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 and Exchange Act of 1934

February 23, 2011

Date of Report (date of Earliest Event Reported)

 VELATEL GLOBAL COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in its Charter)

NEVADA	000-52095	98-0489800
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

12526 High Bluff Drive, Suite 155, San Diego, CA 92130

(Address of principal executive offices and zip code)

(760) 230-8986

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name or former address, if changed from 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):

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

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

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

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

Item 1.01  Entry into Material Definitive Agreements 

On February 23, 2012, VelaTel Global Communications, Inc., a Nevada corporation and the registrant responsible for the filing of this Form 8-K (“Company”) entered into the following agreements with Isaac Organization, Inc.: (1) Agreement to Extend and Increase First Line of Credit Loan Agreement and Promissory Note, Cancel Stock Purchase Agreement, and Grant Option in VN Tech Agreement (“Extension Agreement”); and (2) Second Line of Credit Loan Agreement and Promissory Note (“Second Note”). The Company and Isaac are sometimes referred to in each of these agreements and in this Form 8-K as a “Party” and collectively as the “Parties.”

On February 24, 2012, the Company granted promissory notes to (3) Kevin Morrell (“Morrell Note”) and (4) Viking Retirement Assets Custodian for the benefit of Kenneth Hobbs IRA (“Viking Note”).

Extension Agreement

Background: In its quarterly report on SEC Form 10-Q for the period ending June 30, 2011, the Company disclosed the following under Note 19 – Subsequent Events:

Line of Credit Loan Agreement and Promissory Note

On July 1, 2011, the Company entered into a Line of Credit Loan Agreement and Promissory Note with Isaac (“Credit Line”). Pursuant to the Second A&R Isaac SPA, Isaac is entitled to purchase Shares at a price per Share equal to the volume-weighted average of the closing price of the Shares purchased during the ten-day period immediately preceding payment of each Installment. In recognition of the price per Share at which Shares have traded since the Effective Date of the Second A&R Isaac SPA and are likely to trade in the near term, the current and projected future short term capital needs of the Company for its ongoing and expanding operations, and to avoid unnecessary dilution of the equity of all shareholders of the Company, including Isaac, the Company and Isaac considered it to be in their best mutual best interest to fund some or all of the capital needs of the Company over the next six months through debt instead of equity funding.

In the Credit Line, the Company and Isaac agreed that the Company may borrow up to $5.0 million in such installments and subject to the same procedure for making funding requests as apply to the term “Funding Request” as defined in Section 1.7 of the Second A&R Isaac SPA. For each funding request, Isaac will retain 5% of the amount requested (“Holdback”) as a set-up fee and compensation for Isaac’s due diligence. Each Holdback will be added to the principal balance and will accrue interest along with the amount disbursed and outstanding from time to time. Amounts borrowed pursuant to the Credit Line shall bear simple interest at the rate of ten percent per annum. Interest on the unpaid balance of the amounts borrowed accrue monthly, but is not due until the principal balance borrowed is due. The principal balance borrowed is due and payable on December 31, 2011.

As used in this Form 8-K and in the Extension Agreement, the term “First Note” is synonymous with the term “Credit Line” as used in the quoted language from the Company’s Form 10-Q for the period ending June 30, 2011. The effect of the Extension Agreement includes, but is not limited to, extending the Due Date and increasing the amount disbursed and the credit limit under the First Note.

Although the credit limit under the First Note was $5,000,000 and the Due Date of the First Note was December 31, 2011, Isaac has advanced the Company funds in excess of the credit limit, including advances made after the Due Date. In entering into the Extension Agreement, the Parties are agreeing to extend the Due Date for the First Note to June 30, 2012, and to increase the credit limit under the First Note to reflect the total amount borrowed, namely $6,385,000.00 disbursed, plus 5% Holdback fees totaling $336,052.63, for a total principal balance of $6,721,052.63. Interest in the amount of $332,793.99 has accrued on the principal balance, for a total amount due as of February 23, 2012 of $7,053,846.62 (“Pre-Extension Total Amount Due”). In the Extension Agreement, the principal balance of the First Note is increased to $7,425,101.71 (“Increased Principal Balance”), representing the Pre-Extension Total Amount Due plus an additional 5% Holdback fee of $371,255.05. Interest shall accrue on the Increased Principal Balance at the rate of 10% per annum.

