8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K/A

CURRENT REPORT

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

Date of Report (Date of earliest event reported)     November 15, 2013 (November 15, 2013)

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-32421	58-2342021
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

420 Lexington Avenue, Suite 1718 New York, NY	10170
(Address of principal executive offices)	(Zip Code)

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

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation 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))

Item 1.01.  Entry into a Material Definitive Agreement.

On August 30, 2013, Fusion Telecommunications International, Inc. and its recently-formed indirect subsidiary, Fusion Broadvox Acquisition Corp. (collectively, the "Company"), entered into an Asset Purchase and Sale Agreement (the “Agreement”) to acquire specified assets owned by BroadvoxGo! LLC and Cypress Communications, LLC (collectively, “Sellers”) and used in the operation of the cloud communications services segment of Sellers’ business (the “Acquired Business”). The Company also agreed to assume substantially all of the on-going liabilities of the Acquired Business incurred in the ordinary course of business.

On November 15, 2013 the Agreement was amended primarily to (i) increase the amount of the good faith deposit from $200,000 to $300,000, and provide that the deposit be delivered from escrow to the possession and control of Sellers for refund to the Company only under certain limited circumstances; and (ii) change the Outside Closing Date, as defined in the Agreement, from November 15, 2013 to December 16, 2013.  The Company also agreed with Sellers that certain of the conditions precedent to closing contained in the Agreement, including the audit of the financial books and records of the Acquired Business and demonstration that the Acquired Business achieve annualized earnings before interest, taxes, depreciation and amortization (“EBITDA”) of not less than $5.0 million based on the three month period from July through September 2013, have been satisfied.  In addition, the Company has agreed with Sellers that since the EBITDA of the Acquired Business for the three-month period exceeded $6.0 million there will be no downward adjustment of the purchase price.

Consummation of the transactions contemplated by the Agreement remains subject to the satisfaction of certain conditions precedent, including, but not limited to, receipt of any applicable regulatory approvals and certain third-party consents, receipt by the Company of sufficient funding to pay the purchase price and provide for reasonable post-acquisition working capital requirements, and other customary conditions of closing.  Consummation also remains subject to the negotiation of a series of mutually acceptable agreements related to post-closing matters such as (a) certain transition services to be provided to the Company by Sellers, (b) the shared use of certain equipment and systems of Sellers on a transition basis and (c) the Company’s use of certain intellectual property of Sellers on a transition basis.

While the Agreement contemplates that a closing of the sale of the Acquired Business will take place no later than December 16, 2013, the conditions precedent to closing are such that there can be no assurance that the Company will complete its acquisition of the Acquired Business in that time or at all.

The foregoing description of the amendment to the Asset Purchase Agreement contained in this Item 1.01 does not purport to be complete and is qualified in its entirety by reference to the First Amendment to the Asset Purchase and Sale Agreement, a copy of which is filed herewith as Exhibit 10.79, and is incorporated herein by reference.

Item 2.02.  Results of Operations and Financial Condition.

Item 7.01.  Regulation FD Disclosure.

On November 15, 2013, the Company issued a press release entitled “Fusion Improves Adjusted EBTIDA 150% and Increases Third Quarter Revenue 49%”, pertaining to its financial results for the three and nine months ended September 30, 2013.

The press release attached as Exhibit 99.1 to this report is furnished 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 the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

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Forward–Looking Statements

The press release furnished herewith includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1996. Such statements consist of any statement other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as “may,” “expect,” “anticipate,” “intend” or “estimate” or the negative thereof or other variations thereof or comparable terminology. The reader is cautioned that all forward-looking statements are speculative, and there are certain risks and uncertainties that could cause actual events or results to differ from those referred to in such forward-looking statements. This disclosure highlights some of the important risks regarding the Company’s business. The primary risk attributable to the Company is its ability to raise new and continued capital to execute its comprehensive business strategy. Additional risks include uncertainties associated with the integration of businesses following an acquisition, the Company’s ability to comply with its senior debt agreements, concentration of revenue from one source, competitors with broader product lines and greater resources, emergence into new markets, the termination of any of the Company’s significant contracts or partnerships, the Company’s inability to maintain working capital requirements to fund future operations, or the Company’s ability to attract and retain highly qualified management, technical and sales personnel, and the other factors identified by us from time to time in the Company’s filings with the SEC. However, the risks included should not be assumed to be the only things that could affect future performance. We may also be subject to disruptions, delays in collections, or facilities closures caused by potential or actual acts of terrorism, natural disasters or government security concerns.

