0001354488-11-004613.txt : 20111121 0001354488-11-004613.hdr.sgml : 20111121 20111118172724 ACCESSION NUMBER: 0001354488-11-004613 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20110930 FILED AS OF DATE: 20111118 DATE AS OF CHANGE: 20111118 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IVOICE, INC /NJ CENTRAL INDEX KEY: 0001105064 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 521750786 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-29341 FILM NUMBER: 111216931 BUSINESS ADDRESS: STREET 1: 750 HIGHWAY 34 CITY: MATAWAN STATE: NJ ZIP: 07747 BUSINESS PHONE: 7324417700 MAIL ADDRESS: STREET 1: 750 HIGHWAY 34 CITY: MATAWAN STATE: NJ ZIP: 07747 FORMER COMPANY: FORMER CONFORMED NAME: IVOICE, INC /DE DATE OF NAME CHANGE: 20060206 FORMER COMPANY: FORMER CONFORMED NAME: IVOICE COM INC /DE DATE OF NAME CHANGE: 20000426 FORMER COMPANY: FORMER CONFORMED NAME: THIRDCAI INC DATE OF NAME CHANGE: 20000202 10-Q 1 ivoi_10q.htm QUARTERLY REPORT ivoi_10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011
 
OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________________ to _______________________

Commission file number: 000-29341

iVOICE, INC
(Exact name of registrant as specified in its charter)
 
New Jersey
  
51-0471976
(State or other jurisdiction of incorporation or organization)  
  
(I.R.S. Employer Identification No.)
 
750 Highway 34, Matawan, NJ 07747
(Address of Principal Executive Offices)(Zip Code)
 
Registrant’s Telephone Number, Including Area Code: (732) 441-7700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES þ NO o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES þ  NOo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated files, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the exchange act.
 
Large Accelerated filer  o Accelerated filer  o
Non-accelerated filer   o Smaller reporting company  þ
(Do not check if a smaller reporting company)      
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES    o      NO þ

Number of shares of Class A, common stock, No par value, outstanding as of November 18, 2011:  6,265,563,493 
 
 
 
 
 
iVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 AND 2010

TABLE OF CONTENTS
 
PART I.
FINANCIAL INFORMATION
  
Page No.
  
         
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
     3  
           
 
Condensed Consolidated Balance Sheets – September 30, 2011 and December 31, 2010
     3  
           
 
Condensed Consolidated Statements of Operations - For the nine months ended September 30, 2011 and 2010
     5  
           
 
Condensed Consolidated Statement of Accumulated Other Comprehensive Income – For the nine months ended September 30, 2011 and 2010
     6  
           
 
Condensed Consolidated Statements of Cash Flows - For the nine months ended September 30, 2011 and 2010
     7  
           
 
Notes to Condensed Consolidated Financial Statements
     8  
           
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
     18  
           
Item 4T.
Controls and Procedures
     22  
           
PART II.
OTHER INFORMATION
        
           
Item 6.
Exhibits
     23  

 
2
 
 
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
iVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

   
September 30,
    
December 31,
  
   
2011
    
2010
  
   
(unaudited)
        
ASSETS
CURRENT ASSETS
            
Cash and cash equivalents
  
$
291,577
    
$
1,488,557
  
Marketable securities
    
899,645
      
2,014
  
Accounts receivable, net of allowance for doubtful accounts
    
18,017
      
4,284
  
Inventory
    
5,899
      
1,106
  
Prepaid expenses and other current assets
    
20,051
      
33,579
  
   Total current assets
    
1,235,189
      
1,529,540
  
                 
PROPERTY AND EQUIPMENT, net of accumulated depreciation
                
   of $272,349 and $247,764, respectively
    
13,009
      
37,594
  
                 
OTHER ASSETS
                
Intangible assets, net of accumulated amortization of $8,045 and
                
   and $3,081, respectively
    
105,892
      
113,181
  
Deposits and other assets
    
6,666
      
6,666
  
   Total other assets
    
112,558
      
119,847
  
                 
TOTAL ASSETS
  
$
1,360,756
    
$
1,686,981
  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
                 
CURRENT LIABILITIES
                
Accounts payable and accrued expenses
  
$
1,179,663
    
$
1,092,957
  
Due to related parties
    
1,445,199
      
991,934
  
Class A common stock liability
    
354,157
      
354,157
  
Deferred revenues
    
7,510
      
1,170
  
   Total current liabilities
    
2,986,529
      
2,440,218
  
                 
NON CURRENT LIABILITIES
                
Convertible debenture payable, net of discounts of $80,969 and
                
   $104,476, respectively
    
437,131
      
413,624
  
Derivative liability on convertible debentures
    
537,663
      
571,941
  
   Total current liabilities
    
974,794
      
985,565
  
                 
TOTAL LIABILITIES
  
$
3,961,323
    
$
3,425,783
  
                 
                 
COMMITMENTS AND CONTINGENCIES
                
 
See accompanying notes to condensed consolidated financial statements.
 
 
3
 
 
iVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(UNAUDITED)
 
   
September 30,
    
December 31,
  
   
2011
    
2010
  
             
STOCKHOLDERS’ EQUITY (DEFICIT)
             
Stockholders’ equity (deficit):
            
   Preferred stock, $1 par value; authorized 1,000,000 shares;
            
   no shares issued and outstanding
    
--
      
--
  
   Common stock, Class A, no par value; authorized 10,000,000,000 shares;
                
   2011 – 6,265,566,493 shares issued; 6,265,563,493 shares outstanding
                
   2010 – 6,265,566,493 shares issued; 6,265,563,493 shares outstanding
    
25,225,513
      
25,225,513
  
   Common stock, Class B, $0.01 par value; authorized 50,000,000 shares;
                
   no shares issued and outstanding
    
--
      
--
  
   Additional paid-in capital
    
719,702
      
719,702
  
   Accumulated other comprehensive income
    
1,045
      
1,199
  
   Accumulated deficit
    
(26,957,940
)
    
(25,536,587
)
   Treasury stock, 3,000 Class A shares, at cost
    
(28,800
)
    
(28,800
)
   Total iVoice, Inc. stockholders' equity (deficit)
    
(1,040,480)
      
381,027
  
                 
Non-controlling interest
    
(1,560,087
)
    
(2,119,829
)
                 
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
    
(2,600,567
)
    
(1,738,802
)
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
  
$
1,360,756
    
$
1,686,981
  

See accompanying notes to condensed consolidated financial statements.
 