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The Extension Agreement provides that Isaac will be granted an option to at any time convert all or any portion of the balance of principal and interest due under the First Note to shares of the Company’s Series A common stock (“Shares”) to Isaac or any of its assigns. The details of the conversion feature will be agreed to between the Parties when VelaTel has additional authorized Shares available for issuance.

The Extension Agreement also grants Isaac an option to acquire VelaTel’s 51% joint venture interest under a Subscription and Shareholder Agreement between the Company and Shenzhen VN Technologies Co., Ltd. dated April 1, 2011 (“VN Tech Agreement”). The Company disclosed the terms of the VN Tech Agreement under Form 8-K filed on April 6, 2011. The Extension Agreement provides that the price of Isaac’s option is to be determined based on Isaac’s due diligence and a mutually agreed valuation of the joint venture. If Isaac exercises its option to acquire VelaTel’s 51% interest in the VN Tech joint venture, the agreed value of that interest shall be treated as an offset to the amount otherwise due under the First Note.

A complete copy of the Extension Agreement is attached to this Form 8-K as Exhibit 10.1.

Second Note

Under the Second Note, the Company promises to pay to the order of Isaac the principal sum of $7,368,421.05, or so much thereof as may be disbursed to, or for, the benefit of the Company by Isaac, in Isaac’s discretion and subject to Isaac’s approval of budgets identifying the Company’s proposed use of each funding request. For each funding request, Isaac will retain a 5% Holdback as a set-up fee and compensation for Isaac’s due diligence. Each Holdback will be added to the principal balance and will accrue interest along with the amount disbursed and outstanding from time to time. The total potential amount to be disbursed, net of 5% Holdback fees, is $7,000,000.00. Amounts borrowed pursuant to the Second Note shall bear interest at the rate of 10% per annum. Interest shall be calculated based on the principal balance, as may be adjusted from time to time to reflect additional advances and/or partial repayments made. Interest shall accrue but shall not be due until the principal balance is due on December 31, 2011.

The Second Note provides that Isaac will be granted an option to at any time convert all or any portion of the balance of principal and interest due under the Second Note to Shares to Isaac or any of its assigns. The details of the conversion feature will be agreed to between the Parties when the Company has additional authorized Shares available for issuance.

A complete copy of the Second Note is attached to this Form 8-K as Exhibit 10.2.

Morrell and Viking Notes

The terms of the Morrell Note and the Viking Note are identical to each other except as to the disbursement amount and the principal amount. The disbursement amount of the Morrell Note is $650,000 and the principal amount is $684,210.52. The disbursement amount of the Viking Note is $46,000 and the principal amount is $48,421.05. In each case, the difference between the disbursement amount and the principal amount represents the 5% Holdback fee.

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The Maturity Date of both the Morrell Note and the Viking Note is December 31, 2012. The Company may prepay either note in whole or in part prior to its Maturity Date without penalty. Each note bears interest on its principal amount at 10% per annum. Each note provides:

Contemporaneously with the execution of this Note, Borrower is maker on a Note with Isaac Organization, Inc. (“Isaac Note”). The Isaac Note provides that Borrower and Isaac agree to add a conversion feature granting Isaac an option to convert all or a portion of the balance of principal and interest due under the Isaac Note to shares of Borrower’s Series A common stock (“Shares”). The details of the conversion feature will be agreed to between the Parties when Borrower has additional authorized Shares available for issuance. Upon such amendment or substitution of the Isaac Note, Borrower agrees to amend or substitute this Note with a Note containing identical conversion features to the amended or substituted Isaac Note.

Kenneth Hobbs, the beneficiary of the self-directed IRA that is the payee of the Viking Note, is an officer of the Company.

A complete copy of the Morrell Note is attached to this Form 8-K as Exhibit 10.3.

A complete copy of the Viking Note is attached to this Form 8-K as Exhibit 10.4.

Item 1.02  Termination of a Material Agreement 

 The Extension Agreement, described above, also provides that the Company and Isaac acknowledge cancellation and termination of all obligations of the other Party under the Second Amended and Restated Stock Purchase Agreement between the Company and Isaac dated May 10, 2011 (“SPA”). The Company disclosed the terms of the SPA under Form 8-K filed on May 13, 2011.

Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 

 On February 28, 2012, the Company filed an SEC Form S-8 Registration Statement to register 43,166,078 shares of the Company’s Series A Common Stock, some of which are to be issued to officers of the Company pursuant to independent contractor agreements. The terms of the Form S-8 Registration are incorporated by this reference.

Item 8.01  Other Events 

On February 28, 2012, the Company published on its website, at www.velatel.com, a letter from its Chief Executive Officer explaining the events disclosed in this Form 8-K, along with the reasons for the occurrence of those events.

A complete copy of the letter is attached to this Form 8-K as Exhibit 99.1.

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Item 9.01  Exhibits 

10.1	Agreement between VelaTel and Isaac to Extend and Increase First Line of Credit Loan Agreement and Promissory Note, Cancel Stock Purchase Agreement, and Grant Option in VN Tech Agreement
10.2	Second Line of Credit Loan Agreement and Promissory Note between VelaTel and Isaac
10.3	Promissory Note from VelaTel to Kevin Morrell
10.4	Promissory Note from VelaTel to Viking Retirement Assets Custodian, fbo Kenneth Hobbs IRA
99.1	Letter from Chief Executive Officer published on Company’s website.

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 29, 2012

VelaTel Global Communications, Inc.,

By: /s/George Alvarez                          

Name: George Alvarez

Title: Chief Executive Officer

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EX-10.1

Exhibit 10.1

AGREEMENT TO EXTEND AND INCREASE FIRST LINE OF CREDIT LOAN AGREEMENT AND PROMISSORY NOTE, TO CANCEL STOCK PURCHASE AGREEMENT, AND TO GRANT OPTION IN VN TECH AGREEMENT

This Agreement (“Extension Agreement”) is entered into by and between VelaTel Global Communications, Inc. (formerly known as China Tel Group, Inc.), a Nevada corporation (“VelaTel”), and Isaac Organization, Inc., a Canadian corporation organized under the laws of Ontario (“Isaac”), or its assigns, as of February 23, 2012 (“Effective Date”). VelaTel and Isaac are each sometimes referred to individually in this Agreement as a “Party” and together as “Parties.”

RECITALS

A.The Parties originally entered into a stock purchase agreement on February 9, 2010. The terms of that stock purchase agreement have been amended several times, most recently as of May 10, 2011 (collectively “SPA”). Each Party acknowledges the other Party has fully performed all its obligations under the SPA except those not heretofore due or triggered. The Parties now mutually desire to cancel and terminate all of their respective executor obligations under the SPA.

B.Effective July 1, 2011, the Parties entered into that certain First Line of Credit Loan Agreement and Promissory Note (“First Note”) in the principal amount of up to $5,000,000. The First Note became due and payable on December 31, 2011 (“Due Date”). The Parties now mutually desire to extend the Due Date for the First Note and increase the credit limit under the First Note to reflect the total amount actually borrowed, namely $6,385,000.00 actually disbursed, plus 5% Holdback fees totaling $336,052.63, for a total principal balance of $6,721,052.63. Interest in the amount of $332,793.99 has accrued on the principal balance, for a total amount due as of February 23, 2012 of $7,053,846.62 (“Pre-Extension Total Amount Due”).

C.The Parties are entering into a Second Line of Credit Loan Agreement and Promissory Note (“Second Note”) separate from this Extension Agreement.

D.The Parties intend that the debt financing represented by the First Note and the Second Note will replace the equity financing represented by the unfunded portion of SPA.

E.As part of this Extension Agreement, VelaTel is granting Isaac an option to purchase up to 51% of the total equity pursuant to the Subscription and Shareholder Agreement between VelaTel and Shenzhen VN Technologies Co., Ltd. dated April 1, 2011 (“VN Tech Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Extension Agreement agree as follows:

AGREEMENT

1.INCREASED BALANCE OF FIRST NOTE. The principal balance of the First Note is hereby increased to $7,425,101.71 (“Increased Principal Balance”), representing the Pre-Extension Total Amount Due plus an additional Holdback of $371,259.05, representing 5% of the Pre-Extension Total Amount Due. Interest shall accrue on the Increased Principal Balance at the rate of 10% per annum.

2.EXTENSION OF FIRST NOTE DUE DATE. The First Note Due Date is hereby extended until June 30, 2012. Isaac waives any Default based on VelaTel’s failure to repay the First Note in full on or before the Due Date.