Item 9.01 Financial Statements and Exhibits.

(d)           Exhibits.

Exhibit No.	Description
10.79	First Amendment to the Asset Purchase and Sale Agreement dated as of November 15, 2013 by and among Fusion Telecommunications International, Inc., Fusion Broadvox Acquisition Corp., BroadvoxGO! LLC and Cypress Communications LLC.
99.1	Press Release issued by Fusion Telecommunications International Inc., dated November 15, 2013, entitled “Fusion Improves Adjusted EBTIDA 150% and Increases Third Quarter Revenue 49%.”

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SIGNATURE

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

	Fusion Telecommunications International, Inc.
	By:	/s/ Gordon Hutchins, Jr.
		Gordon Hutchins, Jr.
November 21, 2013		as President, Chief Operating Officer and Acting Chief Financial Officer

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EX-10.79

Exhibit 10.79

FIRST AMENDMENT TO THE ASSET PURCHASE AND SALE AGREEMENT

THIS FIRST AMENDMENT TO THE ASSET PURCHASE AND SALE AGREEMENT (this “First Amendment”) is made as of this 15th day of November 2013 (the “Execution Date”), by and among Fusion Telecommunications International, Inc. (“Fusion”), a Delaware corporation with its principal office located at 420 Lexington Avenue, Suite 1718, New York, NY 10170; Fusion Broadvox Acquisition Corp. (“FBAC”, and together with Fusion, “Buyers”; each, a “Buyer”), a Delaware corporation with its principal office located at 420 Lexington Avenue, Suite 1718, New York, NY 10170; BroadvoxGo!, LLC (“Broadvox”), a Delaware limited liability company with its principal office located at 75 Erieview Plaza, Suite 400, Cleveland, OH 44114; and Cypress Communications, LLC (“Cypress”, and together with Broadvox, “Sellers”; each, a “Seller”), a Delaware limited liability company with its principal office located at Four Piedmont Center, Suite 600, Atlanta, GA 30305. The aforementioned Entities may be referred to individually as a “Party” or collectively as the “Parties.”  Capitalize terms used herein but not otherwise defined shall have the meanings set forth in the Purchase Agreement (defined below).

WHEREAS, Buyers and Sellers are parties to that certain Asset Purchase and Sale agreement dated August 30, 2013 (the “Purchase Agreement”) pursuant to which Buyers agreed to purchase from Sellers substantially all of the assets that are used exclusively in the operation of the Business and Sellers agreed to sell said assets to Buyers.

WHEREAS, the obligation of Buyers to consummate the Transaction is subject to the satisfaction by Sellers at or prior to the Closing Date of each of those conditions that are set forth in the Purchase Agreement, including but not limited to those set forth in Sections 6.7 and 8.1 of the Purchase Agreement (the “Buyer Closing Conditions”).

WHEREAS, Buyers wish to extend the Outside Closing Date, and Sellers agree to such extension in exchange for Buyers’ waiver of certain Buyer Closing Conditions.

WHEREAS, Buyers and Sellers wish to amend the Purchase Agreement as set forth in detail herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, the Parties hereby agree to amend the Purchase Agreement as follows:

1.Effective Date. Unless otherwise stated herein, the Parties agree that the Effective Date of this Amendment shall be November 15, 2013.

2.Outside Closing Date. The Parties agree Section 9.1 is hereby deleted in its entirety and replaced with the following:

In the event any of the conditions contained in Section 8.1 are not fully and completely satisfied by the close of business on December 16, 2013 (the “Outside Closing Date”), or if satisfaction of any such condition by the Outside Closing Date is or becomes impossible (other than through the failure of Buyers to comply with their obligations under this Agreement), and the conditions shall not have been expressly waived in writing by Buyers on or before the Outside Closing Date, this Agreement shall terminate upon written notice by Buyers to Sellers.

