Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarter ended March 31, 2015

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

For the transition period from ______ to ______

Commission file number: 000-53668

NETTALK.COM, INC.

(Exact name of Registrant as specified in its charter)

Florida	20-4830633
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

1080 NW 163rd Drive, Miami Gardens, FL	33169
(Address of principal executive offices)	(Zip code)

Registrant's telephone number, including area code: (305) 621-1200

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

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

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company þ

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

The Registrant had 177,592,350 shares of Common Stock, par value $0.001 per share, outstanding as of May 11, 2015

NET TALK.COM, INC.

FORM 10-Q QUARTERLY REPORT

QUARTER ENDED MARCH 31, 2015

INDEX

		Page
Part I - FINANCIAL INFORMATION

Item 1	FINANCIAL STATMENTS	3

	Balance Sheets at March 31, 2015 (Unaudited) and December 31, 2014 (Audited)	3

	Statements of Operations for the Three Months Ended March 31, 2015 and 2014	4

	Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014	5

	Notes to Financial Statements	6

Item 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20

Item 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26

Item 4	CONTROLS AND PROCEDURES	26

Part II	OTHER INFORMATION

Item 1	LEGAL PROCEEDINGS	27

Item 1A	RISK FACTORS	29

Item 2	UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS	29

Item 3	DEFAULTS UPON SENIOR SECURITIES	29

Item 4	MINE SAFETY DISCLOSURES	29

Item 5	OTHER INFORMATION	29

Item 6	EXHIBITS	30

netTALK.COM, Inc.

Condensed Balance Sheets

	March 31,			December 31,
	2015			2014
	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents	$	227,167		$	372,284
Restricted cash		115,530			115,530
Accounts receivable, net		28,600			82,739
Inventory		528,715			680,963
Total current assets		900,012			1,251,516

Property and equipment, net		2,679,093			2,706,426
Intangible assets, net		71,121			72,195
Development costs		450,985			377,172
Other assets		29,341			30,589
Total assets	$	4,130,552		$	4,437,898

Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	2,151,564		$	2,149,333
Accrued expenses		1,696,313			1,448,642
Due to Shareholder		94,662			250,912
Deferred revenue		2,155,714			2,056,515
Current portion of long-term debt		7,334,155			4,580,000
Total current liabilities		13,432,408			10,485,402

Long term debt		212,300			2,996,155
Total liabilities		13,644,708			13,481,557

Stockholders' deficit:
Common stock, $.001 par value, 300,000,000 authorized, 125,676,528 and 121,398,391 issued and outstanding as of March 31, 2015 and December 31, 2014		125,676			121,398
Additional paid in capital		55,299,497			55,217,697
Accumulated deficit		(64,939,329	)		(64,382,754	)
Total stockholders' deficit		(9,514,156	)		(9,043,659	)

Total liabilities and stockholders' deficit	$	4,130,552		$	4,437,898

The accompanying notes are an integral part of the financial statements

netTALK.COM, Inc.

Condensed Statements of Operations
(unaudited)

	Three Months Ended March 31,
	2015			2014

Net revenues	$	1,178,466		$	1,175,879

Cost of revenues		491,973			753,455

Gross profit		686,493			422,424

Operating expenses		1,062,384			922,265

Operating loss		(375,891	)		(499,841	)

Interest expense		(179,772	)		(111,210	)

Net loss	$	(555,663	)	$	(611,051	)

Loss per common share	$	(0.01	)	$	(0.01	)

The accompanying notes are an integral part of the financial statements

netTALK.COM, Inc.

Condensed Statements of Cash Flows
(unaudited)

	Three Months Ended March 31,
	2015			2014
Cash flow used in operating activities:
Net loss	$	(555,663	)	$	(611,051	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		53,256			58,317
Recognition of deferred revenue		(865,554	)		(1,153,526	)
Changes in assets and liabilities:
Accounts receivables		54,139			(20,605	)
Prepaid expenses and other assets		-			(3,643	)
Inventories		152,248			(103,873	)
Other assets		1,248			-
Deferred revenues		964,753			1,438,954
Accounts payable		58,610			(757,496	)
Accrued liabilities		247,671			55,520
Net cash provided by (used in) operating activities		110,708			(1,097,403	)
Cash flow used in investing activities:
Restricted cash		-			68,400
Purchase of property and equipment		(25,762	)		-
Development costs		(73,813	)		(149,311	)
Net cash used in investing activities:		(99,575	)		(80,911	)
Cash flow from financing activities:
Proceeds from promissory and demand notes		-			1,169,273
Issuance of common stock		-			131,148
Due to shareholder		(156,250	)		90,413
Net cash (used in) provided by financing activities		(156,250	)		1,390,834
Net (decrease) increase in cash		(145,117	)		212,520
Cash and cash equivalents, beginning		372,284			76,791
Cash and cash equivalents, ending	$	227,167		$	289,311
Supplemental disclosures:
Cash paid for interest	$	42,000		$	42,000
Cash paid for income taxes	$	-		$	-
Non-cash transactions:
Issuance of common stock from conversion of convertible notes	$	29,700		$	-
Cancellation of convertible notes	$	-		$	500,000
Reduction of accounts payable from Telestrata agreement	$	-		$	928,782
Conversion of demand notes to Telestrata promissory note	$	-		$	837,373
Issuance of common stock in payment of legal fees	$	56,379		$	-

The accompanying notes are an integral part of the financial statements

NET TALK.COM, INC.

Notes to Unaudited Financial Statements

Note 1 – Description of Business and Basis of Presentation

Description of Business

NET TALK.COM, INC. (“netTALK” or the “Company”) was incorporated on May 1, 2006 under the laws of the State of Florida, under the name Discover Screens Inc. On September 10, 2008 the Company changed its name to NETTALK.COM INC. The company is a leading ultra-low cost provider of home phone and smartphone communications. netTALK’s global communications network supports its flagship products which are the DUO home phone service and CONNECT mobile apps. The DUO home phone service provides local and long distance calling throughout the United States and Canada and the complementary CONNECT mobile apps provide a unified communications experience whether at home or on-the-go. The company provides this high tech, easy to use and ultra-low cost service with just one bill once a year. Additionally, the company leverages its extensive call termination agreements to offer wholesale call terminations to other carriers – powered by its carrier grade and proprietary VoIP switching platform. The company believes everyone should have access to easy to use, affordable home and on-the-go digital phone service around the world.

Basis of Presentation

The accompanying unaudited condensed interim financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States (“GAAP”) and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting of interim financial information. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. However, the unaudited condensed interim financial information includes all adjustments which are, in the opinion of management, necessary to fairly present the financial position and the results of operations for the interim periods presented. The operating results for the three months ended March 31, 2015, are not necessarily indicative of the results that may be expected for future fiscal quarters of 2015, for the year ending December 31, 2015, or for future periods. The significant accounting principles used in the preparation of these unaudited condensed interim financial statements are the same as those used in the preparation of the annual audited financial statements. These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and other Company filings with the Securities and Exchange Commission.

Note 2 - Going Concern and Liquidity

We have never sustained profits and our losses could continue. Without sufficient additional capital to repay our indebtedness as it matures, we may be required to significantly scale back our operations, significantly reduce our headcount, seek protection under the provisions of the U.S. Bankruptcy Code, and or discontinue many of our activities which could negatively affect our business and prospects. Our current efforts to raise capital may not be successful on terms satisfactory to the Company, or at all.

We incurred net losses of $555,663 and $611,051 for the three months ended March 31, 2015 and 2014, respectively. As of March 31, 2015, we had $6,146,455 in debt, after deducting applicable discount, of which $5,934,455 is current and we had $1,400,000 in a short term mortgage payable. The Company raised approximately $3,000,000 in secured and convertible promissory notes in 2014. As of March 31, 2015, we had negative working capital of $12,532,396

Our current cash resources, together with anticipated cash flows from operating activities, may not be sufficient to fund our operations or debt that is maturing in 2015 or that is due on demand. In light of these circumstances, we are seeking additional capital through public or private debt or equity financing. However, there are no assurances that those efforts will be successful or that additional capital will be available on terms that do not adversely affect our existing stockholders or restrict our operations, if it is available at all.

Also, any equity financing would likely be substantially dilutive to our stockholders, particularly in light of the prices at which our common stock has been recently trading. In addition, if we raise additional funds through the sale of equity securities, new investors could have rights senior to our existing stockholders. The terms of any future financings may restrict our ability to raise additional capital, which could delay or prevent the further development or marketing of our products and services. Our need to raise capital before the repayment of our debt becomes due may require us to accept terms that may harm our business or be disadvantageous to our current stockholders.

