telecom, Ltd. to us. Flint Telecom Ltd. also has a direct equity investment in us.

Michael Butler Debt Restructure

We had a number of loans outstanding from Mr. Butler, one of our board members as of December 31, 2009, for which we issued various promissory notes, convertible promissory notes, warrants and shares of restricted common stock to him as consideration. As of December 31, 2009, the total outstanding balance on all of Mr. Butler’s loans was approximately $4,100,000. Subject to an agreement that was executed December 31, 2009 that became effective February 5, 2010 we executed a settlement agreement with Mr. Butler in which all of Mr. Butler’s loans to Flint were cancelled in exchange for 302,000 shares of Series E preferred stock of Flint, valued at €10.00 per share, having the following material terms:

Yielding a 14% annual dividend payment, payable monthly in Euros, from February 28, 2010;

Convertible at any time into that number of shares of Common Stock as is determined by the quotient of (i) €10.00 over (ii) the Conversion Price in effect at the time of conversion.

The Conversion Price has a 20% discount to the Market Price at time of conversion and subject to a minimum conversion price of $0.275 per Common Share

Market Price means the average closing price of Flint’s common stock over the twenty trading days preceding the conversion request date

The common stock issued at the time of conversion will be restricted stock and subject to SEC 144 Rule

Based on the minimum conversion price, Mr. Butler would receive 10,981,818 shares of common stock if all preferred shares were converted into common stock.

The Preference Shares will be transferable at Mr. Butler’s discretion, after giving Flint a right of first refusal;

A penalty rate of 0.5% per month on the total amount outstanding will apply for dividend payments that are more than 10 days late, and will continue to apply until default payments are caught up.

Mr. Butler has the right to rescind this agreement in the event that we should enter into a voluntary or involuntary bankruptcy. We have classified these shares of Series E Convertible Preferred as part of Preferred Shares in our Balance Sheet.

SEL Nominees:

On March 8, 2010 SEL Nominees Ltd. (“SEL”) loaned us $58,000 and we issued a $58,000 convertible promissory note accruing interest at a rate of eighteen percent (18%) per annum, with interest only payments due each month and a maturity date of March 2011, and having a variable conversion price of 50% of the Market Price. On March 12, 2010 SEL loaned us $40,000 and we issued a $40,000 convertible promissory note accruing interest at a rate of eighteen percent (18%) per annum with interest only payments due each month and a maturity date of March 2011, and having a variable conversion price of 50% of the Market Price. “Market Price” means the average of the lowest three (3) Trading Prices for the common stock during the ten (10) Trading Day period ending one Trading Day prior to the date the Conversion Notice is sent. These SEL notes also contain a most favored nations clause as it relates to the conversion price. As of June 30, 2010, the conversion price is $0.00055 per share, resulting in the maximum potential total of 178,181,818 shares to be issued upon full conversion of both SEL notes. However, in accordance with the terms of the agreements related to these notes, each note holder cannot beneficially own greater than 4.99% of our total issued and outstanding common stock at any given point in time without shareholder approval. SEL is a related party due to the fact that SEL is controlled by Mr. Butler, who was one of our board members in March of 2010. For the year ended June 30, 2010 we recognized $98,000 in interest expense for beneficial conversion features on these notes.

Employment Agreements :

Effective October 6, 2008, we entered into a four year employment agreement with our CEO, Mr. Browne. Mr. Browne receives a salary in the amount of $180,000 per year, which shall immediately increase to $240,000 when the Company achieves sustainable profitability for one quarter, and 2,500,000 shares of restricted common stock, vesting over a period of four years, such that ¼ of the shares shall vest at the first annual anniversary of the Effective Date, and quarterly thereafter so that 100% of the shares shall be fully vested at his four year anniversary. If Mr. Browne’s employment is terminated by the Company without cause or by Mr. Browne for good reason as provided in the Agreement, or if the Company is acquired or dissolves and a new employment agreement satisfactory to Mr. Browne cannot be reached (a “Severance Event”), all stock and stock options of the Company then owned by Mr. Browne which are unvested shall become immediately fully vested, and the Company shall pay to Mr. Browne severance pay equal to the remaining years and/or months of his then current base salary that are due, based on a four year agreement term. If a Severance Event occurs, Mr. Browne would receive between $480,000 (using a Severance Event date of October 6, 2010 and assuming the Company has achieved sustained profitability) and $0 (using a Severance Event date of October 6, 2012), depending on the actual date the Severance Event occurs.

Effective February 23, 2010, we entered into a two year employment agreement with Bernard A. Fried, effectuating the following: (i) Mr. Fried’s title is President and Chief Operating Officer; (ii) Mr. Fried was appointed as a member of Flint’s Board of Directors, (iii) Mr. Fried will receive a salary in the amount of $186,000 per year, and (iv) Mr. Fried was issued 6,000,000 shares of restricted common stock vesting over a period of four years, such that ¼ of the shares shall vest at the first annual anniversary of the Effective Date, and quarterly thereafter so that 100% of the shares shall be fully vested at his four year anniversary with Flint . The Company may terminate this agreement without cause at any time by giving Mr. Fried 60 days prior written notice, and the Company shall have no further liability other than for the payment of any unpaid salary through the termination date and reimbursement of reasonable business expenses incurred prior to the termination date.

Separation Agreement with Bill Burbank:

Bill Burbank resigned as the President and Chief Operating Officer of the Company, effective February 4, 2010. In connection with Mr. Burbank’s resignation, we entered into a Separation Agreement with Mr. Burbank (the “Separation Agreement”), effective February 5, 2010. The Separation Agreement provides that Mr. Burbank will be paid an aggregate of approximately $150,000 in cash and $842,500 worth of shares of restricted common stock, consisting of:

	·	payment for past wages owed, of approximately $45,785;
	·	repayment for various loans made to the Company, in the amount of $100,000;
	·	reimbursement for approved expenses in an amount that has yet to be determined;
	·	all such cash payments as listed above shall be paid in the future as funds become available;

acceleration of 1,500,000 shares of his unvested restricted stock and the grant and issuance of 4,000,000 additional shares of immediately vested restricted common stock, for a total of 5,500,000 shares of restricted common stock. Additionally, 500,000 vested on January 29, 2010. The 2,000,000 previously issued shares that vested were valued at $0.38 per share (date of original grant). The closing price of our common stock on February 5, 2010 was $0.08 per share, and therefore the additional 4,000,000 shares were valued at $320,000, for a total fair market value of these shares was $842,5500.

Subsequently, effective May 28, 2010, we entered into an Addendum to the Separation Agreement with Mr. Burbank, agreeing to pay a total of $150,000 cash to Mr. Burbank over a period of 8 months; monthly payments in the amount of $18,750 shall commence as of July 31, 2010. As of the date of the filing of this annual report we have not made these payments and are therefore currently in default. As a result, a default interest rate of 18% shall be applied to any outstanding payments owed as of the date of default and an additional cash payment of $40,000 is also immediately due and payable. Mr. Burbank has filed a lawsuit against us for breach of contract, seeking to collect this total amount due (See Subsequent Events Note 24).

Settlement Agreement with China Voice Holding Corp.

Effective as of May 28, 2010, we executed a settlement agreement with China Voice Holding Corp. (CHVC) whereby CHVC has agreed to, among other things, cancel and terminate any and all rights it has under its $7,000,000 promissory note issued by us (the “Note”) and the Series C Preferred Shares of Flint (the “Preferred

Shares”), including the repayment of any and all principal amounts underneath the Note and the Preferred Shares, and to return 15,800,000 shares of our common stock to Flint (thereby allowing CHVC to keep 5,200,000 shares of our common stock), and in exchange we agreed to pay a total of $1,520,242 to CHVC through installment payments over a period commencing August 31, 2010 and ending May 31, 2011 and abandon its claim to 15,000,000 shares of CHVC’s common stock .

