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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ______________________
Commission file number: 000-29341
IVOICE, INC
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 51-0471976
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
750 HIGHWAY 34
MATAWAN, NJ 07747
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (732) 441-7700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [_}
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated files, or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the exchange act.
Large Accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [_] Smaller reporting company [X]
(Do not check if a
smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
Number of shares of Class A, common stock,
No par value, outstanding as of May 14, 2008: 1,384,837,195
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IVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2008 AND 2007
TABLE OF CONTENTS
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet - March 31, 2008 and
December 31, 2007 2 - 3
Condensed Consolidated Statements of Operations - For the
three months ended March 31, 2008 and 2007 4
Condensed Consolidated Statement of Accumulated Other
Comprehensive Loss - For the three months ended
March 31, 2008 5
Condensed Consolidated Statements of Cash Flows - For the
three months ended March 31, 2008 and 2007 6 - 7
Notes to Condensed Consolidated Financial Statements 8 - 22
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 23 - 27
Item 4T. Controls and Procedures 27 - 28
PART II. OTHER INFORMATION
Item 5. Other Information 29
Item 6. Exhibits 29
1
IVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, December 31,
2008 2007
------------ ------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,017,962 $ 79,919
Marketable securities 10,803,841 10,814,954
Securities available for sale 729,759 676,272
Notes receivable - current portion 55,392 --
Accounts receivable, net of allowance for doubtful accounts $8,250
and $0, respectively 3,833 --
Prepaid expenses and other current assets 90,533 194,678
------------ ------------
Total current assets 16,701,320 11,765,823
------------ ------------
PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $217,817 and $214,721, respectively 10,531 11,285
------------ ------------
OTHER ASSETS
Convertible debentures receivable 871,649 852,447
Notes receivable 19,790 --
Intangible assets, net of accumulated amortization of $1,055 and
and $871, respectively 175,891 170,975
Deposits and other assets 6,666 6,666
------------ ------------
Total other assets 1,073,996 1,030,088
------------ ------------
TOTAL ASSETS $ 17,785,847 $ 12,807,196
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,887,412 $ 1,127,695
Short term loan payable 5,406,065 --
Convertible debentures payable, net of discounts of $788,911 and
$1,444,056, respectively 5,546,856 5,004,154
Derivative liability on convertible debentures 4,340,265 4,249,113
Due to related parties 516,097 176,293
Deferred revenues 16,535 --
------------ ------------
Total current liabilities 17,713,230 10,557,255
------------ ------------
COMMITMENTS AND CONTINGENCIES -- --
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY -- --
See accompanying notes to condensed consolidated financial statements.
2
IVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
March 31, December 31,
2008 2007
------------ ------------
(Unaudited) (Audited)
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value; authorized 1,000,000 shares;
no shares issued and outstanding -- --
Common stock, Class A, no par value; authorized 10,000,000,000 shares;
2008 - 943,761,765 shares issued; 943,758,765 shares outstanding
2007 - 420,674,318 shares issued; 420,671,318 shares outstanding 25,710,367 25,325,012
Common stock, Class B, $0.01 par value; authorized 50,000,000 shares;
2008 - 2,204,875 shares issued; 1,524,584 shares outstanding
2007 - 2,204,875 shares issued; 1,552,484 shares outstanding 15,246 15,525
Discount on investment in subsidiary (1,835,868) --
Additional paid-in capital 719,702 719,702
Accumulated other comprehensive loss (1,063,162) (1,096,000)
Accumulated deficit (23,444,868) (22,685,498)
Treasury stock, 3,000 Class A shares, at cost (28,800) (28,800)
------------ ------------
Total stockholders' equity 72,716 2,249,941
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,785,847 $ 12,807,196
============ ============
See accompanying notes to condensed consolidated financial statements.
3
IVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
2008 2007
------------ ------------
(restated)
SALES $ 37,736 $ 317,951
COST OF SALES -- --
------------ ------------
GROSS PROFIT 37,736 317,951
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GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses 346,818 198,768
Amortization of financing costs 43,438 43,437
Depreciation and amortization 1,735 3,467
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Total selling, general and administrative expenses 391,991 245,672
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INCOME (LOSS) FROM CONTINUING OPERATIONS (354,255) 72,279
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OTHER INCOME (EXPENSE)
Other income 185,119 75,006
Gain on revaluation of derivatives 1,174,661 1,345,187
Amortization of discount on debt (1,341,642) (912,236)
Interest expense (406,904) (129,517)
------------ ------------
Total other income (expense) (388,766) 378,440
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES (743,021) 450,719
PROVISION FOR INCOME TAXES -- --
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (743,021) 450,719
LOSS FROM DISCONTINUED OPERATIONS -- (375,956)
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARY NET INCOME (16,349) --
------------ ------------
NET INCOME (LOSS) APPLICABLE TO
COMMON SHARES $ (759,370) $ 74,763
============ ============
NET INCOME (LOSS) PER COMMON SHARE
Continuing Operations - Basic $ (0.00) $ 0.01
============ ============
Continuing Operations - Diluted $ (0.00) $ 0.00
============ ============
Discontinued Operations - Basic and diluted $ (0.00) $ (0.01)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 685,024,562 72,196,480
============ ============
Diluted 685,024,562 874,205,183
============ ============
See accompanying notes to condensed consolidated financial statements.
4
IVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
ACCUMULATED OTHER COMPREHENSIVE LOSS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
2008 2007
------------ ------------
Balance at beginning of the period $ (1,096,000) $ (376,559)
Unrealized gain (loss) on securities available for sale:
Unrealized gain (loss) arising during the period 32,838 (814,408)
Less: reclassification adjustment for losses included
in net loss -- 95,804
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Net change for the period 32,838 (718,604)
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Balance at end of the period $ (1,063,162) $ (1,095,163)
============ ============
See accompanying notes to condensed consolidated financial statements.
5
IVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
2008 2007
------------ ------------
(restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (759,370) $ 450,719
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of fixed assets and amortization of intangibles 1,618 3,467
Amortization of prepaid finance costs 43,438 43,437
Amortization of discount on debt conversion 833,013 912,236
Beneficial interest on issuance of stock 86,076 --
(Gain) loss on sales of securities available for sale (3,606) 95,803
Interest and dividends earned on investments (35,124) (32,346)
Non-cash consulting revenues earned -- (280,000)
Gain on revaluation of derivatives (311,198) (1,345,187)
Minority interest in consolidated subsidiary net income 16,349 --
Changes in certain assets and liabilities:
(Increase) decrease in prepaid expenses and other assets 10,263 (4,755)
Increase in accounts payable and accrued liabilities 226,484 124,744
(Decrease) in deferred revenues -- (12,500)
Increase in related party liabilities 23,230 14,510
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Total cash provided by (used in) operating activities 131,173 (29,872)
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Net loss from discontinued operations -- (375,956)
Net effect on cash flow from spin-off of discontinued operations -- 225,203
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Total cash provided by (used in) operating activities of discontinued operations -- (150,753)
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Total cash provided by (used in) operating activities 131,173 (180,625)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment -- (1,320)
Deferred costs of trademarks and other intangibles (2,020) (4,500)
Net proceeds from sales of securities available for sale 4,349 122,762
Investment in securities and loans in Thomas Pharmaceuticals -- (25,000)
Net redemption of principal and interest on marketable securities 11,113 (2,483)
Net effect on cash flow from consolidation of majority owned investment (612,637) --
------------ ------------
Total cash provided by (used in) investing activities from continuing operations (599,195) 89,459
------------ ------------
Adjustments to reconcile total cash provided by (used in) investing activities from
discontinued operations -- (3,247)
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Total cash provided by (used in) investing activities (599,195) 86,212
------------ ------------
See accompanying notes to condensed consolidated financial statements.
6
IVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31,
2008 2007
------------ ------------
(restated)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from short term borrowings 5,406,065 --
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Total cash provided by financing activities 5,406,065 --
------------ ------------
Adjustments to reconcile total cash provided by financing activities from
discontinued operations -- 154,000
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Total cash provided by financing activities 5,406,065 154,000
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NET INCREASE IN CASH AND CASH EQUIVALENTS 4,938,043 59,587
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 79,919 31,235
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CASH AND CASH EQUIVALENTS - END OF PERIOD $ 5,017,962 $ 90,822
============ ============
CASH PAID DURING THE PERIOD FOR:
Interest expense $ -- $ --
============ ============
Income taxes $ -- $ --
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SUPPLEMENTAL CASH FLOW INFORMATION:
On March 12, 2008, the Company acquired 144.444 shares of iVoice Technology,
Inc.'s Series A 10% Convertible Preferred Stock for $1,444,444. This
transaction was eliminated in consolidation.