 
4
 
 
iVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
   
For the nine months
    
For the three months
  
   
Ended September 30,
    
Ended September 30,
  
   
2011
    
2010
    
2011
    
2010
  
                         
                         
SALES
  
$
171,527
    
$
142,996
    
$
64,173
    
$
43,357
  
COST OF SALES
    
44,042
      
68,958
      
16,044
      
22,288
  
GROSS PROFIT
    
127,485
      
74,038
      
48,129
      
21,069
  
                                 
OPERATING EXPENSES
                                
   Selling, general and administrative expenses
    
955,355
      
966,547
      
319,327
      
308,292
  
   Impairment of assets
    
19,582
      
-
      
-
      
-
  
   Depreciation and amortization
    
12,292
      
9,906
      
3,086
      
3,455
  
Total operating expenses
    
987,229
      
976,453
      
322,413
      
311,747
  
                                 
LOSS FROM OPERATIONS
    
(859,744
)
    
(902,415
)
    
(274,284
)
    
(290,678
)
                                 
OTHER INCOME (EXPENSE)
                                
   Other income
    
35,807
      
272,561
      
7,344
      
6,600
  
   Gain on revaluation of derivatives
    
34,278
      
172,341
      
21,341
      
31,534
  
   Amortization of discount on debt
    
(23,507
)
    
(45,122
)
    
(7,836
)
    
(15,041
)
   Interest expense
    
(13,152
)
    
(217,110
)
    
(5,058
)
    
(60,952
)
Total other income (expense)
    
33,426
      
182,670
      
15,791
      
(37,859
)
                                 
LOSS FROM OPERATIONS BEFORE
                                
   PROVISION FOR INCOME TAXES
    
(826,318
)
    
(719,745
)
    
(258,493
)
    
(328,537
)
                                 
PROVISION FOR INCOME TAXES
    
--
      
--
      
--
      
--
  
                                 
NET LOSS
    
(826,318
)
    
(719,745
)
    
(258,493
)
    
(328,537
)
                                 
Non-controlling interest
    
595,035
      
(135,396
)
    
(15,722
)
    
(120,169
)
                                 
NET LOSS APPLICABLE TO iVOICE, INC.
  
$
(1,421,353
)
  
$
(584,349
)
  
$
(242,771
)
  
$
(208,368
)
                                 
NET LOSS PER COMMON SHARE
                                
   Basic and diluted
  
$
( 0.00
)
  
$
( 0.00
)
  
$
 (0.00
)
  
$
( 0.00
)
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING
                                
   Basic and diluted
    
6,265,563,493
      
4,678,876,888
      
6,265,563,493
      
5,985,506,360
  
 
See accompanying notes to condensed consolidated financial statements.
 
 
5
 
 
iVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
ACCUMULATED OTHER COMPREHENSIVE INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
 
  
  
2011
      
2010
  
               
Balance at beginning of the period
  
$
1,199
    
$
4,658
  
                 
Unrealized gain (loss) on securities available for sale:
                
                 
   Unrealized gain (loss) arising during the period
    
(154
)
    
27,595
  
                 
   Less: reclassification adjustment and losses
                
   included in net loss
    
-
      
(29,814
)
   Net change for the period
    
(154
)
    
(2,219
)
   
                
Balance at end of the period
  
$
1,045
    
$
2,439
  

See accompanying notes to condensed consolidated financial statements.
 
 
6
 
 
iVOICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
 
   
2011
    
2010
  
   CASH FLOWS FROM OPERATING ACTIVITIES:
            
   Net loss
  
$
(826,318
)
  
$
(719,745
)
   Adjustments to reconcile net loss to net cash used in operating activities:
                
   Depreciation of fixed assets and amortization of intangibles
    
12,292
      
9,906
  
   Amortization of discount on debt conversion
    
23,507
      
45,122
  
   Beneficial interest
    
-
      
207,900
  
   Impairment of assets
    
19,582
      
-
  
   Gain on sales of securities available for sale
    
(26,490
)
    
(29,814
)
   (Gain) loss on revaluation of derivatives
    
(34,278
)
    
(172,341
)
   Stock issue to non-controlling shareholders for services
    
4,050
      
15,570
  
   Gain from settlement of note receivable previously written-off
    
-
      
(3,570
)
                 
   Changes in certain assets and liabilities:
                
   (Increase) in accounts receivable
    
(13,733
)
    
(5,120
)
   (Increase) in inventory
    
(4,793
)
    
(879
)
   Decrease in prepaid expenses and other assets
    
13,528
      
8,739
  
   Increase in accounts payable and accrued liabilities
    
86,706
      
205,640
  
   Increase (decrease) in deferred revenues
    
6,340
      
(1,210
)
   Increase in related party liabilities
    
453,265
      
206,857
  
   Net cash used in operating activities
    
(286,342
)
    
(232,945
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
   Purchase of property and equipment
    
-
      
(14,137
)
 
                
   Investment in marketable securities
    
(907,139
)
    
--
  
   Net proceeds from sales of securities available for sale
    
23,298
      
37,581
  
   Net cash provided by (used in) investing activities
    
(883,841
)
    
23,444
  
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
   Repurchase of BGI common stock
    
(26,797
)
    
--
  
   Net cash used in financing activities
    
(26,797
)
    
--
  
                 
NET (DECREASE) IN CASH AND CASH EQUIVALENTS
    
(1,196,980
)
    
(209,501
)
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD
    
1,488,557
      
1,842,801
  
CASH AND CASH EQUIVALENTS – END OF PERIOD
  
$
291,577
    
$
1,633,300
  
                 
CASH PAID DURING THE PERIOD FOR:
                
   Interest expense
  
$
-
    
$
-
  
   Income taxes
  
$
-
    
$
-
  
 
Supplemental Schedule of Non-Cash Financing Activities:

a)  
During the nine months ended September 30, 2011, B Green Innovations issued 3,642,856 shares of B Green Innovations Class A common stock with a fair value of $4,500 for services.

b)  
During the nine months ended September 30, 2010, B Green Innovations issued 4,000,000 shares of B Green Innovations Class A common stock with a fair value $11,570 for services.

c)
During the nine months ended September 30, 2010, B Green Innovations converted $4,000 of accounts payable into 1,300,000 shares of B Green Innovations Class A common stock.

See accompanying notes to condensed consolidated financial statements.
 
 
7
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.  It is suggested that these condensed consolidated financial statements be read in conjunction with the December 31, 2010 audited financial statements and the accompanying notes thereto.

Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, iVoice Innovations, Inc. and its Variable Interest Entity, B Green Innovations.  All significant intra/inter-company transactions and balances have been eliminated in consolidation.

B Green Innovations is considered a Variable Interest Entity by the Company because iVoice, Inc. is the primary beneficiary of B Green Innovations.  Additionally, iVoice has provided more than half the equity of B Green Innovations, and iVoice’s Board of Directors and B Green Innovations’ Board of Directors are the same, and therefore have the power to direct the activities of B Green Innovations, the Variable Interest Equity.  As such, according to provisions of FASB Accounting Standards Codification (“ASC”) Topic 810 “Consolidation”, iVoice, Inc. continued to consolidate the results of operations of B Green Innovations with those of iVoice and its other subsidiary.  The Company reclassified certain accounts in the stockholders’ deficit section to conform to the current year presentation.  The reclassifications had no effect on operations or cash flows.