As of the date of the filing of this annual report, we have not made these payments and are therefore in default. (See the Subsequent Events Note 25 for more details.)

Misc. Loans from other ex-Officers

During the year ended June 30, 2010, Mr. Keaveney, our CFO at the time, loaned $75,000 to us and we issued to him a promissory note in the amount of $75,000, due and payable with a cash fee of $10,000 on or before October 24, 2009. In June of 2010, we agreed to allow Mr. Keaveney to convert a portion of this note, $20,000, into 2,000,000 shares at $0.01/share. As of June 30, 2010, there is a total outstanding balance due on the note of $65,000. Additionally, during the year ended June 30, 2010, Mr. Burbank, our President at the time, loaned $100,000 to us. Payments under this loan were to commence as of July 31, 2010; as of the date of the filing of this annual report, no payments have been made and the note is therefore currently in default (See “Separation Agreement with Bill Burbank” above, which is part of this FN).

Item 14. Principal Accountant Fees and Services

The aggregate fees billed for professional services rendered to us by L.L. Bradford & Company, LLC for the years ended June 30, 2010 and 2009 were:

	2010		2009
Audit fees	$	150,613	$	80,875
Audit-related fees:
SEC filings review and consent		--		--
		------------------------		--------------------
Total audit and audit-related fees	$	150,613	$	80,875
Tax fees		--		--
All other fees		--		--
		-------------------------		-------------------
Total fees	$	150,613	$	80,875

The aggregate fees billed for all audit and audit-related services rendered by L.L. Bradford & Company, LLC for the years ended June 30, 2010 and 2009 (see chart above under heading “Audit-related fees”) relate to the review of and consent to various SEC filings and correspondence. No other professional services were rendered or fees were billed by L.L. Bradford & Company, LLC for the most recent fiscal year or for the year ending June 30, 2009.

Our Board has adopted policies and procedures for the pre-approval of the above fees. All requests for services to be provided by our independent accountants are submitted to the Board. Requests for all non-audit related services require pre-approval from the Board.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)(1) Financial Statements.

The Consolidated Financial Statements filed as part of this Annual Report on Form 10-K are identified in the Index to Consolidated Financial Statements on page F-1 hereto.

(a)(2) Financial Statement Schedules.

All financial statement schedules have been omitted because the information required to be set forth therein is not applicable or is shown on the financial statements or notes thereto.

(a)(3) Exhibits.

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission.

Exhibit Number		DESCRIPTION	LOCATION
	2.1	Contribution Agreement by and among Semotus Solutions, Inc., Flint Telecom, Inc. and Flint Telecom Limited dated April 23, 2008	Incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K filed April 29, 2008.
	2.2	Investment Agreement by and among Semotus Solutions, Inc. and Flint Telecom Limited dated April 23, 2008.	Incorporated by reference to Exhibit 2.2 to the Registrant’s Form 8-K filed April 29, 2008.
	2.3	Agreement and Plan of Merger dated January 29, 2009 by and among Flint, Flint Acquisition Corps. (A-E), each a wholly owned subsidiary of Flint, CHVC, CVC Int’l Inc., Cable and Voice Corporation, StarCom Alliance Inc, Dial-Tone Communication Inc, Phone House Inc. (of Florida) and Phone House, Inc. (of California) dated January 29, 2009.	Incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K filed February 4, 2009.
	2.4	Agreement and Plan of Corporate Separation and Reorganization by and among Flint Telecom Group, Inc. and Semotus, Inc. dated January 29, 2009.	Incorporated by reference to Exhibit 2.3 to the Registrant’s Form 8-K filed February 4, 2009.
	2.5	First Amendment to the Agreement and Plan of Merger by and among Flint, Flint Acquisition Corps. (A-E), each a wholly owned subsidiary of Flint, CHVC, CVC Int’l Inc., Cable and Voice Corporation, StarCom Alliance Inc, Dial-Tone Communication Inc, Phone House Inc. (of Florida) and Phone House, Inc. (of California) dated April 24, 2009.	Incorporated by reference to Exhibit 2.2 to the Registrant’s Form 8-K filed April 30, 2009.
	2.6	Agreement and Plan of Merger by and among Flint Telecom Group, Inc., two of Flint’s wholly-owned subsidiaries, and Ingedigit International, Inc., a Florida Corporation (“III”), Gotham Ingedigit Financial Processing Corp (“P2P”) and all of the shareholders of III and P2P dated October 5, 2010.	Incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K filed on October 6, 2010.
	3.1	Articles of Incorporation.	Incorporated by reference to Exhibit No. 2 to the Registrant's Form 8-A filed on July 22, 1996 (No. 0-21069).
	3.2	Bylaws of the Company.	Incorporated by reference to Exhibit No. 3 to the Registrant's Form 8-A filed on July 22, 1996 (No. 0-21069).
	3.3	Amended and Restated Bylaws of the Company dated January 24, 2000.	Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K Filed on February 17, 2000.
	3.4	Amended and Restated Bylaws of the Company dated December 11, 2008.	Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K Filed on December 23, 2008.
	3.5	Certificate of Amendment to the Articles of Incorporation dated February 17, 1998.	Incorporated by reference to Exhibit 3.2 to the Registrant's Form 10-KSB for the year ended March 31, 1998.
	3.6	Certificate of Amendment to Articles of Incorporation dated July 6, 1999.	Incorporated by reference to Exhibit 3.4 to the Registrant's Form 8-A12B filed on December 21, 1999.
	3.7	Certificate of Amendment to Articles of Incorporation dated January 12, 2001.	Incorporated by reference to Exhibit 3.5 to the Registrant's Form 10-KSB for the year ended March 31, 2001.
	3.8	Certificate of Amendment to Articles of Incorporation dated May 17, 2007.	Incorporated by reference to Exhibit 3.7 to the Registrant's Form 10-KSB for the year ended March 31, 2007.
	3.9	Certificate of Amendment to Articles of Incorporation dated July 20, 2007.	Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on July 24, 2007.
	3.10	Certificate of Amendment to Articles of Incorporation dated April 7, 2008.	Incorporated by reference to Exhibit 3.9 to the Registrant’s Form 10KSB filed on June 27, 2008.
	3.11	Certificate of Amendment to Articles of Incorporation dated September 30, 2008.	Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on October 7, 2008.
	3.12	Certificate of Amendment to Articles of Incorporation dated October 3, 2008.	Incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K filed on October 7, 2008.
	3.13	Certificate of Amendment to Articles of Incorporation dated January 22, 2010.	Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10Q filed on March 25, 2010.
	3.14	Certificate of Designation of Series D Convertible Preferred Stock	Filed electronically herewith.
	3.15	Certificate of Designation of Series E Convertible Preferred Stock	Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on February 11, 2010.
	3.16	Certificate of Designation of Series F Convertible Preferred Stock	Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on June 23, 2010.
	3.17	Certificate of Designation of Series G Convertible Preferred Stock	Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on June 23, 2010.

