- Annual Report (10-K)

Date : 04/15/2009 @ 9:58PM
Source : Edgar (US Regulatory)
Stock : (IVOI)
Quote : 0.0001  0.0 (0.00%) @ 1:00AM

- Annual Report (10-K)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
Form 10-K
 

 
 
  x
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
   
For the fiscal year ended December 31, 2008
     
 
  r
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 000-29341

iVoice, Inc.
(Name of small business issuer in its charter)
 
New Jersey
(State or other jurisdiction of incorporation or organization)
51-0471976
 (I.R.S. Employer Identification No.)
 
750 Highway 34, Matawan, NJ
(Address of principal executive offices)
07747
(Zip Code)
 
Issuer's telephone number (732) 441-7700
 
Securities registered under Section 12(b) of the Exchange Act: None.
Securities registered under Section 12(g) of the Exchange Act: Class A Common, No Par Value
 
Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act). Yes  r No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes  r No x
 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.  x Yes  r No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  r No x
 
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
 
Large Accelerated filer  r                             Accelerated filer   r    Non-accelerated filer  r                  (Do not check if a smaller reporting company)  Smaller reporting Company    x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  r No x
 
Issuer's revenues for its most recent fiscal year. $173,424
 
As of April 13, 2009, the Registrant had 2,602,170,527 shares of Class A, no par value common stock outstanding. The aggregate market value of the voting stock held by non-affiliates as of June 30, 2008 based upon the average bid and ask prices on that date was $515,350.

As of April 13, 2009, the Registrant had no shares of Class B, no par value per share, common stock outstanding.
 
Transitional Small Business Disclosure Format (Check one): Yes  r   No x
 
 

Table of Contents

 Page
PART I
3
11
11
   
PART II
12
15
17
17
   
PART III
19
20
21
22
22
 
PART IV
23

 

 
 
PART I
 
 
Item 1. Description of Business.
 
Background
 
Our corporate configuration is the result of a number of separate transactions over the past several years. On May 21, 1999, International Voice Technologies, Corp., a Delaware corporation, merged with and into Visual Telephone International, Inc. Visual Telephone changed its name to iVoice.com, Inc. and we changed our NASD OTC Bulletin Board trading symbol to “IVOC.”
 
On April 25, 2003, we formed a wholly owned subsidiary in the State of New Jersey and on May 5, 2003, we changed our state of incorporation from Delaware to New Jersey by merging into the newly formed New Jersey subsidiary.
 
On February 2, 2004 and August 5, 2005, we spun out four of our operating companies by distributing special dividends to our shareholders of shares of Class A Common Stock of our three wholly owned subsidiaries, Trey Resources Inc, iVoice Technology Inc, Deep Field Technologies Inc and SpeechSwitch Inc.
 
In May 2005, we formed a new wholly owned subsidiary, iVoice Acquisition Corporation in the State of New Jersey to facilitate future acquisitions made by us.
 
On January 6, 2006, iVoice Acquisition Corporation entered into an Agreement and Plan of Merger with Thomas Pharmaceuticals Ltd., a New York corporation (“Thomas NY”), Farris M. Thomas, Jr., an individual (“Thomas”), John E. Lucas, an individual (“Lucas”) Richard C. Brogle, (“Brogle”), Nina Schwalbe, an individual, (“Schwalbe”), John H. Kirkwood, an individual (“Kirkwood”), and Maureen Gillespie, an individual (“Gillespie”) (Brogle, Schwalbe, Kirkwood, Gillespie, Thomas and Lucas are collectively as the “Thomas Shareholders”). Under the terms of the Agreement, Thomas NY merged into a wholly owned subsidiary of us, Thomas NJ. The Thomas Shareholders of Thomas NY exchanged all of their common stock shares of Thomas NY for 500,000 Thomas NJ Series A Convertible Preferred Stock (“Series A Preferred Stock”) shares. In 2007, the Series A Preferred Stock shareholders elected to have the Company spin-off Thomas NJ from iVoice.
 
On March 6, 2006, we formed a new wholly owned subsidiary, iVoice Innovations, Inc. in the State of New Jersey.  This subsidiary will be used to either acquire other operating companies or for a potential spin-off of an existing asset of ours..
 
On April 10, 2006, pursuant to approval by a majority of voting shares at the Annual Meeting of Shareholders held on March 31, 2006, an Amendment to the Certificate of Incorporation dated April 7, 2006 was accepted by the State of New Jersey (the “Amendment”) to effect a one for two hundred reverse stock split (the “Reverse Split”). The Reverse Split took effect on April 27, 2006 and the trading symbol of our Class A Common Stock was changed to “IVOI”.
 
On November 14, 2007, we spun off our Thomas Pharmaceuticals subsidiary by distributing a special dividend to our shareholders of shares of Class A Common Stock of Thomas Pharmaceuticals Ltd.
 
Significant Events During Fiscal 2008
 
On March 12, 2008, the Company acquired 1,444.44 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.

Our principal offices and facilities are located at 750 Highway 34, Matawan, NJ 07747 and our telephone number is (732) 441-7700.  Our common stock is quoted on the NASD OTC Bulletin Board under the trading symbol “IVOI.”
 
Our Business
 
We have determined that the best way to create shareholder value, separate and apart from our operating performance, is by spinning off and distributing shares of our wholly owned subsidiaries if the form of a special dividend to our shareholders.
 
The common stock distributions are part of a broader strategy relating to our transition into a company focused on the development and licensing of proprietary technologies. To date we have filed fifteen patent applications with the United States Patent and Trademark Office for speech enabled applications that we have developed internally.  Of the patent applications we have filed, four (4) patents have been awarded.  In March 2004 we announced that it has entered into a technology licensing agreement with GlynnTech Inc., to serve as its licensing agent for speaking product packaging technology.
 
 
We will also continue to search for potential merger candidates with or without compatible technology and products, in a further attempt to increase shareholder value.  As an example, in January 2006, we acquired the New York City based Thomas Pharmaceuticals Ltd (“Thomas”), which develops and markets over the counter non-prescription healthcare products. Thomas’ 1st product focuses on the high-end, branded consumables market, with a calcium-enriched, sugar free, anti-gas antacid tablet.
 
In March 2008, we invested $1.4 million in iVoice Technology (OTC Bulletin Board: IVOT) which is dedicated to becoming a “green” technology company, focused on acquiring and identifying promising technologies that address environmental issues.
 
We announced additional plans to enter the alternative energy sector.  Our previous negotiations to acquire the rights to build and operate biodiesel production facilities in Richmond, Virginia and in central Long Island, New York have not been successful. We have curtailed our efforts to identify additional opportunities at this time.
 
Dividends / Spin-Offs:
 
In the last sixty months, we have successfully spun-off five subsidiaries through special dividends to our shareholders.
 
Trey Resources, Inc.: In February 2004, our shareholders received one share of Trey Resources for every 1,793 of our shares held by such shareholder and was spun-off from us.  Following the spin-off, Trey Resources became a publicly held company and we no longer held any stock of Trey. Trey Resources closed on its first acquisition in June 2004 by acquiring an operating company with sales of over $2 million. Since that time, Trey has acquired two companies, hired the management of a third company, and grown from no sales to revenues at a current operating rate of nearly $8 million per annum.
 
iVoice Technology, Inc.: On August 5, 2005, we spun-off iVoice Technology, Inc. to our shareholders, to unlock the value in our interactive voice recognition (IVR) software technology. iVoice Technology later became involved in becoming a “green” technology company.
 
Deep Field Technologies, Inc.: On August 5, 2005, we spun-off Deep Field Technologies Inc. to our shareholders, to unlock the value in its Unified Messaging software technology.  Deep Field later merged with AutoMart, a China based joint venture recently formed between Beijing Silver Harbor Car Service Center and Mayflower Auto Group, LLC. AutoMart business focuses on automobile after-sales services, including maintenance and repairs, insurance, parts sales, interior furnishings, care products, tires, and windshields in the People's Republic of China.

SpeechSwitch, Inc.: On August 5, 2005, we spun-off SpeechSwitch, Inc. to our shareholders, to pursue a strategy designed to unlock the value in our speech recognition software.  The assets that became part of SpeechSwitch included the Speech SDK, Speech Enabled Auto Attendant, Name Dialer, plus two issued patents and two patents pending.
 
Thomas Pharmaceuticals, Ltd.: On November 14, 2007, we spun-off Thomas Pharmaceuticals to our shareholders pursuant to the wishes of the Thomas Pharmaceuticals Series A Convertible Preferred shareholders.
 
Our strategy for our spin-off business is to create value for our shareholders from the shares of the business distributed to our shareholders.  The strategy of acquiring and developing new businesses and subsequently distributing the shares of these businesses to our shareholders has various uncertainties.  We must first identify a business and/or a company that we can develop.  We then fund the business and after the business can be operated independently, we seek to distribute the shares of the business to our shareholders.  This incubation process has many uncertainties, which include identifying target businesses and negotiating the acquisition; successfully integrating the new businesses and profitably managing the operations; responding to competition for acquisition candidates; and the degree of success of the acquired business, any of which could have a material adverse effect on our condition and results of operations.  In addition, this business strategy also creates risks, which include diversion of management attention, inability to retain key personnel, risks associated with unanticipated events and the financial statement effect of potential impairment of acquired intangible assets, any of which could have a material adverse effect on our condition and results of operations.
 
We incur substantial start-up costs and expenses when we acquire and develop a new business.  If the business generates revenues before it is spun-off, we are able to recoup all or a portion of the start-up costs and expenses.  In certain instances, we do not recoup our start-up costs by the time we spin-off the business.  However, if the price of the shares distributed to our shareholders increase, then our shareholders will receive the increased value of those shares.
 
We have spun-off five subsidiaries through special dividends to our shareholders.  The spin-offs have created value for our shareholders by diversifying their investment in us. Some of the original shareholders of our shares also now own shares of Trey Resources, Inc., iVoice Technology, Inc., Deep Field Technologies, Inc., SpeechSwitch, Inc. and Thomas Pharmaceuticals, Ltd.  Our ability to acquire businesses that operate profitably and can create interest in the marketplace will have a significant impact on our prospects for the future.
 
Administrative Service Agreements
 
In conjunction with the various spin-offs, iVoice Technology, Deep Field Technology, SpeechSwitch and Thomas Pharmaceuticals have individually entered into temporary administrative services agreement with us. Under the terms of these agreements, , iVoice provides the companies with physical premises, contract review, sales issuance, invoicing and collection services, financial accounting and reporting, claims administration and reporting, and other areas where the companies need transitional assistance and support. These agreements will continue on a month-to-month basis until these companies have found replacement services for those services being provided by us or can provide these services for itself.
 
 
Patents and Trademarks
 
To date we have filed fifteen patent applications with the United States Patent and Trademark Office for speech enabled applications that we have developed internally.  Of the patent applications we have filed, four (4) patents have been awarded.
 
In March 2004 we announced that we had entered into a technology licensing agreement with GlynnTech Inc., to serve as our licensing agent for speaking product packaging technology. GlynnTech Inc. has been involved in licensing of a variety of technologies for more than thirty years. Besides representing such diverse successful products as the SuperSoaker® Watergun and the RotoWrench®, Glynn has successfully licensed or sold more than thirty-four patents in the field of containers and packaging. We believe GlynnTech can help us unlock the potential of the pending applications.
 
Following the formation and spin out of SpeechSwitch, Inc. in August 2005, we transferred our legal rights to four of the Speech-Enabled Automatic Telephone Dialer patents to SpeechSwitch, Inc.
 
On March 21, 2006, we entered into a Patent Purchase Agreement with Lamson Holdings LLC, a Nevada limited liability company, for the sale of certain United States Letters Patents and/or applications for United States Letters Patents and/or foreign patents and applications.  The patents or patent applications being transferred in this purchase agreement are related to: a) patent 6813341, Voice Activated/Voice Responsive item locator; b) patent 10/696,660, Voice activated, voice responsive product locator system, including product location method utilizing product bar code and aisle-situated, aisle-identifying bar code; c) patent 10/696,090, Voice activated, voice responsive product locator system, including product location method utilizing product bar code and product-situated, location-identifying bar code; and d) patent 10/696,701, Product location method utilizing product bar code and aisle-situated, aisle-identifying bar code.
 
We have eight remaining patent applications in our portfolio.  These applications include the “Voice Activated Voice Operated Copier”, the “Voice Activated Voice Operational Universal Remote Control”, the “Wirelessly Loaded Speaking Medicine Container”, the “Wirelessly Loaded OTC Speaking Medicine Container”, the “Methodology for Talking Consumer Products with Voice Instructions via Wireless Technology”, the “Product Identifier and Receive Spoken Instructions”, the “Pedestrian Air Bag Device” and the “Traffic Signal System with Countdown Signaling and with Advertising and/or News Message”.
 
We have been developing proprietary technology for eight years.  Developing and licensing proprietary technology has various uncertainties, which include, our ability to protect the intellectual property for our technology; obtaining patents that are broad enough to prevent competitors from introducing similar products on the market; unintentionally infringing on the proprietary rights of others; and receiving approval from the United States Patent and Trademark Office, or the USPTO, for the twelve patent applications that we have outstanding.
 
We were awarded three patents by the USPTO in 2003 and 2004.  Two of these patents were transferred to SpeechSwitch, Inc. as part of the spin off in 2005. The third patent for the Voice Activated/Voice Response Item Locator was sold to Lamson Holdings LLC in July 2006 along with the three other patent applications related to voice activated applications for product locating systems. The development and licensing of such patents has created shareholder value as demonstrated by the spinoff of SpeechSwitch, Inc. and from the sales of patents to Lamson Holding LLC.  Our ability to continue to develop and license unique technologies and to license and sell these technologies will have a significant impact on our prospects for the future.
 
In Fiscal Year 2006, the USPTO reported that it “received in excess of 440,000 patent applications in 2006, a record number.”  The USPTO also reports that their “examiners completed 332,000 patent application in 2006” and approved 54% of these.  Patent activity is robust as companies and individuals look to protect their inventions and unique technologies by filing patent applications at a record pace.
 