3.Additional Deposit. Within three (3) business days of the Execution Date hereof, Buyers agree to pay to Sellers an additional One Hundred Thousand and 00/100s Dollars ($100,000) (the “Additional Deposit”) which shall be in addition to the Two Hundred Thousand and 00/100s Dollars ($200,000) currently held in escrow pursuant to Section 6.14 of the Purchase Agreement so that the total Deposit shall be Three Hundred Thousand and 00/100s Dollars ($300,000). The Additional Deposit shall be remitted -in the form of a wire transfer to the following account:

Account Name: Broadvox, LLC

Bank: KeyBank, N.A.

ABA Routing No.: 041001039

Account No.: 350221004335

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Subject to the below provisions, the total Deposit is hereafter deemed non-refundable as of the Execution Date hereof. As such, on the Effective Date, Sellers and Buyers agree to execute and deliver to Escrow Agent joint instructions (in the form attached hereto and incorporated herein at Exhibit A) directing the Escrow Agent to release the Deposit to Sellers in accordance with the terms thereof. Sellers shall, at all times until the Closing or termination of this Agreement, retain the Deposit in Sellers’ bank account, in funds unencumbered by any acts subsequent to this Amendment, so that they are readily available for delivery to Buyers in the event they are determined to be repaid to Buyers in accordance with the following revised Section 6.14(a).

The Parties agree that Section 6.14(a) shall be deleted in its entirety and replaced with the following:

The Parties acknowledge that Buyers have paid to Sellers a good faith deposit (the “Deposit”) of Three Hundred Thousand Dollars and xx/100 ($300,000) to be (i) applied to the Purchase Price at Closing, or (ii) refunded to Buyers only upon (A) Sellers’ refusal or failure to close the Transactions notwithstanding that Buyers are not in default of its obligations under the Purchase Agreement and are ready, willing and able to close or (B) Buyers’ termination of the Purchase Agreement under Section 8.1(k) and Section 9.1(a) solely due to a Subsequent Closing Material Adverse Affect (as hereinafter defined). For purposes hereof, a “Subsequent Closing Material Adverse Affect” shall mean a Closing Material Adverse Affect under circumstances where the Subsequent Material Adverse Affect serving as the basis for termination is caused by the negligence, gross negligence or willful misconduct of Sellers occurring on or after the Effective Date and/or Sellers’ departure, on or after the Effective Date, from the standard of care Sellers have heretofore applied to the Assets or the Business (collectively, the “Bases”). No negligence, gross negligence or willful misconduct shall be attributed to acts occurring with Buyers’ consent, with Buyers’ knowledge in the absence of an objection within a reasonable time, or where the same conduct would likely have occurred under Buyers’ ownership of the assets.  If the Parties are unable to agree upon whether or the extent to which Sellers’ actions or inactions constitute one or more bases for a Subsequent Closing Material Adverse Affect, then, notwithstanding the provisions of Section 18 of the escrow agreement dated September 9, 2013, other than the designation of governing law, the matter shall be decided by a single arbitrator selected and ruling in accordance with the American Arbitration Association’s Expedited Procedures within its Commercial Arbitration Rules and Mediation Procedures, and shall be decided on the briefs and within thirty (30) days of submission of the claim to the selected arbitrator. The Parties agree to deliver instructions to the escrow agent consistent with the provisions of this Section.

4.Hold Back and Escrow Account. The Parties agree that the last sentence of Section 2.6 is deleted in its entirety and replaced with the following:

Pursuant to the Escrow Agreement, (a) fifty percent (50%) of the Hold Back, less the amount of any claim that is then pending, shall be disbursed to Sellers six (6) months following the Closing Date and (b) any remaining balance of the Hold Back that is not then subject to a pending claim shall be disbursed to the Sellers one (1) year following the Closing Date.

5.Buyers’ Waiver of Closing Conditions. Buyers agree that the following Buyer Closing Conditions are hereby amended, modified, and/or waived as follows:

a.Audit. Buyers acknowledge and agree that the Audit as required in Section 6.7 (b) of the Purchase Agreement has been delivered to Buyers as of the Execution Date hereof. Buyers further acknowledge and agree that as of the Effective Date hereof, the Audit Buyer Closing Condition as set forth in Section 6.7(b) of the Purchase Agreement shall be deemed satisfied by Sellers and shall no longer be deemed a Buyer Closing Condition.

