Memorandum of Compliance
Outlining Certain Changes Reflected in
Amendment No. 3 to Registration Statement on Form SB-2
iVoice Technology, Inc.
Set forth below are the responses of iVoice Technology, Inc. to the comments
from the staff of the Division of Corporation Finance (the "Staff") of the
Securities and Exchange Commission (the "SEC") with respect to Amendment No.2
to the Registration Statement on Form SB-2 of the Company, which was filed
with the SEC on April 7, 2005. For the Staff's convenience, the Staff's
comments have been stated below in their entirety, with the responses to a
particular comment set out immediately under the comment or comments. The
responses described below are contained in Amendment No. 3 to the
Registration Statement on Form SB-2 ("Amendment No. 3" or the "registration
statement"), which is being filed simultaneously herewith. Capitalized terms
used herein are intended to have the meanings ascribed to such terms in the
Amendment No. 3.
General
1. We note your response to our prior comment no. 23. Please file an
amended facing page to your registration statement to register your
additional shares. In addition, we note that the first paragraph of
the front cover of your prospectus states that up to 10,000,000 shares
will be distributed as well as your disclosure throughout your
prospectus that approximately 10,000,000 shares will be distributed.
Please reconcile or otherwise explain why your disclosure is
sufficient. We further note your 100,000-for-one stock split as
discussed on page 5. Please explain how your stock split is affected
by the additional shares registered. Please also advise whether you
plan to provide the distribution ratio prior to effectiveness as well
as why more specific numbers cannot be obtained once you have obtained
the holders' list.
An amended facing page has been filed with Amendment No.3. In addition,
disclosure has been modified on the cover page and pages 5, 6, 25, 53, 55, 57
and 58 of the registration statement to clarify that up to 10,050,000 shares
will be distributed. We do not believe our stock split is related to the
additional shares registered. We plan to provide the distribution ratio
(which we believe will be 1 share of the Company's Class A Common Stock for
each 984 shares of iVoice Class A Common Stock held by an iVoice stockholder,
rounded as described in the prospectus) when we obtain a holder's list closer
to the effective date of the registration statement. The final distribution
ratio will be included in the registration statement prior to effectiveness.
2. In light of the termination of your equity line of credit and your
convertible debentures, please advise us of your intent with respect to
your registration statement on Form SB-2, File No. 333-120608.
It is the Company's intention to enter into a new equity line of credit
arrangement pursuant to its existing commitment after the Distribution
occurs. If the Company enters into such arrangement it intends to amend and
update the referenced registration statement to provide for the resale of
the shares as it anticipates it will be required by final documentation to do.
If the Company does not obtain an equity line of credit after the
Distribution, it will withdraw the referenced registration statement.
Risk Factors
iVoice Technology has in the past and may in the future sell..., pp. 14-15
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3. We note your revised risk factor and your statement that as of the date
of your registration statement, you have no outstanding convertible
debentures. Immediately following your statement, you disclose your
$190,000 promissory note which is convertible to Class A common stock.
Please clarify your disclosure.
Disclosure has been modified on page 14 of the registration statement.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
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Results of Operations for the Year Ended December 31, 2004 as Compared with
the Year Ended December 31, 2003, pp. 31-32
4. Please elaborate on your disclosure regarding the $882,042 of interest
and financing costs. You state that such amount resulted primarily
from debt conversion discounts on the issuance of the $560,000 in
secured convertible debentures. However, as disclosed elsewhere in
your prospectus, fees with respect to the debentures were 10% of the
principal amount or $56,000. Please elaborate on the debt conversion
discounts. We further note that a significant portion of iVoice's
interest expense was allocated to you "as a result of the funding for
the loss from operations." Please quantify the allocated amount and
further explain your statement.
Disclosure has been modified on page 31 of the registration statement. In
addition, the Statements of Operations for December 31, 2004 and 2003 have
been expanded to detail the amounts of interest and financing costs.
Disclosure relating to debt conversion discounts has been deleted.
The Company has deleted wording relating to the debt conversion discounts as
it was inadvertently included in the discussion and does not apply.
In addition, the Statements of Operations has been expanded to break out
interest and finance costs.
Liquidity and Capital Resources, pp. 32-35
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5. Please disclose the price upon which Class B common stock will be
exchanged for your obligations under Mr. Mahoney's employment agreement.
Disclosure has been modified on page 34 of the registration statement.
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iVoice Technology's Management
Employment Agreements, pp. 45-47
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6. Please disclose the authority under which Mr. Mahoney would be required
to recuse himself from any discussions or vote regarding any potential
termination of him.
Disclosure has been modified on page 48 of the registration statement.
Federal Income Tax Consequences of the Distribution
7. Please consider including an example of the possible tax consequences
to assist in your disclosure.
We have reconsidered including an example of possible tax consequences and
continue to maintain that such an example would not be helpful and could
possibly be misleading and confusing to shareholders whose tax situations
differ from that presented in the example.
Changes in Accountants
8. Item 304(a)(1)(iv)(A) of Regulation S-B requires you to disclose
whether during the two most recent fiscal years and any subsequent
interim period through the date of dismissal there were any
disagreements, resolved or not, with the former accountant on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement(s), if
not resolved to the satisfaction of the former accountant, would have
caused it to make reference to the subject matter of the
disagreement(s) in connection with its reports. Please revise.
Disclosure has been modified, as requested, on page 62 of the registration
statement.
9. Please file a currently dated letter from your former accountants
stating whether they agree with your Item 304 disclosures, or the
extent to which they do not agree. Refer to Item 304(a)(3) of
Regulation S-B. The letter should be filed as Exhibit 16 to your
amended registration statement.
The letter has been filed as Exhibit 16 to the registration statement.
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