3.18	Certificate of Designation of Series H Convertible Preferred Stock	Incorporated by reference to Exhibit 2.2 to the Registrant’s Form 8-K filed on October 6, 2010.
3.19	Certificate of Amendment to Articles of Incorporation dated August 10, 2010.	Filed electronically herewith.
4.1	Convertible Promissory Note for $200,000 issued to Flint Telecom Limited dated April 23, 2008.	Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on April 29, 2008.
4.2	Form of Warrant to purchase shares of the Company’s common stock at $0.50 per share.	Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on October 7, 2008.
4.3	Form of convertible promissory note to purchase shares of common stock.	Incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K filed on October 7, 2008.
4.4	Stock Purchase Agreement by and among China Voice Holding Corp. and Flint Telecom Group, Inc. dated January 29, 2009.	Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on February 4, 2009.
4.5	Promissory note issued from Flint Telecom Group, Inc. to China Voice Holding Corp. dated January 29, 2009.	Incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K filed on February 4, 2009.
4.6	Common Stock Subscription Agreement by and among Flint Telecom Group, Inc. and David Tracey dated January 29, 2009.	Incorporated by reference to Exhibit 4.6 to the Registrant’s Form 8-K filed on February 4, 2009.
4.7	First Amendment to the Stock Purchase Agreement by and among China Voice Holding Corp. and Flint Telecom Group, Inc. dated April 24, 2009.	Incorporated by reference to Exhibit 4.2 to the Registrant's Form 8-K filed on April 30, 2009.
4.8	First Amendment to the Promissory note issued from Flint Telecom Group, Inc. to China Voice Holding Corp. dated March 16, 2009.	Incorporated by reference to Exhibit 4.3 to the Registrant's Form 8-K filed on April 30, 2009.
4.9	$200,000 Promissory Note, as assigned, amended and restated on April 30, 2009.	Filed electronically herewith.
4.10	Loan and Security Agreement by and among Thermo Credit LLC and Flint Telecom Group, Inc. and its wholly owned subsidiaries dated June 4, 2009.	Incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K filed on June 9, 2009.
4.11	$2,000,000 Promissory Note issued to Thermo Credit LLC dated June 4, 2009.	Incorporated by reference to Exhibit 4.2 to the Registrant's Form 8-K filed on June 9, 2009.
4.12	Form of Subscription Agreement by and among Flint Telecom Group, Inc. and the Subscribers dated June 30, 2009.	Incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K filed on July 7, 2009

4.13	Form of Secured Convertible Promissory Note issued from Flint Telecom Group, Inc. dated June 30, 2009.	Incorporated by reference to Exhibit 4.2 to the Registrant's Form 8-K filed on July 7, 2009
4.14	Form of Security Agreement by and among Flint Telecom Group, Inc. and the Subscribers dated June 30, 2009.	Incorporated by reference to Exhibit 4.3 to the Registrant's Form 8-K filed on July 7, 2009
4.15	Form of Warrant Certificate issued to Subscribers dated June 30, 2009.	Incorporated by reference to Exhibit 4.4 to the Registrant's Form 8-K filed on July 7, 2009
4.16	Amendment Agreement to Promissory Note issued by Flint Telecom Group, Inc. to Michael Butler dated June 30, 2009.	Incorporated by reference to Exhibit 4.5 to the Registrant's Form 8-K filed on July 7, 2009
4.17	Promissory Note issued to John Lavery on March 13, 2009 for $300,000.	Incorporated by reference to Exhibit 4.1 to the Registrant's Form 10Q filed on May 20, 2009.
4.18	Promissory Note issued to Donal Lawless on March 25, 2009 for €100,000 .	Incorporated by reference to Exhibit 4.2 to the Registrant's Form 10Q filed on May 20, 2009.
4.19	Promissory Note issued to John Lavery on May 2, 2009 for $250,000.	Incorporated by reference to Exhibit 4.3 to the Registrant's Form 10Q filed on May 20, 2009.
4.20	Promissory Note issued to Donal Lawless on May 5, 2009 for €100,000.	Incorporated by reference to Exhibit 4.4 to the Registrant's Form 10Q filed on May 20, 2009.
4.21	Promissory Note issued to Michael Butler on May 13, 2009 for $500,000.	Incorporated by reference to Exhibit 4.5 to the Registrant's Form 10Q filed on May 20, 2009.
4.22	Second Amendment to Stock Purchase Agreement by and among Flint Telecom Group, Inc. and China Voice Holding Corp. dated May 1, 2009.	Incorporated by reference to Exhibit 4.6 to the Registrant's Form 10Q filed on May 20, 2009.
4.23	Restructure Agreement by and among Flint Telecom Group, Inc. and Michael Butler dated May 13, 2009.	Incorporated by reference to Exhibit 4.7 to the Registrant's Form 10Q filed on May 20, 2009.
4.24	Convertible Promissory Note issued to Michael Butler on May 13, 2009 for $1,516,000.	Incorporated by reference to Exhibit 4.8 to the Registrant's Form 10Q filed on May 20, 2009.
4.25	Amendment to the Promissory Notes issued to J. Lavery effective September 1, 2009.	Incorporated by reference to Exhibit 4.28 to the Registrant’s Form 10K filed on October 13, 2009.
4.26	First Amendment to the $1,202,500 Promissory Note issued to Flint Telecom, Ltd.	Incorporated by reference to Exhibit 4.28 to the Registrant’s Form 10K filed on October 13, 2009.
4.27	Second Amendment to the $1,202,500 Promissory Note issued to Flint Telecom, Ltd.	Incorporated by reference to Exhibit 4.28 to the Registrant’s Form 10K filed on October 13, 2009.

4.28	$202,500 Promissory Note issued to Flint Telecom Ltd. on September 30, 2008, as amended and restated effective October 1, 2008.	Filed electronically herewith.
4.29	$100,000 Promissory Note issued on August 18, 2009.	Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10Q filed on November 23, 2009.
4.30	200,000 Warrants issued on August 18, 2009.	Incorporated by reference to Exhibit 4.2 to the Registrant’s Form 10Q filed on November 23, 2009.
4.31	$75,000 Promissory Note issued on September 24, 2009.	Incorporated by reference to Exhibit 4.3 to the Registrant’s Form 10Q filed on November 23, 2009.
4.32	$150,000 Promissory Note issued on September 29, 2009.	Incorporated by reference to Exhibit 4.4 to the Registrant’s Form 10Q filed on November 23, 2009.
4.33	$51,000 Promissory Note issued on October 6, 2009.	Incorporated by reference to Exhibit 4.5 to the Registrant’s Form 10Q filed on November 23, 2009.
4.34	$250,000 Promissory Note issued on October 20, 2009.	Incorporated by reference to Exhibit 4.6 to the Registrant’s Form 10Q filed on November 23, 2009.
4.35	250,000 Warrants issued on October 20, 2009.	Incorporated by reference to Exhibit 4.7 to the Registrant’s Form 10Q filed on November 23, 2009.
4.36	$260,000 Promissory Note issued on October 28, 2009.	Incorporated by reference to Exhibit 4.8 to the Registrant’s Form 10Q filed on November 23, 2009.
4.37	$50,000 Convertible Promissory Note issued on December 18, 2009.	Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10Q filed on March 25, 2010.
4.38	$50,000 Convertible Promissory Note issued on January 29, 2010	Incorporated by reference to Exhibit 4.2 to the Registrant’s Form 10Q filed on March 25, 2010.
4.39	$50,000 Convertible Promissory Note issued on January 29, 2010	Filed electronically herewith.
4.40	$58,000 Convertible Promissory Note issued on March 8, 2010.	Incorporated by reference to Exhibit 4.3 to the Registrant’s Form 10Q filed on March 25, 2010.
4.41	$40,000 Convertible Promissory Note issued on March 12, 2010.	Incorporated by reference to Exhibit 4.4 to the Registrant’s Form 10Q filed on March 25, 2010.
4.42	$40,000 Convertible Promissory Note issued on April 22, 2010.	Incorporated by reference to Exhibit 4.5 to the Registrant’s Form 10Q filed on May 24, 2010.
4.43	$30,000 Convertible Promissory Note issued May 18, 2010.	Incorporated by reference to Exhibit 4.6 to the Registrant’s Form 10Q filed on May 24, 2010.
4.44	$40,000 Convertible Promissory Note issued May 31, 2010.	Filed electronically herewith.