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
For the three months ended March 31, 2008:
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a) The Company issued 441,087,447 shares of Class A common stock to YA Global
Investments, LP as repayment of principal on outstanding convertible
debentures, valued at $385,076.
b) The Company issued 82,000,000 shares of Class A Common upon the conversion
of 27,900 shares of Class B Common Stock.
c) The Company received 25,000,000 shares of Thomas Pharmaceuticals, Ltd. Class
A common stock on conversion of $2,000 of convertible debentures receivable.
d) The Company exchanged $101,303 of amounts due from SpeechSwitch, Inc. and
iVoice Technology, Inc. into Convertible Promissory Notes of the same
amount.
e) The Company received 71,000,000 shares of SpeechSwitch, Inc. Class A common
stock on conversion of $5,680 of convertible notes receivable.
f) The Company received 42,000,000 shares of iVoice Technology, Inc. Class A
common stock on conversion of $13,440 of convertible notes receivable. This
transaction was eliminated in consolidation.
For the three months ended March 31, 2007:
a) The Company issued 7,648,608 shares of Class A common stock to YA Global
Investments, LP. f/k/a Cornell Capital Partners as repayment of principal on
outstanding convertible debentures, valued at $95,000.
b) The Company received 4,000,000 shares of Class A common stock of Deep Field
Technologies as compensation for consulting services to be provided pursuant
to the terms of the Consulting Agreement entered into on February 13, 2007.
The value of the agreement was determined to be $1,120,000 and is being
amortized over six months ending August 13, 2007.
See accompanying notes to condensed consolidated financial statements.
7
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated financial statements
include the accounts of iVoice, Inc. (the "Company" or "iVoice") and its
wholly owned subsidiary, iVoice Innovations, Inc. and its majority owned
public company, iVoice Technology, Inc. These condensed consolidated
financial statements have been prepared in accordance with accounting
principles generally accepted in the United States for interim financial
information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting only
of normal recurring adjustments) considered necessary for a fair
presentation have been included. It is suggested that these condensed
consolidated financial statements be read in conjunction with the December
31, 2007 audited financial statements and the accompanying notes thereto.
Between February 11, 2004 and August 5, 2005, the Company completed the
transfer of certain business segments and their related assets and
liabilities to its four wholly owned subsidiaries Trey Resources, Inc,
SpeechSwitch, Inc, iVoice Technology, Inc and Deep Field Technologies, Inc.
These companies were then spun-off from iVoice as special dividends of the
shares of Class A common Stock of the respective companies to the iVoice
stockholders. Effective with the spin-off of the four subsidiaries,
SpeechSwitch, iVoice Technology, Trey Resources and Deep Field Technologies
now operate as independent publicly traded entities.
On March 12, 2008, the Company acquired 144.444 shares of iVoice
Technology, Inc.'s Series A 10% Convertible Preferred Stock for $1,444,444.
The holder of each share of Series A Preferred Stock shall have the right
to one vote for each share of Common Stock into which such Series A
Preferred Stock could then be converted, and with respect to such vote,
such holder shall have full voting rights and powers equal to the voting
rights and powers of the holders of Common Stock, and shall be entitled to
notice of any shareholders' meeting in accordance with the bylaws of the
Corporation, and shall be entitled to vote, together with holders of Common
Stock, with respect to any question upon which holders of Common Stock have
the right to vote. In addition, the holders of the Series A Preferred Stock
shall not have in the aggregate more than seventy percent (70%) of the
total votes of all classes of voting stock of the Corporation that would
vote at a meeting of shareholders. Based on this voting formula, it was
determined that iVoice, Inc. has voting rights equal to 70% of the voting
stock of iVoice Technology and as such, according to APB Opinion No. 18
"THE EQUITY METHOD OF ACCOUNTING FOR INVESTMENTS IN COMMON STOCK", iVoice,
Inc. is required to consolidate the results of operations of iVoice
Technology with those of iVoice and its other subsidiary.
The Company is publicly traded and is currently traded on the Over The
Counter Bulletin Board ("OTCBB") under the symbol "IVOI".
Principles of Consolidation
---------------------------
The accompanying condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary, iVoice
Innovations, Inc. and its majority owned public company, iVoice Technology,
Inc. ("iVoice Technology"). All significant inter-company transactions and
8
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
balances have been eliminated in consolidation.
Use of Estimates
----------------
The preparation of financial statements are in conformity with accounting
principles generally accepted in the United States of America which
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition
-------------------
The parent Company obtains its income primarily from the sales or licensing
of its patents and patent applications. Revenues for the sales of our
patents are recorded upon transfer of title. The patent revenues are
reported net of any broker fees or commissions.
The Company also is reporting revenues for iVoice Technology which derives
its revenues from the licensing of its software product and optional
customer support (maintenance) service. iVoice Technology's standard
license agreement provides for a one-time fee for use of the company's
product in perpetuity for each computer or CPU in which the software will
reside. IVoice Technology's software application is fully functional upon
delivery and implementation and does not require any significant
modification or alteration. iVoice Technology also offers customers an
optional annual software maintenance and support agreement for the
subsequent one-year periods.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company had
cash and cash equivalents at March 31, 2008 and December 31, 2007 of
$5,017,962 and $79,919, respectively.
Concentration of Credit Risk
----------------------------
The Company maintains cash balances at a financial institution that is
insured by the Federal Deposit Insurance Corporation up to $100,000. The
cash equivalents are not insured. The Company has uninsured cash balances
at March 31, 2008 and December 31, 2007 of $4,814,470 and $29,148,
respectively.
Marketable Securities
---------------------
Marketable securities consist of auction rate securities with auction reset
periods less than 12 months and are stated at fair value. The cost of
securities sold is based on specific identification. The Company had
marketable securities at March 31, 2008 and December 31, 2007 of
$10,803,841 and $10,814,954, respectively.
Securities Available-for-sale
-----------------------------
The Company has evaluated its investment policies consistent with FAS No.
115, Accounting for Certain Investments in Debt and Equity Securities, and
determined that all of its investment securities are to be classified as
available-for-sale. Available-for-sale securities are carried at fair
value, with the unrealized gains and losses reported in Stockholders'
Equity under the caption Accumulated Other
9
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
Comprehensive Income (Loss). The Company had securities available for sale
at March 31, 2008 and December 31, 2007 of $743,199 and $676,272,
respectively.
Fair Value of Financial Instruments
-----------------------------------
The Company estimates that the fair value of all financial instruments at
March 31, 2008 and December 31, 2007, as defined in FAS 107, does not
differ materially from the aggregate carrying values of its financial
instruments recorded in the accompanying condensed consolidated balance
sheet. The estimated fair value amounts have been determined by the Company
using available market information and appropriate valuation methodologies.
Considerable judgment is required in interpreting market data to develop
the estimates of fair value, and accordingly, the estimates are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange.
Earnings (Loss) Per Share
-------------------------
FAS No. 128, "Earnings Per Share" requires presentation of basic earnings
per share ("basic EPS") and diluted earnings per share ("diluted EPS").
The computation of basic EPS is computed by dividing income available to
common stockholders by the weighted average number of outstanding Common
shares during the period. Diluted earnings per share gives effect to all
dilutive potential Common shares outstanding during the period. The
computation of diluted EPS for the three months ended March 31, 2008 and
2007, does not assume conversion, exercise or contingent exercise of
securities that would have an anti-dilutive effect on earnings.
The shares used in the computations are as follows:
Three months ended
March 31,
------------------------------
2008 2007
------------ ------------
Net income (loss) from continuing operations $ (743,021) $ 450,719
============ ============
Net income (loss) from discontinued operations $ -- $ (375,956)
============ ============
Minority interest in net income $ (16,349) $ --
============ ============
Net income (loss) applicable to common shares $ (759,370) $ 74,763
============ ============
Weighted average shares outstanding - basic 685,024,562 72,196,480
============ ============
Weighted average shares outstanding - diluted 685,024,562 874,205,183
============ ============
Net income (loss) per common share outstanding:
Continuing operations - basic $ (0.00) $ 0.01
============ ============
Continuing operations - diluted $ (0.00) $ 0.00
============ ============
Discontinued operations - basic and diluted $ (0.00) $ (0.01)
============ ============
The Company had common stock equivalents of 23,456,703,002 and 802,008,703
at March 31, 2008 and 2007, respectively.
