8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

August 16, 2006 (August 14, 2006)

Date of Report (Date of earliest event reported)

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	333-120412	58-2342021
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

420 Lexington Avenue, Suite 1718

New York, NY 10170

(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (212) 201-2400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Forward-Looking Statements

Statements in this Current Report on Form 8-K (including the exhibits) that are not purely historical facts, including statements regarding Fusion's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, introduction of products in a timely fashion, market acceptance of new products, cost increases, fluctuations in and obsolescence of inventory, price and product competition, availability of labor and materials, development of new third-party products and techniques that render Fusion’s products obsolete, delays in obtaining regulatory approvals, potential product recalls and litigation. Risk factors, cautionary statements and other conditions which could cause Fusion's actual results to differ from management's current expectations are contained in Fusion's filings with the Securities and Exchange Commission. Fusion undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this filing.

Item 2.02.  Results of Operations and Financial Condition.

OnAugust 16, 2006, Fusion issued a press release entitled “Fusion Reports Second Quarter 2006 Results with Revised Cash Flow Disclosure.”

The information in this Current Report on Form 8-K (including the exhibit) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by Fusion under the Securities Act of 1933, as amended, or to the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 8.01 Other Events

OnAugust 14, 2006, Fusion issued a press release entitled “Fusion Surpasses 400,000 Efonica Subscribers in less than 60 days.”

The press releases are attached as Exhibits 99.1 and 99.2

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

99.1 Press Release issued by Fusion Telecommunications International, Inc., dated August 16, 2006 entitled “Fusion Reports Second Quarter 2006 Results with Revised Cash Flow Disclosure.”

99.2 Press Release issued by Fusion Telecommunications International, Inc., dated August 14, 2006 entitled “Fusion Surpasses 400,000 Efonica Subscribers in less than 60 days.”

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized.

		Fusion Telecommunications International, Inc.
August 16, 2006	By:	/s/ Matthew D. Rosen Matthew D. Rosen President and Chief Executive Officer

EX-99.1

FUSION	Jonscott Turco
CONTACT:	212-201-2401
	jturco@fusiontel.com
INVESTOR	Andrew Hellman
CONTACT:	CEOcast, Inc.
	212-732-4300
	adhellman@ceocast.com
MEDIA	Rubenstein Associates
CONTACT:	John Henderson
	212-843-8054
	jhenderson@rubenstein.com

Fusion Reports Second Quarter 2006 Results with Revised Cash Flow Disclosure

New York, NY, August 16, 2006 - Fusion (AMEX: FSN) today announced that subsequent to the issuance of the Company’s Second Quarter 2006 Earnings Press Release on Monday, August 14, 2006, but prior to the filing of its Form 10-Q, the Company revised its accounting treatment of a short-term equipment lease to reflect it as a non-cash item. The revised cash flow statement reflects cash used in operations of $6.2 million, the purchase of $2.1 million in property and equipment, and $0.5 million used for capital lease payments.

The revised cash flow statement was included in the Company’s Form 10-Q filed on August 14, 2006. This change had no impact on the Consolidated Balance Sheet, the Consolidated Statement of Operations, or the Reconciliation of Net Loss to Ajusted EBITDA.

Recent Highlights:

· New Efonica VoIP Services launched

· Over 400,000 Subscribers added in less than 60 days

· Revenues increased for third consecutive quarter - up 10.7% over first quarter 2006

· Gross Margin increased from 9.6% in First Quarter 2006 to 11.0% in Second Quarter 2006

Below are the financial results for the quarter ended June 30, 2006:

For the second quarter ended June 30, 2006, Fusion reported revenues of $10.5 million, an increase for the third consecutive quarter. The increase represented a 10.7% improvement compared to revenues of $9.5 million for the first quarter ended March 31, 2006, attributable to an increase in Carrier services traffic. Compared to the second quarter of 2005, revenue was down 45.3%, primarily because the second quarter of 2005 included an extremely favorable vendor agreement, which resulted in an increase in revenue that did not recur.