4.45	$25,750 Amended and Restated Convertible Promissory Notes issued May 27, 2010.	Filed electronically herewith.
4.46	$25,750 Amended and Restated Convertible Promissory Notes issued May 27, 2010.	Filed electronically herewith.
4.47	$98,500 Convertible Promissory Note, as amended and restated on May 29, 2010.	Filed electronically herewith.
4.48	$50,000 Convertible Promissory Note issued June 24, 2010	Filed electronically herewith.
4.49	$35,000 Convertible Promissory Note issued August 19, 2010	Filed electronically herewith.
4.50	$27,500 Convertible Promissory Note issued August 19, 2010, as amended and restated.	Filed electronically herewith.
4.51	$40,000 Convertible Promissory Note issued September 9, 2010.	Filed electronically herewith.
4.52	$50,000 Convertible Promissory Note issued September 22, 2010.	Filed electronically herewith.
4.53	$25,000 Convertible Promissory Note issued September 13, 2010.	Filed electronically herewith.
4.54	$50,000 Convertible Promissory Note issued September 13, 2010, as amended and restated.	Filed electronically herewith.
10.1	2009 Restricted Stock Plan	Incorporated by reference to Appendix A to the Registrant’s Proxy Statement filed on October 26, 2009.
10.2	2005 Stock Option Plan, as Amended and Restated*	Incorporated by reference to Appendix A to the Registrant’s Proxy Statement filed on July 30, 2008.
10.3	Employment Agreement by and among Flint Telecom Group, Inc. and Mr. Bernard A. Fried dated February 23, 2010.*	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on February 23, 2010.
10.4	Settlement Agreement by and among TelSpace and Flint Telecom Group, Inc	Incorporated by reference to Exhibit 10.4 to the Registrant’s Form 10Q filed on May 24, 2010.
10.5	Employment Agreement by and among Flint Telecom Group, Inc. and Mr. Vincent Browne dated October 6, 2008.*	Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on October 7, 2008
10.6	Settlement Agreement and Release dated October 23, 2009 by and among Flint Telecom Group, Inc. and AT&T Diversified Group.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on December 15, 2009.

10.7	Settlement Agreement by and among Flint Telecom Group, Inc. and Michael Butler.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on February 11, 2010.
10.8	Settlement Agreement by and among Flint Telecom Group, Inc. and China Voice Holding Corp. dated May 28, 2010.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on June 4, 2010.
10.9	Settlement Agreement by and among Flint Telecom Group, Inc. and John Lavery dated June 4, 2010.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on June 10, 2010.
10.10	First Amendment to $2,000,000 Note issued to Thermo Credit, LLC.	Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on June 10, 2010.
10.11	Settlement Agreement by and among Flint Telecom Group, Inc., Redquartz and Thomas J Davis dated June 17, 2010.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on June 23, 2010.
10.12	Form of Debt Wrap Agreement by and among Flint Telecom Group, Inc. and the investors named therein.	Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on June 23, 2010.
10.13	Reserve Equity Agreement by and among Flint Telecom Group, Inc. and AGS Capital Group, LLC dated June 17, 2010.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on June 23, 2010.
10.14	Registration Rights Agreement by and among Flint Telecom Group, Inc. and AGS Capital Group, LLC dated June 17, 2010.	Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on June 23, 2010.
10.15	Employment Agreement by and among Flint Telecom Group, Inc. and Mr. Bill Burbank dated January 29, 2009.*	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on February 4, 2009.
10.16	Form of Warrant to purchase up to a maximum total of 420,000 shares of Semotus’ common stock issued to Bathgate Capital Partners dated November 14, 2005	Incorporated by reference to Exhibit 4.3 to the Registrant’s Form 8-K filed November 17, 2005
10.17	Form of Lock-Up Agreement by and among our Officers dated June 30, 2009.	Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed July 7, 2009.
21	Subsidiaries of the Registrant.	Filed electronically herewith.
31.1	Certification of the Chief Executive Officer and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a–14(a)/15d–14(a).	Filed electronically herewith pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer and Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed electronically herewith pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Separation Agreement by and among Flint Telecom Group, Inc. and Christopher Knight dated November 6, 2008.*	Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K filed on November 10, 2008.

99.2	Separation Agreement by and among Bill Burbank and Flint Telecom Group, Inc. dated February 4, 2010.	Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K filed on February 10, 2010.
99.3	Addendum to Separation Agreement by and among Bill Burbank and Flint Telecom Group, Inc. dated June 17, 2010.	Filed electronically herewith.
99.4	First Amendment to Settlement Agreement by and among Flint Telecom Group, Inc. and China Voice Holding Corp. dated October 12, 2010.	Filed electronically herewith.

* Management contract or compensatory plan or arrangement.

SIGNATURES

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

FLINT TELECOM GROUP, INC.

Date: October 20, 2010

By: /s/ Vincent Browne

Vincent Browne

Chief Executive Officer and Chief Financial Officer

FLINT TELECOM GROUP, INC. AND SUBSIDIARIES

Index to Financial Statements

	Page(s)
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Financial Statements:
Consolidated Balance Sheets, June 30, 2010 and 2009		F-3
Consolidated Statements of Operations for the Years Ended June 30, 2010 and 2009		F-5
Consolidated Statements of Stockholders’ Equity (Deficit) and other Comprehensive Loss for the Years Ended June 30, 2010 and 2009		F-7
Consolidated Statements of Cash Flow for the Years Ended June 30, 2010 and 2009		F-9
Notes to Consolidated Financial Statements		F-12

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Flint Telecom Group, Inc. and Subsidiaries

Overland Park, Kansas

We have audited the accompanying consolidated balance sheets of Flint Telecom Group, Inc. and subsidiaries as of June 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two year period ended June 30, 2010. Flint Telecom Group, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Flint Telecom Group, Inc. and subsidiaries as of June 30, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two year period ended June 30, 2010 in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered losses from operations, negative cash flows from operations and current liabilities exceed current assets, all of which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/S/ L.L. Bradford & Company, LLC

L.L. Bradford. & Company, LLC

October 20, 2010

Las Vegas, Nevada

F-2

FLINT TELECOM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30,
	2010				2009
ASSETS
Current assets:
Cash and cash equivalents	$	19,419		$	1,337,002
Accounts receivable, net of allowance for doubtful accounts
of $431,381 and $205,397 as of June 30, 2010 and 2009, respectively		1,049,648			2,585,875
Notes receivable		--			125,000
Inventories		361,784			886,512
Investment in marketable securities		--			2,700,000
Due from Flint Telecom, Ltd.		--			258,731
Due from related parties		--			124,174
Prepaid expenses and other current assets		--			8,724
Current assets		1,430,851			8,026,018

Fixed Assets:
Equipment		1,885,604			1,851,830
Capitalized leases – equipment		194,839			819,025
Total fixed assets		2,080,443			2,670,855
Less: accumulated depreciation		(1,839,372	)		(687,776	)
Net fixed assets		241,071			1,983,079

Deposit		3,200			3,149
Goodwill		--			2,687,080
Other intangible assets, net		--			10,587,115
Total assets	$	1,675,122		$	23,286,441

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	3,641,554		$	5,140,268
Cash overdraft		--			175,096
Other accrued liabilities		587,033			215,898
Accrued interest payable		650,897			545,938
Lease obligations – current		375,371			601,275
Lines of credit		2,038,102			3,143,962
Notes payable		1,935,163			1,525,886
Notes payable – related parties, net of discount		2,061,861			5,440,232
Convertible notes payable, net of discount		517,059			115,000
Convertible notes payable – related parties, net of discount		98,000			94,062
Due to Flint Telecom Ltd.		156,042			--
Redeemable preferred stock		--			1,250,000
Total current liabilities		12,061,082			18,247,617

Convertible notes payable – long-term, net of discount	598,997				--
Convertible notes payable due to related parties – long-term, net of discount	--				542,004
Notes payable due to related parties – long term, net of discount	--				3,021,865
Lease obligations - long-term	405,938				117,707
Total liabilities	13,066,017				21,929,193

F-3


Commitments & contingencies

Stockholders' equity (deficit):
Preferred stock: $0.001 par value; 5,000,000 authorized, 668,780 issued and outstanding at June 30, 2010, 1,250,000 issued and outstanding at June 30, 2009		6,021,301			--
Common stock: $0.01 par value; 900,000,000 authorized, 129,824,422 issued and outstanding at June 30, 2010, 71,294,702 issued and outstanding at June 30, 2009		1,298,244			712,947
Common stock issuable		47,368			44,786
Additional paid-in capital		31,143,927			22,085,472
Accumulated other comprehensive loss		--			(450,000	)
Accumulated deficit		(49,901,735	)		(21,035,957	)
Total stockholders' equity (deficit)		(11,390,895	)		1,357,248
Total liabilities and stockholders’ equity (deficit)	$	1,675,122		$	23,286,441

See accompanying notes to the consolidated financial statements.