b.EBITDA. The Parties agree that the three (3) months preceding the Closing to be used for purposes of calculating EBITDA as required by Section 6.7(c) of the Purchase Agreement shall be July, August and September of 2013. Buyers acknowledge and agree that as of the Effective Date herein, the EBITDA Buyer Closing Condition as set forth in Section 6.7(c) of the Purchase Agreement has been satisfied, shall no longer qualify as a Buyer Closing Condition, and shall not serve as a basis for a Purchase Price adjustment as set forth in Section 6.7(c).

c.Liens. The Parties agree that Section 8.1(e) is deleted in its entirety and replaced with the following:

Except as set forth on Schedule 8.1(e), on or before Closing, Sellers shall have obtained a release and discharge of any and all Liens (except for Permitted Liens) which affect the Acquired Assets or the Business, and Sellers shall provide Buyers with copies of all UCC-3 termination statements, where available, or other evidence reasonably satisfactory to Buyers evidencing such release and discharge.

d.Excluded Liabilities. Section 8.1(n) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

Any Excluded Liabilities that are due and payable on or prior to the Closing Date, except to the extent any of those Excluded Liabilities are being negotiated or contested in good faith by Sellers, shall have been paid or satisfied. Notwithstanding the foregoing, the Parties agree that any and all payments to be made pursuant to any Broadvox, LLC Management Bonus Plan (also known as the Fusion Closing Bonus) shall be paid by Sellers within thirty (30) days of Closing. The Parties further agree that those redemption amounts that may be due to former Cypress shareholders who failed to claim said stock certificates, as set forth on Schedule 2.4(c), in the aggregate amount of $298,546, do not have to be paid at Closing, but shall remain as an Excluded Liability.

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e.Genband. Section 8.1(h) is hereby deleted in its entirety and replaced with the following:

Buyers shall have received written confirmation from Genband reflecting Genband's commitment to provide ongoing support for the CS2K platform for at least three (3) years following the Closing Date, so long as Buyers are paying for said support. Notwithstanding the foregoing, Buyers acknowledge that Genband's support shall not include the repair or replacement of any end-of-life hardware that Genband does not currently support. As a result of this limitation, Sellers shall deliver to Buyers at Closing an inventory of spare hardware that, in the reasonable judgment of Buyers and Sellers after consultation with Genband, is sufficient to support the ongoing operation of the CS2K platform, and which is anticipated to be substantially similar to list of spare hardware in the attached "CS2000 Compact Hardware Audit.

6.Continuing Representation.

a.   Buyers’ Representation. Buyers represent and warrant that as of the Effective Date herein, they are not aware of any occurrence, circumstance or event that would qualify as a breach of the Purchase Agreement by Sellers, either as of the Effective Date herein or with the passage of time, and that would give rise to either Buyers’ right to terminate the Purchase Agreement or a failure to satisfy any of the Buyer Closing Conditions.

b.   Sellers’ Representation. Sellers represent and warrant that as of the Effective Date herein, they are not aware of any occurrence, circumstance or event that would qualify as a breach of the Purchase Agreement by Buyers, either as of the Effective date herein or with the passage of time, that would give rise to a Seller Material Adverse Effect, and/or that would give rise to Buyers’ right to terminate the Purchase Agreement.

7.Reaffirmation; Ratification. The Parties agree that any sections of the Purchase Agreement not specifically amended, waived or modified herein are hereby reaffirmed and ratified in their entirety.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the Parties hereto have executed this First Amendment to the Asset Purchase and Sale Agreement as of the Execution Date.

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. (“FUSION”)	FUSION BROADVOX ACQUISITION CORP. (“FBAC”)
By: /s/ Gordon Hutchins, Jr.	By: /s/ Gordon Hutchins, Jr.
Title: President and Chief Operating Officer	Title: President
BROADVOXGO!, LLC (“BROADVOX”)	CYPRESS COMMUNICATIONS, LLC (“CYPRESS”)
By: /s/ Eugene Blumin	By: /s/ Andre Temnorod
Title: Chief Operating Officer	Title: Chief Executive Officer

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EX-99.1

Exhibit 99.1

Fusion Improves Adjusted EBITDA 150% and Increases Third Quarter Revenue 49%

NEW YORK, NY – November 15, 2013 - Fusion Telecommunications International, Inc. (OTCQB: FSNN), a provider of integrated cloud solutions, including cloud communications, cloud computing, cloud storage and security (“Fusion”), today announced financial results for the third quarter and nine months ended September 30, 2013.