Gross margin as a percent of revenue improved over the prior quarter and over the prior year, at 11.0% for the second quarter of 2006 compared to 9.6% for the first quarter of 2006, and 8.1% for the second quarter of 2005. The improvement was partially due to improved traffic routing and a larger decrease in cost per minute than in revenue per minute for Carrier services traffic. The margin was also favorably impacted by credits received for prior period network cost.

Fusion reported a net loss of ($2.8) million or ($0.10) per share during the quarter ended June 30, 2006 compared to a net loss of ($3.0) million or (0.11) during the quarter ended March 31, 2006 and a net loss of ($1.9) million or ($0.07) per share during the quarter ended June 30, 2005. The Company had a one-time gain on settlement of debt of $0.5 million during the quarter ended June 30, 2006.

For the second quarter ended June 30, 2006, Adjusted EBITDA was ($2.8) million compared to ($2.6) in the prior quarter, and ($1.6) million for the second quarter of 2005.

Selling, general and administrative costs increased for the second quarter of 2006 over the previous year’s second quarter by $1.0 million. Approximately half of the increase was from salaries and benefits associated with the hiring of additional personnel to support the launch of the Company’s new Efonica VoIP services, and approximately $0.2 million resulted from the initiation of recording stock based compensation in connection with the adoption of SFAS No. 123R on January 1, 2006. The Company also incurred additional expenses related to increased legal and professional fees, including expenses associated with Sarbanes Oxley.

Advertising and marketing expenses increased to $0.3 million during the quarter ended June 30, 2006 from $22,000 in the first quarter of 2006, and increased to $.3 million from $0.1 million during the quarter ended June 30, 2005. This increase was the result of an advertising and public relations campaign associated with the initiation of advertising to launch the new Efonica VoIP services.

Commenting on the results, Matthew Rosen, President and Chief Executive Officer of Fusion, said “After diligently preparing for more than 18 months, we launched our new Efonica VoIP service and gained over 400,000 subscribers in less than 60 days. Over the coming quarters, we will be highly focused on driving revenues from our growing subscriber base, which we expect to become an increasingly significant portion of our revenue over time. We will also continue focusing on cost effectively acquiring new subscribers and marketing paid value added services.”

As of June 30, 2006, the Company had cash and cash equivalents of $5.9 million compared to $14.8 million as of December 31, 2005. The decrease in cash was primarily a result of $6.2 million in cash used for operations, the purchase of $2.1 million in property and equipment, and $0.5 million used for capital lease payments.

Stockholders’ equity at June 30, 2006 was $16.8 million compared to $17.7 million as of December 31, 2005. During March 2006, in connection with the Company’s amendment to the acquisition agreement of the 49.8% minority interest in the Efonica joint venture, the Company released 675,581 shares in escrow. This release of shares in escrow resulted in an increase to stockholders’ equity of approximately $4.4 million and a reduction to the recorded long-term liability.

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Use of Non-GAAP Financial Measures:

The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the communications industry to analyze companies on the basis of operating performance and leverage. The Company also believes that EBITDA provides investors with a measure of the Company's operational and financial progress that corresponds with the measurements used by management as a basis for allocating resources and making other operating decisions. Adjusted EBITDA provides an adjusted view of EBITDA that takes into account certain significant nonrecurring transactions, such as impairment losses associated with divested businesses and forgiveness of debt, which vary significantly between periods and are not recurring in nature, as well as non-cash compensation for stock option expense. Although the Company uses Adjusted EBITDA as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses. EBITDA and Adjusted EBITDA are not intended to represent cash flows for the period presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Generally Accepted Accounting Principles (GAAP). Consistent with the SEC Regulation G, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measure, which can be viewed under the heading "Reconciliation of Net Income (Loss) to Adjusted EBITDA", immediately following the Consolidated Statements of Operations included in this press release.

Earnings Conference Call

Management held a conference call at 11:00 am. Eastern Time on August 14, 2006 and reviewed the Company's second quarter results.

For interested individuals who were unable to join the conference call, a replay of the call is available through August 22, 2006, at (888) 203-1112 (domestic) or (719) 457-0820 (International), (Passcode: 7369724). The online replay of the conference call is available via webcast for one year following the call.