F-4

FLINT TELECOM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS



	Years Ended June 30,
	2010			2009
Revenues	$	34,060,505		$	34,337,063
Cost of revenues		32,497,019			34,995,692
Gross margin (loss)		1,563,486			(658,629	)

Operating expenses:
General and administrative:
Consultants		120,152			804,816
Bad debt expense		510,572			188,707
Salaries and payroll related expense		1,468,248			1,310,378
Management fee payable to Flint Telecom, Ltd.		570,000			286,205
Stock compensation and option expense:
Directors and officers		1,901,372			3,515,688
Consultants		986,961			133,501
Employees		212,583			714,762
Depreciation and amortization expense		1,315,924			1,583,406
Other		1,184,235			1,589,144
Total general and administrative		8,270,047			10,126,607

Total operating expenses		8,270,047			10,126,607
Operating loss		(6,706,561	)		(10,785,236	)
Other income (expense)		159,043			(453,552	)
Interest expense		(3,457,600	)		(2,011,640	)
(Loss) on investment		(2,250,000	)		--
Loss on debt settlements		(2,757,702	)		--
Provision for income taxes		--			--
Loss on disposal of fixed assets		(332,023	)		--
Impairment of fixed assets		(1,305,735	)		--
Impairment of goodwill and intangible assets		(12,215,200	)		--
Net loss from continuing operations		(28,865,778	)		(13,250,428	)
Loss from discontinued operations, net of tax		--			(1,311,835	)
Net loss	$	(28,865,778	)	$	(14,562,263	)
Net loss per common share:
Basic	$	(0.35	)	$	(0.31	)
Diluted	$	(0.35	)	$	(0.31	)

Weighted average shares outstanding:
Basic		83,547,968			46,917,683
Diluted		83,547,968			46,917,683

See accompanying notes to the consolidated financial statements.

F-5

FLINT TELECOM GROUP, INC. AND SUBSIDIARIES

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT) AND OTHER COMPREHENSIVE LOSS

	Common Stock						Common Stock Issuable				Additional			Preferred Shares		Accumulated
	Shares			Amount			Shares		Amt.		Paid-In Capital			(Series D, E, F & G)		Compre-hensive Loss			Accum. Deficit			Total
Balances at June 30, 2008		28,460,094		$	284,601			--	$	--	$	778,282		$	--	$	--		$	(6,473,694	)	$	(5,410,811	)
Acquisition of Semotus Solutions, Inc.		2,990,900			29,909			--		--		2,416,364			--		--			--			2,446,273
Acquisition of the six CHVC subsidiaries		21,000,000			210,000			--		--		7,770,000			--		--			--			7,980,000
Issuance of new shares as compensation to officers and employees		5,643,000			56,430			--		--		3,306,320			--		--			--			3,362,750
Stock compensation expense		--			--			--		--		812,000			--		--			--			812,000
Shares issued with the restructure of notes payable		3,260,000			32,600			--		--		1,173,600			--		--			--			1,206,200
Shares issued with new notes payable		660,000			6,600			--		--		229,500			--		--			--			236,100
Shares issued to consultants for service		150,000			1,500			415,454		4,154		127,847			--		--			--			133,501
Shares issued to acquire software		1,500,000			15,000			--		--		540,000			--		--			--			555,000
Disposition of Semotus business		(3,508,000	)		(35,080	)		--		--		(1,297,960	)		--		--			--			(1,333,040	)
Conversion of notes payable into equity		9,511,436			95,115			4,063,183		40,632		3,597,273			--		--			--			3,733,020
Private offering		1,627,272			16,272			--		--		423,728			--		--			--			440,000
Issuance of warrants to holders of notes payable		--			--			--		--		1,690,363			--		--			--			1,690,363
Beneficial conversion feature on convertible notes payable		--			--			--		--		462,454			--		--			--			462,454
Stock options expense for twelve months ended June 30, 2009		--			--			--		--		55,701			--		--			--			55,701
Comprehensive Loss:
Comprehensive loss		--			--			--		--		--			--		(450,000	)		--			(450,000	)
Net loss for the year ended June 30, 2009		--			--			--		--		--			--		--			(14,562,263	)		(14,562,263	)
Balances at June 30, 2009		71,294,702		$	712,947			4,478,637	$	44,786	$	22,085,472			--	$	(450,000	)	$	(21,035,957	)	$	1,357,248

See accompanying notes to the consolidated financial statements.

F-6

	Common Stock						Common Stock Issuable						Additional			Preferred Shares		Accumulated
	Shares			Amount			Shares			Amt.			Paid-In Capital			(Series D, E, F & G)		Compre-hensive Loss			Accum. Deficit			Total
Balances at June 30, 2009		71,294,702			712,947			4,478,637			44,786			22,085,472			--		(450,000	)		(21,035,957	)		1,357,248

Conversion of notes payable into equity		24,312,685			243,127			4,736,842			47,368			52,451			--		--			--			342,946
Beneficial conversion feature on convertible notes payable		--			--			--			--			422,786			--		--			--			422,786
Shares issued to consultants for services		35,790,215			357,902			(55,636	)		(556	)		472,281			162,735		--			--			992,362
Issuance of warrants to holders of notes payable		--			--			--			--			779,091			--		--			--			779,091
Shares issued for cashless exercise of warrants		1,963,636			19,636			--			--			(19,636	)		--		--			--			--
Stock payable issued, net of cancellations		4,413,184			44,132			(4,423,001	)		(44,230	)		(5,302	)		--		--			--			(5,400	)
Stock compensation expense		--			--			--			--			1,194,085			--		--			--			1,194,085
Stock options expense for twelve months ended June 30, 2010		--			--			--			--			46,247			--		--			--			46,247
Shares issued for payments on debt		150,000			1,500			--			--			34,500			--		--			--			36,000
Shares issued to officers, directors and employees for vested stock compensation		7,700,000			77,000			--			--			796,625			--		--			--			873,625
Preferred shares issued for satisfaction of debt		--			--			--			--			--			5,858,566		--			--			5,858,566
Comprehensive Loss:
Comprehensive loss		--			--			--			--			--			--		(1,800,000	)		--			(1,800,000	)
Disposal of 4 CHVC subsidiaries		(15,800,000	)		(158,000	)		--			--			5,285,327			--		2,250,000			--			7,377,327
Net loss for the year ended June 30, 2010		--			--			--			--			--			--		--			(28,865,778	)		(28,865,778	)
Balances at June 30, 2010		129,824,422		$	1,298,244			4,736,842		$	47,368		$	31,143,927		$	6,021,301	$	--		$	(49,901,735	)	$	(11,390,895	)
	==========			========			=======			======			=========			==========		=========			=========			=========

See accompanying notes to consolidated financial statements.