10
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
Comprehensive Income
--------------------
FAS No. 130, "Reporting Comprehensive Income", establishes standards for
the reporting and display of comprehensive income and its components in the
financial statements. The items of other comprehensive income that are
typically required to be displayed are foreign currency items, minimum
pension liability adjustments, and unrealized gains and losses on certain
investments in debt and equity securities. As of March 31, 2008 and 2007,
the Company has several items that represent comprehensive income, and
thus, has included a statement of comprehensive income.
Reclassification of accounts in the prior period financial statements
---------------------------------------------------------------------
The Company has reclassified certain accounts in the statements of
operations and statements of cash flows for the three months ended March
31, 2007 to reflect the Spin-off of Thomas Pharmaceuticals, Ltd. The
statements reflect the reclassification of these operations to below the
line as discontinued operations in accordance with the provisions of FAS
No. 144, "Accounting for the Impairment or Disposal of Long Lived Assets".
There has been no effect on net loss for the three months ended March 31,
2007.
Derivative Liabilities
----------------------
During April 2003, the Financial Accounting Standards Board issued SFAS
149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities." SFAS 149 amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities." The statement requires that
contracts with comparable characteristics be accounted for similarly and
clarifies when a derivative contains a financing component that warrants
special reporting in the statement of cash flows. SFAS 149 is effective for
contracts entered into or modified after September 30, 2003, except in
certain circumstances, and for hedging relationships designated after
September 30, 2003. The financial statements for the three months ended
March 31, 2008 include the recognition of the derivative liability on the
underlying securities issuable upon conversion of the YA Global Convertible
Debentures (f/k/a/ Cornell Convertible Debentures).
Recent Accounting Pronouncements
--------------------------------
In December 2007, the FASB issued SFAC No 141(R), "Business Combinations."
This statement provides new accounting guidance and disclosure requirements
for business combinations. SFAS No 141(R) is effective for business
combinations which occur in the first fiscal year beginning on or after
December 15, 2008.
In December 2007, the FASB finalized the provisions of the Emerging Issues
Task Force (EITF) Issue No. 07-1, "Accounting for Collaborative
Arrangements." This EITF Issue provides guidance and requires financial
statement disclosures for collaborative arrangements. EITF Issue No. 07-1
is effect for financial statements issued for fiscal years beginning after
December 15, 2008. The Company is currently assessing the effect of EITF
Issue No. 07-1 on its financial statements, but it is not expected to be
material.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"), which clarifies
the definition of fair value whenever another standard requires or permits
assets or liabilities to be measured at fair value. Specifically, the
standard clarifies that fair value should be based on the assumptions
market participants would use when pricing
11
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
the asset or liability, and establishes a fair value hierarchy that
prioritizes the information used to develop those assumptions. SFAS No. 157
does not expand the use of fair value to any new circumstances, and must be
applied on a prospective basis except in certain cases. The standard also
requires expanded financial statement disclosures about fair value
measurements, including disclosure of the methods used and the effect on
earnings.
In February 2008, FASB Staff Position ("FSP") FAS No. 157-2, "Effective
Date of FASB Statement No. 157" ("FSP No. 157-2") was issued. FSP No. 157-2
defers the effective date of SFAS No. 157 to fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years, for all
nonfinancial assets and liabilities, except those that are recognized or
disclosed at fair value in the financial statements on a recurring basis
(at least annually). Examples of items within the scope of FSP No. 157-2
are nonfinancial assets and nonfinancial liabilities initially measured at
fair value in a business combination (but not measured at fair value in
subsequent periods), and long-lived assets, such as property, plant and
equipment and intangible assets measured at fair value for an impairment
assessment under SFAS No. 144.
The partial adoption of SFAS No. 157 on January 1, 2008 with respect to
financial assets and financial liabilities recognized or disclosed at fair
value in the financial statements on a recurring basis did not have a
material impact on the Company's financial statements. See Note 3 for the
fair value measurement disclosures for these assets and liabilities. The
Company is in the process of analyzing the potential impact of SFAS No. 157
relating to its planned January 1, 2009 adoption of the remainder of the
standard.
On January 1, 2008, the Company adopted SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities, Including an
amendment of FASB Statement No. 115" ("SFAS No. 159"). SFAS No. 159 permits
entities to choose to measure many financial instruments and certain other
items at fair value, which are not otherwise currently required to be
measured at fair value. Under SFAS No. 159, the decision to measure items
at fair value is made at specified election dates on an
instrument-by-instrument basis and is irrevocable. Entities electing the
fair value option are required to recognize changes in fair value in
earnings and to expense upfront costs and fees associated with the item for
which the fair value option is elected. The new standard did not impact the
Company's Consolidated Financial Statements, as the Company did not elect
the fair value option for any instruments existing as of the adoption date.
However, the Company will evaluate the fair value measurement election with
respect to financial instruments the Company enters into in the future.
NOTE 2 - DISCONTINUED OPERATIONS
On November 21, 2007, iVoice completed the distribution of Thomas
Pharmaceuticals through the issuance of one share of Thomas Pharmaceuticals
Class A common stock for every share of iVoice Class A common stock held on
the record date of November 14, 2007.
The summarized results of operations for the three months ended March 31,
2007 are as follows:
Revenues $ 18,202
Cost of revenues 55,941
------------
Gross profit (37,738)
Operating expenses 302,838
------------
Operating loss (340,576)
Other expense 35,380
Provision for income taxes --
------------
Net loss $ (375,956)
============
NOTE 3 - FAIR VALUE MEASUREMENTS
On January 1, 2008, the Company adopted SFAS No. 157 "Fair Value
Measurements" ("SFAS 157"). SFAS 157 defines fair value, provides a
consistent framework for measuring fair value under Generally Accepted
Accounting Principles and expands fair value financial statement disclosure
requirements. SFAS 157's valuation techniques are based on observable and
unobservable inputs.
12
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
Observable inputs reflect readily obtainable data from independent sources,
while unobservable inputs reflect our market assumptions. SFAS 157
classifies these inputs into the following hierarchy:
Level 1 Inputs- Quoted prices for identical instruments in active
markets.
Level 2 Inputs- Quoted prices for similar instruments in active markets;
quoted prices for identical or similar instruments in markets that
are not active; and model-derived valuations whose inputs are
observable or whose significant value drivers are observable.
Level 3 Inputs- Instruments with primarily unobservable value drivers.
The following table represents the fair value hierarchy for those financial
assets and liabilities measured at fair value on a recurring basis as of
March 31, 2008.
Assets Level I Level II Level III Total
------------ ------------ ------------ ------------
Marketable securities $ 10,803,841 $ -- $ -- $ 10,803,841
Securites available for sale 729,759 -- -- 729,759
Notes receivable -- 75,182 -- 75,182
Convertible debentures -- 871,649 -- 871,649
------------ ------------ ------------ ------------
Total Assets $ 11,533,600 $ 946,831 $ -- $ 12,480,431
============ ============ ============ ============
Short term loans $ -- $ 5,406,065 $ -- $ 5,406,065
Convertible debentures -- 5,546,856 -- 5,546,856
Derivative liabilities -- 4,340,265 -- 4,340,265
------------ ------------ ------------ ------------
Total Liabilities $ -- $ 15,293,186 $ -- $ 15,293,186
============ ============ ============ ============
NOTE 4 - MARKETABLE SECURITIES
At various times since 2004, the Company had deposited proceeds from debt
financing into short-term securities with our Investment broker. During
2006 and 2007, these short-term securities were exchanged for auction rate
preferred shares ("ARPS") which provided greater returns on our
investments. ARPS have long-term maturity with the interest rate being
reset through Dutch auctions that are typically held every 7, 28 or 35
days. The securities trade at par and are callable at par on any interest
payment date at the option of the issuer. Interest is paid at the end of
each auction period. Our auction rate securities are all AAA rated. The
Company had marketable securities at March 31, 2008 and December 31, 2007
of $10,803,841 and $10,814,954, respectively.