The accompanying financial statements have been prepared and are presented assuming the Company’s ability to continue as a going concern. The Company has incurred significant recurring losses from operations and is dependent on outside sources of funding for continuation of its operations. Our independent registered public accounting firm issued its report dated April 15, 2015, in connection with the audit of our financial statements as of December 31, 2014, that included an emphasis of a matter paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern.

The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

In order to address the need to satisfy its continuing obligations and realize its long term strategy, management has been reviewing various strategic alternatives and has taken several steps and is considering additional actions to improve its operating and financial results, which we hope will be sufficient to provide the Company with the ability to continue as a going concern, including the following:

Establish and build strategic alliances and partnerships with companies offering complimentary products and services providing synergies for those involved.

Leverage our extensive call termination agreements to offer wholesale call terminations to other carriers – powered by its carrier grade and proprietary VoIP switching platform.

Rental of available collocations space in our data center as well as available space on our telecommunications tower.

Aggressively pursue new revenue by utilizing our mobile applications for use by our current and future subscriber base.

There can be no assurance that the actions outlined above will be successful or any new financing or equity infusion will be available or that we could obtain any such arrangements on terms suitable to us. The financial statements do not include any adjustments that might result from the outcome of the uncertainty.

Note 3 - Summary of Accounting Policies

The following is a summary of significant accounting policies used in preparing the Company’s financial statements and recent accounting pronouncements that may impact our financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Significant estimates inherent in the preparation of our financial statements include developing fair value measurements upon which to base our accounting for acquisitions of intangible assets and issuances of financial instruments, including our common stock. Our estimates also include developing useful lives for our tangible and intangible assets and cash flow projections upon which we determine the existence of, or the measurements for, impairments, allowance for billing adjustments, doubtful accounts and allocation of prices between device and telecom services.

Our estimates and assumptions are based on experience, historical trends identified by management, telecommunications industry trends and the overall economic condition in the United States and abroad. Actual results could differ significantly from these estimates and assumptions, and the differences could be material.

Risk and Uncertainties

Our future results of operations and financial condition will be impacted by the following factors, among others: dependence on the worldwide telecommunication markets characterized by intense competition and rapidly changing technology, on third-party manufacturers and subcontractors, on third-party distributors in certain markets, on the successful development and marketing of new products in new and existing markets. Generally, we are unable to predict the future status of these areas of risk and uncertainty.

Revenue Recognition

Revenue is generated from product sales, telecom services, shipping and handling charges and leasing cell tower and co-location rack space in our operations center. All revenues are recognized in accordance with ASC 605, Revenue Recognition and SAB 104 as follows: when evidence of an arrangement exists, in the case of products, when the product is shipped to a customer, or in the case of telecom services, when the service is used by the consumer, when the fee is fixed or determinable and amounts are collectible from the customers.

Revenue is recognized for a device sale when the product is shipped and the customer is invoiced for retail sales and when the customer completes the transaction for internet sales. Revenue for telecom service is recognized prorata monthly as the service is used and revenue for shipping costs billed to customers are included as a component of product sales. The associated cost of shipping is included as a component of cost of product sales.

Deferred Revenue

The initial sale of our Device includes telecom service ranging from 1 month to 12 months. The revenue that is telecom is recognized ratably monthly as the service is used. The portion of the telecom service prepaid is recorded as deferred revenue. Subsequent renewals for telephone service are amortized over the corresponding number of months in the call plan.

International calls are billed as earned from our customers. International calls are prepaid and customers account is debited as minutes are used and earned.

Cash and Cash Equivalents

We consider all highly liquid cash balances and debt instruments with an original maturity of three months or less to be cash equivalents. We maintain cash balances only in domestic bank accounts, which at times, may exceed FDIC limits of $250,000. Our cash balances occasionally exceed the FDIC limits during the year but did not exceed the FDIC limit at March 31, 2015.

Inventory

Inventories are stated at the lower of cost or market. Cost is determined using the first-in first-out method. Obsolete inventory is reserved for, if necessary, and there is zero reserve at March 31, 2015 and December 31, 2014.

Property and Equipment

Property and equipment includes acquired assets which consist of network equipment, computer hardware, furniture and purchased and internally developed software. All of our equipment is stated at cost with depreciation calculated using the straight line method over the estimated useful lives of related assets, which range from three to thirty-five years. The costs of repairs and maintenance is charged to operating expenses unless it increases the assets useful life more than one year.

Intangible Assets

Intangible assets includes trademarks, patents and employee agreements. All of our intangible assets are stated at cost with amortization calculated using the straight line method over the estimated useful lives of related assets, which range from two to twenty years. The costs of repairs and maintenance is charged to operating expenses unless it increases the asset’s useful life more than one year.

Impairments and Disposals

We evaluate our tangible and definite-lived intangible assets for impairment annually or more frequently in the presence of circumstances or trends that may be indicators of impairment. Our evaluation is a two-step process. The first step is to compare our undiscounted cash flows, as projected over the remaining useful lives of the assets, to their respective carrying values. In the event that the carrying values are not recovered by future undiscounted cash flows, as a second step, we compare the carrying values to the related fair values and, if lower, record an impairment adjustment. For purposes of fair value, we generally use replacement costs for tangible fixed assets and discounted cash flows, using risk-adjusted discount rates for intangible assets.

Software Development Costs

The Company develops software for both internal and external use. The following describes netTALK’s policies and procedures regarding expensing versus capitalizing software development costs.

We capitalize costs of software to be sold, leased or marketed in accordance with FASB ASC 985-20. We account for our software development costs as costs incurred internally in creating a computer software product and are charged to expense when incurred as research and development until technological feasibility has been established for the product. Technological feasibility is established upon completion of a detail program design or completion of a working model. Capitalization of costs stops when the product is available for general release to customers at which point the capitalized costs are amortized over the software’s useful life.

We capitalize costs for internally developed software in accordance with FASB ASC 350-40. Costs incurred in the preliminary project stage are expensed as incurred. Preliminary project stage includes conceptual formulations and evaluation of alternatives, determination of existence of needed technology and final selection of alternatives. Costs incurred in the application development stage are capitalized as incurred and includes design of chosen path, configuration, coding, installation of hardware, and testing. Capitalization stops after software implementation at which point the capitalized costs are amortized over the software’s useful life.

During the three months ended March 31, 2015 and 2014, we capitalized development costs of approximately $149,000 and $74,000.

Reclassifications

Certain reclassifications have been made to prior year financial statements in order to conform to the current year’s presentation.

Share-Based Payment Arrangements

NetTalk adopted a 2010 Stock Option Plan, a 2011 Stock Option Plan and a 2012 Stock Option Plan (the "Plans") which are intended to advance the interests of the Company’s shareholders by enhancing the Company’s ability to attract, retain and motivate key individuals by providing such persons with equity ownership opportunities and performance-based incentives, thereby better aligning the interests of our employee and consultants with those of the Company. All of the Company’s employees, officers, and directors, and those Company’s consultants and advisors (i) that are natural persons and (ii) who provide bona fide services to the Company not connected to a capital raising transaction or the promotion or creation of a market for the Company’s securities, are eligible to be granted options or restricted stock awards under the Plans. The shares are compensatory in nature and are fully vested upon issuance. We value the shares consistent with fair value at the time of issuance including adjustments for certain restrictions and limitations.

Share–based compensation cost to employees is recorded as compensation expense and is recognized over the service period. Share–based payments to non–employees are recorded as consulting expense and is recognized over the service period.

Fair Value of Financial Instruments

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of valuation hierarchy are defined as follows:

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Financial instruments, as defined in the Accounting Standards Codification (“ASC”) 825 Financial Instruments, consist of cash, evidence of ownership in an entity, and contracts that both (i) impose on one entity a contractual obligation to deliver cash or another financial instrument to a second entity, or to exchange other financial instruments on potentially unfavorable terms with the second entity, and (ii) conveys to that second entity a contractual right (a) to receive cash or another financial instrument from the first entity, or (b) to exchange other financial instruments on potentially favorable terms with the first entity. Accordingly, our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, secured convertible debentures, and derivative financial instruments. The carrying amounts of debt obligations approximate their fair values as the terms are comparable to terms currently offered by local lending institutions for arrangements with similar terms to industry peers with comparable credit characteristics.

We carry cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities at historical costs since their respective estimated fair values approximate carrying values due to their current nature. We also carry convertible debentures and redeemable preferred stock at historical cost.

Derivative financial instruments, as defined in ASC 815-10-15-83, “Derivatives and Hedging”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

Certain risks and concentration

Our primary manufacturer accounted for approximately 20% of our cost of goods sold for the three months ended March 31, 2015 and 2014, respectively. And our primary telecom service provider accounted for approximately 25% and 36% of cost of goods sold for the three months ended March 31, 2015 and 2014, respectively.

One of our customers presently operates under a consignment agreement. Under the agreement we sell and ship merchandise to our customer, and collect payments upon the sale of our product to the ultimate (final) consumer.