Mergers and Acquisitions
 
We continue to search for potential merger candidates with or without compatible technology and products, which management feels may make financing more appealing to potential investors.
 
We do not have any other plans, proposals or arrangements with respect to future acquisitions.
 
Marketing and Distribution
 
We have experience with marketing, promoting and selling our speech-enabled products through telephone reseller channels, telephone equipment manufacturer distributor networks as well as directly to end users. We believe we can leverage this experience into gaining access to these markets for our patenting and licensing of new products being developed by us.
 
New Products
 
We are working with GlynnTech, Inc. to identify viable products and/or services that may be derived from our work on the various patents, such as the “Speech Enabled Voice Activated/Voice Responsive Item Locator”, “Methodology for Talking Consumer Products with Voice Instructions via Wireless Technology” and the “Wirelessly Loaded Speaking Medicine Container”.
 
 
Competition
 
We will be operating in an industry segment having inherent risks generally associated with small technology companies.  Such risks include, but are not limited to, the ability to:  a) generate sales of our product at levels sufficient to cover our costs and provide a return for investors, b) attract additional capital in order to finance growth, c) further develop and successfully market and distribute commercial products and d) successfully compete with other technology companies having significantly greater financial, production and marketing resources.
 
The technology industry is highly competitive, and we believe that this competition will intensify.  Many of our competitors may have longer operating histories, significantly greater financial, technical, product development, and marketing resources, greater name recognition or larger client bases than we do.
 
Suppliers
 
As our future products are yet unknown, our suppliers have not been identified. But our past experience indicates that Dialogic Corporation (an Intel company), iTox, Inc., Dell and Amer.com, Inc. could be ideal candidates to supply our computer hardware components.  We have not experienced any supply shortages with respect to the components used in systems or developed applications in our past.
 
Customers
 
Direct customers could be comprised of businesses, organization and corporate departments that use voice activated processes for efficiency in their operations.  Our patents seek to fulfill these customer needs.
 
Government Regulation
 
We may be subject to licensing and regulation by a number of authorities in their respective state or municipality. These may include health, safety, and fire regulations. Our operations are also subject to federal and state minimum wage laws governing such matters as working conditions and overtime.
 
We are not subject to any necessary government approval or license requirement in order to market, distribute or sell our principal or related products other than ordinary federal, state, and local laws which govern the conduct of business in general.  We are unaware of any pending or probable government regulations that would have any material impact on the conduct of business.
 
Employees
 
As of the date of this filing, we have 2 full-time employees and 1 part-time consultant for a total of 3 individuals.  None of our employees are represented by a labor organization and we are not a party to any collective bargaining agreements. We consider our relationship with our employees generally to be good.
 
In addition to other information in this Annual Report on Form 10-K, the following important factors should be carefully considered in evaluating the Company and its business because such factors currently have a significant impact on the Company's business, prospects, financial condition and results of operations.
 
Forward Looking Statements - Cautionary Factors
 
This annual report on Form 10-K contains forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21F of the Securities Exchange Act of 1934 as amended. The statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms or other similar terminology. These forward-looking statements involve risks and uncertainties and other factors that may cause the actual results, performance or achievements to differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Except for the historical information and statements contained in this Report, the matters and items set forth in this Report are forward looking statements that involve uncertainties and risks some of which are discussed at appropriate points in the Report and are also summarized as follows:
 
As of December 31, 2008, there was substantial doubt about our ability to continue as a going concern. The Company may not be able to continue its operations and the financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
As of December 31, 2008, the Company’s independent public accounting firm issued a “going concern opinion” wherein they stated that the accompanying financial statements were prepared assuming the Company will continue as a 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.
 
 
The Company will face many of the difficulties that companies in the early stage may face.
 
Since the spin-off of our operating subsidiaries in 2004, 2005 and 2007, we have a limited operating history. As such, it may be difficult for you to assess our ability to identify merger or acquisition candidates and our growth and earnings potential.  Therefore, we may face many of the difficulties that companies in the early stages of their development in new and evolving markets often face as they are described below.  We may continue to face these difficulties in the future, some of which may be beyond our control.  If we are unable to successfully address these problems, our future growth and earnings will be negatively affected.
 
Our historical information has limited relevance to our future results of operations.
 
The historical financial information we have included in this report does not reflect what our results of operations, financial position and cash flows will be in the future.  This is because we operated in the past with different goals and objectives from our new objectives.
 
We cannot accurately forecast our future revenues and operating results, which may fluctuate.
 
Our short operating history and the rapidly changing nature of the markets in which we compete make it difficult to accurately forecast our revenues and operating results.  Furthermore, we expect our revenues and operating results to fluctuate in the future due to a number of factors, including the following:
 
·  
the success of identifying and completing mergers and acquisitions, particularly in light of our limited history;
 
·  
the introduction of competitive products by different or new competitors;
 
·  
reduced demand for any given product;
 
·  
difficulty in keeping current with changing technologies;
 
·  
unexpected delays in introducing new products, new product features and services;
 
·  
increased or uneven expenses, whether related to sales and marketing, product development or administration;
 
·  
deferral of recognition of our revenue in accordance with applicable accounting principles due to the time required to complete projects;
 
·  
seasonality in the end-of-period buying patterns of foreign and domestic software markets;
 
·  
the market's transition between operating systems; and
 
·  
costs related to possible acquisitions of technology or businesses.

 
Due to these factors, forecasts may not be achieved, either because expected revenues do not occur or because they occur at lower prices or on terms that are less favorable to us.  In addition, these factors increase the chances that our results could diverge from the expectations of investors and analysts.  If so, the market price of our stock would likely decline.
 
We may fail to develop new products, or may incur unexpected expenses or delays.
 
Due to the risks inherent in developing new products and technologies—limited financing, competition, obsolescence, loss of key personnel, and other factors—we may fail to develop these technologies and products, or may experience lengthy and costly delays in doing so.  Although we are able to license some of our technologies in their current stage of development, we cannot assure that we will be able to develop new products or enhancements to our existing products in order to remain competitive.
 
 
If we cannot raise additional capital to finance future operations, we may need to curtail our operations in the future.
 
We have relied on significant external financing to fund our operations.  Such financing has historically come from a combination of borrowings and sales of securities from third parties and funds provided by certain officers and directors.  We cannot assure you that financing whether from external sources or related parties will be available if needed or on favorable terms.  Our inability to obtain adequate financing will result in the need to curtail business operations.  Any of these events would be materially harmful to our business and may result in a lower stock price.  While we have recently raised sufficient working capital to fund our operations for at least the next 24 months, we will need to raise additional capital to fund our future operations.
 
The Company may in the future sell additional unregistered convertible securities, possibly without limitations on the number of shares of common stock the securities are convertible into, which could dilute the value of the holdings of current stockholders and have other detrimental effects on your holdings.

We have relied on the private placement of secured promissory notes to obtain working capital and may continue to do so in the future.  As of this date, however, we have outstanding convertible obligations.  In order to obtain working capital in the future, we intend to issue additional equity securities and convertible obligations.
 
In the event that the price of our Class A Common Stock decreases, and our convertible obligations (or any other convertible obligations we may issue) are converted into shares of our Class A Common Stock,
 
·  
the percentage of shares outstanding that will be held by these holders upon conversion will increase accordingly,
 
·  
such increased share issuance, in addition to a stock overhang of an indeterminable amount, may depress the price of our Class A Common Stock, and
 
·  
the sale of a substantial amount of convertible debentures to relatively few holders could effectuate a possible change in control of the Company.
 
Our existing convertible obligations are convertible based upon a formula that varies with the market price of our common stock.  As a result, if the market price of our Class A Common Stock increases after the issuance of our convertible obligations, it is possible, that, upon conversion of our convertible obligations, we will issue shares of Class A Common Stock at a price that is far less than the then-current market price of our Class A Common Stock.
 
Protecting our intellectual property in our technology through patents may be costly and ineffective and if we are not able to protect our intellectual property, we may not be able to compete effectively and we may not be profitable.
 
Our future success depends in part on our ability to protect the intellectual property for our technology by obtaining patents.  We will only be able to protect our products and methods from unauthorized use by third parties to the extent that our products and methods are covered by valid and enforceable patents or are effectively maintained as trade secrets.  To date, we have filed fifteen patent applications for internally developed applications with the U.S Patent and Trademark Office.  Of the patent applications we have filed, we have been awarded four patents.  In August 2005, we transferred four of our Speech-Enabled Automatic Telephone Dialer patents to SpeechSwitch, Inc. and in March 2006 we sold four of our voice activated product and item locator patents to Lamson Holdings LLC. We have eight remaining patent applications related to wirelessly loaded speaking medicine containers and consumer products, voice activated copiers and universal remote controls, pedestrian airbag, product identifier receiving wireless directions and our “Traffic Signal System with Countdown Signaling with Advertising and/or News Message”.   No assurances can be given that these remaining patent applications will be approved.
 
The protection provided by our patent applications if issued, may not be broad enough to prevent competitors from introducing similar products into the market.  Our patent applications, if challenged or if we attempt to enforce them, may not be upheld by the courts of any jurisdiction.  Numerous publications may have been disclosed by, and numerous patents may have been issued to, our competitors and others relating to methods of dialysis of which we are not aware and additional patents relating to methods of dialysis may be issued to our competitors and others in the future.  If any of those publications or patents conflict with our patent rights, or cover our products, then any or all of our patent applications could be rejected and any or all of our granted patents could be invalidated, either of which could materially adversely affect our competitive position.
 
Litigation and other proceedings relating to patent matters, whether initiated by us or a third party, can be expensive and time consuming, regardless of whether the outcome is favorable to us, and may require the diversion of substantial financial, managerial and other resources.  An adverse outcome could subject us to significant liabilities to third parties or require us to cease any related development product sales or commercialization activities.  In addition, if patents that contain dominating or conflicting claims have been or are subsequently issued to others and the claims of these patents are ultimately determined to be valid, we may be required to obtain licenses under patents of others in order to develop, manufacture use, import and/or sell our products.  We may not be able to obtain licenses under any of these patents on terms acceptable to us, if at all.  If we do not obtain these licenses, we could encounter delays in, or be prevented entirely from using, importing, developing, manufacturing, offering or selling any products or practicing any methods, or delivering any services requiring such licenses.
 
If we are not able to protect our trade secrets through enforcement of our confidentiality and non-competition agreements, then we may not be able to compete effectively and we may not be profitable.
 
We attempt to protect our trade secrets, including the processes, concepts, ideas and documentation associated with our technologies, through the use of confidentiality agreements and non-competition agreements with our current employees and with other parties to whom we have divulged such trade secrets.  If the employees or other parties breach our confidentiality agreements and non-competition agreements or if these agreements are not sufficient to protect our technology or are found to be unenforceable, our competitors could acquire and use information that we consider to be our trade secrets and we may not be able to compete effectively.  Most of our competitors have substantially greater financial, marketing, technical and manufacturing resources than we have and we may not be profitable if our competitors are also able to take advantage of our trade secrets.
 
 
We may unintentionally infringe on the proprietary rights of others.
 
Many lawsuits currently are being brought in the software industry alleging violation of intellectual property rights.  In addition, a large number of patents have been awarded in the voice-recognition and call processing area.  Although we do not believe that we are infringing on any patent rights, patent holders may claim that we are doing so.  Any such claim would likely be time-consuming and expensive to defend, particularly if we are unsuccessful, and could prevent us from selling our products or services. In addition, we may also be forced to enter into costly and burdensome royalty and licensing agreements.
 
Our future business acquisitions may be unpredictable and may cause our business to suffer.
 
We will seek to expand our operations through the acquisition of additional businesses.  We may not be able to identify, successfully integrate or profitably manage any such businesses or operations.  The proposed expansion may involve a number of special risks, including possible adverse effects on our operating results, diversion of management attention, inability to retain key personnel, risks associated with unanticipated events and the financial statement effect of potential impairment of acquired intangible assets, any of which could have a materially adverse effect on the our condition and results of operations.  In addition, if competition for acquisition candidates or assumed operations were to increase, the cost of acquiring businesses or assuming customers’ operations could increase materially.  Our inability to implement and manage our expansion strategy successfully may have a material adverse effect on our business and future prospects.  Furthermore, through the acquisition of additional businesses, we may effect a business acquisition with a target business which may be financially unstable, under-managed, or in its early stages of development or growth.  While we may, under certain circumstances, seek to effect business acquisitions with more than one target business, as a result of our limited resources, we, in all likelihood, will have the ability to effect only a single business acquisition at one time.  Currently, we has no plans, proposals or arrangements, either orally or in writing, regarding any proposed acquisitions.
 
The Company's stockholders may experience significant dilution if future equity offerings are used to fund operations or acquire businesses.
 
If working capital or future acquisitions are financed through the issuance of equity securities, our shareholders would experience significant dilution.  In addition, the conversion of outstanding debt obligations into equity securities would have a dilutive effect on our shareholders.  Further, securities issued in connection with future financing activities or potential acquisitions may have rights and preferences senior to the rights and preferences of our Class A Common Stock.
 
We believe that our going-forward expenses over the next 12 months will be approximately $700,000.  We have no current plan to hire additional employees, perform additional research and development or purchase additional equipment or services.  We believe that the deficiency between our expenses and net revenues will be more than covered by the cash available.  If there are additional deficiencies that are in excess of the proceeds of the Securities Purchase Agreement, management believes that we can limit our operations, defer payments to management and maintain our business at nominal levels until we can identify alternative sources of capital.
 
Our sole officer controls a significant percentage of our capital stock and has sufficient voting power to control the vote on substantially all corporate matters.
 
As of March 20, 2009, Jerome R. Mahoney, our president, chief executive officer, chief financial officer and director, beneficially owned approximately 53%   of our outstanding shares of our Class A common stock (assuming the conversion of outstanding debt into shares of Class A common stock).  Mr. Mahoney is able to influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions.  This concentration of ownership, which is not subject to any voting restrictions, could limit the price that investors might be willing to pay for our Class A common stock.  In addition, Mr. Mahoney is in a position to impede transactions that may be desirable for other shareholders.  He could, for example, make it more difficult for anyone to take control of us.
 
Our industry is characterized by rapid technological change and failure to adapt our product development to these changes may cause our products to become obsolete.
 
We participate in a highly dynamic industry characterized by rapid change and uncertainty relating to new and emerging technologies and markets.  Future technology or market changes may cause some of our products to become obsolete more quickly than expected.
 
If we lose the services of any of our key personnel, including our president and chief executive officer, our business may suffer.
 
We are dependent on our key officer, Jerome R. Mahoney, our president and chief executive officer.  The loss of our key officer could materially harm our business because of the cost and time necessary to retain and train a replacement.  Such a loss would also divert management attention away from operational issues.  In an attempt to minimize the effects of such loss, we presently maintain a $5,000,000 key-man term life insurance policy on Mr. Mahoney.
 
 
The Company has limited segregation of duties amongst its employees with respect to the Company’s preparation and review of the Company’s financial statements due to the Company’s limited number of employees, which is a  material weakness in internal controls , and if the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the Company’s financial reporting which could harm the trading price of the Company’s stock.

Effective internal controls are necessary for the Company to provide reliable financial reports and prevent fraud.  Inferior internal controls could cause investors to lose confidence in the Company’s reported financial information, which could have a negative effect on the trading price of the Company’s stock.  Management has found it necessary to limit the Company’s administrative staffing in order to conserve cash, until the Company’s level of business activity increases. As a result, there is very limited segregation of duties amongst the administrative employees, and the Company and its independent public accounting firm have identified this as a material weakness in the Company’s internal controls.  The Company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the Company’s employees as soon as there are sufficient resources available.  However, until such time, this material weakness will continue to exist.  Despite the limited number of administrative employees and limited segregation of duties, management believes that the Company’s administrative employees are capable of following its disclosure controls and procedures effectively.

We have made a distribution of shares of Class A Common Stock of Trey Resources, Inc. to our shareholders, which may result in our President, Chief Executive Officer and Director having conflicts of interest, and we do not have any formal procedure for resolving any such conflicts in the future.
 
Following the distribution to our shareholders of shares of Class A Common Stock of Trey Resources, our President, Chief Executive Officer and Director, Jerome R. Mahoney, is now serving as Non-executive Chairman of the Board of Trey Resources and has the right to convert approximately $1,000,000 of indebtedness into approximately 1,000,000 shares of Class B common stock of Trey Resources, which are convertible into an indeterminable number of shares of Class A common stock of Trey Resources.  This could create, or appear to create, potential conflicts of interest when our President, Chief Executive Officer and Director is faced with decisions that could have different implications for Trey Resources.  Examples of these types of decisions might include any of the potential business acquisitions made by us or the resolution of disputes arising out of the agreements governing the relationship between Trey Resources and us.  Also, the appearance of conflicts, even if such conflicts do not materialize, might adversely effect the public’s perception of us following the distribution.  Furthermore, we do not have any formal procedure for resolving any such conflicts of interest if they do arise.
 
We have made a distribution of shares of Class A Common Stock of iVoice Technology, Inc. to our shareholders, which may result in our President, Chief Executive Officer and Director having conflicts of interest, and we do not have any formal procedure for resolving any such conflicts in the future.
 
Following the distribution to our shareholders of shares of Class A common stock of iVoice Technology, our President, Chief Executive Officer and Director, Jerome R. Mahoney, is now also serving as President, Chief Executive Officer and Director of iVoice Technology and has the right to convert $396,678 of indebtedness into 396,678 shares of Class B common stock of iVoice Technology, which are convertible into an indeterminable number of shares of Class A common stock of iVoice Technology.  This could create, or appear to create, potential conflicts of interest when our President, Chief Executive Officer and Director is faced with decisions that could have different implications for iVoice Technology.  Examples of these types of decisions might include any of the potential business acquisitions made by us or the resolution of disputes arising out of the agreements governing the relationship between iVoice Technology and us.  Also, the appearance of conflicts, even if such conflicts do not materialize, might adversely effect the public’s perception of us following the distribution.  Furthermore, we do not have any formal procedure for resolving any such conflicts of interest if they do arise.
 
We have made a distribution of shares of Class A Common Stock of SpeechSwitch, Inc. to our shareholders, which may result in our President, Chief Executive Officer and Director having conflicts of interest, and we do not have any formal procedure for resolving any such conflicts in the future.
 
Following the distribution to our shareholders of shares of Class A common stock of SpeechSwitch, our President, Chief Executive Officer and Director, Jerome R. Mahoney, will have the right to convert approximately $400,000 of indebtedness into approximately 400,000 shares of Class B common stock of SpeechSwitch, which are convertible into an indeterminable number of shares of Class A common stock of SpeechSwitch.  This could create, or appear to create, potential conflicts of interest when our President, Chief Executive Officer and Director is faced with decisions that could have different implications for SpeechSwitch.  Examples of these types of decisions might include any of the potential business acquisitions made by us or the resolution of disputes arising out of the agreements governing the relationship between SpeechSwitch and us.  Also, the appearance of conflicts, even if such conflicts do not materialize, might adversely effect the public’s perception of us following the distribution.  Furthermore, we do not have any formal procedure for resolving any such conflicts of interest if they do arise.
 
Our Securities
 
We do not expect to pay dividends in the foreseeable future.
 
At the annual meeting on March 31, 2006, the Board of Directors received approval from the shareholders to grant discretionary authority for the Board of Directors to declare a cash dividend to Class A Common Stock shareholders of $1.5 million. As of the date of this filing, the Board of Directors has not proceeded with the declaration of the dividend and we do not expect to pay dividends in the foreseeable future.
 
The price of our stock may be affected by a limited trading volume and may fluctuate significantly
 
There has been a limited public market for our Class A common stock and there can be no assurance that an active trading market for our stock will continue.  An absence of an active trading market could adversely affect our shareholders’ ability to sell our Class A common stock in short time periods, or possibly at all.  Our Class A common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations which could adversely affect the market price of our stock without regard to our operating performance.  In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our Class A common stock to fluctuate substantially.
 

Our class A common stock is deemed to be "penny stock," which may make it more difficult for investors to sell their shares due to suitability requirements
 
Our Class A common stock is deemed to be "penny stock" as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934. These requirements may reduce the potential market for our Class A common stock by reducing the number of potential investors.  This may make it more difficult for investors in our Class A common stock to sell shares to third parties or to otherwise dispose of them.  This could cause our stock price to decline.  Penny stocks are stock:
 
·  
With a price of less than $5.00 per share
 
·  
That are not traded on a "recognized" national exchange;
 
·  
Whose prices are not quoted on the NASDAQ automated quotation system  (NASDAQ listed stock must still have a price of not less than $5.00 per share); or
 
·  
In issuers with net tangible assets less than $2.0 million (if the issuer has been in continuous operation for at least three years) or $5.0 million (if in continuous operation for less than three years), or with average revenues of less than $6.0 million for the last three years.
 
Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks.  Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor.
 
Future sales of our Class A common stock could cause our stock price to decline.
 
The sale of a large number of our shares, or the perception that such a sale may occur, could lower our stock price.  Such sales could make it more difficult for us to sell equity securities in the future at a time and price that we consider appropriate.
 
Issuance of our reserved shares of Class A common stock may significantly dilute the equity interest of existing stockholders.
 
We have reserved for issuance, shares of our Class A common stock upon exercise or conversion of stock options, warrants, or other convertible securities that are presently outstanding.  Issuance of these shares will have the effect of diluting the equity interest of our existing shareholders and could have an adverse effect on the market price for our Class A common stock.  As of December 31, 2008, 30,000,000 shares have been reserved for conversion of warrants pursuant to the Investor Registration Rights Agreement entered into with YA Global Investments and there are 250,000 shares remaining available for issuance under the 2005 Stock Incentive Plan.  Otherwise, 7,367,579,473 shares of Class A common stock, reserved for possible future issuance.
 
Reports to Security Holders
 
We are a "reporting company" under the Securities Exchange Act of 1934, as amended and we file reports with the Securities and Exchange Commission. In this regard, the Company files quarterly reports on Form 10-Q, annual reports on Form 10-K and as required, files reports on Form 8-K.
 
The public may read and copy any materials the Company files with the Securities and Exchange Commission at the Commission's Public Reference Room at 100 F Street, N. E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address of the Commission's site is ( http://www.sec.gov ).

Item 2. Description of Property.
 
We do not own any real property for use in our operations or otherwise.
 
Our primary facility is located at 750 Highway 34, Matawan, New Jersey and consist of approximately 3,500 square feet of space.  Our space is leased on a month-to month basis at a monthly rent of $4,000.   We use our facilities to house our corporate headquarters and believe our facilities are suitable for such purpose.  We also believe that our insurance coverage adequately covers our interest in our leased space.  We have a good relationship with our landlord and believe that our current facilities will be adequate for the foreseeable future.
 
Item 3. Legal Proceedings.
 
We are subject to litigation from time to time arising from our normal course of operations.  Currently, there are no open litigation matters relating to our products, product installations or technical services provided.
 
 
PART II
 

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Class A common stock, no par value, was quoted on the NASD OTC Bulletin Board under the symbol “IVOI.”  The following table shows the high and low closing prices for the periods indicated.
 
   
High
   
Low
 
2007
           
             
First Quarter
  $ 0.0190     $ 0.0095  
Second Quarter
  $ 0.0160     $ 0.0053  
Third Quarter
  $ 0.0069     $ 0.0012  
Fourth Quarter
  $ 0.0096     $ 0.0011  
                 
2008
               
                 
First Quarter
  $ 0.0015     $ 0.0005  
Second Quarter
  $ 0.0005     $ 0.0001  
Third Quarter
  $ 0.0003     $ 0.0001  
Fourth Quarter
  $ 0.0003     $ 0.0001  

Holders of Common Equity.
 
As of April 13, 2009, the number of record holders of our common shares was approximately 766.
 
Dividend Information.
 
To date, we have never paid a cash dividend and we do not expect to pay dividends in the foreseeable future.
 
Sales of Unregistered Securities.
 
In the year ending December 31, 2008, the Company issued the following unregistered securities pursuant to various exemptions from registration under the Securities Act of 1933, as amended:
 
·  
The Company issued 1,805,499,209 shares of Class A common stock to YA Global Investments as repayment of principal and accrued interest on an outstanding convertible debenture, valued at $778,751.
 
·  
The Company issued 316,000,000 shares of Class A common stock upon conversion of 40,380 shares of Class B common stock, pursuant to the provisions of Class B common stock.
 
·  
The Company issued 60,000,000 shares of Class A common stock to Kenneth Glynn for legal services, valued at $6,000, related to continuation of work on patent prosecution
 
Description of Securities
 
Pursuant to our certificate of incorporation, as amended, we are authorized to issue up to: 10,000,000,000 shares of Class A common stock, no par value per share, 50,000,000 shares of Class B common stock, par value $.01 per share and 1,000,000 shares of preferred stock, par value of $1.00 per share.  Below is a description of our outstanding securities, including Class A common stock, Class B common stock, options, warrants and debt.
 

Preferred Stock
 
The Board of Directors expressly is authorized, subject to limitations prescribed by the New Jersey Business Corporations Act and the provisions of this Certificate of Incorporation, to provide, by resolution and by filing an amendment to the Certificate of Incorporation pursuant to the New Jersey Business Corporations Act, for the issuance from time to time of the shares of Preferred Stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences and other rights of the shares of each such series and to fix the qualifications, limitations and restrictions thereon, including, but without limiting the generality of the foregoing, the following:
 
a)  
the number of shares constituting that series and the distinctive designation of that series;
 
b)  
the dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series;
 
c)  
whether that series shall have voting rights, in addition to voting rights provided by law, and, if so, the terms of such voting rights;
 
d)  
whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provisions for adjustment of the conversion rate in such events as the Board of Directors shall determine;
 
e)  
whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;
 
f)  
whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund;
 
g)  
the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series; and
 
h)  
any other relative powers, preferences and rights of that series, and qualifications, limitations or restrictions on that series.
 
In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Preferred Stock of each series shall be entitled to receive only such amount or amounts as shall have been fixed by the certificate of designations or by the resolution or resolutions of the Board of Directors providing for the issuance of such series.
 
Class A Common Stock
 
Each holder of our 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.  We have not paid any dividends on our common stock and do not contemplate doing so in the foreseeable future.  We anticipate that any earnings generated from operations will be used to finance our growth.
 
As of December 31, 2008, we had 2,602,173,527  shares of Class A common stock issued and 2,602,170,527 shares outstanding.
 
Class B Common Stock
 
Each holder of Class B Common Stock shall have the right to convert each share of Class B Common Stock into the number of Class A Common Stock Shares calculated by dividing the number of shares of Class B Common Stock being converted by 50% of the lowest price that we had previously issued our Class A Common Stock since the Class B Common Stock were issued.  Every holder of the outstanding shares of the Class B Common Stock shall be entitled on each matter to cast the number of votes equal to the number of Class A Common Stock that would be issued upon the conversion of the Class B Common Stock held by that holder, had all of the outstanding Class B Common Stock held by that holder been converted on the record date used for purposes of determining which shareholders would vote in such an election.  With respect to all matters upon which shareholders are entitled to vote or to which shareholders are entitled to give consent, the holders of the outstanding shares of Class B Common Stock shall vote together with Class A Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law.  There shall be no cumulative voting by shareholders.  Each share of Class B Common Stock shall receive dividends or other distributions, as declared, equal to the number of Class A Common Stock that would be issued upon the conversion of the Class B Common Stock, had all of the outstanding Class B Common Stock been converted on the record date established for the purposes distributing any dividend or other shareholder distribution. Jerome R. Mahoney is the sole owner of the Class B common stock of which there are 50,000,000 shares authorized, 2,204,875 shares issued, 1,512,104 shares outstanding and 692,771 shares retired as of December 31, 2008.  As of December 31, 2008, these shares of Class B Common Stock were convertible into 33,602,311,111 shares of Class A common stock. Following the redemption of the Class B common stock on March 11, 2009, there are no shares of Class B Common Stock outstanding.
 
 
Options and Warrants
 
On May 25, 2006, we issued warrants to YA Global Investments (f/k/a/ Cornell Capital Partners) to purchase 30,000,000 shares of our Class A common stock. These warrants have exercise prices ranging from $0.30 per share to $0.50 per share, with a weighted average exercise price of $0.40 per share.  These warrants expire on May 25, 2011.
 
Stock Incentive Plans
 
2005 Stock Incentive Plan
 
On December 20, 2005, the Company adopted the 2005 Stock Incentive Plan (the “2005 Plan”). The purpose of the 2005 Plan is to (i) provide long-term incentives and rewards to employees, directors, independent contractors or agents of iVoice, Inc. and its subsidiaries; (ii) assist the Company in attracting and retaining employees, directors, independent contractors or agents with experience and/or ability on a basis competitive with industry practices; and (iii) associate the interests of such employees, directors, independent contractors or agents with those of the Company's stockholders.
 
Under the Plan, the Board of Directors shall have all the powers vested in it by the terms of the Plan to select the Eligible Participants to be granted awards under the Plan, to determine the type, size and terms of awards to be made to each Eligible Participant selected, to determine the time when awards will be granted, when they will vest, when they may be exercised and when they will be paid, to amend awards previously granted and to establish objectives and conditions, if any, for earning awards and whether awards will be paid after the end of the award period. The Board shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Board deems necessary or advisable and to interpret same. The Board's interpretation of the Plan, and all actions taken and determinations made by the Board pursuant to the powers vested in it hereunder shall be conclusive and binding on all parties concerned, including the Company stockholders, any participants in the Plan and any other Eligible Participant of the Company.
 
All employees of the Company and all employees of subsidiaries shall be eligible to participate in the Plan. The Board, in its sole discretion, shall from time to time designate from among the eligible employees and among directors, independent contractors or agents those individuals who are to receive awards under and thereby become participants in the Plan.
 
For the years ended December 31, 2008 and 2007, no shares were granted under the 2005 Plan.
 
Debt  
 
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%. 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 period of January 1, 2008 until May 12, 2008, we issued 882,165,877 shares of Class A common stock, with a value of $529,640, as repayment of $401,700 of principal. The difference of $127,940 is charged to the Statement of Operations as beneficial interest. On May 12, 2008, the remaining principal balance of $4,796,510 was repaid in cash from the proceeds of the Smith Barney short term loans and sales of the ARPSs. As of December 31, 2008, the unpaid balance of accrued interest was $799,139.

On May 25, 2006, the Company issued to YA Global a $1,250,000 (“Debenture Number CCP-1”) 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. During the year ended December 31, 2008, we issued 923,333,332 shares of Class A common stock, with a value of $249,111, as repayment of $83,100 of principal. The difference of $166,011 is charged to the Statement of Operations as beneficial interest. As of December 31 2008, the unpaid principal balance on the secured convertible debenture is $1,166,900 plus accrued interest of $319,916.
 
On May 25, 2006, we entered into a Securities Purchase Agreement with YA Global whereby we issued to YA Global an aggregate $8,547,886 of YA Global Debentures convertible into shares of our Class A Common Stock.  The aggregate principal amount of $8,547,886 of YA Global Debentures consists of the three secured convertible debentures mentioned above and a fourth secured convertible debenture in the principal amount of $1,250,000 to be issued to YA Global two (2) business days prior to the date the Registration Statement is declared effective by the SEC. On May 7, 2007, we suspended activities related to the filing of the Registration Statement and have not received the proceeds from the fourth secured convertible debenture.
 
We can redeem a portion or all amounts outstanding under the YA Global Debentures at any time upon three business days advanced written notice.  We shall pay 20% redemption premium on the principal amount being redeemed. YA Global may, at its discretion, convert the outstanding principal and accrued interest, in whole or in part, into a number of shares of our Class A Common Stock equal to the quotient obtained by dividing (x) the outstanding amount of the YA Global Debentures to be converted by (y) 90% of the lowest closing bid price of our shares of Class A Common Stock during the 30 trading days immediately preceding the conversion date.
 
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.

On February 21, 2008, the Company entered in an Amendment Agreement with YA Global to: a) extend the maturity date of Debenture Number CCP-1 until May 25, 2011, b) to raise the interest rate on Debenture Number CCP-1 to 15% per annum and c) to change the conversion price to 70% of the lowest closing bid price of the Common Stock during the 30 trading days immediately preceding the conversion date.

On December 1, 2008, the Company notified YA Global that there was a dispute regarding the final balance of principal and accrued interest for Convertible Debentures with YA Global. This dispute dates back to written commitments and verbal reconfirmations made to the Company by YA Global in respect to the Company’s unreimbursed losses on the investment in Corporate Strategies. The Company proposed a settlement of $300,000 to settle the disputed balance, but the settlement is still pending at the time of this filing.
 
 
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
This discussion and analysis of our financial condition and results of operations includes “forward-looking” statements that reflect our current views with respect to future events and financial performance.  We use words such as we “expect,” “anticipate,” “believe,” and “intend” and similar expressions to identify forward-looking statements.  You should be aware that actual results may differ materially from our expressed expectations because of risks and uncertainties inherent in future events and you should not rely unduly on these forward looking statements.  We will not necessarily update the information in this discussion if any forward-looking statement later turns out to be inaccurate.
 
This discussion and analysis of financial condition and results of operations should be read in conjunction with our Financial Statements included in this filing.
 
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 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 1,444.44 shares of iVoice Technology, Inc.’s Series A 10% Convertible Preferred Stock for $1,444,444.  iVoice Technology, Inc. used 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.

Results of Operations
 
Year ended December 31, 2008 compared to year ended December 31, 2007

Total sales for the years ended December 31, 2008 and 2007 were $173,424 and $1,276,761, respectively. Sales in 2008 include $46,773 of recurring maintenance contracts and new anti-vibration product revenues of iVoice Technology and $126,651 of administrative services agreements. Sales in 2007 include $1,120,000 of consulting revenues earned on the Deep Field agreement and revenues from the administrative services agreements of $156,761. The consulting revenues from the Deep Field agreement are not expected to be repeated in future periods.
 
Cost of sales for the year ended December 31, 2008 were $746. The costs represent the direct material and labor costs for the anti-vibration products produced by iVoice Technology’s out-sourced manufacturer.
 
Total operating expenses for the years ended December 31, 2008 and 2007, were $1,410,840 and $957,962, respectively, for an increase of $452,878.  Of these increases, $461,620 is attributable to the expenses of iVoice Technology, professional fees increased $109,474 and overhead and office expenses of the parent increased by $13,325. These increases are offset by decreases in amortization of finance costs and depreciation expense of $103,616 and decreases in rent of $27,925 on the consolidation into smaller space in the home office.
 
Total other income (expense) for the year ended December 31, 2008 was an expense of $1,326,839. This total was primarily comprised of $1,959,745 amortization of the discount on debt conversion, $2,982,833 fair value adjustment on the impairment of several investments and $880,618 of accrued interest expense on the YA Global notes and other debt. These amounts are offset by $3,854,935 gain on revaluation of the derivatives, $543,244 of interest income and $98,178 of other income primarily from the iVoice Technology settlement with YA Global. Total other income (expense) for the year ended December 31, 2007 was an expense of $2,702,067. This total was primarily comprised of $3,725,279 amortization of the discount on debt, $481,156 of accrued interest expense on the YA Global notes and other debt and $314,273 loss on sales of securities available for sale. These are offset by $1,131,305 gain on revaluation of the derivatives and $686,760 of interest income on the cash accounts and promissory notes receivable.
 
Net loss from continuing operations for the year ending December 31, 2008 was $2,565,001. The net loss from continuing operations for the year ending December 31, 2007 was $2,383,268. The increase in net loss of $181,733 was primarily due to the loss on the fair value adjustment on investments, lower sales, increased operating expenses and increased interest expenses, offset by increased gain on revaluation of derivatives on the repayment of the underlying debt and the reduced amortization of the discount on debt as the result of the factors discussed above.

Net loss from discontinued operations for the year ended December 31, 2007 was $765,833. This operation had been experiencing reduced product sales and had curtailed spending to better manage their available resources.

As required by APB Opinion No. 18, the Company is required to record minority shareholders’ interest in net income (loss) of iVoice Technology.  For the year ended December 31, 2008, iVoice Technology reported a net loss of $115,012 and as such, the Company recorded no minority shareholders’ interest for the period.
 
The total net loss for the year ended December 31, 2008 was $2,565,001 as compared to the net loss of $3,149,101 for the year ended December 31, 2007.  The decrease in net loss of $584,100 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 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 years ended December 31, 2008 and 2007, we had incurred net losses from continuing operations of $2,565,001 and $2,383,268, respectively, and had cash flow deficiencies from continuing operations of $203,554 and $174,729, respectively.  These matters raise substantial doubt about 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 generates 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 $60,000, professional fees of $100,000, business insurance of $70,000 and miscellaneous administrative expenses of $70,000.  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.

During the year ended December 31, 2008, we had a net increase in unrestricted cash and cash equivalents of $3,362,671. During the year ended December 31, 2007, we had a net increase in cash and cash equivalents of $48,684. The Company’s principal sources and uses of funds in the years ended December 31, 2008 and 2007 were as follows:
 
Cash flows from operating activities .  We used $203,554 in cash for continuing operations in the year ended December 31, 2008 and we used $174,729 in cash for continuing operations in the year ended December 31, 2007. The increase in cash used in operations of $28,825 was primarily the result of higher net cash loss (net loss after adding back non-cash items but before considering changes in certain assets and liabilities) of $134,645 and an increase in notes receivables of $89,325. These increases were offset by favorable changes in prepaid expenses of $97,320, deferred revenues of $50,000, accounts payable and accrued liabilities of $7,402 and increases in related party accounts of $40,423.
 
The net effect on cash flows from operating activities by the discontinued operations for the year ended December 31, 2007 was a decrease in cash of $447,977.
 
Cash flows from investing activities .  We provided cash of $9,874,839 from investing activities in the year ended December 31, 2008. We provided cash of $223,413 from investing activities in the year ended December 31, 2007. The increase in cash was primarily due to the liquidation of our Auction Rate Securities of $10,814,954. These proceeds are offset by the net effect of the consolidation of iVoice Technology of $879,840. 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 and to their investment in B Green Innovations, a wholly owned subsidiary of iVoice Technology.
 
The net effect on cash flows from investing activities from the discontinued operations for the years ending December 31, 2007 was an increase of cash of $119,248.
 
Cash flows from financing activities . For the year ended December 31, 2008, we used $6,308,614 cash for financing activities. During the year, funds provided by the Smith Barney Credit Line of $5,660,000 were used to pay down the YA Global convertible debentures of $4,796,510. Proceeds from the liquidation of our Auction Rate Securities were then used to repay the Smith Barney Credit Line account and the Company used $1,512,104 of the funds to redeem Class B Common Shares. For the year ended December 31, 2007, we were unable to raise any addition capital from the YA Global Securities Purchase Agreement because of the failed registration statement in May 2007.
 
The net effect on cash flows from financing activities from the discontinued operations was an increase in cash of $154,000 for the year ending December 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 12, 2008, the remaining principal balance of $4,796,510 was repaid in cash from the proceeds of the Smith Barney short term loans.
 
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 February 21, 2008, this debenture was amended to extend the maturity date until May 25, 2011 and to raise the interest rate to 15% per annum.
 
On March 7, 2008 and May 8, 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”). The interest rate charged on the loan is tied to the dividend rates earned on the ARPSs. When the ARPS were sold, a portion of the proceeds were applied to pay down the short term loans and the balance was deposited into interest bearing savings account at our primary banking center.
 
 
We can redeem a portion or all amounts outstanding under the YA Global Debentures at any time upon three business days advanced written notice.  A 20% redemption premium on the principal amount being redeemed is required. YA Global may, at its discretion, convert the outstanding principal and accrued interest, in whole or in part, into a number of shares of our Class A Common Stock equal to the quotient obtained by dividing (x) the outstanding amount of the YA Global Debentures to be converted by (y) 70% of the lowest closing bid price of our shares of Class A Common Stock during the 30 trading days immediately preceding the conversion date.
 
In addition, on any conversion date, YA Global may require us to make a cash payment in lieu of delivering shares of our Class A Common Stock if the conversion shares to be issued to YA Global, when aggregated with all other shares of our Class A Common Stock beneficially owned by YA Global at such time, would result in YA Global beneficially owning greater than 4.9% of our outstanding shares of Class A Common Stock.  For example, assuming YA Global did not beneficially own any shares of our Class A Common Stock at the time of conversion, if YA Global were to request a conversion of $30,000 at a conversion price of $.0001, then we would have to issue 333,333,333 shares ($30,000 / ($.0001 multiplied by 90%) to YA Global.  Since this number of shares exceeds 4.9% of our issued and outstanding shares of Class A Common Stock (134,076,084 shares), then YA Global could request that we make a cash payment of $19,926 (199,257,249 multiplied by $.0001).  We believe we have sufficient cash on-hand to satisfy such obligations if and when they shall arise.
 
We cannot predict the actual number of shares of Class A Common Stock that will be issued pursuant to the YA Global Debentures, in part, because the conversion price of the YA Global Debentures will fluctuate based on prevailing market prices.  If we are unable to issue enough shares to meet our obligations, then YA Global could request cash payments, which could have a material impact on our long-term growth strategy.
 
There is no assurance that the future funding, if any, offered by YA Global Investments, LP. in the form of secured convertible debentures will enable us to raise the requisite capital needed to implement our long-term growth strategy or that alternative forms of financing will be available.  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 year ended December 31, 2008, we did not engage in any material off-balance sheet activities or 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.
 
Item 8. Financial Statements and Supplementary Data.
 
The financial statements and notes of this Form 10-K appear after the signature page to this Form 10-K.
 
Item 9A(T). Controls and Procedures.

Evaluation of disclosure controls and procedures.

An evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of December 31, 2008.  Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer had concluded that the Company's disclosure controls and procedures were not effective.

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 
Management’s Report on Internal Control Over Financial Reporting

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, 2008 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 — Integrated Framework, our management concluded that our internal control over financial reporting was not effective for the following reasons:

a)
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)
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.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we engaged our independent registered public accounting firm to perform, an audit on our internal control over financial reporting pursuant to the 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 tentatively beginning with our annual report for the year ended December 31, 2009.

Changes in internal controls.

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 fiscal year covered by this Annual Report on Form 10-K.  There was no change in the Company's internal control over financial reporting identified in that evaluation that occurred during the fiscal year covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Risk factors related to controls and procedures

The Company has limited segregation of duties amongst its employees with respect to the Company's preparation and review of the Company's financial statements due to the limited number of employees, which is a deficiency in internal controls, and if the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the Company's financial reporting which could harm the trading price of the Company's stock.

Management has found it necessary to limit the Company's administrative staffing in order to conserve cash, until the Company's level of business activity increases. As a result, there is very limited segregation of duties amongst the administrative employees, and the Company and its independent public accounting firm have identified this as a deficiency in the Company's internal controls. The Company intends to remedy this deficiency by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this deficiency will continue to exist. Despite the limited number of administrative employees and limited segregation of duties, management believes that the Company's administrative employees are capable of following its disclosure controls and procedures effectively.
 
 
Part III

Item 10. Directors, Executive Officers, and Corporate Governance .

 
The Company has two directors and one principal officer. Listed below is certain information concerning individuals who currently serve as directors and executive officers of the Company.
 
Name
 
Age
 
Position
 
Period Served as OfficerDirector
Jerome R. Mahoney
 
49
 
President, CEO, Director
 
5-21-99 to present
Frank V. Esser
  69
 
Director
 
2-24-04 to present
 
Jerome R. Mahoney .  Mr. Mahoney has been our Chief Executive Officer and our sole director since May 21, 1999.  Mr. Mahoney started at Executone Information Systems, a telephone systems manufacturer, and was Director of National Accounts from 1988 to 1989.  In 1989, Mr. Mahoney founded Voice Express, Inc., a New York company that sold voicemail systems and telephone system service contracts and installed these systems.  Mr. Mahoney sold Voice Express Systems in 1993.  From 1993 to 1997, Mr. Mahoney was President of IVS Corp., and on December 17, 1997, he established International Voice Technologies, which we merged with on May 21, 1999.  Mr. Mahoney is also the Non-Executive Chairman of the Board of Trey Resources, Inc., Livingston, New Jersey and a member of its Board of Directors since January 1, 2003. He had served as Non-Executive Chairman of the Board of SpeechSwitch, Inc., Matawan, New Jersey, from November 10, 2004 until February 2008.  He has served as Non-Executive Chairman of the Board of Thomas Pharmaceuticals, Ltd., Matawan, New Jersey from May 19, 2005 until April 16, 2008. He has also served as Non-Executive Chairman of the Board of MM² Group, Inc., Matawan, New Jersey since October 19, 2005.  He is the President, Chief Executive Officer, Chief Financial Officer and Secretary of iVoice Technology, Inc, Matawan, NJ, and has held this position since August 30, 2006. He was also the Non-Executive Chairman of the Board of Deep Field Technologies, Inc., Matawan, New Jersey, until January 27, 2007. Mr. Mahoney received a B.A. in finance and marketing from Fairleigh Dickinson University, Rutherford, N.J. in 1983.
 
Frank V. Esser . Board Member since February 24, 2004 and the Head of The Audit Committee. Mr. Esser, who is a Certified Public Accountant, from 1959 to 1968, he functioned as Transfer Agent and Head Bookkeeper in the Treasury Department of Texaco Inc. As a certified public accountant with Ernst & Young from 1968 to 1981, he participated in the audits of major publicly traded companies such as J.P. Stevens & Co., Dynamics Corporation of America, and Phillips – Van Heusen Corporation, along with law firms, banks, manufacturing companies and other organizations. He also participated in the public offerings of equity and debt and the preparation of SEC filings. In 1981, Mr. Esser accepted the position of Corporate Controller with a client, Grow Group, Inc., a Fortune 500 manufacturer of paints, solvents, and household products. Ascending to the position of Chief Financial Officer in 1987. In 1998, Mr. Esser accepted the position of Senior Associate at Beacon Consulting Associates, adding the title of Vice President in 1999. Mr. Esser is also a Board member of iVoice Technology, Inc., Matawan, New Jersey, since June 2005.  Mr. Esser is also a Board member of Thomas Pharmaceuticals, Ltd, Matawan, New Jersey, since January 2006.  Mr. Esser holds a BBA degree from Baruch College of the City University of New York and is a Certified Public Accountant in New York State.
 
There are no agreements or understandings for the officer or directors to resign at the request of another person and the above-named officers and director is not acting on behalf of nor will act at the direction of any other person. The Company has an audit committee in place and has one independent member of the Board of Directors.

For the year ended December 31, 2008, the Board held no meeting and acted forty-four times through written unanimous consent in lieu of a meeting.

AUDIT COMMITTEE

During 2008, Messrs. Mahoney and Esser served on the Audit Committee with Mr. Esser serving as the Chairman of the committee. The Audit Committee has one independent member who may also be deemed to be a financial expert as defined in §228.401(e) of the regulations promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended.  Management is responsible for the Company’s internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted accounting principles and to issue a report thereon and as to management’s assessment of the effectiveness of internal controls over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes, although the members of the Audit Committee are not engaged in the practice of auditing.  The Audit Committee met once in 2008. The Board of Directors approved an Audit Committee Charter on March 23, 2006. As of this date, the Audit Committee operates pursuant to this Audit Committee Charter.

AUDIT COMMITTEE REPORT

The following is the Audit Committee’s report submitted to the Board of Directors for the fiscal year ended December 31, 2008.  The Audit Committee has:

·  
reviewed and discussed the Company’s audited financial statements with management and Bagell, Josephs, Levine & Company, L.L.C., the Company’s independent registered public accounting firm;
·  
discussed with Bagell, Josephs, Levine & Company, L.L.C. the matters required to be discussed by Statement on Auditing Standards No.   114, as may be modified or supplemented; and
·  
received from Bagell, Josephs, Levine & Company, L.L.C. the written disclosures and the letter regarding their independence as required by Independence Standards Board Standard No. 1, as may be modified or supplemented, and discussed the auditors’ independence with them.
 

 
 
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, for filing with the Securities and Exchange Commission.

 
AUDIT COMMITTEE
 
Frank V. Esser, Chairman
 
Jerome Mahoney, Member
 
The Audit Committee report shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under these acts.

NOMINATING COMMITTEE

The Company does not have a standing nominating committee or a committee performing similar functions, as the Board of Directors consists of only two members.  Due to the Company’s size, it finds it difficult to attract individuals who would be willing to accept membership on the Company’s Board of Directors.  Therefore, with only two members of the Board of Directors, the full Board of Directors would participate in nominating candidates to the Board of Directors.  The Company did not have an annual meeting of shareholders in the past fiscal year.
 
Section 16(a) Beneficial Ownership Reporting Compliance.

No person who was a director, officer, beneficial owner of more than ten percent of any class of equity securities of the registrant registered pursuant to section 12 (“Reporting Person”) failed to file on a timely basis the necessary reports, on Forms 3, 4, or 5, as required by section 16(a) of the Exchange Act during the most recent fiscal year.
 
Code of Ethics.

The Company has adopted a Code of Ethics for adherence by its Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Controller to ensure honest and ethical conduct; full, fair and proper disclosure of financial information in the Company's periodic reports filed pursuant to the Securities Exchange Act of 1934; and compliance with applicable laws, rules, and regulations. Any person may obtain a copy of our Code of Ethics by mailing a request to the Company at the address appearing on the front page of this Annual Report on Form 10-K.
 
Item 11. Executive Compensation.
 
The following table sets forth compensation information for services rendered by certain of our executive officers in all capacities during the last two completed fiscal years.  The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted, and certain other compensation, if any, whether paid or deferred.  
 
Summary Compensation Table
 
Name and Position(s)
 
Year
 
Salary($)
   
All Other Compensation
   
Total Compensation
 
Jerome R. Mahoney
                     
Chief Executive Officer
 
2008
  $ 383,328     $ 866 (1)   $ 384,194  
    and President
 
2007
  $ 360,480     $ 866 (1)   $ 361,346  
                             
(1)  
Represents $866 in life insurance premiums paid on behalf of Mr. Mahoney for the year ending December 31, 2008 and 2007.
 
 
 
Compensation of Directors
 
The following table sets forth compensation information for services rendered by our directors during the last completed fiscal year.  The following information includes the dollar value of fees earned or paid in cash and certain other compensation, if any, whether paid or deferred.  Our directors did not receive any bonus, stock awards, option awards, non-equity incentive plan compensation, or nonqualified deferred compensation earnings during the last completed fiscal year.
 
Director Compensation
 
Name
 
Fees Earned or Paid in Cash
($)
   
All Other Compensation
($)
   
Total Compensation
($)
 
Frank V. Esser(1)
  $ 12,000 (2)   $ 0     $ 12,000  

(1)  
Mr. Esser has been serving as our outside director since June 2005 at a fee of $12,000 per year.
 
(2)  
Includes $9,000 of Director’s fees that have been accrued and unpaid.
 
Employment Contracts
 
On May 1, 1999, the Company entered into a five-year employment agreement with its majority stockholder (the "Executive"). He will serve as the Company's Chairman of the Board and Chief Executive Officer for a term of five years. As consideration, the Company agrees to pay the Executive a sum of $180,000 the first year with a 10% increase every year thereafter.  The employment agreement with Mr. Mahoney provides for a severance payment to him of three hundred percent (300%), less $100, of his average annual amount actually paid by the Company or any parent or subsidiary of the Company to the Executive and included in the Executive's gross income for services rendered in each of the five prior calendar years (or shorter period during which the Executive shall have been employed by the Company) should his employment be terminated following a Change in Control, as defined in the agreement.
 
On November 15, 2004, the Company amended the employment agreement with Jerome Mahoney and extended the term for an additional five-year period commencing on May 1, 2004. He will serve as the Company's Chairman of the Board, President and Chief Executive Officer for a term of five years. As consideration, the Company agrees to pay Mr. Mahoney a sum of $270,000 the first year with a 10% increase every year thereafter.

Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
 
The following tables set forth certain information regarding the beneficial ownership of our voting securities as of April 13, 2009 of (i) each person known to us to beneficially own more than 5% of the applicable class of voting securities, (ii) our directors, (iii) and each named executive officer and (iv) all directors and executive officers as a group.  As of April 13, 2008 a total of 2,602,170,527 shares of Class A Common Stock outstanding and a no shares of our Class B Common Stock were outstanding.  Each share of Class A common stock is entitled to one vote on matters on which holders of common stock are eligible to vote.  Every holder of the outstanding shares of the Class B Common Stock Shares shall be entitled on each matter to cast the number of votes equal to the number of Class A Common Stock Shares that would be issued upon the conversion of the Class B Common Stock Shares held by that holder, had all of the outstanding Class B Common Stock Shares held by that holder been converted on the record date used for purposes of determining which shareholders would vote in such an election.  The column entitled “Percentage of Total Voting Stock” shows the percentage of total voting stock beneficially owned by each listed party.

The number of shares beneficially owned is determined under rules promulgated by the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose.  Under those rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of April 13, 2009, through the exercise or conversion of any stock option, convertible security, warrant or other right.  Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of capital stock listed as owned by that person or entity.
 
 
 
Ownership of Common Stock
 
       
Common Stock
Beneficially Owned
 
Name/Address
 
Title of Class
 
Number
   
Percent
 
Jerome R. Mahoney
 
Class A Common Stock
    2,940,930,258 (1)     53.3 %
c/o iVoice, Inc.
 
Class B Common Stock
    131,201 (2)     100.0 %
750 Highway 34
                   
Matawan, New Jersey  07747
                   
                     
Frank V. Esser (Director)
 
Class A Common Stock
    70,892       0.0 %
27 Arden Road
                   
Old Bridge, New Jersey  08857
                   
                     
YA Global Investments LP
 
Class A Common Stock
    16,700,000,000 (3)     86.5 %
101 Hudson Street, Suite 3700
                   
Jersey City, New Jersey  07302
                   
                     
Director and executive officer as a group
 
Class A Common Stock
    2,941,001,150       53.3 %
   
Class B Common Stock
    131,201       100.0 %
                     
(1)  
Includes (i) 25,352,480 shares of our Class A common stock held by Mr. Mahoney and his minor aged children and (ii) 2,915,577,778 shares of our Class A common stock issuable upon repayment of accrued interest and deferred compensation.  Mr. Mahoney may, at any time, convert amounts owed to him into (i) one share of our Class B common stock for each dollar owed, (ii) the number of shares of our Class A common stock calculated by dividing (x) the sum of the amount being prepaid by (y) 50% of the lowest issue price of shares of our Class A common stock since the first advance of funds under such note, or (iii) payment of the principal of the note, before any repayment of interest.  At April 13, 2009, the total balance owed to Mr. Mahoney was $131,201, convertible into 131,201 shares of our Class B common stock, or 2,915,577,778 shares of our Class A common stock.

(2)  
Includes $131,201 of amounts due to Mr. Mahoney, which is convertible into 131,201 shares of Class B common stock.

(3)  
Includes (i) 16,670,000,000 shares of our Class A common stock issuable upon conversion of $1,166,900 principal balance on the YA Global Convertible Debentures, and (ii) 30,000,000 shares of our Class A common stock issuable upon conversion of YA Global Warrants.  Pursuant to the terms of the YA Global Convertible Debentures, YA Global may, at any time, convert outstanding principal and accrued interest, in whole or in part, into a number of shares of our Class A Common Stock equal to the quotient obtained by dividing (x) the outstanding amount of the YA Global Debentures to be converted by (y) 70% of the lowest closing bid price of our shares of Class A Common Stock during the 30 trading days immediately preceding the conversion date.

Item 13. Certain Relationships and Related Transactions and Director Independence.
 
At December 31, 2008, the total balance owed to Mr. Mahoney, by the parent of iVoice Inc., was $296,506, which is convertible into 296,506 shares of our Class B common stock, or 6,589,022,222 shares of our Class A common stock.
 
At December 31, 2008, the total balance owed to Mr. Mahoney, by iVoice Technology Inc., was $420,488, which is convertible into 420,488 shares of iVoice Technology’s Class B common stock, or 1,051,218,750 shares of iVoice Technology’s Class A common stock.
 
At December 31, 2008, the total balance owed to Mr. Mahoney, by B Green Technology, Inc., a wholly owned subsidiary of iVoice Technology Inc., was $16,000, for deferred compensation.
 
Item 14. Principal Accountant Fees and Services    
 
The following table sets forth fees billed to the Company by the Company’s independent auditors for the year ended December 31, 2008 and December 31, 2007 for (i) services rendered for the audit of the Company’s annual financial statements and the review of the Company’s quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.
 
Services
 
2007
   
2007
 
Audit Fees
  $ 25,000     $ 27,000  
Audit - Related Fees
    (1 )     (1 )
Tax fees
    (1 )     (1 )
All Other Fees (review of other filings)
  $ 160     $ 1,200  
Total
  $ 25,160     $ 28,200  
(1) Included in base audit fee, not itemized
               

Prior to engaging our accountants to perform a particular service, our Audit Committee obtains an estimate for the service to be performed. All of the services described above were approved by the Audit Committee in accordance with its procedures .
 
 
PART IV
 
Item 15. Exhibits and Financial Statement Schedules.
 
(a)           Exhibits                  
 
No. Description
3.1
Certificate of incorporation of  iVoice, Inc., a New Jersey corporation, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 10-QSB for the period ended March 31, 2003.
3.2
Amendment to the Certificate of incorporation of  iVoice, Inc., filed with the Treasurer of the State of New Jersey on June 9, 2005, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated June 9, 2005.
3.3
Amendment to the Certificate of incorporation of  iVoice, Inc., filed with the Treasurer of the State of New Jersey on June 17, 2005, incorporated herein by reference to Exhibit 3.2 of the Registrant’s Form 8-K dated June 9, 2005.
3.4
By-laws of iVoice, Inc., a New Jersey corporation, incorporated herein by reference to Exhibit 3.2 of the Registrant’s Form 10-QSB for the period ended March 31, 2003.
3.5
Amendment to the Certificate of Incorporation of iVoice, Inc., filed with the Treasurer of the State of New Jersey on April 10, 2006, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated March 30, 2006.
3.6
Amendment to the Certificate of Incorporation of iVoice, Inc., filed with the Treasurer of the State of New Jersey on March 6, 2009, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated March 13, 2009.
4.1
Secured Convertible Debenture dated May 11, 2006, between YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal value of $5,544,110. (incorporated herein by reference to Exhibit 4.1 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.2
Secured Convertible Debenture dated May 11, 2006, between YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal value of $503,776. (incorporated herein by reference to Exhibit 4.2 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.3
Secured Convertible Debenture dated May 25, 2006, between YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal value of $1,250,000.  (incorporated herein by reference to Exhibit 4.3 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.4
Warrant to Purchase 10,000,000 shares of common stock issued to YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an exercise price per share of $.30. (incorporated herein by reference to Exhibit 4.4 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.5
Warrant to Purchase 10,000,000 shares of common stock issued to YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an exercise price per share of $.40. (incorporated herein by reference to Exhibit 4.6 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.6
Warrant to Purchase 10,000,000 shares of common stock issued to YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an exercise price per share of $.50. (incorporated herein by reference to Exhibit 4.6 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
10.1
iVoice, Inc. 2005 Stock Incentive Plan incorporated herein by reference to Appendix A to the Schedule 14A filed on February 27, 2006.
10.2
Amended and Restated Security Agreement, dated May 25, 2006 between YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. (incorporated herein by reference to Exhibit 10.15 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
10.3
Agreement and Plan of Merger dated January 6, 2006 by and among iVoice, Inc., Thomas Pharmaceuticals, Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey corporation, Thomas Pharmaceuticals Ltd., a New York corporation, Farris M. Thomas, Jr., an individual, John E. Lucas, an individual, Richard C. Brogle, Nina Schwalbe, an individual, John H. Kirkwood, an individual, and Maureen Gillespie, an individual (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.4
Secured Convertible Debenture dated January 6, 2006 issued by Thomas Pharmaceuticals, Ltd. a New Jersey corporation. for the sum of $360,000 (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.5
Administrative Services Agreement dated January 6, 2006 between Thomas Pharmaceuticals, Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey corporation and iVoice, Inc. (incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.6
Security Agreement dated January 6, 2006 by and between iVoice, Inc. and Thomas Pharmaceuticals, Ltd., a New Jersey corporation (incorporated herein by reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.7
Administrative Services Convertible Debenture dated January 6, 2006 issued by Thomas Pharmaceuticals, Ltd. a New Jersey corporation. for the sum of $100,000 (incorporated herein by reference to Exhibit 10.8 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.8
Stock Purchase Agreement dated August 7, 2006 by and among Thomas Pharmaceuticals Ltd., Thomas Pharmaceutical Acquisition Corp. and iVoice, Inc. (incorporated herein by reference to Exhibit 10.28 of Amendment No. 2 to Form SB-2 filed on October 23, 2006).
10.9
Extension Agreement dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd., Thomas Pharmaceutical Acquisition Corp. and iVoice, Inc. (incorporated herein by reference to Exhibit 10.1 of Form 8-K filed on January 26, 2007).
10.10
Secured Convertible Debenture dated January 26, 2007 by and among Thomas Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated herein by reference to Exhibit 10.2 of Form 8-K filed on January 26, 2007).
10.11
Convertible Debenture dated January 26, 2007 by and among Thomas Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated herein by reference to Exhibit 10.3 of Form 8-K filed on January 26, 2007).
10.12
Promissory Note dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd., and Thomas Pharmaceutical Acquisition Corp. (incorporated herein by reference to Exhibit 10.4 of Form 8-K filed on January 26, 2007).
10.13
Security Agreement dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd., Thomas Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated herein by reference to Exhibit 10.5 of Form 8-K filed on January 26, 2007).
 
 
 
No. Description  
10.14
Consulting Services Agreement dated February 13, 2007 between iVoice, Inc and Deep Field Technologies, Inc. (incorporated herein by reference to Exhibit 10.34 of Form 10-KSB for the fiscal year ended December 31, 2007).
 
10.15
Amendment Agreement dated February 21, 2008 by and between iVoice, Inc. and YA Global Investments LP. (incorporated herein by reference to Exhibit 10.1 of Form 8-K dated February 22, 2008).
10.16
10.17
10.18
10.19
Administrative Services Agreement, Amendment No. 1, dated March 5, 2008 between iVoice Technology, Inc., a New Jersey corporation, and iVoice, Inc. (incorporated herein by reference to Exhibit 10.1 of Form 8-K dated March 5, 2008).
10.20
Secured Convertible Promissory Note dated March 5, 2008 issued by iVoice Technology, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.2 of Form 8-K dated March 5, 2008).
10.21
Security Agreement dated March 5, 2008 issued by iVoice Technology, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.3 of Form 8-K dated March 5, 2008).
10.22
10.23
10.24
10.25
Administrative Services Agreement dated June 10, 2008 between Small Cap Advisors, Inc., a New Jersey corporation, and iVoice, Inc. (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.26
Secured Convertible Promissory Note dated June 10, 2008 issued by Small Cap Advisors, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.27
Security Agreement dated June 10, 2008 issued by Small Cap Advisors, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.28
Administrative Services Agreement, Amendment No. 1, dated June 12, 2008 between Thomas Pharmaceuticals, Ltd., a New Jersey corporation, and iVoice, Inc. (incorporated herein by reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10. 29
Secured Convertible Promissory Note dated June 10, 2008 issued by Thomas Pharmaceuticals, Ltd., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.5 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.30
Security Agreement dated June 12, 2008 issued by Thomas Pharmaceuticals, Ltd., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.6 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.31
Amendment No. 3 to Employment Agreement dated March 13, 2009 by and between iVoice, Inc., a New Jersey corporation, and Jerome Mahoney (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 8-K dated March 13, 2009.
14.1
Code of Ethics (incorporated by reference to Exhibit 14.1 filed with the Registrant’s Form 10-KSB for the fiscal year ended December 31, 2003).
21
31.1
32.1
                  
 
*  Filed herein
 

 
 
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 
iVoice, Inc.
 
By: /s/ JEROME R MAHONEY                                April 15, 2009
Jerome R. Mahoney
President, Chief Executive Officer,
Chief Financial Officer and Director
 

In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:               /s/ Jerome R. Mahoney                                              April 15, 2009
Jerome R. Mahoney
President, Chief Executive Officer,
Chief Financial Officer and Director


By:               /s/ Frank V. Esser                                                         April 15, 2009
Frank V. Esser
Director
 

INDEX OF EXHIBITS

 
No. Description
3.1
Certificate of incorporation of  iVoice, Inc., a New Jersey corporation, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 10-QSB for the period ended March 31, 2003.
3.2
Amendment to the Certificate of incorporation of  iVoice, Inc., filed with the Treasurer of the State of New Jersey on June 9, 2005, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated June 9, 2005.
3.3
Amendment to the Certificate of incorporation of  iVoice, Inc., filed with the Treasurer of the State of New Jersey on June 17, 2005, incorporated herein by reference to Exhibit 3.2 of the Registrant’s Form 8-K dated June 9, 2005.
3.4
By-laws of iVoice, Inc., a New Jersey corporation, incorporated herein by reference to Exhibit 3.2 of the Registrant’s Form 10-QSB for the period ended March 31, 2003.
3.5
Amendment to the Certificate of Incorporation of iVoice, Inc., filed with the Treasurer of the State of New Jersey on April 10, 2006, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated March 30, 2006.
3.6
Amendment to the Certificate of Incorporation of iVoice, Inc., filed with the Treasurer of the State of New Jersey on March 6, 2009, incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated March 13, 2009.
4.1
Secured Convertible Debenture dated May 11, 2006, between YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal value of $5,544,110. (incorporated herein by reference to Exhibit 4.1 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.2
Secured Convertible Debenture dated May 11, 2006, between YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal value of $503,776. (incorporated herein by reference to Exhibit 4.2 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.3
Secured Convertible Debenture dated May 25, 2006, between YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal value of $1,250,000.  (incorporated herein by reference to Exhibit 4.3 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.4
Warrant to Purchase 10,000,000 shares of common stock issued to YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an exercise price per share of $.30. (incorporated herein by reference to Exhibit 4.4 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.5
Warrant to Purchase 10,000,000 shares of common stock issued to YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an exercise price per share of $.40. (incorporated herein by reference to Exhibit 4.6 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
4.6
Warrant to Purchase 10,000,000 shares of common stock issued to YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an exercise price per share of $.50. (incorporated herein by reference to Exhibit 4.6 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
10.1
iVoice, Inc. 2005 Stock Incentive Plan incorporated herein by reference to Appendix A to the Schedule 14A filed on February 27, 2006.
10.2
Amended and Restated Security Agreement, dated May 25, 2006 between YA Global Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. (incorporated herein by reference to Exhibit 10.15 of the Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30, 2006).
10.3
Agreement and Plan of Merger dated January 6, 2006 by and among iVoice, Inc., Thomas Pharmaceuticals, Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey corporation, Thomas Pharmaceuticals Ltd., a New York corporation, Farris M. Thomas, Jr., an individual, John E. Lucas, an individual, Richard C. Brogle, Nina Schwalbe, an individual, John H. Kirkwood, an individual, and Maureen Gillespie, an individual (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.4
Secured Convertible Debenture dated January 6, 2006 issued by Thomas Pharmaceuticals, Ltd. a New Jersey corporation. for the sum of $360,000 (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.5
Administrative Services Agreement dated January 6, 2006 between Thomas Pharmaceuticals, Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey corporation and iVoice, Inc. (incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.6
Security Agreement dated January 6, 2006 by and between iVoice, Inc. and Thomas Pharmaceuticals, Ltd., a New Jersey corporation (incorporated herein by reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.7
Administrative Services Convertible Debenture dated January 6, 2006 issued by Thomas Pharmaceuticals, Ltd. a New Jersey corporation. for the sum of $100,000 (incorporated herein by reference to Exhibit 10.8 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006, filed with the SEC on May 15, 2006).
10.8
Stock Purchase Agreement dated August 7, 2006 by and among Thomas Pharmaceuticals Ltd., Thomas Pharmaceutical Acquisition Corp. and iVoice, Inc. (incorporated herein by reference to Exhibit 10.28 of Amendment No. 2 to Form SB-2 filed on October 23, 2006).
10.9
Extension Agreement dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd., Thomas Pharmaceutical Acquisition Corp. and iVoice, Inc. (incorporated herein by reference to Exhibit 10.1 of Form 8-K filed on January 26, 2007).
10.10
Secured Convertible Debenture dated January 26, 2007 by and among Thomas Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated herein by reference to Exhibit 10.2 of Form 8-K filed on January 26, 2007).
10.11
Convertible Debenture dated January 26, 2007 by and among Thomas Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated herein by reference to Exhibit 10.3 of Form 8-K filed on January 26, 2007).
10.12
Promissory Note dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd., and Thomas Pharmaceutical Acquisition Corp. (incorporated herein by reference to Exhibit 10.4 of Form 8-K filed on January 26, 2007).
10.13
Security Agreement dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd., Thomas Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated herein by reference to Exhibit 10.5 of Form 8-K filed on January 26, 2007).
 
 
                  
 
*  Filed herein
 

 
 
No. Description  
10.14
Consulting Services Agreement dated February 13, 2007 between iVoice, Inc and Deep Field Technologies, Inc. (incorporated herein by reference to Exhibit 10.34 of Form 10-KSB for the fiscal year ended December 31, 2007).
 
10.15
Amendment Agreement dated February 21, 2008 by and between iVoice, Inc. and YA Global Investments LP. (incorporated herein by reference to Exhibit 10.1 of Form 8-K dated February 22, 2008).
10.16
10.17
10.18
10.19
Administrative Services Agreement, Amendment No. 1, dated March 5, 2008 between iVoice Technology, Inc., a New Jersey corporation, and iVoice, Inc. (incorporated herein by reference to Exhibit 10.1 of Form 8-K dated March 5, 2008).
10.20
Secured Convertible Promissory Note dated March 5, 2008 issued by iVoice Technology, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.2 of Form 8-K dated March 5, 2008).
10.21
Security Agreement dated March 5, 2008 issued by iVoice Technology, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.3 of Form 8-K dated March 5, 2008).
10.22
10.23
10.24
10.25
Administrative Services Agreement dated June 10, 2008 between Small Cap Advisors, Inc., a New Jersey corporation, and iVoice, Inc. (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.26
Secured Convertible Promissory Note dated June 10, 2008 issued by Small Cap Advisors, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.27
Security Agreement dated June 10, 2008 issued by Small Cap Advisors, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.28
Administrative Services Agreement, Amendment No. 1, dated June 12, 2008 between Thomas Pharmaceuticals, Ltd., a New Jersey corporation, and iVoice, Inc. (incorporated herein by reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10. 29
Secured Convertible Promissory Note dated June 10, 2008 issued by Thomas Pharmaceuticals, Ltd., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.5 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.30
Security Agreement dated June 12, 2008 issued by Thomas Pharmaceuticals, Ltd., a New Jersey corporation, to iVoice, Inc. (incorporated herein by reference to Exhibit 10.6 of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed with the SEC on August 13, 2008).
10.31
Amendment No. 3 to Employment Agreement dated March 13, 2009 by and between iVoice, Inc., a New Jersey corporation, and Jerome Mahoney (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 8-K dated March 13, 2009.
14.1
Code of Ethics (incorporated by reference to Exhibit 14.1 filed with the Registrant’s Form 10-KSB for the fiscal year ended December 31, 2003).
21
31.1
32.1
                  
 
*  Filed herein

 
 
iVOICE, INC.  AND SUBSIDIARIES
 
CONSOLIDATED FINANCIAL STATEMENTS
 
DECEMBER 31, 2008 and 2007
 
 
 
iVOICE , INC. AND SUBSIDIARIES
 
CONSOLIDATED FINANCIAL STATEMENTS
 
CONTENTS
 
 
 
 
 
 
BAGELL , JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified Public Accountants
406 Lippincott Drive – Suite J
Marlton, New Jersey 08053
(856) 355-5900  Fax (856) 396-0022


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS’ OF iVOICE, INC.
Matawan, New Jersey

We have audited the accompanying consolidated balance sheets of iVoice, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders' equity (deficit), accumulated other comprehensive income (loss) and cash flows for each of the years in the two-year period ended December 31, 2008.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of iVoice, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 19 to the consolidated financial statements, 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 their subsidiary. These issues raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also discussed in Note 19. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.





Bagell, Josephs, Levine & Company, LLC
Marlton, New Jersey
April 9, 2009
 
 
 
iVOICE , INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,

ASSETS  

  
   
2008
   
2007
 
CURRENT ASSETS
           
    Cash and cash equivalents
  $ 3,442,590     $ 79,919  
   Marketable securities
    --       10,814,954  
Securities available for sale
    13,016       676,272  
   Inventory
    6,246       --  
   Prepaid expenses and other current assets
    21,811       194,678  
                 
   Total current assets
    3,483,663       11,765,823  
                 
                 
PROPERTY AND EQUIPMENT, net of accumulated depreciation
               
   of $221,162 and $214,721, respectively
    23,556       11,285  
                 
                 
OTHER ASSETS
               
    Convertible debentures receivable
    --       852,447  
   Intangible assets, net of accumulated amortization of $1,608 and $871
    233,939       170,975  
   Deposits and other assets
    6,666       6,666  
                 
   Total other assets
    240,605       1,030,088  
                 
TOTAL ASSETS
  $ 3,747,824     $ 12,807,196  

The accompanying notes are an integral part of these consolidated financial statements.



 
iVOICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – (Continued)
December 31,

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 
   
2008
   
2007
 
CURRENT LIABILITIES
           
    Accounts payable and accrued expenses
  $ 2,171,229     $ 1,127,695  
   Due to related parties
    648,058       176,293  
   Convertible debenture payables, net of discount of $170,808 and $1,444,056
    996,092       5,004,154  
   Derivative liability on convertible debentures
    1,659,991       4,249,113  
   Redemption of Class B common stock liability, net of restricted cash of $1,512,104
    --       --  
   Deferred revenue
    9,407       --  
                 
   Total current liabilities
    5,484,777       10,557,255  
                 
COMMITMENTS AND CONTINGENCIES
               
                 
STOCKHOLDERS' EQUITY (DEFICIT)
               
    Preferred stock, $1 par value; Authorized shares - 1,000,000;
               
   Issued and outstanding shares – none
    -       -  
   Common stock, Class A:
               
   2008 – no par value; Authorized 10,000,000,000,
               
   2,602,173,527 shares issued, 2,602,170,527 shares outstanding
               
   2007 – no par value; Authorized 10,000,000,000,
               
   420,674,318 shares issued, 420,671,318 shares outstanding
    24,613,184       25,325,012  
   Common stock, Class B:
               
   2008 - $.01 par value; Authorized 50,000,000
               
   2,204,875 shares issued, 1,512,104 shares outstanding,
               
   2007 - $.01 par value; Authorized 50,000,000
               
   2,204,875 shares issued, 1,552,484 shares outstanding
    --       15,525  
   Additional paid-in capital
    719,702       719,702  
   Discount on investment in subsidiary
    (1,792,325 )     -  
   Accumulated other comprehensive income (loss)
    1,785       (1,096,000 )
   Accumulated deficit
    (25,250,499 )     (22,685,498 )
   Treasury stock, 3,000 Class A shares, at cost
    (28,800 )     (28,800 )
                 
   Total stockholders' equity (deficit)
    (1,736,953 )     2,249,941  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  $ 3,747,824     $ 12,807,196  
 

The accompanying notes are an integral part of these consolidated financial statements.
 
 

iVOICE , INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,

   
2008
   
2007
 
SALES, net
  $ 173,424     $ 1,276,761  
                 
COST OF SALES
    746       --  
                 
GROSS PROFIT
    172,678       1,276,761  
                 
SELLING, GENERAL AND
               
   ADMINISTRATIVE EXPENSES
               
    General and administrative expenses
    1,331,812       775,318  
   Amortization of financing costs
    72,396       173,750  
   Depreciation and amortization
    6,632       8,894  
                 
   Total selling, general and administrative expenses
    1,410,840       957,962  
                 
INCOME (LOSS) FROM CONTINUING OPERATIONS
    (1,238,162 )     318,799  
                 
OTHER INCOME (EXPENSE)
               
    Other income
    641,422       373,063  
   Gain on revaluation of derivatives
    3,854,935       1,131,305  
   Amortization of discount on debt
    (1,959,745 )     (3,725,279 )
   Fair value adjustment on investments
    (2,982,833 )     --  
   Interest expense
    (880,618 )     (481,156 )
   Total other income (expense)
    (1,326,839 )     (2,702,067 )
                 
LOSS FROM CONTINUING OPERATIONS BEFORE
               
PROVISION FOR INCOME TAXES
    (2,565,001 )     (2,383,268 )
                 
PROVISION FOR INCOME TAXES
    --       --  
                 
LOSS FROM CONTINUING OPERATIONS
    (2,565,001 )     (2,383,268 )
                 
LOSS FROM DISCONTINUED OPERATIONS
               
    Loss from discontinued operations
    --       (765,833 )
                 
NET LOSS APPLICABLE TO COMMON SHARES
  $ (2,565,001 )   $ (3,149,101 )
                 
NET LOSS PER BASIC AND DILUTED COMMON SHARE
               
    Continuing Operations: basic and diluted
  $ (0.00 )   $ (0.02 )
    Discontinued Operations: basic and diluted
  $ (0.00 )   $ (0.02 )
                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
               
    Basic and diluted
    1,798,730,508       141,801,089  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
iVOICE , INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007


   
Common Stock Class A
   
Common Stock Class B
   
Treasury
Stock
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Amount
 
Balance at January 1, 2007
    69,070,695     $ 24,831,084       1,605,347     $ 16,053     $ (28,800 )
                                         
Issuance of stock on conversion of Class B shares
    86,012,651       528       (52,863 )     (528 )     -  
                                         
Issuance of stock as repayment of principal on an outstanding convertible debentures
    265,587,972       493,400       -       -       -  
                                         
Unrealized loss on securities available for sale
    -       -       -       -       -  
                                         
Gain on spin off of subsidiary to shareholders
    -       -       -       -       -  
                                         
Net loss for the year ended December 31, 2007 from continuing operations
    -       -       -       -       -  
                                         
Net loss for the year ended December 31, 2007 from discontinued operations
    -       -       -       -       -  
                                         
Balance at December 31, 2007
    420,671,318     $ 25,325,012       1,552,484     $ 15,525     $ (28,800 )
                                         
Issuance of stock as repayment of principal on an outstanding convertible debentures
    1,805,499,209       778,751       -       -       -  
                                         
Issuance of stock on conversion of Class B shares
    316,000,000       404       (40,380 )     (404 )     -  
                                         
Issuance of stock for legal services
    60,000,000       6,000       -       -       -  
                                         
Reclass of redemption of Class B common stock to liabilities
    -       (1,496,983 )     -       (15,121 )     -  
                                         
Discount on investment in subsidiary
    -       -       -       -       -  
                                         
Unrealized loss on securities available for sale
    -       -       -       -       -  
                                         
Reclassification adjustment for losses included in net loss
    -       -       -       -       -  
                                         
Net loss for the year ended December 31, 2008
    -       -       -       -       -  
                                         
Balance at December 31, 2008
    2,602,170,527     $ 24,613,184       1,514,104     $ -     $ (28,800 )

The accompanying notes are an integral part of these consolidated financial statements.





iVOICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

   
Discount on Investment
   
 
Additional
   
Accumulated Other
         
Total Stockholders’
 
   
In
   
Paid-In
   
Comprehensive
   
Accumulated
   
Equity
 
   
Subsidiary
   
Capital
   
(Losses)
   
(Deficit)
   
(Deficit)
 
Balance at January 1, 2007
  $ -     $ 719,702     $ (376,559 )   $ (21,501,690 )   $ 3,659,790  
                                         
Issuance of stock on conversion of Class B shares
    -       -       -       -       -  
                                         
Issuance of stock as repayment of principal on an outstanding convertible debentures
    -       -       -       -       493,400  
                                         
Unrealized loss on securities available for sale
    -       -       (719,441 )     -       (719,441 )
                                         
Gain on spin off of subsidiary to shareholders
    -       -       -       1,965,293       1,965,293  
                                         
Net loss for the year ended December 31, 2007 from continuing operations
    -       -       -       (2,383,268 )     (2,383,268 )
                                         
Net loss for the year ended December 31, 2007 from discontinued operations
    -        -       -       (765,833 )     (765,833 )
                                         
Balance at December 31, 2007
  $ -     $ 719,702     $ (1,096,000 )   $ (22,685,498 )   $ 2,249,941  
                                         
Issuance of stock as repayment of principal on an outstanding convertible debentures
    -       -       -       -       778,751  
                                         
Issuance of stock on conversion of Class B shares
    -       -       -       -       -  
                                         
Issuance of stock for legal services
    -       -       -       -       6,000  
                                         
Reclass of redemption of Class B common stock to liabilities
    -       -       -       -       (1,512,104 )
                                         
Discount on investment in subsidiary
    (1,792,325 )     -       -       -       (1,792,325 )
                                         
Unrealized loss on securities available for sale
    -       -       (11,952 )     -       (11,952 )
                                         
Reclassification adjustment for losses included in net loss
    -       -       1,109,737       -       1,109,737  
                                         
Net loss for the year ended December 31, 2008
    -        -       -       (2,565,001 )     (2,565,001 )
                                         
Balance at December 31, 2008
  $ (1,792,325 )   $ 719,702     $ 1,785     $ (25,250,499 )   $ (1,736,953 )

The accompanying notes are an integral part of these consolidated financial statements.


 
iVOICE , INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

 
   
Accumulated Other
 
   
Comprehensive
 
   
Income (Loss)
 
Balance at January 1, 2007
  $     $ (376,559 )
               
   Unrealized loss on securities available for sale:
             
   Unrealized losses arising during the period
    (1,033,714 )        
   Less: reclassification adjustment for losses included in net loss
    314,273          
   Net change for the year
            (719,441 )
Balance at December 31, 2007
            (1,096,000 )
                 
   Unrealized loss on securities available for sale:
               
   Unrealized losses arising during the period
    (11,952 )        
   Less: reclassification adjustment for losses included in net loss
    (1,109,737 )        
   Net change for the year
            1,097,785  
Balance at December 31, 2008
  $ -     $ 1,785  


The accompanying notes are an integral part of these consolidated financial statements.




 
iVOICE , INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,


   
2008
   
2007
 
CASH FLOW FROM OPERATING ACTIVITIES
           
    Net loss
  $ (2,565,001 )   $ (2,383,268 )
   Adjustments to reconcile net loss to net
               
   cash (used in) operating activities:
               
   Depreciation and amortization
    5,779       8,894  
   Amortization of prepaid financing costs
    72,396       173,750  
   Amortization of discount on debt conversion
    1,273,248       3,725,279  
   Fair value adjustment on investments
    2,982,833       --  
   Beneficial interest on issuance of stock
    293,951       --  
   (Gain) loss on sales or exchange of marketable securities
    (12,111 )     314,273  
   Issuance of common stock services
    6,000       --  
   Gain on revaluation of derivatives
    (2,589,122 )     (1,131,305 )
   Non-cash consulting revenues
    --       (1,120,000 )
   Interest and dividends earned on investments
    (149,883 )     (134,888 )
   Changes in certain assets and liabilities:
               
   (Increase) in notes receivable
    (89,325 )     --  
   (Increase) in prepaid and other current assets
    (2,036 )     (99,356 )
   Increase in accounts payable and accrued expenses
    449,504       442,102  
    (Decrease) in deferred revenue
    --       (50,000 )
    Increase in related party accounts
    120,213       79,790  
                 
   Total cash (used in) operating activities of continuing operations
    (203,554 )     (174,729 )
                 
   Net loss from discontinued operations
    --       (765,833 )
   Net effect on cash flow from spin-off of subsidiaries
    --       492,585  
                 
    Total cash (used in) operating activities of discontinued operations
    --       (273,248 )
                 
   Total cash (used in) operating activities
    (203,554 )     (447,977 )

The accompanying notes are an integral part of these consolidated financial statements.



 
iVOICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEARS ENDED DECEMBER 31,


   
2008
   
2007
 
CASH FLOWS FROM INVESTING ACTIVITIES
           
    Purchase of property and equipment
    --       (4,708 )
   Net redemption of principal and interest on marketable securities
    10,814,954       7,399  
   Net proceeds from sales of securities available for sale
    26,136       264,872  
   Investment in securities and loans of unaffiliated companies
    (77,250 )     (25,000 )
   Net effect on cash flow from consolidation of majority owned investment
    (879,840 )     --  
   Purchase of intangibles assets
    (9,161 )     (19,150 )
   Total cash provided by investing activities from continuing operations
    9,874,839       223,413  
                 
   Adjustments to reconcile total cash provided by investing activities from
               
   discontinued operations
    --       119,248  
                 
    Total cash provided by investing activities
    9,874,839       342,661  
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
    Proceeds from short term borrowings
    5,660,000       --  
   Repayment of short term borrowings
    (5,660,000 )     --  
   Repayment of convertible debentures
    (4,796,510 )     --  
   Redemption of Class B common stock
    (1,512,104 )     --  
                 
   Total cash (used in) financing activities from continuing operations
    (6,308,614 )     --  
                 
   Adjustments to reconcile total cash provided by (used in) financing activities
               
   from discontinued operations
    --       154,000  
                 
    Total cash provided by (used in) financing activities
    (6,308,614 )     154,000  
                 
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS
    3,362,671       48,684  
                 
                 
CASH AND EQUIVALENTS – BEGINNING OF YEAR
    79,919       31,235  
                 
CASH AND EQUIVALENTS – END OF YEAR
  $ 3,442,590     $ 79,919  
                 
SUPLLEMENTAL DISCLOUSRE OF NON CASH ACTIVITIES:
               
CASH PAID DURING THE YEAR FOR:
               
    Interest expense
  $ 45,041     $ --  
   Income taxes
  $ --     $ --  

The accompanying notes are an integral part of these consolidated financial statements.

 

iVOICE , INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

During the year ended December 31, 2008:

a)  The Company issued 1,805,499,209 shares of Class A common stock to YA Global Investments, LP as repayment of $484,800 of principal on outstanding convertible debentures. The stock was valued at $778,751 and $293,951 was charged to beneficial interest expense.

b)   The Company issued 316,000,000 shares of Class A Common upon the conversion of 40,380 shares of Class B Common Stock.

c)   The Company received 142,600,000 shares of Thomas Pharmaceuticals, Ltd. Class A common stock on conversion of $12,368 of convertible debentures receivable.

d)   The Company exchanged $92,861 of amounts due from SpeechSwitch, Inc. into a Convertible Promissory Note of the same amount.

e)   The Company received 151,000,000 shares of SpeechSwitch, Inc. Class A common stock on conversion of $12,080 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.

g)   The Company exchanged $71,302 of amounts due from Thomas Pharmaceuticals, Ltd. into a Convertible Promissory Note of the same amount.

h)   The Company issued 60,000,000 shares of Class A common stock to Kenneth Glynn for legal services, valued at $6,000, related to continuation of work on patent prosecution.

i)    Reclassification of Class B common stock from equity to liability for $1,512,104.

During the year ended December 31, 2007:

a)   The Company issued 265,587,972 shares of Class A common stock to YA Global Capital Partners (f/k/a/ Cornell Capital Partners) as repayment of principal on an outstanding convertible debenture, valued at $493,400.

b)   The Company converted 52,863 shares of Class B Common into 86,012,651 shares of Class A Common, pursuant to the provisions of Class B common stock.
 
c)    On November 21, 2007, the Company completed the distribution of shares of Thomas Pharmaceuticals to the iVoice shareholders and effectuated the spin-off of Thomas. Refer to Footnote 2 for a discussion of the effects on the Company’s financial statements.
 
d)   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 fair value of the agreement was determined to be $1,120,000 and was amortized over six months ending August 13, 2007.
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2008 and 2007
 
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) B asis of Presentation
 
iVoice, Inc. formerly known as Visual Telephone International, Inc. (“Visual”) was incorporated under the laws of Utah on December 2, 1995, and subsequently changed to Delaware.

On May 21, 1999, the Company executed a Reorganization Agreement (the “Agreement”) that provided that the Company and International Voice Technologies, Corp. (“IVT”) would be merged and the Company would be the surviving entity. On May 25, 1999, a certificate of merger was filed with the State of Delaware and the name of the Company was changed to iVoice.com, Inc.

On April 24, 2000, the Company entered into an agreement and plan of reorganization with all the stockholders of ThirdCAI, another shell company that was a reporting company under the Securities Exchange Act of 1934.  In this transaction, which took place by means of a short-form merger, with ThirdCAI’s name being changed to iVoice.com, Inc. The purpose of this transaction was to enable the Company’s business to be conducted by a reporting company, as pursuant to the “eligibility rule” adopted by the National Association of Securities Dealers, Inc., or “NASD,” only reporting companies may continue to have stock quoted on the OTC Bulletin Board.

On August 24, 2001, the Company amended its certificate of incorporation to change its name from iVoice.com, Inc. to iVoice, Inc.

On April 25, 2003, the Company formed a wholly owned subsidiary in the State of New Jersey and on May 5, 2003, changed its state of incorporation from Delaware to New Jersey by merging into the newly formed New Jersey subsidiary.

In September 2003, the Company announced its intention to distribute to its stockholders shares of Class A common stock of Trey Resources, Inc., one of the Company’s subsidiaries, and its Automated Reminder business, upon the effectiveness of required Securities and Exchange Commission filings and final approval by the iVoice Board of Directors of the terms and conditions of the proposed distribution, as described in the registration statement on Form SB-2 of Trey Resources, initially filed with the Securities and Exchange Commission on October 3, 2003.  Effective with the spin-off of Trey Resources on February 11, 2004, Trey Resources now owns and operates the Automatic Reminder software business as an independent publicly traded entity following this distribution.

In September 2004 and November 2004, the Company announced its intention to distribute to its stockholders, in the form of a special dividend, shares of Class A Common Stock of its three wholly owned subsidiaries, iVoice Technology, Deep Field and SpeechSwitch (the “Spin-off”). The Company announced on July 21, 2005, that the Board of Directors set a record date for the previously announced spin-off of its three wholly owned subsidiaries. Shareholders of record on July 29, 2005 were entitled to receive the special dividend.  The special dividend was distributed on August 5, 2005.  Holders of iVoice Class A Common Stock, other than affiliates of iVoice, received one share of Class A Common Stock of each of iVoice Technology, Inc., Deep Field Technologies, Inc. and SpeechSwitch, Inc. for every 988 shares of iVoice common stock that they held.  Holders of less than 988 shares of iVoice common stock received one share of iVoice Technology, Inc., Deep Field Technologies, Inc. and SpeechSwitch, Inc. Class A common stock.  All of the outstanding shares of Class B Common Stock (including convertible debt into such shares) of iVoice Technology, Inc., Deep Field Technologies, Inc. and SpeechSwitch, Inc. will be beneficially owned by affiliates of iVoice, Inc. or iVoice Technology, Inc., Deep Field Technologies, Inc. and SpeechSwitch, Inc.

In May 2005, we formed a new wholly owned subsidiary, iVoice Acquisition Corporation in the State of New Jersey.  This subsidiary would be used in the future for an acquisition made by us.

On January 6, 2006, iVoice, Inc. entered into an Agreement and Plan of Merger (the “Agreement”) with Thomas Pharmaceuticals, Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey corporation (“ Thomas NJ ”), a wholly owned subsidiary of the Company, Thomas Pharmaceuticals Ltd., a New York corporation (“ Thomas NY ”), Farris M. Thomas, Jr., an individual (“Thomas”), John E. Lucas, an individual (“Lucas”) Richard C. Brogle, (“Brogle”), Nina Schwalbe, an individual, “Schwalbe”), John H. Kirkwood, an individual (“Kirkwood”), and Maureen Gillespie, an individual (“Gillespie”) (Brogle, Schwalbe, Kirkwood, Gillespie, Thomas and Lucas are collectively as the “ Shareholders ”).  Under the terms of the Agreement, Thomas NY merged into a wholly owned subsidiary of the Company, Thomas NJ.  The Shareholders of Thomas NY exchanged all of their common stock shares of Thomas NY for 500,000 Thomas NJ Series A Convertible Preferred Stock (“Series A Preferred Stock”) shares.  In 2007, the Series A Preferred Stock shareholders elected to have the Company spin-off Thomas NJ from iVoice.

On March 6, 2006, we announced that we had formed a new wholly owned subsidiary, iVoice Innovations, Inc. in the State of New Jersey.  This subsidiary will be used to either acquire other operating companies or for a potential spin-off of an existing asset of ours similar to the recent spin-offs of Trey Resources, iVoice Technology, Deep Field and SpeechSwitch.

On April 10, 2006, pursuant to approval by a majority of voting shares at the Annual Meeting of Shareholders held on March 31, 2006, an Amendment to the Certificate of Incorporation dated April 7, 2006 was accepted by the State of New Jersey (the “Amendment”) to effect a one for two hundred reverse stock split (the “Reverse Split”). The Reverse Split took effect on April 27, 2006 and the trading symbol of our Class A Common Stock was changed to “IVOI”. All shareholders' holdings were divided by two hundred and the number of issued and outstanding Class A Common Stock shares were reduced from 9,994,728,373 to 49,973,642, plus any additional shares issued as a result of the rounding up of fractional shares created by the Reverse Split.  The Amendment provided for the issuance of no fractional shares, but instead, all fractional shares created by the Reverse Split were rounded up to one whole share.  Additionally, the shareholders approved a re-authorization of the number of authorized Class A Common Stock shares to 10 billion shares.

On October 9, 2007, the Company announced that the Board of Directors set a record date of October 15, 2007 for the spin-off of Thomas Pharmaceuticals. This date was subsequently amended to be November 14, 2007 to satisfy requirements of the Securities and Exchange Commission (“SEC”). Shareholders of record on November 14, 2007 were entitled to receive the special dividend.  On November 21, 2007, the holders of iVoice Class A Common Stock, other than affiliates of iVoice, received one share of Class A Common Stock of Thomas Pharmaceuticals, Ltd. for each share of iVoice common stock that they held.  In addition, on December 14, 2007, 500,000 shares of Series A Preferred Stock of Thomas Pharmaceuticals were exchanged for 5,091,237 shares of Class A Common Stock of Thomas Pharmaceuticals to complete the terms of the spin-off agreement

As part of the Spin-off, the Company transferred certain of its assets and related liabilities to Thomas Pharmaceuticals immediately prior to the distribution.  The consolidated financial statements for the years ended December 31, 2008 and 2007 include reclassifications of the operations of the Thomas to reflect the disposal of the businesses in accordance with the provisions of Statements of Financial Accounting Standards (FAS) 144, “Accounting for the Impairment or Disposal of Long Lived Assets”.

 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 2008 and 2007
 
On March 12, 2008, the Company acquired 1,444.44 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”.

b) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company, its subsidiary, iVoice Innovations Inc. and its majority owned public company, iVoice Technology, Inc.    On November 21, 2007, Thomas Pharmaceuticals Ltd was distributed to iVoice shareholders through a Spin-off transaction. All significant inter-company transactions and balances have been eliminated in consolidation.

c) Line of Business
We have determined that the best way to create shareholder value, separate and apart from our operating performance, is by spinning off and distributing shares of our wholly owned subsidiaries in the form of a special dividend to our shareholders.  The only industry in which we currently have operations are patent licensing.
We will also continue to search for potential merger candidates with or without compatible technology and products, in a further attempt to increase shareholder value.

d) Start-up Costs
In accordance with the American Institute of Certified Public Accountants Statement of Position 98-5, “Reporting on the Costs of Start-up Activities,” the Company expenses all costs incurred in connection with the start-up and organization of the Company.

e) 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.

f) Revenue and Cost Recognition
The 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 customer support (maintenance) service of its software product and environmentally conscious green anti-vibration products. iVoice Technology offers customers annual software maintenance and support agreements for one-year periods. Sales of three green products are cash in advance and carry a 30 day money back guarantee.

Costs for patents include expensing the deferred costs of the licensing activities. There are no direct costs associated with the customer support service contracts of iVoice Technology. Costs for the anti-vibration products represent the direct material and labor costs of production of the products by iVoice Technology’s out-sourced manufacturer.

g) 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 December 31, 2008 and 2007 of $4,954,694 and $79,919, respectively.

h) 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 December 31, 2008 and 2007 of $0 and $10,814,954, respectively.

i) 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 (Deficit) under the caption Accumulated Other Comprehensive (Loss). The Company had securities available for sale at December 31, 2008 and 2007 of $13,016 and $676,272, respectively.

j)