Revenue and Cost Recognition
The parent Company obtains its income primarily from the sales or licensing of its patents and patent applications.  Revenues for the sales of our patents are recorded upon transfer of title.  The patent revenues are reported net of any broker fees or commissions.

The Company also is reporting revenues for B Green Innovations which primarily derives revenues from the shipments of “green products” which are recognized at the time of shipment to, or acceptance by customer, provided title and risk of loss is transferred to the customer.  Provisions, when appropriate, are made where the right of return exists.  B Green Innovation also derives revenues from the customer support (maintenance) service contracts for its IVR software product for one-year periods.  Deferred revenues are recorded when the company receives payment and then revenues are recorded over the maintenance period.

Concentration of Credit Risk
The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits.  The balances exceed FDIC insured limits.  The Company has not experienced any losses in such accounts.

Fair Value of Financial Instruments
The Company estimates that the fair value of all financial instruments at September 30, 2011 and December 31, 2010, as defined in ASC 320-10-35, “Subsequent Measurement of Investment Securities”, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed consolidated balance sheet.  The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies.  Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
 
 
8
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
Income (Loss) Per Share
ASC 260, “Earnings Per Share” requires presentation of basic earnings per share (“basic EPS”) and diluted earnings per share (“diluted EPS”).The computation of basic EPS is computed by dividing income available to common stockholders by the weighted average number of outstanding Common shares during the period.  Diluted earnings per share gives effect to all dilutive potential Common shares outstanding during the period.  The computation of diluted EPS for the nine months ended September 30, 2011 and 2010 does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.

The shares used in the computations are as follows:
 
   
Nine months ended
September 30,
  
   
2011
    
2010
  
   Net (loss) applicable to iVoice, Inc.
  
$
(1,421,353
)
  
$
(584,349
)
                 
   Weighted average shares outstanding - basic
    
6,265,563,493
      
4,678,876,888
  
   Weighted average shares outstanding - diluted
    
6,265,593,493
      
4,678,876,888
  
                 
   Net (loss) per common share - basic
  
$
(0.00
)
  
$
(0.00
)
   Net (loss) per common share - diluted
  
$
(0.00
)
  
$
(0.00
)
 
As of September 30, 2011, the Company has common stock equivalents of 4,428,205,128 issuable upon conversion of the YA Global Convertible Debentures and an obligation to issue 274,901,691 shares of common stock outstanding.  As of September 30, 2010, the Company had common stock equivalents of 4,428,205,128 issuable upon conversion of the YA Global Convertible Debentures and an obligation to issue 553,559,410 shares of common stock outstanding.  The computation of diluted EPS in the periods ended September 30, 2011 and 2010 do not include the common stock equivalents because these would have an anti-dilutive effect on loss per share.
 
Accumulated Other Comprehensive Income
Comprehensive income (loss) includes net income (loss) and other revenues, expenses, gains and losses that are excluded from net income (loss) but are included as a component of total stockholders’ equity (deficit).  Comprehensive income (loss) for the nine months ended September 30, 2011 and 2010 was ($154) and ($2,219), respectively.  The difference between comprehensive income (loss) and net income (loss) results primarily from the effect of unrealized gains and losses determined in accordance with FASB ASC 320, “Investments – Debts and Equity Securities”.  As of September 30, 2011 and December 31, 2010, the accumulated balance of unrealized gains and losses excluded from net income (loss) was $1,045 and $1,199, respectively.  These amounts are presented as “Accumulated other comprehensive income” in the balance sheet.
 
 
9
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued ASU 2011-04, guidance to improve consistency in application of existing fair value measurement and disclosure requirements.  The standard is intended to clarify the application of the requirements, not to establish valuation standards or affect valuation practices outside of financial reporting.  The guidance is effective for interim and annual periods beginning on or after December 15, 2011, with early adoption prohibited.  We do not expect adoption of this guidance to have an impact on our consolidated financial statements.
 
In June 2011, the FASB issued ASU 2011-05, guidance to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  The standard eliminates the current option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity.  The amendment requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  The amendment does not affect how earnings per share is calculated or presented.  The guidance is effective for interim and annual periods beginning after December 15, 2011.  Early adoption is permitted.
 
In September 2011, the FASB issued ASU 2011-08, “Intangibles — Goodwill and Other (Topic 350).”  The objective of this Update is to simplify how entities test goodwill for impairment.  This Update permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.  The Update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011.  We do not anticipate any material impact from this Update.
 
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
 
 
10
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)

NOTE 2 – CONSOLIDATED FINANCIAL STATEMENTS AND NON-CONTROLLING INTEREST

On March 12, 2008, the Company acquired 1,444.44 shares of B Green Innovations, Inc. (f/k/a iVoice Technology, Inc.)  Series A 3% Secured Convertible Preferred Stock for $1,444,444.  At the time that the Company acquired these shares, the holder of each share of Series A Preferred Stock had the right to one vote for each share of Common Stock into which such Series A Preferred Stock could then be converted, and 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.  These securities are also secured by the assets of B Green Innovations.  On March 6, 2009, B Green Innovations amended its Certificate of Incorporation to remove the voting and conversion rights of the Series A Convertible Preferred Stock.  Based on this change, the Company no longer has any voting rights in the stock of B Green Innovations.  On February 23, 2010, the Company acquired 1,219 shares of B Green Innovations, Inc.’s Series A 3% Convertible Preferred Stock for $1,218,766 of cash and convertible debt.  In addition, on February 23, 2010, B Green Innovations reinstated the conversion rights on their Series A Convertible Preferred Stock.  iVoice may, with the consent of B Green Innovation, convert an amount of the Series A Preferred Stock into Class A common stock calculated by dividing the Series A Initial Value by the closing bid price of the Class A common stock on the last trading day immediately prior to the date of the Notice of Conversion and which limits the conversion to Class A common stock to 9.99% of the outstanding shares of B Green Innovations.  iVoice will receive no discount to the closing bid price on the conversion.  The Company is the primary beneficiary of B Green Innovations, and as such, according to ASC 810, “Consolidation”, iVoice, Inc. continued to consolidate the results of operations of B Green Innovations with those of iVoice, Inc. and its other subsidiary.
 
For the periods ended September 30, 2011, December 31, 2010 and September 30, 2010, the stockholders’ equity for non-controlling interest and net income attributable to non-controlling interest reflects 90% of the non-controlling interest’s portion of B Green Innovations operations, after giving effect of elimination of intra-company transactions.

On January 5, 2011, B Green Innovations, Inc. converted $66,104 of the principal amount and accrued interest of the iVoice Note Receivable, dated April 30, 2010 for redemption of 1,057,664 shares of B Green Innovations Series A 3% Preferred Stock in accordance with the terms of the Promissory Note.