Third Quarter Company Highlights

●   Achieved revenues of $14.8 million, an increase of $4.9 million, or 49%, from the third quarter of 2012.

o   Revenues from Fusion’s higher margin Business Services Segment increased by $7.2 million to $7.8 million compared to the same period last year.

●   Gross profit increased 511% to $4.9 million compared to the third quarter of 2012.

●   Gross margin increased to 32.8% as compared to 8.0% for the third quarter of 2012.

●   Adjusted EBITDA improved to $0.7 million from an adjusted EBITDA loss of $1.3 million for the same period last year.

●   Adjusted EBITDA increased by more than 34% from the second quarter of 2013.

●   Business Services Segment churn was 1.0%.

●   Business Services Segment ARPU was $721.

●   Contracted value of new booked Business Services Segment orders was $3.2 million, a 150% increase compared to the same period last year.

“Fusion’s third consecutive quarter of improved financial results, high ARPU and low churn reflect our ongoing progress in executing our strategy,” said Matthew Rosen, Fusion’s Chief Executive Officer.  “Throughout the year, we have continued to differentiate Fusion with a portfolio of integrated cloud solutions that we are increasingly targeting to specific vertical markets. We believe that much of our progress reflects our customers’ confidence in a strategy that combines a scalable and diverse network connecting customers to our cloud, with an advanced, proprietary cloud platform delivering true end to end solutions to enterprises of every size.  During the quarter, we continued work on closing our recently announced acquisition of Broadvox’s cloud services business, a transaction that we expect to close prior to the end of 2013. The acquisition will contribute substantially to the financial and operational platform we have already built, positioning us well for accelerated organic growth and additional tuck in acquisitions.”

Third Quarter Results

Fusion reported consolidated revenues of $14.8 million for the quarter ended September 30, 2013, an increase of $4.9 million, or 49%, from the third quarter of 2012.  Revenues from Fusion’s Business Services Segment increased by $7.2 million to $7.8 million in the third quarter of 2013 compared to the same period of a year ago, and reflects the inclusion of revenue contributed by NBS, which the Company acquired on October 29, 2012.  The Company’s Carrier Services revenue for the third quarter decreased by $2.4 million, or 25.1%, from the third quarter of 2012, mainly due to a decrease in the volume of traffic terminated over its network.

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Fusion’s revenue mix has shifted significantly toward the higher margin Business Services segment.  As a result, the Company’s consolidated gross margin increased to 32.8% for the third quarter of 2013, as compared to 8.0% for the third quarter of 2012.  The Business Services segment generated a gross margin of 51.4%, compared with a 40.4% gross margin in the same period of a year ago, and reflects the acquisition of NBS.  The gross margin for the Carrier Services segment increased to 12.2% in the third quarter of 2013 from 6.0% in the third quarter of 2012.

Net loss for the third quarter was $2.2 million, or ($0.01) per share, as compared to a net loss of $1.6 million, or ($0.01) per share in the same period of a year ago. The net loss in the third quarter of 2013 includes the following non-cash items not present in the same period of a year ago: a loss of $0.8 million due to the change in fair value of the Company’s derivative liability associated with warrants issued in connection with senior debt; a loss on extinguishment of debt in the amount of $0.3 million for warrants issued in connection with the conversion of related party debt; and amortization of intangibles acquired in the NBS transaction of $0.6 million.  The third quarter of 2012 also includes interest on senior debt in the amount of $0.5 million with no comparable amount present in 2012.

Adjusted EBITDA (earnings (loss) before interest, taxes, depreciation, amortization and specific non-recurring and non-cash adjustments) for the third quarter of 2013 was $0.7 million, as compared to an adjusted EBITDA loss of $1.3 million in the third quarter of 2012, with the improvement being primarily attributable to the inclusion of NBS’ results in the current period.

At September 30, 2013, the Company had a working capital deficit and stockholders’ deficit of $3.6 million and $3.0 million, respectively, as compared to a working capital deficit of $8.0 million and $6.1 million, respectively, at December 31, 2012, and total assets of $26.7 million.

Nine Months Results

Fusion reported consolidated revenues of $45.2 million for the nine months ended September 30, 2013, an increase of $13.5 million, or 42.6%, from the nine months ended September 30, 2012.  Revenues from Fusion’s Business Services Segment increased by $21.0 million to $22.8 million for the nine months ended September 30, 2013 compared to the same period of a year ago, and includes revenue contributed by NBS.  The Company’s Carrier Services revenue for the nine months ended September 30, 2013 decreased by $7.5 million, or 25.1%, from the first nine months of 2012, due to a decrease in the volume of traffic terminated.

The Company’s consolidated gross margin increased to 30.7% in the nine months ended September 30, 2013, as compared to 11.2% for the same period of 2012, due to an increased contribution from the higher margin Business Services segment, which generated a gross margin of 50.7% in the first nine months of 2013, compared with a 37.7% gross margin in the same period of a year ago, as NBS generates consistently higher margins than the Company’s pre-acquisition Business Services segment.  The gross margin for the Carrier Services segment increased to 10.6% for the nine months ended September 30, 2013 from 9.6% in the same period of a year ago, mainly due to proceeds received from a business interruption insurance claim.

Net loss for the nine months ended September 30, 2013 was $2.1 million, or ($0.01) per share, as compared to a net loss of $3.7 million and ($0.02) per share in the same period of a year ago. The net loss in the first nine months of 2013 reflects a $1.5 million decrease in operating loss, as well as a one-time $2.9 million non-cash gain that was more than offset by interest on senior debt of $1.4 million, amortization of intangibles acquired in the NBS transaction of $1.7 million and a $0.7 million loss on the change in fair value of the Company’s derivative liability.

Adjusted EBITDA for the nine months ended September 30, 2013 was $1.5 million, as compared to an adjusted EBITDA loss of $2.8 million in the same period of 2012, with the improvement being primarily attributable to the inclusion of NBS’ results in the current period.

Use of Non-GAAP Financial Measurements:

The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used in the cloud communications industry to evaluate 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 non-recurring transactions, if any, such as impairment losses and expenses associated with pending acquisitions, which vary significantly between periods and are not recurring in nature, as well as certain recurring non-cash charges such as stock-based compensation.  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 accounting principles generally accepted in the United States of America (“U.S. GAAP”).  In accordance with SEC Regulation G, the non-GAAP measurements in this press release have been reconciled to the nearest GAAP measurement, which can be viewed under the heading "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA", immediately following the Consolidated Balance Sheets included in this press release.

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Fusion Telecommunications International, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenues	$	14,811,828		$	9,959,965		$	45,210,427		$	31,714,105
Cost of revenues, exclusive of depreciation and
amortization, shown separately below		9,953,734			9,164,247			31,310,864			28,172,796
Gross profit		4,858,094			795,718			13,899,563			3,541,309
Depreciation and amortization		911,613			94,426			2,634,112			286,603
Selling general and administrative expenses		4,312,508			2,215,751			13,013,954			6,525,277
Total operating expenses		5,224,121			2,310,177			15,648,066			6,811,880
Operating loss		(366,027	)		(1,514,459	)		(1,748,503	)		(3,270,571	)
Other (expenses) income:
Interest expense		(663,689	)		(56,861	)		(1,992,939	)		(160,477	)
Loss on extinguishment of debt		(291,995	)		-			(442,574	)		-
Other income (expenses), net		(845,171	)		(63,576	)		(802,255	)		(224,419	)
Total other income (expenses)		(1,800,855	)		(120,437	)		(3,237,768	)		(384,896	)
Gain on extinguishment of accounts payable		(25,222	)		-			2,883,660			-
Net loss		(2,192,104	)		(1,634,896	)		(2,102,611	)		(3,655,467	)
Preferred stock dividends		(101,451	)		(101,451	)		(301,046	)		(302,149	)
Net loss applicable
to common stockholders	$	(2,293,555	)	$	(1,736,347	)	$	(2,403,657	)	$	(3,957,616	)
Basic and diluted loss per common share:	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Weighted average common
shares outstanding:
Basic and diluted		220,582,275			166,432,351			198,625,110			164,107,320

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Fusion Telecommunications International, Inc.

Consolidated Balance Sheets

	September 30, 2013			December 31, 2012
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	1,212,514		$	543,214
Accounts receivable, net		3,978,844			2,924,302
Inventory		435,808			341,118
Prepaid expenses and other current assets		559,056			1,001,449
Total current assets		6,186,222			4,810,083
Property and equipment, net		2,633,847			2,406,944
Other assets:
Security deposits		646,855			439,741
Restricted cash		396,036			1,026,326
Goodwill		2,603,525			2,406,269
Intangible assets, net		13,736,143			15,396,117
Other assets		476,329			582,947
Total other assets		17,858,888			19,851,400
TOTAL ASSETS	$	26,678,957		$	27,068,427
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable - non-related parties	$	625,000		$	208,333
Notes payable - related parties		439,286			639,286
Equipment financing obligations		285,702			136,392
Escrow payable		122,500			-
Accounts payable and accrued expenses		7,638,426			10,579,496
Related party payable		667,793			1,159,573
Current liabilities from discontinued operations		55,000			55,000
Total current liabilities		9,833,707			12,778,080
Long-term liabilities:
Notes payable - non-related parties, net of discount		14,245,256			14,475,747
Notes payable - related parties		3,478,081			4,492,136
Equipment financing obligations		190,161			102,071
Derivative liability		1,798,875			1,066,000
Other long-term liabilities		167,685			266,132
Total liabilities		29,713,765			33,180,166
Stockholders' deficit:
Preferred stock		50			119
Common stock		2,992,670			1,782,504
Capital in excess of par value		150,729,450			146,760,005
Accumulated deficit		(156,756,978	)		(154,654,367	)
Total stockholders' deficit		(3,034,808	)		(6,111,739	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	26,678,957		$	27,068,427

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Fusion Telecommunications International, Inc. and Subsidiaries

Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net loss	$	(2,192,104	)	$	(1,634,896	)	$	(2,102,611	)	$	(3,655,467	)
Interest expense and other financing costs		710,782			123,092			2,168,801			398,670
Depreciation and amortization		911,614			94,426			2,634,112			286,603
EBITDA		(569,708	)		(1,417,378	)		2,700,302			(2,970,194	)
Acquisition transaction expenses		37,432			82,719			39,615			169,981
Loss on disposal of property and equipment		2,374			-			2,374			-
Loss on extinguishment of debt		317,217			-			442,574			-
Gain on extinguishment of accounts payable		-			-			(2,883,660	)		-
Change in fair value of derivative liability		838,142			-			732,875			-
One-time executive compensation		-			-			175,000			-
Restructuring charges		7,654			-			41,717			-
Tax related items		1,887			-			1,887			(98,141	)
Stock-based compensation expense and
stock issued for services		66,061			31,503			205,556			100,686
Adjusted EBITDA	$	701,059		$	(1,303,156	)	$	1,458,240		$	(2,797,668	)

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Forward Looking Statements:

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 1996. Such statements consist of any statement other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as “may”, “expect”, “anticipate”, “intend”, “estimate” or “continue” or the negative thereof or other variations thereof or comparable terminology. The reader is cautioned that all forward-looking statements are speculative, and there are certain risks and uncertainties that could cause actual events or results to differ from those referred to in such forward-looking statements. This disclosure highlights some of the important risks regarding the Company’s business. The primary risk is the Company’s ability to raise new and continued capital to execute its comprehensive business strategy. Additional risks include uncertainties associated with the integration of businesses following an acquisition; the Company’s ability to comply with its senior debt agreements; concentration of revenue from one source; competitors with broader product lines and greater resources; emergence into new markets; natural disasters, acts of war, terrorism or other events beyond the Company’s control; the termination of any of the Company’s significant contracts or partnerships; the Company’s inability to maintain working capital requirements to fund future operations; the Company’s ability to attract and retain highly qualified management, technical and sales personnel; and the other factors identified by us from time to time in the Company’s filings with the Securities and Exchange Commission, which are available through http://www.sec.gov.  However, the reader is cautioned that our future performance could also be affected by risks and uncertainties not enumerated above.

About Fusion

Fusion is a leading provider of integrated cloud solutions to small, medium and large businesses. Fusion’s advanced, high availability service platform enables the integration of leading edge solutions in the cloud, including cloud voice, cloud computing, cloud connectivity, cloud storage and security.  Fusion’s innovative yet proven cloud solutions lower our customers’ cost of ownership, and deliver new levels of security, flexibility, scalability and speed of deployment. For more information, please visit www.fusiontel.com.

Contact

Company

Laura Nadal

212-389-9720

lnadal@fusiontel.com

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