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3.RIGHT TO CONVERT. The Parties agree to add a conversion feature granting Isaac an option to at any time convert all or any portion of the balance of principal and interest due under the First Note to shares of VelaTel’s Series A common stock (“Shares”) to Isaac or any of its assigns. The details of the conversion feature will be agreed to between the Parties when VelaTel has additional authorized Shares available for issuance.

4.ASSIGNMENT. Isaac shall have the right to assign its rights under this Second Note in whole or in part.

5.INCORPORATION BY REFERENCE. Except as amended, all terms of the First Note remain in full force and effect.

6.CANCELLATION OF SPA. VelaTel and Isaac do each hereby acknowledge cancellation and termination of all obligations of the other Party under the SPA except those already performed prior to the Effective Date of this Extension Agreement.

7.OPTION GRANT IN VN TECH AGREEMENT. Under the VN Tech Agreement, VelaTel is to acquire a 51% interest in a joint venture to distribute hydrogen fuel cell technology. VelaTel hereby grants Isaac an option to acquire VelaTel’s 51% joint venture interest at a price to be determined based on Isaac’s due diligence and a mutually agreed valuation of the value of the venture. If Isaac exercises its option to acquire VelaTel’s 51% interest, the agreed value of that interest shall be treated as an offset to the amount otherwise due under this First Note.

VELATEL GLOBAL COMMUNICATIONS INC.	ISAAC ORGANIZATION, INC.
By: /s/ George Alverez______________________ George Alvarez, its Chief Executive Officer	By: /s/ Antonios Isaac____________________________ Antonios Isaac, its Chief Executive Officer
12526 High Bluff Drive, Suite 155 San Diego, CA 92130, USA Facsimile: 760.230.7042 Email: galvarez@velatel.com	105 Schneider Road Ottawa, Ontario K2K 1Y3, CANADA Facsimile: 613.254.8912 Email: tony@isaac.com

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EX-10.2

Exhibit 10.2

SECOND LINE OF CREDIT LOAN AGREEMENT AND PROMISSORY NOTE

$ 7,368,421.05 Date: February 23, 2012

This Second Line of Credit Loan Agreement and Promissory Note (“Second Note”) is entered into by and between VelaTel Global Communications, Inc., a Nevada corporation (“VelaTel”), and Isaac Organization, Inc., a Canadian corporation organized under the laws of Ontario, (“Isaac”), or its assigns, as of February 23, 2012 (“Effective Date”). VelaTel and Isaac are each sometimes referred to individually in this Second Note as a “Party” and, together, as “Parties.”

RECITALS

A.Contemporaneously with this Second Note, the Parties are entering into an agreement to increase and extend a previous Line of Credit Loan Agreement and Promissory Note (“First Note”) and to cancel a previous Stock Purchase Agreement (“SPA”) between them.

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties to this Second Note agree as follows:

AGREEMENT

1.FOR VALUE RECEIVED, VelaTel promises to pay to the order of Isaac the principal sum of Seven Million Three Hundred Sixty-Eight Thousand Four Hundred Twenty-One and 05/100 U.S. Dollars ($7,368,421.05), or so much thereof as may be disbursed to, or for, the benefit of VelaTel by Isaac, in Isaac’s discretion and subject to Isaac’s approval of budgets identifying VelaTel’s proposed use of each funding request.

2.RIGHT TO CONVERT. The Parties agree to add a conversion feature granting Isaac an option to at any time convert all or any portion of the balance of principal and interest due under this Second Note to shares of VelaTel’s Series A common stock (“Shares”) to Isaac or any of its assigns. The details of the conversion feature will be agreed to between the Parties when VelaTel has additional authorized Shares available for issuance.

3.LOAN SETUP FEE. From each Funding Request pursuant to this Second Note, Isaac shall retain 5% of the amount requested (“Holdback”) as a set-up fee and compensation for Isaac’s due diligence in connection with the Second Note. Each Holdback shall, nonetheless, be added to the principal balance and shall accrue interest along with the amount actually disbursed and outstanding from time to time. The principal sum of this Second Note includes a Holdback on total potential disbursements of $7,000,000.00.