Since 2004, iVoice has provided administrative services to B Green Innovations and its subsidiary through various agreements.  In 2008, the accumulated unpaid receivables were exchanged for Convertible Promissory Notes payable to iVoice by B Green Innovations and its subsidiary.  In November 2009, iVoice and B Green Innovations mutually agreed to terminate and extinguish the following agreements:
 
 
a.
The Administrative Services Agreement dated March 1, 2007 by and between B Green Innovations, Inc.(subsidiary) and iVoice, Inc.
 
b.
The Convertible Promissory Note dated May 5, 2008 issued by B Green Innovations, Inc. (subsidiary) payable to iVoice, Inc.
 
c.
The Security Agreement dated May 5, 2008 by and between B Green Innovations, Inc. (subsidiary) and iVoice, Inc.
 
 
11
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
On February 10, 2010, the remaining Administrative Services Agreement with B Green Innovations was terminated, and the Company entered into an Exchange Agreement to exchange the B Green Innovations Convertible Promissory Note, having a principal and accrued interest of approximately $119,000, for 119 shares of the B Green Innovations 3% Convertible Preferred Stock.

On February 10, 2010, and as subsequently amended (see below), the Company entered into an administrative services agreement with B Green Innovations to provide iVoice with administrative and financial services and office space.  This agreement will continue on a month-to-month basis unless terminated by either party by providing 30 days written notice.  In consideration of the services, iVoice will pay B Green $5,000 per month.

On March 10, 2011, the Company and iVoice, Inc. entered into a new administrative services agreement which supersedes all prior agreements.  The terms of the agreement are as follows: In consideration of the services, iVoice, Inc. will pay B Green $5,000 per month.  On March 10, 2011, the agreement was modified to increase the administrative service fee from iVoice from $5,000 to $15,000 per month.  This agreement will continue on a month-to-month basis unless terminated by either party by providing 30 days written notice.

 
i.  
The agreement is on a month-to-months basis unless terminated by either party providing thirty (30) days advance notice to the non-terminating party.  This agreement cannot be terminated until B green has redeemed all of the B Green Series A 3% Preferred Stock that is held by the Company.
 
ii.  
In consideration of the services, iVoice, Inc. will pay B Green $15,000 per month.
 
iii.  
B Green shall receive payment by redeeming the number of B Green Series A 3% Preferred Stock shares held by iVoice using the formula set below:
 
i.  
calculate the number of iVoice Class A Common Stock shares by dividing (x) the dollar value of the fees that B Green is to be paid by fifty percent (50%) of the lowest issue price of iVoice Class A common Stock.
 
ii.  
The iVoice market value shall be equal to the number of iVoice Class A Common Stock shares calculated above multiplied by the highest closing ask price of iVoice Class A Common stock in the previous thirty (30) trading days prior to the date of the calculation.
 
iii.  
The number of B Green Series A 3% Preferred Stock shares to be redeemed hereunder shall be calculated by dividing the iVoice Market value calculated above by the Series A Initial Value, as defined in the B Green Certificate of Incorporation.

For the nine months ended September 30, 2011 the Company and B Green Innovations recorded administrative service fees of $116,500 as compared to $45,000 for the nine months ended September 30, 2010.

All transactions between the Company and B Green Innovations, Inc. are eliminated in consolidation.

NOTE 3 – GOING CONCERN

The Company has negative cash flows from operations, negative working capital and recurring losses from operations.  These issues raise substantial doubt about the Company’s ability to continue as a going concern.  Therefore, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn, is dependent upon the Company’s ability to raise capital and/or generate positive cash flow from operations.

Since the spin-off of the three operating subsidiaries in 2005, the Company has transitioned itself into a company focused on the development and licensing of proprietary technologies.  Following the sales of patents to Lamson Holdings LLC, the Company has 2 remaining patent applications, which have been awarded or are pending.  These applications include various versions of the “Wirelessly Loaded Speaking Medicine Container”, which is also filed internationally and “Wireless Methodology for Talking Consumer Products” which is also filed internationally.
 
 
12
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
The Company also continues to search for potential merger candidates with or without compatible technology and products, which management feels may make financing more appealing to potential investors.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

NOTE 4 – FAIR VALUE MEASUREMENTS

ASC 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).  The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.  These inputs can be readily observable, market corroborated, or generally unobservable.  The Company classifies fair value balances based on the observability of those inputs.  ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

ASC 820 classifies these inputs into the following hierarchy:

 
Level 1 Inputs–  Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.  Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 
Level 2 Inputs–  Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date.  Level 2 includes those financial instruments that are valued using models or other valuation methodologies.  These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.  Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.  Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

 
Level 3 Inputs–  Pricing inputs include significant inputs that are generally less observable from objective sources.  These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
 
 
13
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of September 30, 2011 and December 31, 2010.  As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

September 30, 2011

Assets
  
Level I
    
Level II
    
Level III
    
Total
  
                         
Securities available for sale
  
$
899,645
    
$
-
    
$
-
    
$
899,645
  
Total Assets
  
$
899,645
    
$
-
    
$
-
    
$
899,645
  
                                 
Derivative liabilities
  
$
-
    
$
537,663
    
$
-
    
$
537,663
  
Total Liabilities
  
$
-
    
$
537,663
    
$
-
    
$
537,663
  

December 31, 2010

Assets
  
Level I
    
Level II
    
Level III
    
Total
  
                         
Securities available for sale
  
$
2,014
    
$
-
    
$
-
    
$
2,014
  
Total Assets
  
$
2,014
    
$
-
    
$
-
    
$
2,014
  
                                 
Derivative liabilities
  
$
-
    
$
571,941
    
$
-
    
$
571,941
  
Total Liabilities
  
$
-
    
$
571,941
    
$
-
    
$
571,941
  
 
Valuation methods:
The Company’s securities available for sale are valued using quoted security prices based on the market on which they are traded.

The Company’s derivatives are classified within Level 2 of the valuation hierarchy.  The Company’s derivatives are valued using internal models that use as their basis readily observable market inputs, such as time value, forward interest rates, and volatility factors.  Refer to Note 6 for more discussion on derivatives.
 
 
14
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
NOTE 5 - CONVERTIBLE DEBENTURES PAYABLE

On November 12, 2009, the Company issued an Amended and Restated convertible debenture for the principal amount of $671,600 due on May 25, 2014.  This debenture is secured with a $370,000 secured convertible debenture dated January 6, 2006 held by the Company, which has been fully reserved, and issued by Thomas Pharmaceuticals, Ltd.  Additionally, under the terms of the Settlement Agreement, YA Global released its security interest on the other assets of the Company, terminated the outstanding warrants previously issued by the Company in favor of YA Global and both parties executed releases fully releasing each other from any and all claims through the date of the Settlement Agreement.  This debenture has no interest rate and the Company imputed an effective interest rate of 5.25% and recorded imputed interest of $141,043 which is being amortized over the term of the debenture.  The Company amortized $23,507 of this interest during the nine months ended September 30, 2011 and 2010.  The Company can redeem a portion or all amounts outstanding under the YA Global Debentures at any time upon three business days advanced written notice.  The Company 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 three (3) trading days immediately preceding the conversion date.