About Fusion:

Fusion provides its Efonica branded VoIP (Voice over Internet Protocol), Internet access, and other Internet services to, from, in and between emerging markets in Asia, the Middle East, Africa, Latin America and the Caribbean. Fusion currently provides services to consumers, corporations, international carriers, government entities, and Internet service providers in over 100 countries. For more information please go to: http://www.fusiontel.com or http://www.efonica.com.

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Statements in this Press Release that are not purely historical facts, including statements regarding Fusion's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, introduction of products in a timely fashion, market acceptance of new products, cost increases, fluctuations in and obsolescence of inventory, price and product competition, availability of labor and materials, development of new third-party products and techniques that render Fusion's products obsolete, delays in obtaining regulatory approvals, potential product recalls and litigation. Risk factors, cautionary statements and other conditions which could cause Fusion's actual results to differ from management's current expectations are contained in Fusion's filings with the Securities and Exchange Commission and available through http://www.sec.gov.

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FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets

	June 30, 2006			December 31, 2005
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	5,912,003		$	14,790,504
Accounts receivable, net of allowance for doubtful accounts of approximately
$516,000 and $414,000, in 2006 and 2005, respectively		3,863,513			2,952,760
Restricted cash		40,000			—
Prepaid expenses and other current assets		1,433,898			1,242,266
Total current assets		11,249,414			18,985,530
Property and equipment, net		7,034,928			4,516,271
Other assets
Security deposits		185,293			331,891
Restricted cash		416,566			218,176
Goodwill		5,118,640			5,118,640
Intangible assets, net		4,879,784			4,861,012
Other assets		347,553			354,259
Total other assets		10,947,836			10,883,978
TOTAL ASSETS	$	29,232,178		$	34,385,779
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Long-term debt, current portion	$	150,000		$	150,000
Capital lease/equipment financing obligations, current portion		1,094,165			1,419,965
Accounts payable and accrued expenses		10,124,583			9,269,341
Investment in Estel		651,069			771,182
Liabilities of discontinued operations		235,085			620,809
Total current liabilities		12,254,902			12,231,297
Long-term liabilities
Capital lease/equipment financing obligations, net of current portion		78,100			7,650
Other long-term liabilities		—			4,357,497
Total long-term liabilities		78,100			4,365,147
Commitments and contingencies
Minority interests		59,167			67,694
Stockholders’ equity
Common stock		268,943			104,394
Common stock, Class A		—			157,400
Capital in excess of par value		110,314,011			105,447,041
Accumulated deficit		(93,742,945	)		(87,987,194	)
Total stockholders’ equity		16,840,009			17,721,641
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	29,232,178		$	34,385,779

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

AND SUBSIDIARIES

Consolidated Statement of Operations

		Three months ended						Six months ended
		June 30,						June 30,
		2006			2005			2006			2005
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues
Operating expenses:	$	10,543,112		$	19,259,891		$	20,065,270		$	31,188,943
Cost of revenues, exclusive of depreciation and amortization shown separately below		9,382,411			17,703,991			17,987,714			28,701,414
Depreciation and amortization		247,651			436,387			478,541			869,411
Selling, general and administrative expenses (includes $245,639 and $449,871 of non-cash compensation for the three and six months ended June 30, 2006, respectively)		3,969,352			2,950,198			7,648,133			5,618,654
Advertising and marketing		301,759			79,482			324,751			116,433
Total operating expenses		13,901,173			21,170,058			26,439,139			35,305,912
Operating loss		(3,358,061	)		(1,910,167	)		(6,373,869	)		(4,116,969	)
Other income (expense)
Interest income		102,117			126,543			235,578			182,870
Interest expense		(29,514	)		(35,163	)		(59,514	)		(367,293	)
Gain on settlements of debt		465,854			5,340			465,854			5,340
Loss from investment in Estel		(33,080	)		(142,545	)		(70,638	)		(299,460	)
Other		48,758			5,956			38,311			5,956
Minority interests		2,235			49,155			8,527			48,084
Total other income (expense)		556,370			9,286			618,118			(424,503	)
Loss from continuing operations		(2,801,691	)		(1,900,881	)		(5,755,751	)		(4,541,472	)
Discontinued operations:
Income from discontinued operations		—			—			—			175,000
Net loss	$	(2,801,691	)	$	(1,900,881	)	$	(5,755,751	)	$	(4,366,472	)
Basic and diluted net loss per common share:
Loss from continuing operations	$	(0.10	)	$	(0.07	)	$	(0.22	)	$	(0.19	)
Income from discontinued operations		—			—			—			0.01
Net loss per common share	$	(0.10	)	$	(0.07	)	$	(0.22	)	$	(0.18	)
Weighted average shares outstanding
Basic and diluted		26,894,211			26,146,204			26,546,842			23,730,789