NOTE 5 - SECURITIES AVAILABLE FOR SALE
On January 6, 2006 and April 27, 2006, iVoice, Inc. purchased an aggregate
of $550,000 of Thomas NJ Series B Convertible Preferred Stock. The initial
value of each share is $1,000 and is subject to adjustment for stock
dividends, combinations, splits, recapitalizations and the like. The
holders of these shares are entitled to receive dividends at a rate of 10%
per annum based on the initial value of the shares outstanding. Upon
liquidation, the holders of these shares will receive up to 125% of the
initial value of the shares plus accumulated and unpaid dividends, but
following the distribution to
13
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
any senior debt or senior equities. The holders of these shares may convert
their shares into Class A Common Stock at the price per share equal to
eighty percent (80%) of the lowest closing bid price of the Common Stock
for the five (5) trading days immediately preceding the conversion date,
but cannot be converted into more than 9.99% of the total Class A Common
Stock at that time of conversion. The holders of these shares shall have
one vote for each shares of Class A Common Stock into which each shares of
Series B Preferred Shares could be converted assuming a conversion price of
eighty percent (80%) of the lowest closing bid price of the Common Stock
for the five (5) trading days immediately preceding the record date, but
are limited to voting rights to no more than 9.99% of the total voting
rights of the aggregate of the Series B Preferred Stock, Class A Common
Stock and Class B Common Stock shareholders. The accounts are valued at the
initial stated value plus earned dividends. At March 31, 2008 and December
31, 2007, the total balance is $665,977 and $652,264, respectively.
On February 13, 2007, the Company received 4,000,000 shares for Deep Field
Technologies Class A Common Stock as compensation pursuant to the
Consulting Agreement with Deep Field Technologies, valued at $1,120,000.
The Company provided "general corporate finance advisory and other similar
consulting services" for a period of six (6) months from the date of the
agreement. At March 31, 2008, the book value of these securities is
$1,120,000 and the market value is $4,000. The cumulative unrealized loss
of $1,116,000 is included in the Other Comprehensive Income (Loss).
On January 15, 2008, the Company received 25,000,000 shares of Thomas
Pharmaceuticals, Ltd. Class A Common Stock upon conversion of $2,000 of 10%
Secured Convertible Debentures receivable dated January 6, 2006. During the
three months ended March 31, 2008, the Company sold 9,517,923 for a net
proceeds of $4,367. The book value of the remaining shares is $1,239 and
the market value is $3,096. The unrealized gain of $1,857 is included in
the Other Comprehensive Income (Loss).
On March 10, 2008, the Company received 71,000,000 shares of SpeechSwitch,
Inc. Class A Common Stock upon conversion of $5,680 of Convertible
Promissory Note receivable dated March 5, 2008. The market value is $7,100
at March 31, 2008. The unrealized gain of $1,420 is included in the Other
Comprehensive Income (Loss).
On March 10, 2008 and March 18, 2008, the Company received an aggregate of
42,000,000 shares of iVoice Technology, Inc. Class A Common Stock upon
conversion of $13,440 of Convertible Promissory Note receivable dated March
5, 2008. The market value is $63,000 at March 31, 2008. The unrealized gain
of $49,560 is included in the Other Comprehensive Income (Loss).
Cash receipts from the sales of the securities is deposited in a short term
money market funds at our broker. Periodically these funds are transferred
to our operating cash account. At March 31, 2008, the unremitted balance in
the money market fund at our broker was $25.
As of March 31, 2008, the aggregate book value of these securities was
$1,792,921, the market value was $729,759 and the cumulative unrealized
loss was $1,063,162.
14
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
NOTE 6 -PROMISSORY NOTES RECEIVABLE
On February 4, 2008, iVoice Technology advanced $30,000 to Atire
Technologies, Inc., an acquisition candidate, in the form of a Promissory
Note, due February 4, 2010, at an interest of 8% per annum. The terms of
the note provided deferred payments of interest only starting on July 4,
2008 and principal and interest payments starting on October 4, 2008. As of
March 31, 2008, the balance due on the note is $30,000 plus accrued
interest of $388.
On March 5, 2008, the Company converted its outstanding accounts due from
SpeechSwitch, Inc. for unpaid administrative services in the amount of
$50,652 into a convertible promissory note at the rate of prime plus 1
percent per annum. Additional amounts may be added to this note based on
any unpaid administrative services, and will accrue interest at the above
specified rate from date of advance until paid. The principal and interest
shall be due and payable as follows: (a) interest shall accrue monthly on
the unpaid balance and shall be paid annually, and (b) principal shall be
payable on demand. On March 10, 2008, the Company received 71,000,000
shares of SpeechSwitch, Inc. Class A Common Stock upon conversion of $5,680
of Promissory Notes Receivable. At March 31, 2008, the balance of the note
is $45,182 which includes accrued interest of $210.
NOTE 7 - CONVERTIBLE DEBENTURES RECEIVABLE
During 2006 and 2007, the Company purchased an aggregate of $710,000 of
Thomas NJ Secured Convertible Debentures. The holders of these debentures
are entitled to receive interest of 10%, compounded quarterly. Thomas NJ
can redeem a portion or all amounts outstanding under the Convertible
Debentures at any time upon thirty (30) business days advanced written
notice. The redemption price shall be equal to one hundred twenty-five
percent (125%) multiplied by the portion of the principal sum being
redeemed, plus any accrued and unpaid interest. The Company may, at its
discretion, convert the outstanding principal and accrued interest, in
whole or in part, into a number of shares of Thomas Pharmaceuticals Class A
Common Stock at the price per share equal to eighty percent (80%) of the
lowest closing bid price of the Common Stock for the five (5) trading days
immediately preceding the conversion date, but they cannot be converted
into more than 9.99% of the total Class A Common Stock at that time of
conversion. During the three months ended March 31, 2008, the Company
converted $2,000 of principal into 25,000,000 shares of Thomas
Pharmaceuticals Class A Common Stock at a conversion price of $.00008. The
debentures are valued at the principal value plus accumulated interest. At
March 31, 2008, the total balance is $871,649, which includes accrued
interest.
NOTE 8 -CONSOLIDATION OF MAJORITY OWNED SUBSIDIARY AND MINORITY INTEREST
On March 12, 2008, the Company acquired 144.444 shares of iVoice
Technology's Series A 10% Convertible Preferred Stock for $1,444,444. The
holder of each share of Series A Preferred Stock shall have the right to
one vote for each share of Common Stock into which such Series A Preferred
Stock could then be converted, and with respect to such vote, such holder
shall have full voting rights and powers equal to the voting rights and
powers of the holders of Common Stock, and shall be entitled to notice of
any shareholders' meeting in accordance with the bylaws of the Corporation,
and shall be entitled to vote, together with holders of Common Stock, with
respect to any question upon
15
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
which holders of Common Stock have the right to vote. In addition, the
holders of the Series A Preferred Stock shall not have in the aggregate
more than seventy percent (70%) of the total votes of all classes of voting
stock of the Corporation that would vote at a meeting of shareholders.
Based on this voting formula, it was determined that iVoice, Inc. has
voting rights equal to 70% of the voting stock of iVoice Technology and as
such, according to APB Opinion No. 18 "THE EQUITY METHOD OF ACCOUNTING FOR
INVESTMENTS IN COMMON STOCK", iVoice, Inc. is required to consolidate the
results of operations of iVoice Technology with those of iVoice and its
other subsidiary. iVoice Technology had a deficit net worth prior to
consolidation with iVoice and as such, iVoice was required to record a
discount on investment in subsidiary in the amount of $1,822,428 in
consolidation. iVoice is also required to recognize the minority
shareholders' interest in net income equal to 30% of the net profit of
iVoice Technology. For the three months ended March 31, 2008, the minority
shareholders' interest in net income is $16,349 and at March 31, 2008, the
discount on investment in subsidiary was $1,835,868.
NOTE 9 - SHORT TERM LOANS PAYABLE
On March 7, 2008 the Company received proceeds from an Express Creditline
Loan from Smith Barney that is collateralized by the proceeds available
from the sales of the auction rate preferred shares ("ARPS") discussed in
Note 3. The interest rate charged on the loan is tied to the dividend rates
earned on the ARPSs. When an ARPS is sold, a portion of the proceeds is
applied to pay down the short term loan and the balance is wired to the
Company's savings account. As of March 31, 2008 the remaining balance of
the loan is $5,406,065, which includes accrued interest of $6,065.
NOTE 10 - CONVERTIBLE DEBENTURES PAYABLE
On May 11, 2006 the Company issued to YA Global a $5,544,110 secured
convertible debenture due on May 11, 2008 bearing interest of 7.5% (see
Note 15). This debenture replaced a promissory note with a principal
balance of $5,000,000 and $544,110 of accrued interest due to YA Global
from June 15, 2005. During the three months ended March 31, 2008, we issued
441,087,447 shares of Class A common stock, with a value of $385,076, as
repayment of $299,000 of principal. The difference of $86,076 is charged to
the Statement of Operations as beneficial interest. As of March 31, 2008,
the unpaid principal balance on the secured convertible debenture is
$4,899,210 plus accrued interest of $756,812.
On May 25, 2006, the Company issued to YA Global a $1,250,000 secured
convertible debenture due on May 25, 2008 bearing interest of 7.5% per
annum pursuant to a Securities Purchase Agreement entered into between us
and YA Global. On February 21, 2008, this debenture was amended to extend
the maturity date until May 25, 2010 and to raise the interest rate to 15%
per annum. As of March 31, 2008, the unpaid principal balance on the
secured convertible debenture is $1,250,000 plus accrued interest of
$182,245.
On October 31, 2007, the Company executed a waiver agreement with YA Global
that provides that if the Company reduces the debt to $141,523 that YA
Global will waive its rights to any future payments and will consider the
account paid in full. This waiver agreement was executed to compensate the
Company for losses incurred on the sales of the Corporate Strategies
investments.
16
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
On April 16, 2007, iVoice Technology issued a Secured Convertible Debenture
dated March 30, 2007 to YA Global Investments for the sum of $700,000 in
exchange for a previously issued note payable for the same amount. The
Debenture has a term of three years, and pays interest at the rate of 5%
per annum. YA Global has the right to convert a portion or the entire
outstanding principal into iVoice Technology's Class A Common Stock at a
Conversion Price equal to eighty percent (80%) of the lowest closing Bid
Price of the Common Stock during the five (5) trading days immediately
preceding the Conversion Date. YA Global may not convert the Debenture into
shares of Class A Common Stock if such conversion would result in YA Global
beneficially owning in excess of 4.9% of the then issued and outstanding
shares of Class A Common Stock. On March 14, 2008, iVoice Technology and YA
Global Investments agreed that iVoice Technology would redeem all amounts
outstanding under the Debenture, except for the $186,557 of the outstanding
interest remaining on the original notes payable that were originally
exchanged for the Debenture. The amount redeemed was $691,021, consisting
of the remaining balance of the Debenture of $572,815, accrued interest of
$32,284, and a redemption premium of $85,922. The Debenture was amended to
change amount to $186,557 with a due date of March 14, 2009. The Debenture
shall accrue interest at the rate of 15% per annum, and shall be
convertible at a conversion price equal to 70% of the lowest closing bid
price of iVoice Technology's common stock during the 30 trading days
immediately preceding the conversion date. No conversions can be made prior
to November 1, 2008. As of March 31, 2008, the outstanding balance on the
Convertible Debenture was $186,557.
The aggregate principal value of these four debentures at March 31, 2008 is
$6,335,767. This amount is shown on the balance sheet net of the
unamortized portion of the discount on conversion of $788,911. This
discount is being amortized over the life of the debenture and is being
amortized as debt discount on the statement of operations.
NOTE 11 - DERIVATIVE LIABILITY
In accordance with SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities" and EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock",
the conversion feature associated with the YA Global Secured Convertible
Debentures represents embedded derivatives. As such, the Company had
recognized embedded derivatives in the amount of $6,908,078 as a derivative
liability in the accompanying condensed consolidated balance sheet, and it
is now measured at its estimated fair value of $4,340,265.
The estimated fair value of the embedded derivative has been calculated
based on a Black-Scholes pricing model using the following assumptions:
At Issue At 3/31/08
-------- ----------
Fair market value of stock $0.096 - $0.125 $ 0.00050
Exercise price $0.086 - $0.113 $ 0.00045
Dividend yield 0.00% 0.00%
Risk free interest rate 5.47% 5.47%
Expected volatility 195.36% - 196.54% 242.11%
Expected life 2.00 years 2 to 26 months
17
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
On the iVoice Technology debentures, iVoice Technology determined that the
conversion feature met the criteria of an embedded derivative, and
therefore the conversion feature of their Debenture needed to be bifurcated
and accounted for as a derivative. The fair value of the embedded
conversion was estimated at the date of issuance using the Black-Scholes
model with the following assumptions: risk free interest rate: 5.6%;
expected dividend yield: 0%: expected life: 3 years; and volatility:
383.29%. The conversion feature of the debenture was recorded as a
derivative liability. As such, in March 2007 the Company recorded the
conversion options as a liability, recorded a debt discount of $700,000,
and charged Loss on Valuation of Derivative for $492,403, resulting
primarily from calculation of the conversion price. On March 14, 2008, a
substantial portion of this debenture was redeemed and as of March 31,
2008, the estimated fair value is $397,190.
Changes in the fair value of the embedded derivatives are calculated at
each reporting period and recorded in gain on revaluation of derivatives in
the condensed consolidated statements of operations. During the three
months ended March 31, 2008, there was a change in the fair value of the
embedded derivatives, which resulted in a gain of $1,174,661.
In accordance with SFAS 133, SFAS 150, "Accounting for Certain Financials
Instruments With Characteristics of Both Liabilities and Equity" and EITF
00-19, the fair market value of the derivatives and warrants are bifurcated
from the convertible debentures as a debt discount. The debt discount of is
being amortized over the life of the convertible debentures. Amortization
expense on the debt discount on the convertible debentures for the three
months ended March 31, 2008 was $1,341,642, which includes the acceleration
of the debt discount on the redeemed debenture in iVoice Technology.
NOTE 12 - RELATED PARTY ACCOUNTS
From time to time, the Company has entered into various loan agreements and
employment agreements with Jerome R. Mahoney, President and Chief Executive
Officer of the Company. As of March 31, 2008, the balances due to Mr.
Mahoney where: a) loan of $2,295; b) accrued interest of $5,082; and c)
deferred compensation is $192,146. The loan accrues interest at 9.5% per
year on the unpaid balance. Balances due to Mr. Mahoney are convertible
into either (i) one Class B common stock share of iVoice, Inc., $.01 par
value, for each dollar owed, or (ii) the number of Class A common stock
shares of iVoice, Inc. calculated by dividing (x) the sum of the principal
and interest that the Note holder has decided to prepay by (y) fifty
percent (50%) of the lowest issue price of Series A common stock since the
first advance of funds under this Note, whichever the Note holder chooses,
or (iii) payment of the principal of this Note, before any repayment of
interest. The Board of Directors of the Company maintains control over the
issuance of shares and may decline the request for conversion of the
repayment into shares of the Company.
In August 2005, iVoice Technology had assumed an outstanding promissory
demand note in the amount of $190,000 payable to Jerome Mahoney,
Non-Executive Chairman of the Board of iVoice Technology. The note bears
interest at the rate of prime plus 2.0% per annum on the unpaid balance
until paid. Under the terms of the Promissory Note, at the option of the
Note holder, principal and interest can be converted into either (i) one
share of Class B Common Stock of iVoice Technology, Inc., par value $.01,
for each dollar owed, (ii) the number of shares of Class A Common Stock of
18
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
iVoice Technology, Inc. calculated by dividing (x) the sum of the principal
and interest that the Note holder has requested to have prepaid by (y)
eighty percent (80%) of the lowest issue price of Class A Common Stock
since the first advance of funds under this Note, or (iii) payment of the
principal of this Note, before any repayment of interest. The Board of
Directors of iVoice Technology maintains control over the issuance of
shares and may decline the request for conversion of the repayment into
shares of the iVoice Technology. As of March 31, 2008, the outstanding
balance was $141,708, plus accrued interest of $68,590.
On August 1, 2004, iVoice Technology entered into a five-year employment
agreement with Jerome Mahoney to serve as Non-Executive Chairman of the
Board of Directors of iVoice Technology with a base salary of $85,000 for
the first year with annual increases based on the Consumer Price Index. A
portion of Mr. Mahoney's compensation shall be deferred until such time
that the Board of Directors of iVoice Technology determines that it has
sufficient financial resources to pay his compensation in cash. As of March
31, 2008, iVoice Technology has recorded $174,866 of deferred compensation
due to Mr. Mahoney. The Board of iVoice Technology has the option to pay
Mr. Mahoney's compensation in the form of Class B Common Stock. Pursuant to
the terms of the Class B Common Stock, a holder of Class B Common Stock has
the right to convert each share of Class B Common Stock into the number of
shares of Class A Common Stock determined by dividing the number of Class B
Common Stock being converted by a 20% discount of the lowest price for
which the Company had ever issued its Class A Common Stock. On August 30,
2006 Mr. Mahoney was elected to the position of President and Chief
Executive Officer of iVoice Technology and no longer serves as
Non-Executive Chairman of the Board of iVoice Technology.
On March 5, 2008, the Company converted its outstanding accounts due from
iVoice Technology, Inc. for unpaid administrative services in the amount of
$50,652 into a convertible promissory note at the rate of prime plus 1
percent per annum. Additional amounts may be added to this note based on
any unpaid administrative services, and will accrue interest at the above
specified rate from date of advance until paid. The principal and interest
shall be due and payable as follows: (a) interest shall accrue monthly on
the unpaid balance and shall be paid annually, and (b) principal shall be
payable on demand. On March 10, 2008 and March 18, 2008, the Company
received an aggregate of 42,000,000 shares of iVoice Technology, Inc. Class
A Common Stock upon conversion of $13,440 of Promissory Notes Receivable.
At March 31, 2008, the balance of the note is $37,403 which includes
accrued interest of $191.
On March 11, 2008, the Company entered into a Stock Purchase Agreement with
iVoice Technology, Inc. for the purchase of 144.444 shares of iVoice
Technology's Series A 10% Secured Convertible Preferred Stock valued at
$1,444,444. The holders of the stock are entitled to receive dividends at a
rate 10% per annum and will have voting rights for each share of Common
Stock that the Series A Preferred Stock would be converted into using the
applicable conversion price. The holders of the Series A Preferred Stock
shall not have in the aggregate more than 70% of the total votes of all
classes of voting stock. The Company also received $144,444 in funding fees
on the transaction.
On March 11, 2008, the Company received a warrant to purchase common stock
of iVoice Technology, Inc. pursuant to the terms of the Stock Purchase
Agreement. The warrant provides that the Company can purchase shares of
Class A common stock at a price calculated by dividing
19
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
$144,444 by the lowest price that iVoice Technology has ever issued its
Class A common stock, provided, that in no event shall the holder be
entitled to exercise this Warrant for a number of shares which, upon giving
effect to such exercise, would cause the aggregate number of shares of
Common Stock beneficially owned by the holder and its affiliates to exceed
9.99% of the outstanding shares of the Common Stock following such
exercise.
NOTE 13 - COMMON STOCK
Pursuant to the Company's certificate of incorporation, as amended, iVoice,
Inc. is authorized to issue 1,000,000 shares of preferred stock, par value
of $1.00 per share, 10,000,000,000 shares of Class A common stock, no par
value per share, and 50,000,000 shares of Class B common stock, par value
$.01 per share.
a) Preferred Stock
---------------
Preferred Stock consists of 1,000,000 shares of authorized preferred
stock with $1.00 par value. As of March 31, 2008, no shares were issued
or outstanding.
b) Class A Common Stock
--------------------
Class A common stock consists of 10,000,000,000 shares of authorized
common stock with no par value. As of March 31, 2008, 943,761,765
shares were issued and 943,758,765 shares were outstanding.
Each holder of Class A common stock is entitled to one vote for each
share held of record. Holders of our Class A common stock have no
preemptive, subscription, conversion, or redemption rights. Upon
liquidation, dissolution or winding-up, the holders of Class A common
stock are entitled to receive our net assets pro rata. Each holder of
Class A common stock is entitled to receive ratably any dividends
declared by our board of directors out of funds legally available for
the payment of dividends. The Company has not paid any dividends on its
common stock and management does not contemplate doing so in the
foreseeable future. The Company anticipates that any earnings generated
from operations will be used to finance growth.
For the three months ended March 31, 2008, the Company had the
following transactions in its Class A Common Stock:
1) The Company issued 441,087,447 shares of Class A common stock to YA
Global, valued at $385,076 as repayment of principal on an
outstanding convertible debenture valued at $299,000.
2) The Company issued 82,000,000 shares of Class A common stock upon
conversion of 27,900 shares of Class B common stock, pursuant to
the provisions of Class B common stock.
c) Class B Common Stock
--------------------
Class B Common Stock consists of 50,000,000 shares of authorized common
stock with $.01 par value. Each share of Class B common stock is
convertible into Class A common stock calculated by dividing the number
of Class B shares being converted by fifty percent (50%) of the lowest
20
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
price that the Company had previously issued its Class A common stock
since the Class B shares were issued. Each holder of Class B common
stock has voting rights equal to the number of Class A shares that
would be issued upon the conversion of the Class B shares, had all of
the outstanding Class B shares been converted on the record date used
for purposes of determining which shareholders would vote. Holders of
Class B common stock are entitled to receive dividends in the same
proportion as the Class B common stock conversion and voting rights
have to Class A common stock. Jerome R. Mahoney is the sole owner of
the Class B common stock. As of March 31, 2008, there are 2,204,875
shares issued and 1,524,584 shares outstanding.
Pursuant to the conversion terms of the Class B Common stock, on March
31, 2008, the 1,524,584 outstanding shares of Class B common stock are
convertible into 5,081,946,667 shares of Class A common stock.
d) Treasury Stock
--------------
On February 11, 2002, the Company repurchased 600,000 shares of Class A
common stock from a previous employee for $28,800. Following the
reverse stock split on April 27, 2006, the shares were converted in
3,000 shares.
NOTE 14 - GOING CONCERN
The Company has incurred substantial accumulated deficits, has an
obligation to deliver an indeterminable amount of common stock due on
derivative liabilities and has completed the process of spinning out the
five operating subsidiaries. These issues raise substantial doubt about the
Company's ability to continue as a going concern. Therefore, recoverability
of a major portion of the recorded asset amounts shown in the accompanying
balance sheets is dependent upon continued operations of the Company, which
in turn, is dependent upon the Company's ability to raise capital and/or
generate positive cash flow from operations.
Since the spinoff of the three operating subsidiaries in 2005, the Company
has transitioned itself into a company focused on the development and
licensing of proprietary technologies. Following the sales of patents the
Lamson Holdings LLC, the Company has 9 remaining patent applications, which
have been awarded or are pending. These applications include various
versions of the "Wirelessly Loaded Speaking Medicine Container", which is
also filed internationally, the "Voice Activated Voice Operated Copier",
the "Voice Activated Voice Operational Universal Remote Control", "Wireless
Methodology for Talking Consumer Products" which is also filed
internationally, "Product Identifier and Receive Spoken Instructions" and
"Traffic Signal System with Countdown Signaling with Advertising and/or
News Message".
The Company also continues to search for potential merger candidates with
or without compatible technology and products, which management feels may
make financing more appealing to potential investors.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the
Company cannot continue in existence.
21
IVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2008 AND 2007
NOTE 15 - SUBSEQUENT EVENTS
Between April 4, 2008 and May 8, 2008, the Company issued an aggregate of
441,078,430 shares of Class A common stock to YA Global Investments as
repayment of principal on an outstanding convertible debenture, valued at
$102,700.
On May 8, 2008, the Company issued 130,000,000 shares of Class A common
stock upon conversion of 7,800 shares of Class B common stock, pursuant to
the provisions of Class B common stock.
On May 12, 2008, the Company paid down $4,796,510 of amounts due on the
principal balance of YA Global Convertible Debenture dated May 11, 2006.
On May 13, 2008, the Company received an additional $260,000 from
borrowings on the Smith Barney Express Creditline Loan account. The
proceeds will be set aside to provide liquidity for operations.
22
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Some information included in this Quarterly Report on Form 10-Q and other
materials filed by us with the Securities and Exchange Commission, or the SEC,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Such forward-looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future and, accordingly,
such results may differ materially from those expressed in any forward-looking
statements made by or on behalf of us. For a discussion of material risks and
uncertainties that the Company faces, see the discussion in the Form 10-KSB for
the fiscal year ended December 31, 2007 entitled "Risk Factors". This discussion
and analysis of financial condition and plan of operations should be read in
conjunction with our Condensed Consolidated Financial Statements included
herein.
OVERVIEW
- --------
Since 2005, the Company has transitioned itself into a company focused on the
development and licensing of proprietary technologies. As an example, in March
2006 we sold four of our voice activated product and item locator patents to
Lamson Holdings LLC for the net proceeds of $136,000 and on December 6, 2007 we
were issued Patent 7,305,344 for a patent for Methodology for Talking Consumer
Products with Voice Instructions via Wireless Technology. On January 8, 2008,
the Company entered into a Technology Transfer Agreement with GlynnTech to
market its recently issued patent. GlynnTech will provide assistance in
developing a DVD of the patents capabilities. GlynnTech will also be obligated
to solicit licensing opportunities and/or acquisition of the patent.
The Company also continues to search for potential merger candidates with or
without compatible technology and products, which management feels may make
financing more appealing to potential investors.
On March 12, 2008, the Company acquired 144.444 shares of iVoice Technology,
Inc.'s Series A 10% Convertible Preferred Stock for $1,444,444. iVoice
Technology, Inc. will use the proceeds from the sale of the stock to fund the
repayment of convertible debt to YA Global Investments and to fund their
acquisition programs. The holder of each share of iVoice Technology's Series A
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Series A Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, and shall be
entitled to notice of any shareholders' meeting in accordance with the bylaws of
the Corporation, and shall be entitled to vote, together with holders of Common
Stock, with respect to any question upon which holders of Common Stock have the
right to vote. In addition, the holders of the Series A Preferred Stock shall
not have in the aggregate more than seventy percent (70%) of the total votes of
all classes of voting stock of the Corporation that would vote at a meeting of
shareholders. Based on this voting formula, it was determined that iVoice, Inc.
has voting rights equal to 70% of the voting stock of iVoice Technology and as
such, according to APB Opinion No. 18 "THE EQUITY METHOD OF ACCOUNTING FOR
INVESTMENTS IN COMMON STOCK", iVoice, Inc. is required to consolidate the
results of operations of iVoice Technology with those of iVoice and its other
subsidiary as of March 31, 2008.
23
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED MARCH 31, 2008 COMPARED TO THREE MONTHS ENDED MARCH 31, 2007
Total sales for the three months ended March 31, 2008 and 2007 were $37,736 and
$317,951, respectively. Sales in 2008 include $13,073 of maintenance revenues of
iVoice Technology and $24,663 of administrative services agreements. Sales in
2007 include $280,000 of consulting revenues earned on the Deep Field agreement
and revenues from the administrative services agreements of $37,951. Total
operating expenses for the three months ended March 31, 2008 and 2007, were
$391,991 and $245,672, respectively, for an increase of $146,319. Of these
increases, $81,694 is attributable to the expenses of iVoice Technology and the
remaining increase of $64,625 is primarily comprised of increase in professional
fees of $51,897 and increases in overhead and office expenses of the parent of
$12,728.
Total other income (expense) for the three months ended March 31, 2008 was an
expense of $388,766. This total was primarily comprised of $1,341,642
amortization of the discount on debt and $406,904 of accrued interest expense on
the YA Global notes and other debt which is offset by $1,174,661 gain on
revaluation of the derivatives and $185,119 of interest and other income. Total
other income (expense) for the three months ended March 31, 2007 was an income
of $378,440. This total was primarily comprised of $1,345,187 gain on
revaluation of the derivatives and $75,006 of interest income on the cash
accounts. These are offset by $912,236 amortization of the discount on debt and
$129,517 of accrued interest expense on the YA Global notes and other debt.
Net loss from continuing operations for the three months ending March 31, 2008
was $743,021. The net income from continuing operations for the three months
ending March 31, 2007 was $450,719. The increase in net loss of $1,193,740 was
primarily due to the lower sales, increase operating expenses and increase other
expenses of $767,206, as the result of the factors discussed above.
Net loss from discontinued operations for the three months ended March 31, 2007
was $375,956. This operation had been experiencing reduced product sales and had
curtailed spending to better manager their available resources.
As required by APB Opinion No. 18, the Company recorded the minority
shareholders' interest in net income of iVoice Technology for the three months
ended March 31, 2008, of $16,349.
The total net loss for the three months ended March 31, 2008 was $759,370 as
compared to the net income of $74,763 for the three months ended March 31, 2007.
The increase in net loss of $834,133 was the result of the factors discussed
above.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
We are currently seeking additional operating income opportunities through
potential acquisitions or investments. Such acquisitions or investments may
consume cash reserves or require additional cash or equity. Our working capital
and additional funding requirements will depend upon numerous factors,
including: (i) strategic acquisitions or investments; (ii) an increase to
current Company personnel; (iii) the level of resources that we devote to sales
and marketing capabilities; (iv) technological advances; and (v) the activities
of competitors.
During the three months ended March 31, 2008 and the year ended December 31,
2007, we had incurred net losses from continuing operations of $743,021 and
$2,383,268, respectively. These matters raise doubt about
24
our ability to generate cash flows internally through our current operating
activities sufficient enough that its existence can be sustained without the
need for external financing. Our primary need for cash is to fund our ongoing
operations until such time that we can identify sales opportunities for new
products or identify strategic acquisitions that generate enough revenue to fund
operations. There can be no assurance as to the receipt or timing of revenues
from operations. We anticipate that our operations will require at least
$700,000 for the next 12 months. These expenses are anticipated to consist of
the following: payroll and benefits of $400,000, occupancy costs of $135,000,
professional fees of $60,000, business insurance of $70,000 and miscellaneous
administrative expenses of $35,000. We expect to fund these obligations from
cash on hand or otherwise from the sale of equity or debt securities. We believe
that we have sufficient funds on-hand to fund our operations for at least 24
months.
At various times since 2004, the Company had deposited proceeds from debt
financing into short-term securities with our Investment broker. During 2006 and
2007, these short-term securities were exchanged for auction rate preferred
shares ("ARPS") which provided greater returns on our investments. ARPS have
long-term maturity with the interest rate being reset through Dutch auctions
that are typically held every 7, 28 or 35 days. The securities trade at par and
are callable at par on any interest payment date at the option of the issuer.
Interest is paid at the end of each auction period. Our auction rate securities
are all AAA rated. Until February 2008, the auction rate securities market was
highly liquid. Starting the week of February 11, 2008, a substantial number of
auctions "failed," meaning that there was not enough demand to sell the entire
issue at auction. The immediate effect of a failed auction is that holders
cannot sell the securities and the interest or dividend rate on the security
generally resets to a "penalty" rate. In the case of a failed auction, the
auction rate security is deemed not currently liquid and in the event we need to
access these funds, we will not be able to do so without a loss of principal,
unless a future auction on these investments is successful. We do not intend to
hold these securities to maturity, but rather to use the interest rate reset
feature to provide the opportunity to maximize returns while preserving
liquidity. Because of the failed Dutch auctions, the Company was unable to sell
these securities to meet current operating obligations. With the assistance of
Smith Barney, the Company was able to obtain an Express Creditline Loan which is
collateralized by the proceeds available from the sales of the auction rate
securities. On March 7, 2008 the Company received $5,400,000 from the Express
Creditline account and deposited the funds in our operating bank accounts to
ensure current liquidity.
During the three months ended March 31, 2008, iVoice had a net increase in cash
of $4,938,043. iVoice's principal sources and uses of funds in the three months
ended March 31, 2008 were as follows:
CASH FLOWS FROM OPERATING ACTIVITIES. The Company provided $131,173 in cash from
continuing operations in the three months ended March 31, 2008, an increase of
$161,045 compared to $29,872 in cash used for continuing operations in the three
months ending March 31, 2007.
The net effect on cash flows from operating activities by the discontinued
operations for the three months ending March 31, 2007 was a decrease of $150,753
as the operations were struggling with their liquidity.