4.DUE DATE. The principal balance and accrued interest of this Second Note shall be due and payable on December 31, 2012 (“Second Note Due Date”). There shall be no penalty for early repayment of all or any part of the principal and accrued interest on this Second Note.

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5.INTEREST AND PRINCIPAL OF THE SECOND NOTE: The unpaid principal of the Second Note shall bear simple interest at the rate of ten percent (10%) per annum. Interest shall be calculated based on the principal balance, as may be adjusted from time to time to reflect additional advances and/or partial repayments made pursuant to this Second Note. Interest on the unpaid principal balance of this Second Note shall accrue but shall not be due and payable until such time as the principal balance of this Second Note becomes due and payable.

6.ASSIGNMENT. Isaac shall have the right to assign its rights under this Second Note in whole or in part.

7.NOTICE: All notices and other communications given or made pursuant to this Second Note (“Notice”) shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the Party to be notified; (ii) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective Parties at their address as set forth on the signature page, or to such email address, facsimile number or address as subsequently modified by Notice given in accordance with this Section.

8.DEFAULT: VelaTel shall be in default of this Second Note on the occurrence of any of the following events: (i) VelaTel shall fail to meet its obligation to make the required principal or interest payments hereunder; (ii) VelaTel shall be dissolved or liquidated; (iii) VelaTel shall make an assignment for the benefit of creditors or shall be unable to, or shall admit in writing their inability to pay their debts as they become due; (iv) VelaTel shall commence any case, proceeding, or other action under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, or any such action shall be commenced against the undersigned; (v) VelaTel shall suffer a receiver to be appointed for it or for any of its property or shall suffer a garnishment, attachment, levy or execution; or (vi) failure to increase authorized Shares to allow Isaac to convert.

9.REMEDIES: Upon default of this Second Note, Isaac may declare the entire amount due and owing hereunder to be immediately due and payable. Isaac may also use all remedies in law and in equity to enforce and collect the amount owed under this Second Note.

10.ATTORNEY FEES: If any action at law or in equity is necessary to enforce or interpret the terms of any of this Second Note, the prevailing Party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled.

11.WAIVER: VelaTel hereby waives demand, presentment, notice of dishonor, diligence in collecting, grace and notice of protest. 

VELATEL: VELATEL GLOBAL COMMUNICATIONS INC.	ISAAC: ISAAC ORGANIZATION, INC.
By: /s/ George Alverez______________________ George Alvarez, its Chief Executive Officer	By: /s/ Antonios Isaac____________________________ Antonios Isaac, its Chief Executive Officer
12526 High Bluff Drive, Suite 155 San Diego, CA 92130, USA Facsimile: 760.230.7042 Email: galvarez@velatel.com	105 Schneider Road Ottawa, Ontario K2K 1Y3, CANADA Facsimile: 613.254.8912 Email: tony@isaac.com

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EX-10.3

PROMISSORY NOTE

$ 684,210.52 Date: February 24, 2012

FOR VALUE RECEIVED, VelaTel Global Communications, Inc. (“Borrower”) promises to pay to the order of Kevin J. Morrell Revocable Trust (“Lender”) the sum of Six Hundred Eighty-Four Thousand Two Hundred Ten and 52/100 U.S. Dollars (“Principal Amount”), together with interest at the rate of 10% per annum from the date hereof.

From the Principal Amount, Lender shall deduct prior to disbursement 5% of the Principal Amount as a loan set-up fee and as compensation for Lender’s due diligence in connection with this Note (“Holdback”). The Holdback shall nonetheless be included in the Principal Amount upon which interest shall accrue. The amount Lender shall disburse to Borrower is $650,000.00

The entire Principal Amount, together with all interest accrued and unpaid, shall be due and payable on the first anniversary from the date hereof (“Maturity Date”). Borrower may prepay this Note in whole or in part prior to the Maturity Date without penalty. Any partial payments shall be applied first to costs of collection incident to any event of default, then to interest accrued but unpaid, then to reduction of the Principal Amount. All interest on this Note shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

Should this Note be placed in the hands of an attorney for collection, Borrower promises to pay such reasonable attorney fees and other costs of collection as Lender may incur, whether or not suit is brought. Borrower hereby waives demand, presentment, notice of dishonor, diligence in collecting, grace and notice of protest.