F-7

FLINT TELECOM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

	Years ended June 30,
	2010			2009
Cash Flows from Operating Activities:
Net loss	$	(28,865,779	)	$	(14,562,263	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,315,924			1,583,406
Impairment of good will and intangible assets		12,215,200			--
Impairment of fixed assets		1,305,735			--
Interest charges capitalized to lease obligations		128,000			--
Loss on debt settlements		2,757,702			--
Loss on investment		2,250,000			--
Loss on disposal		332,023			--
Stock and option compensation expense		3,100,916			4,363,951
Amortization / accretion of debt discount		1,576,379			810,192
Amortization of beneficial conversion feature		422,786			--
Amortization of debt issuance cost		--			128,369
Gain on disposal of Semotus		--			1,311,835

Changes in assets and liabilities, net of acquisitions & disposals:
Accounts receivable		1,170,445			(271,184	)
Prepaid expense		8,724			97,473
Inventories		524,728			(597,262	)
Deposit		(51	)		(3,149	)
Accounts payable		(2,136,931	)		1,857,473
Cash overdraft		(174,834	)		175,096
Accrued liabilities		457,306			(144,497	)
Net due from Flint Telecom, Ltd.		657,072			(486,328	)
Accrued interest payable		750,372			--
Due from related parties		--			(124,174	)
Deferred revenue		--			27,112
Accrued interest		--			1,144,499
Net cash used in operating activities		(2,204,283	)		(4,689,451	)

Cash Flows from Investing Activities:
Purchases of fixed assets		(8,532	)		(353,703	)
Proceeds from sale of fixed assets		6,538			--
Investment in notes receivable		(125,000	)		(125,000	)
Cash paid for the acquisition of CHVC Subs		--			(1,200,000	)
Cash assumed (disposed) in acquisitions (disposals)		--			(45,774	)
Net cash used in investing activities		(126,994	)		(1,724,477	)

Cash Flows From Financing Activities:
Proceeds from lines of credit		21,905			2,020,121
Proceeds from related parties debt		370,550			3,057,000
Proceeds from debt		1,015,000			2,138,743
Payments on lines of credit		(3,925	)		--

F-8

Payments on related parties debt		(50,279	)		(249,000	)
Payments on debt		(175,000	)		(423,583	)
Proceeds from private offerings		--			440,000
Redemption of preferred stock		--			(550,000	)
Payments on lease obligations		(6,088	)		(98,263	)
Net cash provided by financing activities		1,172,163			6,335,018

Cash Flows From Foreign Currency Activities:
Exchange gain (loss) on debt		(158,469	)		(71,109	)
Net cash provided by (used in) foreign currency activities		(158,469	)		(71,109	)

Net increase (decrease) in cash and cash equivalents		(1,317,583	)		(150,019	)
Cash and cash equivalents, beginning of the period		1,337,002			1,487,021
Cash and cash equivalents, end of the period	$	19,419		$	1,337,002

See accompanying notes to consolidated financial statements.

F-9

FLINT TELECOM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

	Years Ended June 30,
	2010			2009
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest	$	26,000		$	394,811
Cash paid for income taxes	$	--		$	--
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Assets purchased under capital lease obligations	$	--		$	40,262
Discounts – warrants	$	779,901		$	1,690,363
Discounts – beneficial conversion	$	422,786		$	462,454
Satisfaction of notes payable to related party and accrued interest by issuance of common stock	$	--		$	1,206,200
Conversion of notes payable and accrued interest	$	342,946		$	3,733,020
Payment on lease obligations through stock issuance	$	36,000		$	--
Capitalization of accrued interest to principal	$	266,415		$	--
Due from related party satisfied with redeemable preferred stock	$	1,250,000		$	--
Transfer from Flint Telecom Limited to Notes payable	$	280,000		$	--
Cancellation of discount on related party notes payable	$	--		$	141,730
Fixed assets received in satisfaction of note receivable	$	250,000		$	--
Debt Settlements:
Preferred shares issued	$	5,858,566		$	--
Debt and accrued interest instruments cancelled	$	3,100,864		$	--

Disposition of 4 CHVC subsidiaries:
Assets	$	2,192,968		$	--
Liabilities and equity	$	(7,478,296	)	$	--
Contribution	$	(5,285,328	)	$	--
Acquisition of Semotus Solutions, Inc.:
Cash	$	--		$	83,171
Accounts receivable	$	--		$	390,712
Prepaid expense	$	--		$	18,922
Goodwill	$	--		$	2,538,148
Accounts payable	$	--		$	(123,036	)
Accrued liabilities	$	--		$	(269,367	)
Deferred revenue	$	--		$	(192,277	)
	$	--		$	2,446,273
Disposition of Semotus Solutions, Inc.:
Cash	$	--		$	325,851
Accounts receivable	$	--			143,874
Prepaid expense	$	--			12,876

F-10

Accounts payable	$	--		(46,300	)
Accrued liabilities	$	--		(110,185	)
Deferred revenue	$	--		(219,389	)
	$	--	$	106,727
	==========		===========
Acquisition of CHVC Subsidiaries:
Accounts receivable	$	--	$	1,979,684
Prepaid expense	$	--	$	34,151
Inventory	$	--	$	289,250
Fixed assets	$	--	$	252,124
Investment in marketable securities	$	--	$	3,150,000
Goodwill	$	--	$	2,687,080
Other intangible asset	$	--	$	11,525,000
Cash assumed	$	--	$	196,906
Accounts payable	$	--	$	(2,133,304	)
Accrued liabilities	$	--	$	(891	)
	$	--	$	17,980,000
Redeemable preferred stock	$	--	$	(1,800,000	)
Cash paid	$	--	$	(1,200,000	)
Note payable	$	--	$	(7,000,000	)
	$	--	$	7,980,000

Non-cash acquisition of software	$	--	$	555,000

See accompanying notes to the consolidated financial statements.

F-11

Flint Telecom Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Organization and Formation

The subsidiaries provide the following telecom services and / or distribute the following telecom products:

F-12

As part of our ongoing emphasis on streamlining our operations and reaching profitability, during the fiscal year ended June 30, 2010 we shut down and disposed of four of our other wholly owned subsidiaries: CVC Int’l, Phone House Inc. of Florida, Dial-Tone Communications and Starcom Alliance. Consequently, we recognized a one-time loss of $12,215,200.

Following the corporate restructuring during the financial year ended June 30, 2010, the Company’s management decided to structure the business into three separate operating segments. These segments are (1) the sale of third-party telecoms and networking equipment and software services (collectively referred to as equipment as “telecom software, services & equipment”), (2) the sale of Company produced and third-party prepaid calling products (collectively refered to as “prepaid telecom services”) (3) the delivery of wholesale and VoIP telecom services to other operators and direct to end users (collectively referred to as “telecom services”). Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment are reflected in the table below as “corporate activities”. See Note 24, Segment Information, for more details.

2. Significant Accounting Policies

Revenue Recognition – Flint recognizes revenues based upon contract terms and completion of the sales process. Revenue is generated from the sale of telecoms and networking equipment to cable and other operators and from the sale of prepaid calling cards and wireless services to distribution partners. The Company recognizes the net revenue generated when the products are shipped to the partners and payment is reasonably assured.

