Risks and Uncertainties

3 Months Ended

May 31, 2012

Notes to Financial Statements

Risks and Uncertainties

Note 6 – Risks and Uncertainties

We have created a proprietary Internet Protocol (“IP”) telephony network and have transitioned from being a reseller of traditional wireline telephone services into a voice over IP service provider to take advantage of the network cost savings that are inherent in an IP network and the growth of the mobile IP industry. While the IP telephony business continues to grow, we face strong competition. We have built our IP telephony business with significantly less financial resources than many of our competitors. The survival of our business currently is dependent upon the success of our IP operations. Future results of operations involve a number of risks and uncertainties. Factors that could affect future operating results and cash flows and cause actual results to vary materially from historical results include, but are not limited to:

· The availability of additional funds to successfully pursue our business plan;

· The cooperation of industry service partners that have signed agreements with us;

· Our ability to market our services to current and new customers and to generate customer demand for our products and services in the geographical areas in which we operate;

· The cooperation of our creditors;

· The impact of changes the Federal Communications Commission or State Public Service Commissions may make to existing telecommunication laws and regulations, including laws dealing with Internet telephony;

· Our ability to comply with provisions of our financing agreements;

· The highly competitive nature of our industry;

· The acceptance of telephone calls over the Internet by mainstream consumers;

· Our ability to retain key personnel;

· Our ability to maintain adequate customer care and manage our churn rate;

· The impact of adverse tax or regulatory rulings or actions affecting our operations, including the imposition of taxes, fees and penalties;

· Our ability to maintain, attract and integrate internal management, technical information and management information systems;

· Our ability to manage rapid growth while maintaining adequate controls and procedures;

· The availability and maintenance of suitable vendor relationships, in a timely manner, at reasonable cost;

· The decrease in telecommunications prices to consumers; and

· General economic conditions.