Contemporaneously with the execution of this Note, Borrower is maker on a Note with Isaac Organization, Inc. (“Isaac Note”). The Isaac Note provides that Borrower and Isaac agree to add a conversion feature granting Isaac an option to convert all or a portion of the balance of principal and interest due under the Isaac Note to shares of Borrower’s Series A common stock (“Shares”). The details of the conversion feature will be agreed to between the Parties when Borrower has additional authorized Shares available for issuance. Upon such amendment or substitution of the Isaac Note, Borrower agrees to amend or substitute this Note with a Note containing identical conversion features to the amended or substituted Isaac Note.

VELATEL GLOBAL COMMUNICATIONS, INC.

By /s/ George Alvarez                                  

George Alvarez, its Chief Executive Officer

EX-10.4

Exhibit 10.4

PROMISSORY NOTE

$ 48,421.05 Date: February 24, 2012

FOR VALUE RECEIVED, VelaTel Global Communications, Inc. (“Borrower”) promises to pay to the order of Viking Retirement Assets Custodian, FBO Kenneth Hobbs IRA (“Lender”) the sum of Forty-Eight Thousand Four-Hundred Four Hundred Twenty-One and 05/100 U.S. Dollars (“Principal Amount”), together with interest at the rate of 10% per annum from the date hereof.

From the Principal Amount, Lender shall deduct prior to disbursement 5% of the Principal Amount as a loan set-up fee and as compensation for Lender’s due diligence in connection with this Note (“Holdback”). The Holdback shall nonetheless be included in the Principal Amount upon which interest shall accrue. The amount Lender shall disburse to Borrower is $46,000.00.

The entire Principal Amount, together with all interest accrued and unpaid, shall be due and payable on the first anniversary from the date hereof (“Maturity Date”). Borrower may prepay this Note in whole or in part prior to the Maturity Date without penalty. Any partial payments shall be applied first to costs of collection incident to any event of default, then to interest accrued but unpaid, then to reduction of the Principal Amount. All interest on this Note shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

Should this Note be placed in the hands of an attorney for collection, Borrower promises to pay such reasonable attorney fees and other costs of collection as Lender may incur, whether or not suit is brought. Borrower hereby waives demand, presentment, notice of dishonor, diligence in collecting, grace and notice of protest.

Contemporaneously with the execution of this Note, Borrower is maker on a Note with Isaac Organization, Inc. (“Isaac Note”). The Isaac Note provides that Borrower and Isaac agree to add a conversion feature granting Isaac an option to convert all or a portion of the balance of principal and interest due under the Isaac Note to shares of Borrower’s Series A common stock (“Shares”). The details of the conversion feature will be agreed to between the Parties when Borrower has additional authorized Shares available for issuance. Upon such amendment or substitution of the Isaac Note, Borrower agrees to amend or substitute this Note with a Note containing identical conversion features to the amended or substituted Isaac Note.

VELATEL GLOBAL COMMUNICATIONS, INC.

By: /s/ George Alvarez                                

George Alvarez, its Chief Executive Officer

EX-99

Exhibit 99.1

 

12526 High Bluff Drive, Suite 155

San Diego, CA 92130

February 29, 2012

To VelaTel Shareholders

Dear Shareholders:

VelaTel is today announcing several events that secure the 2012 budget needs for our current projects. We have secured approximately $7.7 million of cash funding commitments under promissory notes from investors. Our U.S. based independent contractors (former employees) have agreed to accept up to 100% of their remaining 2012 compensation in the form of our stock, saving us approximately $4.3 million in cash over the course of the year. This allows us to devote more of the working capital we have raised towards launching and expanding our networks.

Ten days ago we started the process to increase the authorized shares of our public stock from one billion to two billion. We have received SEC approval of our Preliminary Information Statement and will be mailing notice of our increase in the number of our shares to shareholders of record. The process will be complete in approximately three weeks, when we file a Certificate of Amendment to our Articles of Incorporation. We will use those shares, in combination with our cash financing commitments, to expand our networks and grow our subscriber base and revenue in accordance with our pro formas previously disclosed. We need to spend money on infrastructure in order to obtain those increased revenues. Fortunately, we are able to leverage a lot of equipment and services for relatively little money in down payment deposits, thanks to our favorable financing relationship with ZTE and our membership in the Global TD-LTE Initiative.