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Net loss	$	(2,801,691	)	$	(1,900,881	)	$	(5,755,751	)	$	(4,366,472	)
Income from discontinued operations		-			-			-			(175,000	)
Loss from continuing operations		(2,801,691	)		(1,900,881	)		(5,755,751	)		(4,541,472	)
Adjustments:
Interest income		(102,117	)		(126,543	)		(235,578	)		(182,870	)
Interest expense		29,514			35,163			59,514			367,293
Depreciation and amortization		247,651			436,387			478,541			869,411
Non-cash compensation		245,639			-			449,871			-
Forgiveness of debt		(465,854	)		(5,340	)		(465,854	)		(5,340	)
Adjusted EBITDA	$	(2,846,858	)	$	(1,561,214	)	$	(5,469,257	)	$	(3,492,978	)

EX-99.2

FUSION	Jonscott Turco
CONTACT:	212-201-2401
	jturco@fusiontel.com
INVESTOR	Andrew Hellman
CONTACT:	CEOcast, Inc.
	212-732-4300
	adhellman@ceocast.com
MEDIA	Rubenstein Associates
CONTACT:	John Henderson
	212-843-8054
	jhenderson@rubenstein.com

FUSION SURPASSES 400,000 EFONICA SUBSCRIBERS

IN LESS THAN 60 DAYS

Efonica adds additional 150,000 subscribers in less than two weeks

NEW YORK, August 14, 2006 - Fusion Telecommunications International, Inc. (AMEX:FSN), a global VoIP service provider, today announced that in two months since launching its new Efonica VoIP services, it has registered more than 400,000 subscribers from over 100 countries, having added an additional 150,000 subscribers in the last two weeks alone.

“Fusion is very pleased with the rapid growth of the worldwide Efonica subscriber community. In a short period of time, we have demonstrated our ability to acquire customers rapidly, and are successfully achieving a critical mass from which the Company will continue to build value”, said Matthew Rosen, President and CEO of Fusion.

Efonica offers consumers the ability to call each other for free using their existing landline or mobile telephone numbers. Calls can be made to and from any combination of PCs, Internet phones and regular telephones (with a SIP adapter), connected to either a wireless, broadband or dial-up Internet connection. Sign-up for Efonica services is fast and easy and can be done anytime by visiting http://www.efonica.com.

“Having achieved this milestone, Efonica is continuing to focus on the developing cutting edge features and products offerings for our customers worldwide and further enhancing our global distribution network. Amassing more than 400,000 subscribers in less than two months since launch is a great testament to the case and universality of the Efonica service offerings. We look to remain continuously ahead of the curve offering revolutionary and innovative VoIP products and services.” added Roger Karam, President of Fusion’s VoIP Division.

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About Fusion:

Fusion provides its Efonica branded VoIP (Voice over Internet Protocol), Internet access, and other Internet services to, from, in and between emerging markets in Asia, the Middle East, Africa, Latin America and the Caribbean. Fusion currently provides services to consumers, corporations, international carriers, government entities, and Internet service providers in over 100 countries. For more information please go to: http://www.fusiontel.com or http://www.efonica.com.

Statements in this Press Release that are not purely historical facts, including statements regarding Fusion's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, introduction of products in a timely fashion, market acceptance of new products, cost increases, fluctuations in and obsolescence of inventory, price and product competition, availability of labor and materials, development of new third-party products and techniques that render Fusion's products obsolete, delays in obtaining regulatory approvals, potential product recalls and litigation. Risk factors, cautionary statements and other conditions which could cause Fusion's actual results to differ from management's current expectations are contained in Fusion's filings with the Securities and Exchange Commission and available through http://www.sec.gov.

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