Basis of Consolidation – The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of Flint Telecom Group, Inc. The Company additionally consolidated the financial statements of its wholly owned operating subsidiaries: Cable and Voice Corporation, Phone House, Inc. (of California), Digital Phone Solutions, Inc. and Flint Prepaid, Inc. The financial statements include consolidated income information for CVC Int’l, Starcom Alliance, Phone House, Inc. of Florida and Dial Tone Communications only through the date of discontinuation, and for Semotus Solutions, Inc. only through the date of disposition. All intercompany accounts and transactions have been eliminated in consolidation. The results of subsidiaries acquired or disposed of during the respective periods are included in the consolidated statements of operations from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Cost of Revenue – Costs directly related to the supply of the equipment and cards to customers and distribution partners are categorized as a cost of revenue. These costs are the direct cost of the equipment invoiced by vendor partners and the costs levied by third-party telecom providers for the prepaid calling cards and wireless services. Costs become payable on terms provided by vendors when the goods are received and held in inventory for onward shipment.

Earnings (loss) per share - Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution, using the treasury stock method or the if converted method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Any dilutive security issued, that would create an anti-dilutive effect, is not included in the weighted average share calculation for that period.

F-13

Income taxes - Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is provided when it is more likely than not that some portion or the entire deferred tax asset will not be realized.

The Company provides for the minimum recognition threshold a tax position must meet before being recognized in the Company’s financial statements. Generally, recognition is limited to situations where, based solely on the technical merits of the tax position, the Company has determined that the tax position is more likely than not to be sustained on audit.

Cash and Cash Equivalents – The Company considers all highly liquid investments with original maturities of three months or less or money market funds from substantial financial institutions to be cash equivalents. The Company places substantially all of its cash and cash equivalents in interest bearing demand deposit accounts with one financial institution and in amounts that are insured either by the Irish government for Euro deposits or by the Federal Deposit Insurance Corporation for U.S deposits.

Allowance for Doubtful Accounts - The Company provides an allowance for doubtful accounts based on management’s periodic review of recoverability of accounts receivable. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make payments, which results in bad debt expense. Management determines the adequacy of this allowance by continually evaluating individual customer receivables, considering the customer’s financial condition, credit history and current economic conditions. The Company recognizes bad debts on unpaid trade accounts receivable as each account is deemed to be uncollectible and estimates an allowance for accounts that have a risk of not being collected.

Inventory - Inventory consists of finished goods and is valued at the lower of cost or market basis using the first-in, first-out method.

Goodwill - Goodwill resulting from a business combination is not subject to amortization. The company tests such goodwill at the reporting unit level for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Other Intangible Assets are amortized over a 3-15 year period.

Stock Options and Other Share-Based Compensation - The Company issues stock options and other share-based compensation to its employees. For equity awards, such as stock options, total compensation cost is based on the grant date fair value and for liability awards, such as stock appreciation rights, total compensation cost is based on the settlement value. The Company recognizes stock-based compensation expense for all awards over the service period required to earn the award. The Company amortizes these newly issued graded awards on a straight-line basis.

Concentrations of Credit Risk - Financial instruments which potentially subject the Company to concentrations of risk consist principally of trade and other receivables. The Company extends credit to its customers in the ordinary course of business and periodically reviews the credit levels extended to customers, estimates the collectability and creates an allowance for doubtful accounts, as needed. The Company does not require cash collateral or other security to support customer receivables. Provision is made for estimated losses on uncollectible accounts.

The Company estimates its allowance for doubtful accounts by applying estimated loss percentages against its aging of accounts receivable balances. The estimated loss percentages are updated periodically and are based on the Company’s historical write-off experience, net of recoveries. Changes to allowances may be required if the financial condition of the Company’s customers improves or deteriorates or if the Company adjusts its credit standards for new customers, thereby resulting in write-off patterns that differ from historical experience.

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. Certain significant estimates were made in connection with preparing the Company’s financial statements. Actual results could differ from those estimates.

F-14

Fair value of financial instruments - The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and short term notes approximate fair value because of their short maturity as of June 30, 2010.

The Convertible Notes were recorded at face value as of the issuance date. Those Convertible Notes issued in the Euro currency were translated at the Euro – U.S. Dollar exchange rate as of the transaction date and are adjusted for exchange rate changes on a quarterly basis. The Convertible Notes approximate fair value since they are a long term liability with a fixed interest rate, adjusted for exchange rates if required and will be held until maturity or until converted into common stock.

Foreign Currency Transactions - Exchange adjustments resulting from foreign currency transactions are generally recognized in operations. Flint has a loan that is in the Euro currency, and a note payable in British Pounds. Net foreign currency transaction gains were $158,469 for the year ended June 30, 2010 against a loss of $71,109 for the year ended June 30, 2009.

Fixed Assets – These assets are stated at cost, net of accumulated depreciation and amortization. Depreciation is provided on the straight-line method over the estimated useful lives of the related assets, generally three to seven years. Amortization on capital leases is over the lesser of the estimated useful life or term of the lease if shorter, and is included in depreciation and amortization expense in the statement of operations. Ordinary course repairs and maintenance on fixed assets are expensed as incurred.

The carrying value of fixed assets are assessed annually or when factors indicating an impairment are present. We review our fixed assets for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable. Impairment reviews require a comparison of the estimated future undiscounted cash flows to the carrying value of the asset. If the total of the undiscounted cash flows is less than the carrying value, an impairment charge is recorded for the difference between the estimated fair value and the carrying value of the asset.

Fiscal Year End – The Company’s fiscal year end is June 30.

3. Going Concern

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of our business. As reflected in the accompanying financial statements, Flint had a net loss of $28,865,778 and $14,562,263 for the years ended June 30, 2010 and 2009, respectively, negative cash flow from operating activities of $2,204,283 for the year ended June 30, 2010, an accumulated stockholder’s deficit of $11,390,895 and a working capital deficit of $10,630,231 as of June 30, 2010. Also, as of June 30, 2010, we had limited liquid and capital resources. We are currently largely dependent upon obtaining sufficient short and long term financing in order to continue running our operations.

As of the date of this filing we are currently in default on a number of notes payable and other debt repayment plans, as a result, all outstanding principal and accrued interest, if any, outstanding and owed as of the date of default shall be immediately due and payable , which include, but are not limited to, the following (these amounts reflect principal amounts only): Thermocredit ($2,000,000), CHVC ($1,520,242), Tom Davis ($800,000), and Bill Burbank ($150,000) (See Related Parties Note 9, Notes Payable Note 15, and Subsequent Events Note 25 for more details). We have also not made any dividend payments on our Series E or Series F preferred stock as these payments have become due (See Stockholders Equity Note ).

The foregoing factors raise substantial doubt about our ability to continue as a going concern. Ultimately, our ability to continue as a going concern is dependent upon our ability to attract new sources of capital, exploit the growing telecom services market in order to attain a reasonable threshold of operating efficiency and achieve profitable operations. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

We recently announced significant reductions in our operating costs and are in ongoing discussions with our creditors to restructure our balance sheet and future debt payments. Management expects that the successful outcome of these discussions will allow us to become EBITDA positive as soon as possible. We have secured a $10

F-15

million Reserve Equity Financing agreement with AGS Capital Group, LLC that we can draw against when a planned S1 Registration Statement becomes effective with the SEC (See Note 23 for more details) and other indicative funding commitments from investors for additional capital following the planned restructure that management believes is sufficient to fund our operating cash flow needs, before debt repayments, for the next twelve months.

4. Acquisition and Subsequent Partial Discontinuation and Partial Disposition of the CHVC Acquisition Companies

On January 29, 2009, we acquired six U.S. operating subsidiaries of China Voice Holding Corp. (“CHVC”), namely: CVC Int’l Inc., Cable and Voice Corporation, StarCom Alliance Inc, Dial-Tone Communication Inc, Phone House of Florida, Inc., and Phone House, Inc. (of California) (the “Acquisition Companies”), in exchange for 21,000,000 shares of our restricted common stock and $500,000 in cash at Closing and $1,000,000 in deferred payments. Additionally, we issued a Promissory Note to CHVC dated January 29, 2009, in an amount of $7,000,000. As part of the closing of the transaction and in addition to the issuance of the common stock and cash paid as noted above, we also acquired 15,000,000 shares of restricted common stock of CHVC in exchange for deferred payments totaling $1,500,000.