Redeemable Preferred Stock

Redeemable preferred stock is initially evaluated for possible classification as liabilities under ASC 480 Distinguishing Liabilities from Equity. Redeemable preferred stock that does not, in its entirety, require liability classification is evaluated for embedded features that may require bifurcation and separate classification as derivative liabilities under ASC 815. In all instances, the classification of the redeemable preferred stock host contract that does not require liability classification is evaluated for equity classification or mezzanine classification based upon the nature of the redemption features. Generally, any feature that could require cash redemption for matters not within our control, irrespective of probability of the event occurring, requires classification outside of stockholders’ equity.

Loss per Common Share

Basic loss per common share represents our loss applicable to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted loss per common share gives effect to all potentially dilutive securities. We compute the effects on diluted loss per common share arising from warrants and options using the treasury stock method or, in the case of liability classified warrants, the reverse treasury stock method. We compute the effects on diluted loss per common share arising from convertible securities using the if-converted method. The effects are all anti-dilutive and are excluded.

Patent Costs

Assets are probable future economic benefits obtained as a result of past transactions or events. Legal fees and other costs incurred for successfully defending a patent from infringement are considered deferred legal costs in the sense that they are part of the cost of retaining and obtaining the future economic benefit of the patent as per Statement of Accounting Concept No. 6. If defense of the patent lawsuit is expected to be successful, costs may be capitalized to the extent of an evident increase in the value of the patent per TIS Section 2260. On February 27, 2015, all claims and counterclaims have been dismissed and, as a result, the deferred legal costs have been expensed as of December 31, 2014.

Recent Accounting Pronouncements

In May 2014, the FASB issued standard ASU 2014-09, Revenue from Contracts with Customers, that provides a single, comprehensive revenue recognition model for all contracts with customers. The standard is principle-based and provides a five-step model to determine the measurement of revenue and timing of when it is recognized. The core principle is that a company will recognize revenue to reflect the transfer of goods or services to customers at an amount that the company expects to be entitled to in exchange for those goods or services. This standard is effective for our interim and annual reporting periods beginning after December 15, 2016 and allows for either full retrospective adoption or modified retrospective adoption. We will adopt this guidance on January 1, 2017, and are currently evaluating the impact on our financial statements.

Note 4 – Accounts Receivable

Trade accounts receivable consisted of the following at:

	March 31,			December 31,
	2015			2014

Accounts receivable, gross	$	85,462		$	137,411
Allowance for returns and doubtful accounts		(56,862	)		(54,672	)
Accounts receivable, net	$	28,600		$	82,739

Note 5 – Inventory

Inventories, recorder at lower of cost or market, are as follows:

	March 31,		December 31,
	2015		2014

Raw materials	$	-	$	-
Finished goods		528,715		680,963
Total	$	528,715	$	680,963

Inventory is recorded at the lower of cost or market. Of our total finished goods inventory, at March 31, 2015 and December 31, 2014, $20,889 and $35,711, respectively, is held on consignment at one of our distributors.

During the three months ended March 31, 2015 and 2014, there were no write-downs of obsolete inventory.

Note 6 – Property and equipment

Property and equipment consisted of the following at:

	Estimated	March 31,			December 31,
	Useful Life	2015			2014

Telecommunication equipment	7	$	392,966		$	373,089
Computer equipment	5		171,659			171,659
Building	35		2,448,364			2,448,364
Building improvements	10		91,414			86,442
Office equipment and furnishing	7		48,212			48,212
Purchased and developed software	3		124,728			124,728
Land			270,000			270,000
			3,547,343			3,522,494
Less: accumulated depreciation			(868,250	)		(816,068	)
Property and equipment, net		$	2,679,093		$	2,706,426

Our property and equipment is located in our network operations center and corporate offices which are housed in the same building. Depreciation expense for the three months ended March 31, 2015 and 2014 was $52,182 and $57,242, respectively.

Note 7 - Intangible Assets

Intangible assets consisted of the following at:

	Estimated	March 31,			December 31,
	Useful Life	2015			2014
Trademarks National and International	5	$	332,708		$	332,708
Employment agreements	3		225,084			225,084
Knowhow and specialty skills	3		212,254			212,254
Workforce	3		54,000			54,000
Patents	20		93,747			93,747
Finance cost	2		83,280			83,280
			1,001,073			1,001,073
Less: accumulated amortization			(929,952	)		(928,878	)
Intangible assets, net		$	71,121		$	72,195

Amortization expense for the three months ended March 31, 2015 and 2014, was $1,074 and $11,075, respectively.

Note 8 – Debt Restructuring, Promissory Notes and Mortgage Payable

Debt Restructuring

The Company executed a redemption and debt restructuring agreement with Vicis Capital Master Fund ("Vicis") to, among other things, extend the term of our loans to September 30, 2014 with two additional one year extensions if accrued interest is paid in full, and reduce the overall loan with Vicis from approximately $17,000,000 to $3,000,000. The restated loan accrues interest at six percent (6%) per annum. In addition, pursuant to the redemption and restructuring agreement, all shares and derivative securities held by Vicis including the series A convertible redeemable preferred stock, 19,995,092 shares of the Company’s common stock, and common stock purchase warrants exercisable for 76,864,250 shares of common stock have been returned to the Company and cancelled. The holders received no additional consideration to effect the modification.

The approximately $14,000,000 extinguishment of debt was recorded as an equity transaction and the cancelled securities have been reflected as a reduction of the related shares of preferred and common stock and other securities as of December 31, 2013. The result was a decrease to common stock of $19,995 and an increase to additional paid-in capital of $14,098,847 from the extinguishment of debt, $5,000,000 from the write-off of preferred stock and $1,601,116 from the write-off of preferred stock dividends.

Phoenix Vitae Holdings, LLC (“PV”), which is owned by the CEO of the Company, purchased the 6%, $3,000,000 secured promissory note from Vicis Capital Master Fund July 7, 2014. PV extended the interest payment date for the initial interest payment from June 30, 2014 to September 1, 2014. On September 1, 2014, a note amendment agreement was entered into whereby, the note is due on demand and the interest rate and terms are as follows: Interest on the principal amount (or any balance thereof) outstanding from time to time under this Note shall begin to accrue on the September 1, 2014 and shall accrue at a fixed rate per year equal to six percent (6.00%); provided, however, interest shall accrue at a fixed rate per year equal to nine percent (9.00%) during the period from July 1, 2014 through August 31, 2014; and provided further, that interest shall accrue at a fixed rate per year equal to twelve percent (12.0%); from and after September 1, 2014 until the Note is paid in full (in each case, computed on the basis of a 360-day year).

Demand, Promissory and Convertible Notes

Long term debt consisted of the following at:

	March 31,			December 31,
	2015			2014
$3,000,000, 6% secured promissory note, due on demand	$	3,000,000		$	3,000,000
$1,400,000, 12% mortgage note payable, due November 29, 2015		1,400,000			1,400,000
$2,766,155, 5% secured promissory note, due March 1, 2016		2,766,155			2,766,155
$175,000, 6% promissory note, due June 30, 2017		175,000			175,000
$500,000 12% convertible promissory note, due August 21, 2016		37,300			55,000
$83,500 8% convertible promissory note, due September 19, 2015		71,500			83,500
$43,000 8% convertible promissory note, due November 21, 2015		43,000			43,000
$53,500 8% convertible promissory note, due December 29, 2015		53,500			53,500
		7,546,455			7,576,155
Less current portion		(7,334,155	)		(4,580,000	)
Long-term debt	$	212,300		$	2,996,155

Promissory Notes

Effective March 11, 2014, netTALK and Telestrata LLC (“Telestrata”), a Colorado limited liability company executed a restricted stock and warrant purchase agreement, pursuant to which, in part, Telestrata purchased: (a) 25,441,170 shares of the Company’s common stock and (b) a common stock purchase warrant entitling Telestrata to purchase shares of common stock of the Company equal to 20% of the then outstanding shares of common stock of netTALK.

Subject to repayment obligations of the Company as provided below, Telestrata received credit of $4,071,940 to acquire shares and warrant as follows: (a) $500,000 in the form of the conversion and cancellation of two promissory notes issued to Samer Bishay in May and July 2013, (b) $837,374 in loans to the Company received in the third and fourth quarters of 2013 and (c) the satisfaction by Telestrata of $2,734,566 of liabilities of the Company.

On March 11, 2014, the Company executed a secured promissory note with Telestrata for $4,071,940. Interest accrues at 5% and the note and interest are payable March 1, 2016, subject to accelerated repayment terms as defined in the promissory note agreement. The principal balance of the note increased $500,000 based on additional payments, as defined in the promissory note agreement. As of June 30, 2014, the Company received $250,000 of additional cash payments and $250,000 of additional indirect cash payments for telecom service received from an affiliate of Telestrata. This affiliate is owned by the previous President of the Company. These amounts were added to the original principal balance resulting in a new principal balance of $4,571,940 less the discount of up to $1,805,785. The promissory note provides for a discount of up to a maximum of $1,805,785 if the Company makes timely principal and interest payments as required by the promissory note. Advanced payments are required based on certain conditions with qualified financing as defined in the Secured Promissory Note.

Reconciliation of Telestrata Promissory Note at:

	March 31,
	2015
Original secured promissory note due to Telestrata	$	4,071,940
Less promissory note discount		(1,805,785	)
Increase in principal from additional cash payment		250,000
Increase in principal from indirect cash payment for telecom service		250,000
Revised secured promissory note due to Telestrata	$	2,766,155

On August 21, 2014, the Company issued a Convertible Promissory Note (“Note 1”) to a third party accredited investor, in the aggregate principal amount of five hundred thousand dollars ($500,000) for an aggregate purchase price of up to four-hundred and fifty thousand dollars ($450,000) (“Aggregate Purchase Price”). The investor paid initial consideration of $50,000 and may, at its discretion, pay additional consideration, up to an amount equal to the Aggregate Purchase price. The principal sum due to investor shall be prorated based upon the amount of consideration actually paid by investor to the Company (plus an approximate 10% original issue discount that is prorated based upon the amount of consideration actually paid by investor to the Company) such that the Company is only required to repay the amount actually funded by investor.

Note 1 is convertible, at the option of the holder, into shares of the Company’s common stock, par value $0.001 per share, at a conversion price equal to the lesser of $0.17 or 60% of the lowest trade price in the 25 trading days previous to the conversion date. The Company has the right, in its discretion, to enforce a “Conversion Floor” equal to $0.10 per share, which, if enforced by the Company, shall require the Company to make whole any loss suffered by investor in the form of cash payment, as further described in the Amendment to the Note. In the first quarter of 2015, the investor converted $17,700 of debt into 1,550,000 shares of netTALK common stock.

Note 1 has a maturity date of August 21, 2016. If the Company repays any then outstanding principal amount due to investor prior to the date 90 days following the issue date (the “Interest Date”) of the Note, the interest on such amount shall be 0%. If the Company repays any then outstanding principal amount due to investor after the Interest Date, such amount shall be charged with a one-time 12% interest charge.

On September 24, 2014, the Company entered into a Securities Purchase Agreement (“SPA”) with a third party accredited investor pursuant to which the Company issued an 8% Convertible Promissory Note (“Note 2”) to the investor in the principal amount of eighty-three thousand five hundred dollars ($83,500) for a purchase price of eighty-three thousand five hundred dollars ($83,500). In the first quarter of 2015, the investor converted $12,000 of debt into 1,318,681 shares of netTALK common stock.

Note 2 is convertible, at the option of the holder, into shares of the Company common stock, par value $0.001 per share, based on the conversion price equal to 65% multiplied by the average of the lowest five (5) trading prices for the Company’s common stock during the ten (10) days prior to the date of conversion, as further described in the Note. Interest accrues at 8% per annum and is due at maturity date which is September 11, 2015.

On November 19, 2014, the Company entered into a SPA with a third party accredited investor pursuant to which the Company issued an 8% Convertible Promissory Note (“Note 3”) to the investor in the principal amount of forty-three thousand dollars ($43,000) for a purchase price of forty-three thousand five hundred dollars ($43,000).

Note 3 is convertible, at the option of the holder, into shares of the Company common stock, par value $0.001 per share, based on the conversion price equal to 65% multiplied by the average of the lowest five (5) trading prices for the Company’s common stock during the ten (10) days prior to the date of conversion, as further described in Note 3. Interest accrues at 8% per annum and is due at maturity date which is November 19, 2015.

On December 29, 2014, the Company entered into a Securities Purchase Agreement with a third party accredited investor pursuant to which the Company issued an 8% Convertible Promissory Note (“Note 4”) to the investor in the principal amount of fifty-three thousand five hundred dollars ($53,500) for a purchase price of fifty-three thousand five hundred dollars ($53,500).

Note 4 is convertible, at the option of the holder, into shares of the Company common stock, par value $0.001 per share, based on the conversion price equal to 65% multiplied by the average of the lowest five (5) trading prices for the Company’s common stock during the ten (10) days prior to the date of conversion, as further described in Note 4. Interest accrues at 8% per annum and is due at maturity date which is December 29, 2015.

Notes 1, 2, 3 and 4 were offered and sold to accredited investors in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933.

During 2014, the CEO (and shareholder) loaned the Company $575,000 in non-interest bearing demand notes of which all was repaid to the CEO as of March 31, 2015. Additionally, the CEO was repaid $87,583 in back-pay that was accrued in 2013. Also, the Company accrued $94,662 relating to the voluntary reduction in the CEO’s cash compensation which is due to the CEO as of March 31, 2015.

During the first and second quarters of 2013, the Company received advances of $175,000 from a third party. These advances are evidenced by a promissory note, accrues interest at 6% per year, and matures June 30, 2017.

On May 31, and July 15, 2013, the Company issued to Samer Bishay, previous President of the Company, two 5% secured convertible promissory notes with face values of $300,000 and $200,000, respectively. These notes were due on December 1, 2013 and January 15, 2014, respectively, and were convertible into shares of the Company’s common stock at a rate of $0.08 per share, for a total of 3,750,000 and 2,500,000 common shares, respectively. These notes had a second priority security interest, junior in priority only to the holder of the first priority interest, to all real property of the Company and any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. On March 11, 2014, these notes were converted and cancelled as part of the promissory note due to Telestrata as discussed above.

During the third and fourth quarters of 2013, the Company received $521,000, for working capital from a now related party. On March 11, 2014, these demand notes were converted to the promissory note due to Telestrata as discussed above.

Mortgage Payable

On November 29, 2012, the Company borrowed $1,000,000 from a lender and in exchange, the Company issued a 12% promissory note and a mortgage and security agreement. The 12% promissory note, among other matters, accrues interest at 12% per annum, is payable in full on November 29, 2014, and is secured by our corporate office building, located at 1080 NW 163^rd Drive, Miami Gardens, FL 33169. We are working with the lender to extend the maturity date of the mortgage payable. See footnote 14 for further discussion.

On January 11, 2013, we received an additional advance of $400,000 pursuant to its existing lending facility with 1080 NW 163rd Drive, LLC. The additional advance of $400,000 was endorsed by a promissory note which was consolidated with the initial advance of $1,000,000 from the mortgage on 1080 NW 163rd Drive, LLC. The consolidated promissory mortgage note has an aggregate principal balance of $1,400,000, accrues interest at 12% per annum, is payable in full on November 29, 2015, and is secured by our corporate office building, located at 1080 NW 163rd Drive, Miami Gardens, FL 33169.

Note 9 – Revenue and Cost of Revenues

Revenues and cost of revenues consisted of the following:

	Three Months Ended March 31,
Revenues:	2015		2014
Sales of devices	$	41,598	$	167,793
Renewals and access charges		1,087,306		967,591
Other		49,562		40,495
Total		1,178,466		1,175,879

Cost of revenues:
Cost of sales of devices		152,246		283,672
Cost of renewals and access charges		339,727		469,783
Total		491,973		753,455

Gross profit	$	686,493	$	422,424

Note 10 - Share-Based Payment Arrangements

In the first quarter of 2014, the Company issued 10,929,000 share of common stock under the Plan to management and employees. The compensation expense related to these shares is $131,148. Additional paid in capital was credited for $120,219 and common stock was credited for $10,929. No shares were issued in the first quarter of 2015.

Also, in the first quarter of 2014, the Company issued a common stock purchase warrant entitling management to purchase shares of common stock of the Company equal to 20% of the then outstanding shares of common stock of netTALK.

Note 11 - Issuance of Equity Securities

Effective March 11, 2014, netTALK and Telestrata LLC (“Telestrata”), a Colorado limited liability company executed a restricted stock and warrant purchase agreement, pursuant to which, in part, Telestrata purchased: (a) 25,441,170 shares of the Company’s common stock and (b) a common stock purchase warrant entitling Telestrata to purchase share of common stock of the Company equal to 20% of the then outstanding shares of common stock of netTALK.

On October 15, 2014, Telestrata, exercised its warrant for 19,424,000 shares of netTALK common stock. This issuance was recorded as a debit to interest expense for $69,926, a credit to common stock for $19,424 and a credit to additional paid in capital for $50,502.

On October 16, 2014, management exercised its warrant for 24,280,000 shares of netTALK common stock. This issuance was recorded as a debit to compensation expense for $87,408, a credit to common stock for $24,280 and a credit to additional paid in capital for $63,128.

In the third and fourth quarters of 2014, the Company issued four convertible promissory notes totaling $235,000. Each of these notes were offered and sold to accredited investors in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933. See footnote 8 for further discussion. In the first quarter of 2015, investors converted approximately $29,700 in convertible debt into 2,868,681 shares of common stock. These issuances were recorded as a debit to convertible debt for $29,700, a credit to common stock for $2,869 and a credit to additional paid in capital for $26,831.

In the first quarter of 2015, the Company has issued 1,409,456 of shares of common stock as payment for $56,378 in legal fees. This issuances were recorded as a debit to accounts payable for $56,378, a credit to common stock for $1,409 and a credit to additional paid in capital for $54,969.

Note 12 - Related Party Transactions

Iristel, Inc. (“Iristel”), a vendor that previously provided a significant portion of netTALK’s telecom service in 2013 and 2014, is owned by Samer Bishay, who was President and member of the board of directors of netTalk.com, Inc. until removed from the board of directors by a majority of the Company’s shareholders on November 26, 2014. Mr. Bishay also owns and or controls Telestrata, LLC (“Telestrata”), a debt and equity holder of netTalk.com, Inc., a significant portion of which debt and equity was issued in full settlement of amounts due to Iristel.

On October 10, 2014, Mr. Bishay caused Iristel to terminate all its contracts with netTalk.com, Inc. On October 17, 2014, Mr. Bishay, purporting to act as President of netTalk.com, Inc., attempted to cause netTalk.com, Inc. to reinstate one of its contracts with Iristel, which he had previously caused Iristel to terminate. The Company continues to deny that the reinstatement was effective.

On or about October 24, 2014, Mr. Bishay, despite being obviously conflicted, despite acting without authorization and against the wishes of the board of directors, and despite the absence of the Company seal, filed an unauthorized mortgage on certain real property of the Company, in favor of Telestrata, which he owns and or controls. The Company is continuing to dispute that mortgage.

On November 5, 2014, Telestrata filed an action against the company in the United States District Court for the Southern District of Florida titled: Telestrata, LLC v. netTalk.com., Inc. et al., 1:14-cv-24137. See footnote 14 for further discussion.

As a continuation of these ongoing attempts to tortiously damage the Company and its shareholders, Mr. Bishay, through Iristel and Telestrata, is attempting to overstate, or completely misstate, the amounts owed by the Company. The Company has accrued and recorded the amounts it believes are owed to Iristel. The Company completely denies the validity of any such claims, and intends to vigorously pursue Iristel, Telestrata and Mr. Bishay for the damage any such misstatements may cause.

The Chief Operating Officer is related to the CEO and was promoted to COO January 1, 2014 by the Board of Directors.

Phoenix Vitae Holdings, LLC (“PV”), which is owned by the CEO (and shareholder) of the Company, purchased the 6%, $3,000,000 secured promissory note from Vicis Capital Master Fund on July 7, 2014. The parties executed a note amendment agreement September 1, 2014 whereby the note is due on demand and interest is accruing at 12% annually. See footnote 8 for further discussion on the note and terms.

During 2014, the CEO (and shareholder) loaned the Company $575,000 in non-interest bearing demand notes of which $400,000 was repaid to the CEO as of December 31, 2014. Additionally in 2014, the CEO was repaid $87,583 in back-pay that was accrued in 2013 and the Company accrued $75,000 relating to the voluntary reduction in the CEO’s cash compensation. As of December 31, 2014, the amount due to the CEO was $250,912. In the first quarter of 2015, the Company repaid $175,000 to the CEO and accrued an additional $18,750 in voluntary compensation reduction.

Note 13 – Subsequent Events

An existing investor invested an additional $25,000 into the Company in the second quarter of 2015 through the purchase of convertible debt. And existing investors converted debt in the amount of $94,108 into 46,325,278 shares of netTALK common stock at various conversion rates in April and May 2015.

Also, the Company issued 5,590,544 shares of common stock to legal counsel as payment for $223,622 in legal fees.

Note 14 – Commitments and Legal Proceedings

Employment Agreements

On January 2, 2014, the Company entered into employment agreements with the Chief Executive Officer, Executive Vice President, Chief Financial Officer, Chief Operating Officer and Chief Technical Officer according to the following terms. Stated salary for 2014 and 2015, a term of 2 to 5 years and a change in control payment, as defined in the agreements. These employment agreement have an annual commitment of $750,000 for 2015 and $625,000 for 2016 through 2018 and a total commitment of $2,625,000.

Commitments

The Company has commitments with various telecom vendors providing for telecom and related services. The Company has an annual commitment of approximately $307,400 and a total commitment of approximately $490,300 as defined in the agreements.

During the middle of 2013, the Company encountered severe financial difficulties. As a result, the Company became delinquent on filing and paying certain taxes. As of the date of this filing, the Company is working to complete all filing obligations required by federal, state, county, city or locality jurisdictions. As of March 31, 2015, the Company has accrued $727,000 for taxes, penalties and interest which is recorded in accrued expenses.

Legal Proceedings

On April 4, 2012, MagicJack Vocaltec Ltd. filed a complaint in United States District Court for the Southern District of Florida, Civil Action No.: 9:12-cv-80360-DMM, against the Company, alleging patent infringement, seeking injunctive relief and damages as a result of the alleged patent infringement. The Company answered the complaint, denying all of its material allegations, asserting a number of affirmative defenses, and seeking counterclaims for declaratory relief. The Company’s patent counsel has provided an opinion that the NetTalk DUO does not infringe their patent. MagicJack Vocaltec Ltd. and NetTalk filed a Joint Stipulation and motion for the dismissal. Effective November 2012, the federal court has dismissed the entire case with prejudice, including all claims, counterclaims, defenses and causes of action.

On September 21, 2012, NetTalk.com, Inc. filed a complaint in United States District Court for the Southern District of Florida, Civil Action No.: 9:12-cv-810220-CIV-MIDDLEBROOK/BRANNON, against MAGICJACK VOCALTECLTD, MAGIJACK HOLDINGS CORPORATION f/k/a YMAX HOLDINGS CORPORATION and DANIEL BORISLOW. In the complaint we allege patent infringement by the defendants and are seeking injunctive relief and two hundred million dollars ($200,000,000) in damages as a result of the alleged patent infringement by defendants. There can be no assurances as to the outcome of this litigation.

As a result of this action, MAGICJACK/ VOCALTEC LTC filed a document with the United States Patent Office (“USPTO”) requesting reexamination of netTALK patent 8,243,722. The USPTO granted the reexamination petition and the claim against MAGICJACK/VOVALTEC LTD was stayed pending the outcome of the USPTO reexamination.

In December 2013, netTALK received a USPTO Notice of Intent to Issue Ex Parte Reexamination Certificate (“NIRC”) for netTALK’s U.S. Patent Number 8,243,722.

In January 2014, netTALK petitioned the courts to restart the aforementioned lawsuit against MAGICJACK VOCALTECLTD, MAGIJACK HOLDINGS CORPORATION f/k/a YMAX HOLDINGS CORPORATION and DANIEL BORISLOW.

On February 27, 2014, netTALK received the reexamination certificate which restated that all three claims of the ‘722 Patent are deemed allowable by the USPTO. The three claims of the ‘722 Patent were minimally amended during the proceeding.

On February 27, 2015, by stipulation of the parties, the district court dismissed all claims and counterclaims in netTALK v. magicJack (Case No. 9:12-cv- 810220, Dkt. #158.) On February 27, 2015, by stipulation of the parties, the district court dismissed all claims and counterclaims in netTALK v. magicJack (Case No. 9:12-cv- 810220, Dkt. #158.) On April 24, 2015, magicJack filed a motion asking the district court to order netTALK to pay magicJack’s attorney fees of approximately $2,000,000. Under the Patent Statute, attorney fees may only be awarded in “exceptional” cases, which the Supreme Court has defined as being “uncommon,” “rare,” “not ordinary,” “out of the ordinary course,” “unusual,” “special,” or “not run-of-the-mill.”

On September 14, 2012, a supplier to the Company, Arrow Electronics, Inc. (“Arrow”), filed a complaint in the United States District Court for the Southern District of Florida, Case No.: 1:12-cv-23366-FAM, alleging breach of contract by the Company and seeking damages of not less than $473,319 due to such alleged breach. The Company and Arrow Electronics, Inc. entered into a settlement agreement providing for the payment of past due amounts. A final order was entered into on December 12, 2012 dismissing the litigation. As of March 31, 2015, the Company owes Arrow approximately $43,790 which is recorded in accounts payable. The Company will continue making installment payments until the obligation is paid in full.

On March 20, 2014 a claim was filed by Billsoft, Case No. 14CV01827. The claim states the Company is indebted to Billsoft in the amount of $16,776 pursuant the terms of said Contract including $1,192 for attorney and court fees incurred by Billsoft for a total of $17,968. The Company has reached a settlement agreement on April 24, 2014, to make monthly payments of $1,000 until the debt is satisfied. The balance due at March 31, 2015 is $7,969 which is recorded in accounts payable.

On July 30, 2014, Active Media Services, Inc. commenced an action against the Company in the United States District Court for the Southern District of New York, Case No. 14-CV-5916. The Complaint filed by the plaintiff seeks $374,803 in damages based on the theory of breach of contract. On September 9, 2014 the Company answered the complaint. The parties engaged in discovery and the discovery phase of the action ended on April 24, 2015. The Court set a deadline of May 15, 2015 for the submission of motions for summary judgment, and the trial of this action is scheduled to commence on July 27, 2015.

On July 30, 2014, the Company was served with a complaint from QVC, Inc. that was filed in the United States District Court, for the Eastern District of Pennsylvania, Case No.: 2:14-cv-04406-LS, alleging breach of contract by the Company and seeking damages of no less than $95,798. As of the filing date of this Report, the parties have settle the case for $99,870 and the first installment has been paid according to the settlement agreement. At March 31, 2015, the balance remaining of $80,561 is recorded in accounts payable.

On February 27, 2015, the Company was served with a complaint from Northern Communication Services, Inc. that was filed in the Circuit Court of the 11^th Judicial Circuit In and For Miami-Dade County, Florida, Case No.: 14029771CA01 Civil Division, alleging breach of contract by the Company and seeking damages of no less than $43,110. As of the date of this filing, the parties have settled the case for $43,110 and the first installment has been paid according to the settlement agreement. At March 31, 2015, the balance remaining of $40,110 is recorded in accounts payable.

On March 25, 2015, the Company received a collection letter from Canadian Credit Corporation threatening litigation for breach of contract by the Company and seeking damages of no less than $29,687. As of the date of this filing, the Company is evaluating whether a loss is probable or if there is a reasonable possibility that a loss may had been incurred. As of March 31, 2015, the amount claimed, $29,687, has been accrued by the Company and is recorded in accounts payable.

On April 3, 2015, the Company received a collection letter from Receivables Control Corporation threatening litigation for breach of contract by the Company and seeking damages of no less than $247,500. As of the filing date of this report, the parties have settle the case for $10,000 and the first installment has been paid according to the settlement agreement. As of March 31, 2015, the amount settled has been accrued by the Company and is recorded in accounts payable.

On November 5, 2014, Telestrata, LLC (“Plaintiff”) filed an action against the company in the United States District Court for the Southern District of Florida titled: Telestrata, LLC v. NetTAlk.com., Inc. et al., 1:14-cv-24137. The Complaint makes claims derivatively on behalf of the Company’s shareholders for an injunction ordering the Company’s management to: (1) turn over to the Company all documents, data and other property; (2) prohibiting current management from accessing the Company’s computer systems; (3) prohibiting current management from representing they are employed with the Company; (4) suspending Anastasios Kyriakides from his position as chairman of the board of directors; and (5) preventing the Company and its employees from disclosing any information to current management. The Complaint also makes derivative claims for breach of fiduciary duty against current management and seeks a declaratory judgment that holding the employment agreements between the Company and Anastasios Kyriakides, Kenneth Hosfeld, Nick Kyriakides, Steven Healy, and Garry Paxinos are void.

The Complaint makes direct claims against the Company and its management for: (1) a declaratory judgment stating the amount of shares owned by current management is inaccurate; (2) an accounting; (3) breach of contract for an unspecified amount of damages; (4) fraudulent inducement for an unspecified amount of damages (5) an equitable lien; and conspiracy.

The Company moved to dismiss this action. By Order of the Court, dated April 27, 2015, the Court denied the motion in its entirety. Also, by Order, dated April 27, 2015, the Court consolidated this action with the action below to quiet title. The Company is required to serve and file its Answer and Counterclaims on or before May 18, 2015. The Company denies the material allegations of the Complaint and intends to vigorously defend this action.

On or about December 24, 2014, the Company filed an action against Telestrata, LLC in Florida State Court seeking to quiet title on its property and for slander of title based on Telestrata placing a mortgage on the property without the Company’s authorization. On February 4, 2015, Telestrata, LLC removed this action to the United States District Court for the Southern District of Florida. As discussed above, by Order, dated April 27, 2015, the Court consolidated this action with the above action commenced by Telestrata against the Company. The Company was directed to assert its claims as counterclaims in the consolidated action.

We are aggressively defending all of the lawsuits and claims described above. While we do not believe these aforementioned claims will have a material adverse effect on our financial position, given the uncertainty and unpredictability of litigation there can be no assurance of no material adverse effect. The Company is engaged in other legal actions and claims arising in the ordinary course of business, none of which are believed to be material to the Company.

Item 2 – Management Discussion and Analysis of Financial Conditions and Results of Operations

Our Management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements included elsewhere in this Quarterly Report and with the audited financial statements for the year ended December 31, 2014, included in our Annual Report on Form 10-K. This Quarterly Report contains, in addition to unaudited historical information, forward-looking statements, which involve risk and uncertainties. The words “believe,” “expect,” “estimate,” “may,” “will,” “could,” “plan,” or “continue” and similar expressions are intended to identify forward-looking statements. Our actual results could differ significantly from the results discussed in such forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those discussed under the headings “Risk Factors” in our 2013 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, if any. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to (and we expressly disclaim any obligation to) revise or update any forward-looking statement, whether as a result of new information, subsequent events, or otherwise (except as may be required by law), in order to reflect any event or circumstance which may arise after the date of this Quarterly Report on Form 10-Q.

Cautionary Statement about Forward Looking Statements

Certain statements contained in this Form 10-Q and other written material and oral statements made from time to time by us do not relate to historical or current facts. As such, they are referred to as “forward-looking statements,” which are intended to convey our expectations or predictions regarding the occurrence of possible future events or the existence of trends and factors that may impact our future plans and operating results. These forward-looking statements are derived, in part, from various assumptions and analyses we have made in the context of our current business plan and information currently available to us and in light of our experience and perceptions of historical trends, current conditions and expected future developments and other factors we believe to be appropriate in the circumstances. You can generally identify forward-looking statements through words and phrases such as “seek,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “budget,” “project,” “may be,” “may continue,” “may likely result,” and similar expressions. When reading any forward looking statement, you should remain mindful that actual results or developments may vary substantially from those expected as expressed in or implied by that statement for a number of reasons or factors, such as those relating to:

●	our ability to develop sales and marketing capabilities;

●	the accuracy of our estimates and projections;

●	our ability to fund our short-term and long-term financing needs;

●	changes in our business plan and corporate strategies; and other risks and uncertainties discussed in greater detail in the sections of this Form 10Q, including the section captioned “Plan of Operation”.

Each forward-looking statement should be read in context with, and with an understanding of, the various other disclosures concerning our Company and our business made elsewhere in this Form 10Q, as well as other public reports filed with the SEC. You should not place undue reliance on any forward-looking statement as a prediction of actual results or developments. We are not obligated to update or revise any forward-looking statement contained in this report to reflect new events or circumstances unless and to the extent required by applicable law.

Going Concern and Liquidity

We have never sustained profits and our losses could continue. Without sufficient additional capital to repay our indebtedness as it matures, we may be required to significantly scale back our operations, significantly reduce our headcount, seek protection under the provisions of the U.S. Bankruptcy Code, and/or discontinue many of our activities which could negatively affect our business and prospects. Our current efforts to raise capital may not be successful on terms favorable to the Company, or at all.

We incurred net losses of $555,663 and 611,051 for the three months ended March 31, 2015 and 2014. As of March 31, 2015, we have $6,146,455 in secured and convertible promissory notes, after deducting applicable discount, all of which is short term other than $212,300 and we have $1,400,000 in a short term mortgage payable. Also, as of March 31, 2015, we had negative working capital of $12,532,396.

Our current cash resources, together with anticipated cash flows from operating activities, may not be sufficient to fund our operations or debt that is maturing in the third and fourth quarters of 2015 or that is due on demand. In light of these circumstances, we are seeking additional capital through public or private debt or equity financing. However, there are no assurances that those efforts will be successful or that additional capital will be available on terms that do not adversely affect our existing stockholders or restrict our operations, if it is available at all.

Establish and build strategic alliances and partnerships with companies offering complimentary products and services providing synergies for those involved.

Leverage our extensive call termination agreements to offer wholesale call terminations to other carriers – powered by its carrier grade and proprietary VoIP switching platform.

Rental of available collocations space in our data center as well as available space on our telecommunications tower.

Aggressively pursue new revenue by utilizing our mobile applications for use by our current and future subscriber base.

Company and Business

History and Overview

We are a Florida corporation, incorporated on May 1, 2006, under the name Discover Screens, Inc. (“Discover Screens”).

Prior to September 10, 2008, we were known as Discover Screens, a company dedicated to providing advertising through interactive, audiovisual, information and advertising portals located in high-traffic indoor venues. Our name and business operations changed in a series of transactions beginning in December of 2007.

On September 10, 2008, we changed our name from Discover Screens, Inc. to NetTalk.com, Inc. and we acquired certain tangible and intangible assets, formerly owned by Interlink Global Corporation (“Interlink”), directly from Interlink’s creditor who had seized the assets pursuant to a Security and Collateral Agreement.

Operation

We provide, sell and supply commercial and residential telecommunication services, including services utilizing voice over internet protocol (“VoIP”) technology, session initiation protocol (“SIP”) technology, wireless fidelity technology, wireless maximum technology, marine satellite services technology and other similar type technologies. We are developing our business infrastructure and new products and services.

General and Recent Developments

On October 10, 2014, the Company received a termination letter from its primary vendor, Iristel (owned by, and with its CEO being, the previous President of netTALK), which provides telecommunications service and phone numbers (“DID”), with respect to two contracts between Iristel and the Company, one dealing with carriage and one dealing with DIDs. Upon being informed of the termination, the Company ported its carriage to a new carrier, and informed Iristel that, pursuant to its rights under the DID contract, it would port the DIDs promptly to a new provider. On October 17, 2014, Samer Bishay, previous President of the Company and CEO of Iristel, purporting to act on behalf of both the Company and Iristel, without conflict waivers of any sort, attempted to agree to rescind the termination of the DID contract, which neither Iristel nor the Company had the power to do. The Company attempted to shift the DIDs to new carriers, but Iristel, through Samer Bishay, the previous President of the Company, refused to allow these customers to be moved to new DID vendors.

On October 15, 2014, Telestrata LLC (“Telestrata”), a Colorado limited liability company, owned or controlled by three members of the NetTalk board of directors that were removed from the Board November 26, 2014, exercised its warrant for 19,424,000 shares of netTALK common stock. On October 16, 2014, (1) members of management exercised their warrants for 24,280,000 shares of netTALK common stock and (2) shareholders representing more than a majority of the then outstanding common stock of the Company voted, via written consent in lieu of a meeting, to remove each of Samer Bishay (President), Maged Bishara, and Nardir Aljasrawi from their positions as members of the Company's Board of Directors (the "Director Removal"). The Director Removal became effective November 26, 2014.

On October 27, 2014, Company was notified that Samer Bishay, current President of the Company, on or about October 24th, 2014, through counsel for Telestrata, an entity with which he is affiliated, unilaterally filed a mortgage in the amount of approximately $4.5 million, encumbering certain real property of the Company. The Company's Board of Directors (the "Board"), through a unanimous written consent executed September 2, 2014, by all directors including Mr. Bishay, authorized the company to undertake such action only under certain conditions, including the condition that only the Chief Financial Officer of the Company could execute and authorize any such filing. Such written consent has not been revoked, modified or superseded by any subsequent valid action of the Board, and accordingly, the Company is working with counsel to rescind such unauthorized encumbrance and pursue any causes of action it or its shareholders may have against Mr. Bishay.

As a result of this unauthorized encumbrance, at this time the Company is unable to refinance the mortgage payable that was to mature November 29, 2014. However, the maturity date was extended to November 29, 2015.

Effective March 11, 2014, netTALK and Telestrata executed a restricted stock and warrant purchase agreement, pursuant to which, in part, Telestrata purchased: (a) 25,441,170 shares of the Company’s common stock and (b) a common stock purchase warrant entitling Telestrata to purchase shares of common stock of the Company equal to 20% of the then outstanding shares of common stock of netTALK. Subject to repayment obligations of the Company as provided below, Telestrata received credit of $4,571,940 to acquire the shares and warrants as follows: (a) $500,000 in the form of the conversion and cancellation of two promissory notes issued to Samer Bishay in May and July 2013, (b) $837,374 in loans to the Company received in the third and fourth quarters of 2013 and (c) the satisfaction by Telestrata of $2,734,566 of liabilities of the Company.

Also, on March 11, 2014, the Company executed a secured promissory note with Telestrata for $4,071,940. Interest accrues at 5% and the note and interest are payable March 1, 2016 subject to accelerated repayment terms as defined in the secured promissory note agreement. The principal balance of this note increased $500,000 from additional advances, as defined in the promissory note agreement, resulting in a new principal balance of $4,571,940. Advanced payments are required based certain conditions with qualified financing as defined in the secured promissory note agreement. The promissory note provides for a discount of up to a maximum of $1,805,785 if the Company makes timely principal and interest payments as required by the promissory note.

Effective December 31, 2013, the Company executed a redemption and debt restructuring agreement with Vicis Capital Master Fund ("Vicis") to, among other things, extend the term of its loans with two additional one year extensions, and reduce the overall loan with Vicis from approximately seventeen million dollars ($17,000,000) to three million dollars ($3,000,000). The restated loan accrues interest at six percent (6%) per annum.

In addition, pursuant to the redemption and restructuring agreement, all shares and derivative securities held by Vicis were cancelled including the series A convertible redeemable preferred stock, 19,995,092 shares of the Company’s common stock, and common stock purchase warrants exercisable for 76,864,250 shares of common stock. These securities have been returned to the Company and have been cancelled. The holders received no additional consideration to effect the modification.

Critical Accounting Policies

Our accounting policies are discussed and summarized in Note 3 to our financial statements. The following describes our critical accounting policies.

Use of Estimates

Fair Value of Financial Instruments

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Derivative financial instruments, as defined in ASC 815-10-15-83 Derivatives and Hedging, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

Revenue Recognition

Revenue is generated from product sales, telecom services, shipping and handling charges, leasing cell tower space and leasing co-location rack space in our operations center. All revenues are recognized in accordance with ASC 605, Revenue Recognition and SAB 104 as follows: when evidence of an arrangement exists, in the case of products, when the product is shipped to a customer, or in the case of telecom services, when the service is used by the consumer, when the fee is fixed or determinable and amounts are collectible from the customers.

Revenue is recognized for device sales when the customer is invoiced for retail sales and when the customer completes the transaction for internet sales. Revenue for telecom service is recognized prorata monthly as the service is used and revenue for shipping costs billed to customers are included as a component of product sales. The associated cost of shipping is included as a component of cost of product sales.

Results of Operations

Three months ended March 31, 2015 Compared to Three Months Ended March 31, 2014

Revenues: Net revenues were $1,178,466 and $1,175,879 for the three months ended March 31, 2015 and 2014, respectively. The decrease in revenues is primarily due to a decrease in devices sold, deep discount and free device offers to customers which is partially offset by an increase in telecom renewals and a higher portion of the initial sales price going to device sales due to, among other things, product offerings providing less telecom service.

Cost of revenues: Cost of revenues were $491,973 and $753,455 for the three months ended March 31, 2015 and 2014, respectively. The decrease in cost of revenues is primarily due to a reduction in the number of devices sold and a reduction in the telecom cost per subscriber offset by higher cost of device sales due to deep discounts and free device offers to customers.

Gross margin: Gross profits were $686,493 and $422,424 for the three months ended March 31, 2015 and 2014, respectively. The increase is due primarily to a reduction in the cost of telecom service charge per subscriber plus selling fewer low margin devices.

Operating expenses: Operating expenses were $1,062,384 compared to $922,265 for the three months ended March 31, 2015 and 2014, respectively. The increase in operating expenses is due primarily to the increase in professional fees including legal fees to defend our legal matters and consulting fees offset by a decrease in advertising and compensation expense.

	Three Months Ended March 31,				Three Months Ended March 31,
	2015		2014		$ Change			% Change
Advertising	$	873	$	64,047	$	(63,174	)		-99	%
Compensation & Benefits		273,437		367,374		(93,937	)		-26	%
Professional fees		291,816		92,399		199,417			216	%
Depreciation & Amortization		53,256		58,317		(5,061	)		-9	%
Research & Development		135,711		96,281		39,430			41	%
General & Administrative		307,291		243,847		63,444			26	%
Total operating expenses	$	1,062,384	$	922,265	$	140,119

General and Administrative Expenses: General and administrative expenses were $307,291 and $243,847 for the three months ended March 31, 2015 and 2014, respectively. The increase in general and administrative expenses is primarily due an overall increase in expenses as compared to the 3 months ended March 31, 2014 at which point the company was in a company-wide cost cutting plan to conserve liquidity.

	Three Months Ended March 31,				Three Months Ended March 31,
	2015		2014		$ Change		% Change
Insurance	$	50,555	$	40,314	$	10,241		25	%
Taxes and licenses		53,066		44,767		8,299		19	%
Travel		17,574		14,497		3,077		21	%
Commissions		61,714		52,133		9,581		18	%
Other		124,382		92,136		32,246		35	%
Total G&A expenses	$	307,291	$	243,847	$	63,444

Loss from Operations: Losses from operations were $375,891 and $499,481 for the three months ended March 31, 2015 and 2014, respectively. The decrease in losses was due primarily to increased gross profit margin from the reduction in telecom service charges partially offset by the increase in operating expenses.

Interest Expense: Interest expense was $179,772 and $111,210 for the three months ended March 31, 2015 and 2014, respectively. The increase in interest expense was primarily due to the increase in debt and increase in certain interest rates.

Net Loss: Net loss was $555,663 and $611,051 for the three months ended March 31, 2015 and 2014, respectively.

Net loss Per Common Share: Net loss per common share was $$0.005 and $$0.012 for the three months ended March 31, 2015 and 2014, respectively.

Liquidity and Capital Resources

Our principal source of liquidity are our cash and cash equivalent balances, cash flow from operations, and access to financial markets. Our current cash resources, together with anticipated cash flows from operating activities, may not be sufficient to fund our operations, pay the mortgage payable that matures November 29, 2015 or pay our convertible promissory notes that mature in the third and fourth quarter of 2015. Although, the terms may not be acceptable to the Company if available at all.

As of March 31, 2015, our cash and cash equivalents were $227,167 compared to $372,284 at December 31, 2014. As of March 31, 2015 we had negative working capital of $12,532,396 compared to $9,233,886 at December 31, 2014. The increase is due primarily to the current status of virtually all debt other than promissory notes of $212,300.

Net cash provided by operating activities for the three months ended March 31, 2015 was $110,708 compared to net cash used in operations of $1,097,403 for the same period of 2014. The improvement in cash from operating activities was due primarily to cash provided by an increase in accounts payable in 2015 compared to reduction in accounts payable from converting accounts payable into a portion of the Telestrata promissory note.

Net cash used in investing activities for the three months ended March 31, 2015 was $99,575 compared to net cash used in investing activities of $80,911 for the same period of 2014. The increase in cash used in investing activities was due primarily to restricted cash providing liquidity in 2014 of $68,400 compared to zero in 2015.

Net cash used in financing activities for the three months ended March 31, 2015 was $156,250 compared to net cash provided by financing activities of $1,390,834 for the same period of 2014. The reduction in cash provided by investing activities was due primarily to cash proceeds of $1,169,273 in 2014 compared to no new funding in 2015.

Certain Risks and Concentration

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2015.

Item 3 Quantitative and Qualitative Disclosures about Market Risk

Not applicable. We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.

Item 4 Controls and Procedures

Disclosure Controls

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also 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.

As of March 31, 2015, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses at March 31, 2015:

Due to the limited resources, we have insufficient personnel resources and technical accounting and reporting expertise to properly address all of the accounting matters inherent in our financial transactions. We do not have a formal audit committee and the Board of Directors does not have a financial expert, thus we lack the Board oversight role within the financial reporting process.

Our small accounting department prohibits the segregation of duties necessary to ensure certain controls are effective.

Our Chief Executive Officer and Chief Financial Officer are in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed will be recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this problem, and intends to developed procedures to address them to the extent possible given limitations of financial resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

Changes in Internal Controls.

During the three months ended March 31, 2015, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (f) of Rule 13a-15 or Rule 15d-15 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

Legal Proceedings

In December 2013, netTALK received a USPTO Notice of Intent to Issue Ex Parte Reexamination Certificate (“NIRC”) for netTALK’s U.S. Patent Number 8,243,722.

In January 2014, netTALK petitioned the courts to restart the aforementioned lawsuit against MAGICJACK VOCALTECLTD, MAGIJACK HOLDINGS CORPORATION f/k/a YMAX HOLDINGS CORPORATION and DANIEL BORISLOW.

Item 1A. Risk Factors

For the quarter ended March 31, 2015, there are no material changes to the risk factors set forth in “Item 1A, Risk Factors” of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2015..

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The Company issued 4,278,137 shares of common stock to investors who converted convertible debt and for certain legal fees incurred by the Company in the first quarter of 2015.

Item 3.

Defaults upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not Applicable.

Item 5.

Other Information.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On September 23, 2013 (the "Dismissal Date"), the Company dismissed, its independent certifying accountant. The Company's Board of Directors approved the dismissal on September 23, 2013. There were no disputes or disagreements between Thomas, Howell, Ferguson, CPA's and the Company during the previous fiscal year. Except for the provision of a "Going Concern" opinion, the reports of Thomas, Howell, Ferguson, CPA's on the Company's financial statements for the year ended December 31, 2012 did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified, or modified as to audit scope or accounting principle.

During the year ended December 31, 2012 and through the Dismissal Date, the Company has not had any disagreements with Thomas, Howell, Ferguson, CPA's on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

During the year ended December 31, 2012 and through the Dismissal Date, there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.

New independent registered public accounting firm

On September 23, 2013, the Company engaged Zachary Salum Auditors P.A., as its independent registered public accounting firm, to audit the Company's financial statements. The decision to engage Zachary Salum Auditors P.A was approved by the Company's Board of Directors at a Board meeting called for such purpose.

Item 6. Exhibits

Exhibit No.		Description
3.01		Articles of Incorporation of Net Talk.com Inc. (1)
3.02		Articles of Amendment to the Articles of Incorporation of Net Talk.com Inc. (1)
3.03		Articles of Amendment to the Articles of Incorporation of Net Talk.com Inc. (1)
3.04		Articles of Amendment to the Articles of Incorporation of Net Talk.com Inc. (1)
3.05		Bylaws of Net Talk.com (1)
10.01		Redemption and Debt Restructuring Agreement (2)
10.02		Fourth Amended and Restated Agreement (2)
10.03		6% Secured Promissory Note (2)
10.04		Restricted Stock and Warrant Purchase Agreement (3)
10.05		Registration Rights Agreement (3)
10.06		Secured Promissory Note (3)
10.07		Employment Agreements (4)
31.01		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 14, 2014. (5)
31.02		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 14, 2014. (5)
32.01		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 14, 2014. (5)
32.02		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 14, 2014. (5)
101.		INS XBRL Instance Document (5)
101.		SCH XBRL Taxonomy Extension Scheme Document (5)
101.		CAL XBRL Taxonomy Extension Calculation Linkbase Document (5)
101.		LAB XBRL Taxonomy Extension Label Linkbase Document (5)
101.		PRE XBRL Taxonomy Extension Presentation Linkbase Document (5)

(1) Filed as an exhibit to the Company’s Form S-1 which was filed with the Commission on February 2, 2009, and incorporated herein by reference.

(2) Previously filed as an exhibit to the Form 8-K, filed with the SEC on January 27, 2014 and incorporated herein by reference.

(3) Previously filed as an exhibit to the Form 8-K, filed with the SEC on March 24, 2014 and incorporated herein by reference.

(4) Previously filed as an exhibit to the Form 10-K, filed with the SEC on May 7, 2014 and incorporated herein by reference.

(5) Filed herewith.

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.

	NetTalk.com, Inc.

Date: May 15, 2015	By	/s/ Anastasios Kyriakides
	Anastasios Kyriakides
	Chief Executive Officer (Principal Executive Officer)

Date: May 15, 2015	By	/s/ Steve Healy
	Steve Healy
	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Anastasios Kyriakides, certify that:

(1)	I have reviewed this quarterly report on Form 10-Q of netTALK.COM, Inc.;

(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

(4)

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted account principles;

(c)

Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

(5)	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors of small business issuer’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

	May 15, 2015	/s/ Anastasios Kyriakides
		Anastasios Kyriakides
		Chief Executive Officer (Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Steven Healy, certify that:

(1)	I have reviewed this quarterly report on Form 10-Q of netTALK.COM, Inc.;

(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

(4)

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

(c)

(d)

(5)	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors of small business issuer’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

	May 15, 2015	/s/ Steven Healy
		Steven Healy
		Chief Financial Officer (Principal Financial Officer)

EXHIBIT 32.1

NET TALK.COM, INC.

CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b) OF THE

SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the three ended March 31, 2015 of netTALK.COM, Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anastasios Kyriakides, Chairman of the Board and Chief Executive Officer of the Company, certify pursuant to Rule 13a-14(b) or 15d-14(b) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Anastasios Kyriakides
Anastasios Kyriakides
Chief Executive Officer (Principal Executive Officer)

Date: May 15, 2015

EXHIBIT 32.2

NET TALK.COM, INC.

CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b) OF THE

SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the three ended March 31, 2015 of netTALK.COM, Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven Healy, Chief Financial Officer of the Company, certify pursuant to Rule 13a-14(b) or 15d-14(b) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven Healy
Steven Healy
Chief Financial Officer (Principal Financial Officer)

Date: May 15, 2015

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