The aggregate principal value of the remaining debentures at September 30, 2011 and December 31, 2010 is $518,100.  These amounts are shown on the balance sheet net of imputed interest of $80,969 and $104,476, respectively.  This amount is being amortized over the life of the debenture and is being amortized as interest expense on the statement of operations.

NOTE 6 - DERIVATIVE LIABILITY

In accordance with ASC 815, "Derivatives and Hedging", the conversion feature associated with the YA Global Secured Convertible Debentures represents embedded derivatives.  At September 30, 2011, the derivative liability  is measured at its estimated fair value of $537,663.

The estimated fair value of the embedded derivative has been calculated based on a Black-Scholes pricing model using the following assumptions:
 
   
At 9/30/11
    
At 12/31/10
  
   Fair market value of stock
  
$
0.00013
    
$
0.00013
  
   Exercise price
  
$
0.00012
    
$
0.00012
  
   Dividend yield
    
0.00
%
    
0.00
%
   Risk free interest rate
    
1.2
%
    
1.2
%
   Expected volatility
    
221.33
%
    
291.98
%
   Expected life
  
2.67 years
    
3.42 years
  
 
Changes in the fair value of the embedded derivatives are calculated at each reporting period and recorded in gain (loss) on revaluation of derivatives in the condensed consolidated statements of operations.  During the nine months ended September 30, 2011, there was a change in the fair value of the embedded derivatives, which resulted in a gain of $34,278.

In accordance with ASC 820, the fair market value of the derivatives and warrants are bifurcated from the convertible debentures as a debt discount.  The debt discount is being amortized over the life of the convertible debentures.  The consolidated amortization expense on the debt discount on the convertible debentures for the nine months ended September 30, 2011 and 2010 was $-0- and $21,615, respectively.
 
 
15
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
NOTE 7 – DUE TO RELATED PARTIES

From time to time, iVoice, Inc. has entered into various loan agreements and employment agreements with Jerome R. Mahoney, President and Chief Executive Officer of the Company.  As of September 30, 2011, the balances due to Mr. Mahoney were: a) accrued interest of $5,285 and b) deferred compensation of $862,379.  Amounts due to Mr. Mahoney are convertible into either (i) one Class B common stock share of iVoice, Inc., $.01 par value, for each dollar owed, or (ii) the number of Class A common stock shares of iVoice, Inc. calculated by dividing (x) the sum of the principal and interest that the Note holder has decided to prepay by (y) fifty percent (50%) of the lowest issue price of Series A common stock since the first advance of funds under this Note, whichever the Note holder chooses, or (iii) payment of the principal of the Note, before any repayment of interest.  The Board of Directors of the Company maintains control over the issuance of shares and may decline the request for conversion of the repayment into shares of the Company.
 
In August 2005, B Green Innovations had assumed an outstanding promissory demand note in the amount of $190,000 payable to Jerome Mahoney, then, the Non-Executive Chairman of the Board of B Green Innovations.  The note bears interest at the rate of prime plus 2.0% per annum (5.25% at September 30, 2011 and December 31, 2010) on the unpaid balance until paid.  Under the terms of the Promissory Note, at the option of the Note holder, principal and interest can be converted into either (i) one share of Class B Common Stock of B Green Innovations, Inc., par value $.01, for each dollar owed, (ii) the number of shares of Class A Common Stock of B Green Innovations, Inc. calculated by dividing (x) the sum of the principal and interest that the Note holder has requested to have prepaid by (y) eighty percent (80%) of the lowest issue price of Class A Common Stock since the first advance of funds under this Note, or (iii) payment of the principal of this Note, before any repayment of interest. The Board of Directors of B Green Innovations maintains control over the issuance of shares and may decline the request for conversion of the repayment into shares of the B Green Innovations.  During the nine months ended September 30, 2011 and 2010, Mr. Mahoney did not receive any payments against this loan.  As of September 30, 2011 and December 31, 2010, the outstanding balances were $3,003, plus accrued interest $126,546 and $113,394, respectively.

B Green Innovations, Inc. entered into a five-year employment agreement with Jerome Mahoney to serve as Non-Executive Chairman of the Board of Directors, effective August 1, 2004.  On March 9, 2009, the term of the employment agreement between the Company and Mr. Mahoney, the Company’s CEO, was extended to July 31, 2016.  B Green will compensate Mr. Mahoney with a base salary of $85,000 for the first year with annual increases based on the Consumer Price Index.  Mr. Mahoney had a consulting agreement with the Company’s former subsidiary B Green Innovations for annual compensation of $24,000 and upon every annual anniversary thereafter, at the rate based on the increase in the Consumer Price Index for All Urban Consumers (New York-Northern N.J.-Long Island).  Effective January 1, 2010, this amount was added to Mr. Mahoney’s base salary.  On June 15, 2010, Mr. Mahoney’s employment agreement was amended to increase the base salary to $195,000 effective July 1, 2010.  All other terms of the Employment Agreement shall remain in full force and effect.  A portion of Mr. Mahoney’s compensation shall be deferred until such time that the Board of Directors determines that B Green has sufficient financial resources to pay his compensation in cash.

B Green’s Board has the option to pay Mr. Mahoney’s compensation in the form of Class B Common Stock.  Mr. Mahoney will also be entitled to certain bonuses based on mergers and acquisitions completed by the Company.  Pursuant to the terms of the Class B Common Stock, a holder of Class B Common Stock has the right to convert each share of Class B Common Stock into the number of shares of Class A Common Stock determined by dividing the number of Class B Common Stock being converted by a 20% discount of the lowest price for which the Company had ever issued its Class A Common Stock.  As of September 30, 2011 and December 31, 2010, total deferred compensation due to Mr. Mahoney was $447,987 and $312,750 respectively.
 
 
16
 
 
iVOICE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011 and 2010
(UNAUDITED)
 
NOTE 8 - COMMON STOCK

Class A Common Stock
Class A common stock consists of 10,000,000,000 shares of authorized common stock with no par value.  As of September 30, 2011, 6,265,563,493 shares were issued and outstanding.

Each holder of Class A common stock is entitled to one vote for each share held of record.  Holders of our Class A common stock have no preemptive, subscription, conversion, or redemption rights.  Upon liquidation, dissolution or winding-up, the holders of Class A common stock are entitled to receive our net assets pro rata.  Each holder of Class A common stock is entitled to receive ratably any dividends declared by our board of directors out of funds legally available for the payment of dividends.  The Company has not paid any dividends on its common stock and management does not contemplate doing so in the foreseeable future.  The Company anticipates that any earnings generated from operations will be used to finance growth.  There were no shares issued for the nine months ended September 30, 2011.

NOTE 9 – INCOME TAXES

The tax effect of temporary differences, primarily net operating loss carryforwards, asset reserves and accrued liabilities give rise to a deferred tax asset.  Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse.  Because of the current uncertainty of realizing the benefit of the tax carry forward, a valuation allowance equal to the tax benefit for deferred taxes has been established.  The full realization of the tax benefit associated with the carry forward depends predominantly upon the Company's ability to generate taxable income during the carry forward period.

NOTE 10 - SUBSEQUENT EVENTS

On March 9, 2011, iVoice, Inc. entered into an Agreement and Plan of Merger (the “Agreement”) with Hydra Fuel Cell Corporation (“Hydra”).  Hydra is a wholly owned subsidiary of American Security Resources Corporation.

On November 8, 2011, iVoice and Hydra entered into an Amended and Restated Agreement and Plan of Merger (the “Amended Agreement”) that superseded the previously executed Agreement and Plan of Merger.  Pursuant to the terms of the Amended Agreement Hydra, will merge into a wholly owned subsidiary of iVoice, iVoice Innovations, Inc.

In exchange for the common stock of Hydra, the sole shareholder of Hydra, American Security Resources Corporation (“ASRC”) will receive 1 million shares of iVoice Series A Preferred Stock (the “Preferred Stock”) with each share of Preferred Stock convertible into 153.5 shares of iVoice Class A Common Stock.  However, the Preferred Stock will have no voting rights.  Pursuant to the Amended Agreement, the Preferred Stock will not be delivered to ASRC until the following conditions are met:  (i) Delivery by Hydra of the audited financial statements of Hydra for the fiscal year ended December 31, 2010 and certain other conditions set forth on Exhibit C of the Amended Agreement.
 
 
17
 
 
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Some information included in this Quarterly Report on Form 10-Q and other materials filed by us with the Securities and Exchange Commission, or the SEC, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of us.  For a discussion of material risks and uncertainties that the Company faces see the discussion in the Form 10−K for the fiscal year ended December 31, 2010 entitled “Risk Factors”.  This discussion and analysis of financial condition and plan of operations should be read in conjunction with our Condensed Consolidated Financial Statements included herein.

Overview

Since 2005, the Company has transitioned itself into a company focused on the development and licensing of proprietary technologies.  As an example, in March 2006 we sold four of our voice activated product and item locator patents to Lamson Holdings LLC for 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.
 
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. (n/k/a B Green Innovations, Inc) Series A 10% Convertible Preferred Stock for $1,444,444.  At the time that the Company acquired these shares, the holder of each share of Series A Preferred Stock had the right to one vote for each share of Common Stock into which such Series A Preferred Stock could then be converted, and 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.  As a result of this transaction, the Company consolidated the results of operations of B Green Innovations, Inc.  On March 6, 2009, iVoice Technology amended their Certificate of Incorporation to remove the voting and conversion rights of the Series A Convertible Preferred Stock.  Based on this change, the Company no longer has any voting rights in the stock of iVoice Technology.  In February 2010, the Company filed with the State of New Jersey an Amendment to the Certificate that revised the rights of the holders of the Company’s Series A 10% Secured Convertible Preferred Stock.  The revisions included:
 
a. The preferred stock will be referred to in the Company’s Certificate of Incorporation as: “Series A 3% Preferred Stock”.
b. The holders of the preferred stock will have a new dividend rate of 3%.
c. The holders of the Series A 3% Preferred Stock shall have no voting rights.
d. Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof with the consent of B Green Innovations, Inc., (“B Green”) at any time after the date of issuance of such share into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Series A Initial Value, as may be adjusted from time to time, by the Conversion Price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The "Conversion Price” per share shall be calculated as the closing bid price of the Class A Common stock on the last trading day immediately prior to the date that the Notice of Conversion is tendered to B Green, subject to certain adjustments.
e. The holders of shares of Series A Preferred Stock shall be prohibited from converting shares of Series A Preferred Stock, and B Green shall not honor any attempted conversion of Series A Preferred Stock, if, and to the extent, the shares of Common Stock held by such converting holder of Series A Preferred Stock following any attempted conversion would exceed 9.99% of the outstanding shares of Common Stock of B Green after giving effect to such conversion.
 
 
18
 
 
On November 16, 2009, iVoice Technology completed a merger with its wholly owned subsidiary B Green Innovations, Inc, and renamed the company B Green Innovations, Inc. (“B Green Innovations”).  The Company is the primary beneficiary of B Green Innovations, and as such, according to provisions of FASB Accounting Standards Codification (“ASC”) Topic 810 “Consolidation”, iVoice, Inc. continued to consolidate the results of operations of B Green Innovations with those of iVoice and its other subsidiary.
 
On March 9, 2011, iVoice, Inc. entered into an Agreement and Plan of Merger (the “Agreement”) with Hydra Fuel Cell Corporation (“Hydra”).  Hydra is a wholly owned subsidiary of American Security Resources Corporation.

On November 8, 2011, iVoice and Hydra entered into an Amended and Restated Agreement and Plan of Merger (the “Amended Agreement”) that superseded the previously executed Agreement and Plan of Merger.  Pursuant to the terms of the Amended Agreement Hydra, will merge into a wholly owned subsidiary of iVoice, iVoice Innovations, Inc.

In exchange for the common stock of Hydra, the sole shareholder of Hydra, American Security Resources Corporation (“ASRC”) will receive 1 million shares of iVoice Series A Preferred Stock (the “Preferred Stock”) with each share of Preferred Stock convertible into 153.5 shares of iVoice Class A Common Stock.  However, the Preferred Stock will have no voting rights.  Pursuant to the Amended Agreement, the Preferred Stock will not be delivered to ASRC until the following conditions are met:  (i) Delivery by Hydra of the audited financial statements of Hydra for the fiscal year ended December 31, 2010 and certain other conditions set forth on Exhibit C of the Amended Agreement.

The transaction contemplated under the Amended Agreement will close upon certain conditions being met as specified in the Amended Agreement and the completion by due diligence.

Results of Operations

Total sales increased $28,531 (20.0%) and $20,816 (48.0%) for the nine months and three months ended September 30, 2011, respectively, when compared to the same periods in the prior year.  An increase in revenues for our “green” products was offset by a decrease in maintenance services for the IVR business.  Lower and more competitive prices of our “green products.”  was mostly offset by the substantial increase in volume attributed to the lower prices.  The Company continues to evaluate additional products to its product line as well as expanding its distribution channels.  The Company continues its efforts to market and sell its products through a distribution network.  B Green has entered into distribution agreements with reputable distributors that have proven themselves within their territories and industry segments.

Gross profit increased $53,447 (72.2%) and $27,060 (128.4%) for the nine months and three months ended September 30, 2011, respectively, as compared to the same periods in the prior year as a result of the lower outsourced manufacturing costs of the “green” products.
 