Subsequently, in March and April of 2009, a number of terms and conditions within the Merger Agreement, Stock Purchase Agreement and Promissory Note were amended.

During the third quarter ended March 31, 2010 we shut down four of these subsidiary companies: CVC Int’l, Phone House Inc. of Florida, Dial-Tone Communications and Starcom Alliance. Consequently, we recognized a loss in the form of a one-time impairment charge of goodwill and other intangibles and other one-time costs in the amount of $12,215,200. During the fourth quarter ended June 30, 2010 we sold these four companies pursuant to a settlement agreement, as amended, with CHVC effective June 30, 2010 (See Note 15 Related Party Transactions).

Consequently, we recognized an equity contribution in the amount of $5,285,327 and a one-time charge of $2,250,000 relating to the return of the CHVC shares held by the Company at the time of the sale.

5. Acquisition and Subsequent Disposition of Semotus Solutions, Inc.

During the year ended June 30, 2009, we acquired Semotus Solutions, Inc. (“Semotus”) through a reverse merger and disposed of the Semotus software business on January 28, 2009. Semotus issued 28,460,094 shares of restricted common stock to Flint Telecom, Inc. pursuant to a definitive Contribution Agreement dated April 23, 2008 (the “Contribution Agreement”). Through the acquisition of Semotus, we acquired $492,796 in fair value of assets, $584,680 in liabilities. Separate from the Contribution Agreement, as a hiring and retention incentive and in lieu of issuing stock options under the Company’s stock option plan, we issued 8,410,000 shares of restricted common stock, vesting over a period of four years, to executive officers and key employees, and 3,508,000 shares of restricted common stock to Mr. LaPine. These shares of restricted common stock were valued at $2,631,000. We recorded $2,631,000 in expense in the year ended June 30, 2009, related to the shares of restricted common stock granted to these executive officers, directors and key employees.

Semotus Business Disposition:

On January 29, 2009, we sold all of the assets and liabilities of the ‘Semotus Business’ or ‘Solutions Division’ to Mr. Anthony LaPine for 3,508,000 shares of our restricted common stock valued at $1,333,040owned by Mr. LaPine. Mr. LaPine exercised his right to purchase the Semotus Business/Solutions Division from Flint, in accordance with Section 8.2(f) of the Contribution Agreement by and among Semotus Solutions, Inc. (now named Flint Telecom Group, Inc., and referred to as “Flint”) and Flint Telecom, Inc. dated April 23, 2008, in exchange for 3,508,000 shares of our restricted common stock owned by Mr. LaPine. This transaction was further clarified and consummated by the Agreement and Plan of Corporate Separation and Reorganization by and among Flint and Semotus, Inc. executed as of January 29, 2009, pursuant to which we transferred all of the assets and properties, subject to all the liabilities, debts, obligations and contracts, of the Solutions Division to Semotus, Inc. in exchange for Mr. LaPine’s 3,508,000 shares of our restricted common stock. The “Semotus Business”, as set forth in Section

F-16

7.18 of the Contribution Agreement, is defined as the operations of Semotus as conducted immediately prior to the acquisition transaction of Flint Telecom, Inc. that closed on October 1, 2008, and does not reflect the business operations of Flint Telecom, Inc. acquired in connection with that transaction.

As a result of this discontinuation, we recorded a net loss of $1,311,835 in discontinued operations, for the year ended June 30, 2009.

6. Recent Accounting Pronouncements

F-17

from the entity that could potentially be significant to the VIE. The guidance also requires an enterprise to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has power to direct the activities of the VIE that most significantly impact the entity’s economic performance. The guidance also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE, requires enhanced disclosures and eliminates the scope exclusion for qualifying special-purpose entities. The guidance is effective for fiscal years beginning after November 15, 2009. We are currently evaluating the potential impact, if any, of the adoption of this guidance on our consolidated financial statements.

Management does not believe that there are any recently-issued, but not yet effective, accounting standards that could have a material effect on the accompanying financial statements.

7. Accounts Receivable and Concentration of Credit Risk

Two customers accounted for 28% and 13% of our revenue, respectively, for the year ended June 30, 2010. No one customer accounted for more than 10% of the accounts receivable at June 30, 2010. Two customers accounted for 30% and 14% of our revenue, respectively, for the year ended June 30, 2009. Five customers accounted for 60% of the accounts receivable at June 30, 2009, the largest of which accounted for 16% of the receivables.

8. Private Placements

In January 2009, in order to finance the CHVC acquisition, we entered into a Common Stock and Warrant Purchase Agreement with Redquartz Atlanta, LLC (“Redquartz”), in which we sold 5,454,545 shares restricted common stock at $0.275 per share and issued 3,750,000 warrants to purchase shares common stock at $0.40 per share, having a three year term and a cashless exercise provision, in exchange for $1,500,000. As of June 30, 2009, this investment was only partially closed, with Redquartz having invested $500,000 of the $1,500,000 total that was agreed upon. As of June 30, 2009 there was no longer a reasonable expectation that we would receive the remaining $1,000,000 investment from RedQuartz, and therefore the 3,750,000 warrants were cancelled and the 5,454,545 shares of common stock were returned to Flint. An agreement was reached in June of 2010 and a settlement agreement was executed on June 17, 2010 (See Note 15: Promissory Notes: Restructures).

On January 29, 2009, we entered into a Stock Purchase Agreement with an individual investor, in which we sold 1,454,545 shares of restricted common stock at $0.275 per share in exchange for $400,000. On March 1, 2009, we entered into a Stock Purchase Agreement with an individual investor, in which we sold 100,000 shares of restricted common stock at $0.20 per share in exchange for $20,000. On April 7, 2009, we entered into a Stock Purchase Agreement with an individual investor, in which we sold 72,727 shares of restricted common stock at $0.275 per share in exchange for $20,000.

9. Related Party Transactions

Flint, Ltd. :

Flint Telecom Ltd, which is controlled by Mr. Browne, Flint’s CEO, has an amount due to it of $156,042 at June 30, 2010. This includes charges for management fees earned by Flint Telecom, Ltd., which during the year ended June 30, 2010 and 2009 were $570,000 and $286,205, respectively. $280,000 of these management fees were reclassified as note payables and assigned to a number of third parties. The management fees are for the executive, operating and financial services provided by Flint Telecom, Ltd. to us. Flint Telecom, Ltd. also has a direct equity investment in us.

During the year ended June 30, 2009, we amended the $1,202,500 Promissory Note due to Flint Telecom, Ltd., by extending the Note’s maturity date to September 20, 2011 and decreasing the principal amount owed under the Note to $202,500. The decrease was done to accurately reflect the actual amount of money loaned to Flint at the time the Note was issued. During the year ended June 30, 2010, Flint Telecom Ltd. assigned $200,000 of its $202,500 promissory note to a third party. This note has a 15% interest rate and originally matured on March 30, 2009 but was extended to September 30, 2011.

See Note 15 for more details on these transactions.

F-18

Michael Butler Debt Restructure

We had a number of loans outstanding from Mr. Butler, one of our board members as of December 31, 2009, for which we issued various promissory notes, convertible promissory notes, warrants and shares of restricted common stock to him as consideration. As of December 31, 2009, the total outstanding balance on all of Mr. Butler’s loans were approximately $4,100,000. Subject to an agreement that was executed December 31, 2009 that became effective February 5, 2010 we executed a settlement agreement with Mr. Butler in which all of Mr. Butler’s loans to Flint were cancelled in exchange for 302,000 shares of Series E preferred stock of Flint, valued at €10.00 per share, having the following material terms: