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

Date of Report (Date of earliest event reported): March 4, 2010(March 2, 2010)

XFONE, INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

Commission File No. 001-32521

11-3618510

(I.R.S. Employer Identification Number)

5307 W. Loop 289

Lubbock, Texas 79414

 (Address of principal executive offices) (Zip Code)

806-771-5212

(Registrant’s telephone number, including area code)

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:

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))

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Item 7.01                      Regulation FD Disclosure.

RUS Funding Approved

On March 4, 2010, Xfone, Inc. (‘Xfone”) was notified that the applications of its wholly owned subsidiary, PRIDE Network, Inc. (“PRIDE Network”), for Rural Utility Service (“RUS”) funding from the U.S. Department of Agriculture under the Broadband Initiative Program for the Fiber To The Premise (FTTP) build out of PRIDE Network’s projects in Texas, have been approved.  PRIDE Network was selected to receive approximately $63.6 million in RUS funding for these projects, which will be split between loans of approximately $35.5 million and grants of approximately $28.1 million.

A copy of Xfone’s press release announcing the approval is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Non-Binding Memorandum of Understanding for the Sale of Xfone 018 Ltd.

On March 2, 2010, a non-binding memorandum of understanding (the “MoU”) was entered into by and among Xfone, Xfone’s 26% minority interest partner (the “Minority Partner”) in Xfone’s Israeli-based subsidiary, Xfone 018 Ltd. (“Xfone 018”), and Marathon Telecom Ltd. (“Marathon Telecom”), for the sale by Xfone and the Minority Partner of their aggregate holdings (95%) in Xfone 018 to Marathon Telecom (the “Transaction”). The MoU provides for an all cash transaction. Pursuant to the MoU, the parties will begin a due diligence process at the end of which the parties expect to enter into a definitive agreement. There can be no assurance that the Transaction will be consummated.

Item 9.01                       Financial Statements and Exhibits

(a)            Not applicable.

(b)            Not applicable.

(c)            Not applicable.

(d)            Exhibits.

Exhibit No.	Description
99.1	Press Release dated March 4, 2010.

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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 hereunto duly authorized.

	Xfone, Inc.
Date: March 4, 2010	By:	/s/  Guy Nissenson
		Guy Nissenson
		President, Chief Executive Officer and Director

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EX-99.1

FOR IMMEDIATE RELEASE

PRIDE Network Receives Approval For Funding of Projects Under the Broadband Initiative Program of the American Recovery and Reinvestment Act

Lubbock, TX – March 4, 2010 – XFONE, Inc. (NYSE Amex and TASE: XFN) (“XFONE” or “the Company”) announced that its wholly owned subsidiary, PRIDE Network, Inc.’s applications for USDA (United States Department of Agriculture) RUS (Rural Utility Service) funding under the Broadband Initiative Program (BIP) for the Fiber To The Premise (FTTP) build out of the Company’s PRIDE Network in Texas, have been approved.

The Company’s Texas South Plains Project was selected to receive a $22,720,551 loan and a $21,829,549 grant. The funding will provide an FTTP telecommunications infrastructure, with a WiMAX service-extension overlay that will bring advanced broadband services to rural communities of the Texas South Plains region. The Burkburnett and Iowa Park Project was selected to receive a $12,811,071 loan and a $6,309,931 grant. The funding will provide an FTTP telecommunications infrastructure, with a WiMAX service-extension overlay, that will bring advanced broadband services to the rural communities of Burkburnett and Iowa Park (less than five percent of this network will serve an area in Oklahoma).

The funding is contingent upon PRIDE Network’s meeting the terms of the loan, grant, or loan/grant agreement.

About XFONE, Inc.

A U.S.-domiciled corporation, XFONE is a holding and managing company with operations in the United States, the United Kingdom and Israel, that offers a wide range of communications services which include: local, long distance and international telephony services; video; prepaid and postpaid calling cards; cellular services; Internet services; messaging services (Email/Fax Broadcast, Email2Fax and Cyber-Number); and reselling opportunities.  The Company serves customers worldwide.

This press release contains forward-looking statements. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." XFONE's financial and operational results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the Company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to: rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.

Contact Details:

US IR Contact John G. Nesbett/Jennifer Belodeau Institutional Marketing Services (IMS) Tel: 1.203.972.9200. E-mail: jnesbett@institutionalms.com Company Contact Niv Krikov, CFO Tel: 1.806.771.1181 E-mail: niv@xfone.com