CASH FLOWS FROM INVESTING ACTIVITIES. The Company had a net use of funds from
investing activities of $599,195 for the three months ended March 31, 2008. This
was primarily due to the net effect of the consolidation of iVoice Technology of
$612,637. The Company had invested $1.4 million in iVoice Technology's Series A
Convertible Preferred Stock and iVoice Technology has used a portion of these
proceeds to pay down a portion of the YA Global Convertible Debentures.
CASH FLOWS FROM FINANCING ACTIVITIES. The Company provided $5,406,065 cash from
financing in the three months ended March 31, 2008. This represented the
proceeds from the Smith Barney Credit Line that was
25
arranged during the quarter. These funds will be used to pay off some debt that
is coming due during the second quarter of this year.
The net effect on cash flows from financing activities from the discontinued
operations was an increase in cash of $154,000 for the three months ending March
31, 2007. This represented the proceeds from the sale of a $160,000 Promissory
note to Thomas Pharmaceuticals Acquisition, Inc. pursuant to the terms of the
Extension Agreement with Thomas Pharmaceuticals and Thomas Pharmaceuticals
Acquisition.
Below is a description of iVoice's principal sources of funding:
On May 11, 2006 we issued to YA Global a $5,544,110 secured convertible
debenture due on May 11, 2008 with an interest of 7.5%. This debenture replaced
a promissory note with a principal balance of $5,000,000 and $544,110 of accrued
interest due to YA Global from June 15, 2005.
On May 25, 2006, we issued to YA Global a $1,250,000 secured convertible
debenture due on May 25, 2008 with an interest of 7.5% per annum pursuant to a
Securities Purchase Agreement entered into between us and YA Global.
On March 7, 2008 the Company received proceeds from an Express Creditline Loan
from Smith Barney that is collateralized by the proceeds available from the
sales of the auction rate preferred shares ("ARPS") discussed in Note 3. The
interest rate charged on the loan is tied to the dividend rates earned on the
ARPSs. When an ARPS is sold, a portion of the proceeds is applied to pay down
the short term loan and the balance is wired to the Company's savings account.
There is no assurance that the future funding, if any, offered by YA Global or
from other sources will enable us to raise the requisite capital needed to
implement our long-term growth strategy. Current economic and market conditions
have made it very difficult to raise required capital for us to implement our
business plan.
OFF BALANCE SHEET ARRANGEMENTS
- ------------------------------
During the three months ended March 31, 2008, we did not engage in any material
off-balance sheet activities nor have any relationships or arrangements with
unconsolidated entities established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purposes. Further,
we have not guaranteed any obligations of unconsolidated entities nor do we have
any commitment or intent to provide additional funding to any such entities.
CONTRACTUAL OBLIGATIONS
- -----------------------
The Company has no material changes in its contractual obligations during the
three months ended March 31, 2008.
26
FORWARD LOOKING STATEMENTS - CAUTIONARY FACTORS
- -----------------------------------------------
Certain information included in this Form 10-Q and other materials filed or to
be filed by us with the Securities and Exchange Commission (as well as
information included in oral or written statements made by us or on our behalf),
may contain forward-looking statements about our current and expected
performance trends, growth plans, business goals and other matters. These
statements may be contained in our filings with the Securities and Exchange
Commission, in our press releases, in other written communications, and in oral
statements made by or with the approval of one of our authorized officers.
Information set forth in this discussion and analysis contains various
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Private
Securities Litigation Reform Act of 1995 (the "Act") provides certain "safe
harbor" provisions for forward-looking statements. The reader is cautioned that
such forward-looking statements are based on information available at the time
and/or management's good faith belief with respect to future events, and are
subject to risks and uncertainties that could cause actual performance or
results to differ materially from those expressed in the statements.
Forward-looking statements speak only as of the date the statement was made. We
assume no obligation to update forward-looking information to reflect actual
results, changes in assumptions or changes in other factors affecting
forward-looking information. Forward-looking statements are typically identified
by the use of terms such as "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "might," "plan," "predict," "project," "should,"
"will," and similar words, although some forward-looking statements are
expressed differently. Although we believe that the expectations reflected in
such forward-looking statements are reasonable, we can give no assurance that
such expectations will prove to be correct.
ITEM 4T - CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f). Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we conducted
an evaluation of the effectiveness of our internal control over financial
reporting as of December 31, 2007 based on the criteria set forth in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our evaluation under the
criteria set forth in Internal Control Over Financial Reporting - Guidance for
Small Public Companies, our management concluded that our internal control over
financial reporting was effective as of March 31, 2008, except for two
deficiencies discussed in Item 4T.
This Annual Report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this Annual
Report. Our registered public accounting firm will be required to attest to our
management's assessment of internal control over financial reporting beginning
with our Annual Report for the year ended December 31, 2008.
27
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Management of the Company has evaluated, with the participation of the Chief
Executive Officer and Chief Financial Officer of the Company, the effectiveness
of the Company's disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of the end of the fiscal year covered by this Annual
Report on Form 10-KSB. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer of the Company have concluded that the Company's
disclosure controls and procedures as of the end of the fiscal year covered by
this Annual Report on Form 10-KSB are effective to provide reasonable assurance
that information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission and that the information required to be
disclosed in the reports is accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, to allow
timely decisions regarding required disclosure except for the following
deficiencies:
a) A deficiency in the Company's disclosure controls and procedures existed as
of December 31, 2007. The deficiency was identified as the Company's
limited segregation of duties amongst the Company's employees with respect
to the Company's control activities. This deficiency is the result of the
Company's limited number of employees. This deficiency may affect
management's ability to determine if errors or inappropriate actions have
taken place. Management is required to apply its judgment in evaluating the
cost-benefit relationship of possible changes in our disclosure controls
and procedures.
b) A deficiency in the Company's disclosure controls and procedures existed as
of December 31, 2007. The deficiency was identified in respect to the
Company's Board of Directors. This deficiency is the result of the
Company's limited number of external board members. This deficiency may
give the impression to the investors that the board is not independent from
management. Management and the Board of Directors are required to apply
their judgment in evaluating the cost-benefit relationship of possible
changes in the organization of the Board of Directors.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.
Management of the Company has also evaluated, with the participation of the
Chief Executive Officer of the Company, any change in the Company's internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the period covered by this Interim
Report on Form 10-Q. There was no change in the Company's internal control over
financial reporting identified in that evaluation that occurred during the
period covered by this Interim Report on Form 10-Q that has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.
28
PART II - OTHER INFORMATION
ITEM 5 OTHER INFORMATION
(b) The Company does not have a standing nominating committee or a committee
performing similar functions as the Company's Board of Directors consists
of only two members and therefore there would be no benefit in having a
separate nominating committee that would consist of the same number of
members as the full board of directors. Both members of the Board of
Directors participate in the consideration of director nominees.
ITEM 6 EXHIBITS
10.1 Administrative Services Agreement Amendment No. 1 by and between iVoice
Technology, Inc. and iVoice, Inc. dated March 5, 2008 filed with the
Commission as Exhibit 10.1 on Form 8-K dated March 5, 2008.
10.2 Convertible Promissory Note dated March 5, 2008 payable to iVoice, Inc.
filed with the Commission as Exhibit 10.2 on Form 8-K dated March 5,
2008.
10.3 Security Agreement by and between iVoice Technology, Inc. and iVoice,
Inc. dated March 5, 2008 filed with the Commission as Exhibit 10.3 on
Form 8-K dated March 5, 2008.
31.1 Certifications of the Chief Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act Of 2002.
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
iVoice, Inc.
By: /s/ Jerome R. Mahoney Date: May 20, 2008
---------------------------
Jerome R. Mahoney, President,
Chief Executive Officer and
Principal Financial Officer
30
INDEX OF EXHIBITS
10.1 Administrative Services Agreement Amendment No. 1 by and between iVoice
Technology, Inc. and iVoice, Inc. dated March 5, 2008 filed with the
Commission as Exhibit 10.1 on Form 8-K dated March 5, 2008.
10.2 Convertible Promissory Note dated March 5, 2008 payable to iVoice, Inc.
filed with the Commission as Exhibit 10.2 on Form 8-K dated March 5,
2008.
10.3 Security Agreement by and between iVoice Technology, Inc. and iVoice,
Inc. dated March 5, 2008 filed with the Commission as Exhibit 10.3 on
Form 8-K dated March 5, 2008.
31.1 Certifications of the Chief Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act Of 2002
31