Total operating expenses for the nine months and three months ended September 30, 2011 and 2010, were $987,229, $976,453, $322,413 and $311,747, respectively, for an increase of $10,776 (1.1%) and $10,666 (3.4%), respectively.  The increases are primarily attributable to the impairment of intangible assets and higher depreciation expense offset by lower overhead and office expenses.
 
Total other income (expense) for the nine months ended September 30, 2011 was an income of $33,426 as compared to income of $182,670 for the nine months ended September 30, 2010 for a decrease of $149,244.  This decrease was primarily the result of a $232,491 gain on sale of tax losses in the NJEDA program in 2010 that did not occur in 2011.  Total other income (expense) for the three months ended September 30, 2011 was an income of $15,971 as compared to expense of $37,859 for the three months ended September 30, 2010.  This change was primarily the result of lower interest expense of $55,894 due to the beneficial interest on common stock conversions that happened in the prior year, which did not reoccur in the current period offset by the lower gain on revaluation of derivatives as compared to the prior year.
 
The net losses for the nine months ending September 30, 2011 and 2010 were $826,318 and $719,745, respectively.  The unfavorable change was primarily the result of the lower other income offset by increased sales and gross profit.  The net losses for the three months ending September 30, 2011 and 2010 were $258,493 and $329,537, respectively.  The favorable change was primarily the result of the lower interest expense, greater sales, gross profit and lower operating expenses offset by the lower gain on revaluation of derivatives.
 
The net gain attributable to non-controlling interest for the nine months ended September 30, 2011 was $595,035 as compared to net loss of $135,396 for the nine months ended September 30, 2010 reflect the non-controlling interest’s portion of the operating income and losses recorded by B Green Innovations, after effect of elimination of intra-company transactions, which is included in our consolidation for the nine months ended September 30, 2011 and 2010, respectively.
 
 
19
 
 
Liquidity and Capital Resources

We are currently seeking additional operating income opportunities through potential acquisitions or investments.  Such acquisitions or investments may consume cash reserves or require additional cash or equity.  Our working capital and additional funding requirements will depend upon numerous factors, including: (i) strategic acquisitions or investments; (ii) an increase to current Company personnel; (iii) the level of resources that we devote to sales and marketing capabilities; (iv) technological advances; and (v) the activities of competitors.

During the nine months ended September 30, 2011 and the year ended December 31, 2010, we had incurred consolidated losses from operations of $859,744 and $1,653,701, respectively, and had cash flow deficiencies from operations of $286,342 and $379,647, 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 generate enough revenue to fund operations.  There can be no assurance as to the receipt or timing of revenues from operations.  We expect to fund ongoing operations 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 18 months.

During the nine months ended September 30, 2011, the Company had a net decrease in cash of $1,196,980.  The Company’s principal sources and uses of funds in the nine months ended September 30, 2011 were as follows:

Cash flows from operating activities.  The Company used $286,342 in cash from operations in the nine months ended September 30, 2011 as compared to using $232,945 from operations in the nine months ended September 30, 2010.  This increase was primarily attributed to an $180,683 increase in cash losses from operations and decreases in accrued liabilities offset by increases in related party accounts.
 
Cash flows from investing activities.  The Company used $883,841 in investing activities for the nine months ended September 30, 2011 as compared to $23,444 of cash provided by investing activities in the prior year.  The outflow of cash was primarily for investment in marketable securities.

Cash flow from financing activities.  The Company used $22,797 of available cash in the nine months ended September 30, 2011 for the repurchase of B Green Innovations common stock.
 
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.  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 November 12, 2009, the Company and YA Global reached a settlement agreement whereby the Company made a cash payment of $500,000 and issued an Amended and Restated convertible debenture for the sum of $671,600.
 
On March 7, 2008 and May 8, 2008, the Company received proceeds from an Express Creditline Loan from Smith Barney that were collateralized by the proceeds available from the sales of the auction rate preferred shares.  The interest rate charged on the loan is tied to the dividend rates earned on the auction rate preferred shares.  When an auction rate preferred shares were sold in October 2008, a portion of the proceeds is applied to pay down the short-term loan and the balance was deposited into interest bearing savings account at our primary banking center.
 
 
20
 
 
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) 90% of the lowest closing bid price of our shares of Class A Common Stock during the three (3) trading days immediately preceding the conversion date.
 
 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 or from other sources will enable us to raise the requisite capital needed to implement our long-term growth strategy.  Current economic and market conditions have made it very difficult to raise required capital for us to implement our business plan.
 
Off Balance Sheet Arrangements

During the nine months ended September 30, 2011, we did not engage in any material off-balance sheet activities nor have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.  Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide additional funding to any such entities.

Forward Looking Statements - Cautionary Factors

Certain information included in this Form 10-Q and other materials filed or to be filed by us with the Securities and Exchange Commission (as well as information included in oral or written statements made by us or on our behalf), may contain forward-looking statements about our current and expected performance trends, growth plans, business goals and other matters.  These statements may be contained in our filings with the Securities and Exchange Commission, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers.  Information set forth in this discussion and analysis contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements.  The reader is cautioned that such forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements.  Forward-looking statements speak only as of the date the statement was made.  We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.  Forward-looking statements are typically identified by the use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “should,” “will,” and similar words, although some forward-looking statements are expressed differently.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct.
 
 
21
 
 
ITEM 4 - CONTROLS AND PROCEDURES

Controls and Procedures.

Management of the Company has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of the Company had concluded that the Company's disclosure controls and procedures as of the period covered by this Quarterly Report on Form 10-Q were not effective for the following reasons:
 
         a) The Company has limited segregation of duties amongst its 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 Company's has a limited number of external board members.  This deficiency may give the impression to the investors that the board is not independent from management.  Management and the Board of Directors are required to apply their judgment in evaluating the cost-benefit relationship of possible changes in the organization of the Board of Directors.

Changes in internal control over financial reporting.

Management of the Company has also evaluated, with the participation of the Chief Executive Officer of the Company, any change in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q and determined that there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
 
22
 
 
PART II – OTHER INFORMATION

ITEM 6 - EXHIBITS

Certification of the Chief Executive Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS
XBRL Instance Document

101.SCH
XBRL Taxonomy Extension Schema

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XBRL Taxonomy Extension Calculation Linkbase

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XBRL Taxonomy Extension Definition Linkbase

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XBRL Taxonomy Extension Presentation Linkbase

 
23
 
 
SIGNATURES

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

 
iVoice, Inc.
  
       
Date:  November 18, 2011
By:
/s/ Jerome R. Mahoney
  
   
Jerome R. Mahoney,
  
   
President, Chief Executive Officer and Principal Financial Officer
  
 
 
24
 
 
Index of Exhibits
 
Certification of the Chief Executive Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS
XBRL Instance Document

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XBRL Taxonomy Extension Schema

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XBRL Taxonomy Extension Calculation Linkbase

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101.PRE
XBRL Taxonomy Extension Presentation Linkbase
 
 
 
 
25
 
 EX-31.2 2 ivoi_ex311.htm CERTIFICATION ivoi_ex311.htm
Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certifications.