Summarized below and on the accompanying graphics timeline are the major milestones we expect to achieve during 2012. The approximate target dates and sequence of those milestones (our lawyers insist that I include a standard safe harbor disclaimer at the end of this letter, as these estimates are “forward looking”) are as follows:

February	· China’s Ministry of Industry and Information Technology grants approval of VN Tech’s hydrogen fuel cells for use in telecommunications base stations.
March	· Close the Croatia/Montenegro acquisition.
	· Finalize ZTE contracts for all equipment and services for Croatia and Montenegro as well as for Serbia.
	· Finalize ZTE’s requirements for financing equipment for the Sino Crossings fiber project and place the equipment order.
	· Finalize the wholly foreign owned enterprise (WFOE) that will act as the operating company for the New Generation Special Network (NGSN) transaction.
	· Finalize the service agreement between our existing WFOE and Aerostrong for the China Aerospace (CASC) transaction.

VelaTel Shareholders

February 29, 2012

Page 2

	· China Mobile and China Telecom approve VN Tech to conduct trial test sites in Heilongjiang/Harbin (China Mobile), Guangzhou and Beijing (China Telecom).
	· File the 2011 10-K annual report.
April	· Close the Serbia acquisition.
	· When NGSN and CASC obtain spectrum licenses, VelaTel places the equipment orders with ZTE for both projects.
May	· Equipment arrives for Croatia, Montenegro and Serbia and installation begins.
	· File the 2012 Q1 10-Q quarterly report, which will include revenue from subscriber ramp up in Peru, as well as legacy revenue from the consolidation of Croatia’s existing operations (pro-rated as of the closing date of our acquisition).
June	· Continue installing equipment for Croatia, Montenegro and Serbia.
	· Equipment arrives for Sino Crossings, begin installation.
July	· Complete installation for Croatia, Montenegro and Serbia and begin optimization and testing.
	· Continue installation of Sino Crossings fiber equipment.
	· Equipment arrives for NGSN and CASC projects and installation begins.
	· Assuming successful trial tests, China Mobile and China Telecom place orders with VN Tech for hydrogen fuel cells.
August	· Complete optimization and testing of Croatia, Montenegro and Serbia network, open stores and launch marketing campaign.
	· Complete installation of Sino Crossings fiber equipment, begin optimization and testing.
	· Continue installation of NGSN and CASC equipment.
	· Manufacture of hydrogen fuel cells to fill China Mobile and China Telecom orders.
	· File the 2012 Q2 10-Q quarterly report, which will include revenue for continued ramp up of Peru operations, plus a full quarter of legacy revenue from consolidation of Croatia operations, and most or all of a full quarter for Serbia operations.

VelaTel Shareholders

February 29, 2012

Page 3

September	· Launch Croatia, Montenegro and Serbia networks.
	· Complete optimization and testing of Sino Crossings fiber equipment.
	· Complete installation of NGSN and CASC equipment and begin optimization and testing.
	· Continue manufacture of hydrogen fuel cells to fill China Mobile and China Telecom orders.
October	· Launch Sino Crossings fiber network.
	· Complete optimization and testing of NGSN and CASC network.
	· Deliver hydrogen fuel cells to fill China Mobile and China Telecom orders.
November	· Launch NGSN and CASC networks.
	· File 2012 Q3 10-Q quarterly report, which will include any revenue realized prior to end of Q3 (September 30) for new networks launched by then.
December	· Operate seven networks, Peru, Croatia, Montenegro, Serbia, Sino Crossings, NGSN and CASC.

Although we are confident we can deliver these projects within existing budgets and resources, we also expect to raise additional funds through a recapitalization of the company’s equity structure. Our primary focus during 2012 will be on expanding our networks by adding infrastructure and growing subscriber base in all markets. By meeting our targets, the enterprise value of the company, as reflected by the stock price, will take care of itself.

Sincerely,

VelaTel Global Communications, Inc.

/s/ George Alvarez        

George Alvarez

Chief Executive Officer

Safe Harbor Statement

This letter contains forward-looking statements that involve risks and uncertainties. Actual results, events and performances could vary materially from those contemplated by these forward-looking statements. These statements involve known and unknown risks and uncertainties, which may cause the Company's actual results, expressed or implied, to differ materially from expected results. You should independently investigate and fully understand all risks before making an investment decision.