I, Jerome R. Mahoney, certify that:

1)  
I have reviewed this quarterly report on Form 10-Q of iVoice, Inc.;

2)  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)  
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4)
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
 
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our  supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5)
I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
Date:  November 18, 2011
   /s/ Jerome R. Mahoney  
    Jerome R. Mahoney,  
    President, Chief Executive Officer and  
    Principal Financial Officer  
 
 EX-32.1 3 ivoi_ex321.htm CERTIFICATION ivoi_ex321.htm
Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of iVoice, Inc. (the “Company”), on Form 10-Q for the period ended September 30, 2011, as filed with the Securities Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certify, pursuant  to and solely for the purpose of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
 
 
1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.
The information contained in the Report fairly presents, in all material respects the financial condition and results of operations of the Company.
 
 
Date:  November 18, 2011
   /s/ Jerome R. Mahoney  
    Jerome R Mahoney,  
    President, Chief Executive Officer and  
    Principal Financial Officer  
 
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Condensed Consolidated Balance Sheet (Parenthetical) (USD $)
Sep. 30, 2011
Dec. 31, 2010
Assets  
PROPERTY AND EQUIPMENT, Accumulated Depreciation$ 272,349$ 247,764
Intangible assets, Accumulated Amortization8,0453,081
Liabilities  
Convertible debenture payable, discounts$ 80,969$ 104,476
Stockholders Equity  
Preferred stock, par value$ 1$ 1
Preferred stock, authorized shares1,000,0001,000,000
Preferred stock, issued shares00
Preferred stock, outstanding shares00
Common stock, par value Class A$ 0$ 0
Common stock, shares authorized Class A10,000,000,00010,000,000,000
Common stock, shares issued Class A6,265,566,4936,265,566,493
Common stock, shares outstanding Class A6,265,563,4936,265,563,493
Common stock, par value Class B$ 0.01$ 0.01
Common stock, shares authorized Class B50,000,00050,000,000
Common stock, shares issued Class B00
Common stock, shares outstanding Class B00
Treasury stock3,0003,000
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Condensed Consolidated Statements of Operations (Unaudited) (USD $)
3 Months Ended9 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Sep. 30, 2011
Sep. 30, 2010
Income Statement [Abstract]    
SALES$ 64,173$ 43,357$ 171,527$ 142,996
COST OF SALES16,04422,28844,04268,958
GROSS PROFIT48,12921,069127,48574,038
OPERATING EXPENSES    
Selling, general and administrative expenses319,327308,292955,355966,547
Impairment of assets0019,5820
Depreciation and amortization3,0863,45512,2929,906
Total operating expenses322,413311,747987,229976,453
LOSS FROM OPERATIONS(274,284)(290,678)(859,744)(902,415)
OTHER INCOME (EXPENSE)    
Other income7,3446,60035,807272,561
Gain on revaluation of derivatives21,34131,53434,278172,341
Amortization of discount on debt(7,836)(15,041)(23,507)(45,122)
Interest expense(5,058)(60,952)(13,152)(217,110)
Total other income (expense)15,791(37,859)33,426182,670
LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES(258,493)(328,537)(826,318)(719,745)
PROVISION FOR INCOME TAXES0000
NET LOSS(258,493)(328,537)(826,318)(719,745)
Noncontrolling interest(15,722)(120,169)595,035(135,396)
NET LOSS APPLICABLE TO iVOICE, INC.$ (242,771)$ (208,368)$ (1,421,353)$ (584,349)
NET LOSS PER COMMON SHARE Basic and diluted$ 0.00$ 0.00$ 0.00$ 0.00
WEIGHTED AVERAGE SHARES OUTSTANDING Basic and diluted6,265,563,4935,985,506,3606,265,563,4934,678,876,888
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Document and Entity Information
9 Months Ended
Sep. 30, 2011
Nov. 18, 2011
Document And Entity Information  
Entity Registrant NameIVOICE, INC /NJ 
Entity Central Index Key0001105064 
Document Type10-Q 
Document Period End DateSep. 30, 2011
Amendment Flagfalse 
Current Fiscal Year End Date--12-31 
Is Entity a Well-known Seasoned Issuer?No 
Is Entity a Voluntary Filer?No 
Is Entity's Reporting Status Current?Yes 
Entity Filer CategorySmaller Reporting Company 
Entity Common Stock, Shares Outstanding 6,265,563,493
Document Fiscal Period FocusQ3 
Document Fiscal Year Focus2011 
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DERIVATIVE LIABILITY
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
DERIVATIVE LIABILITY

 

In accordance with ASC 815, "Derivatives and Hedging", the conversion feature associated with the YA Global Secured Convertible Debentures represents embedded derivatives. At September 30, 2011, the derivative liability is measured at its estimated fair value of $537,663.

 

The estimated fair value of the embedded derivative has been calculated based on a Black-Scholes pricing model using the following assumptions:

 

    At 9/30/11     At 12/31/10  
   Fair market value of stock   $ 0.00013     $ 0.00013  
   Exercise price   $ 0.00012     $ 0.00012  
   Dividend yield     0.00 %     0.00 %
   Risk free interest rate     1.2 %     1.2 %
   Expected volatility     221.33 %     291.98 %
   Expected life   2.67 years     3.42 years  

 

Changes in the fair value of the embedded derivatives are calculated at each reporting period and recorded in gain (loss) on revaluation of derivatives in the condensed consolidated statements of operations. During the nine months ended September 30, 2011, there was a change in the fair value of the embedded derivatives, which resulted in a gain of $34,278.

 

In accordance with ASC 820, the fair market value of the derivatives and warrants are bifurcated from the convertible debentures as a debt discount.  The debt discount is being amortized over the life of the convertible debentures. The consolidated amortization expense on the debt discount on the convertible debentures for the nine months ended September 30, 2011 and 2010 was $-0- and $21,615, respectively.

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CONSOLIDATED FINANCIAL STATEMENTS AND NON-CONTROLLING INTEREST
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
CONSOLIDATED FINANCIAL STATEMENTS AND NON-CONTROLLING INTEREST

 

On March 12, 2008, the Company acquired 1,444.44 shares of B Green Innovations, Inc. (f/k/a iVoice Technology, Inc.) Series A 3% Secured Convertible Preferred Stock for $1,444,444.  At the time that the Company acquired these shares, the holder of each share of Series A Preferred Stock had the right to one vote for each share of Common Stock into which such Series A Preferred Stock could then be converted, and 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. These securities are also secured by the assets of B Green Innovations. On March 6, 2009, B Green Innovations amended its Certificate of Incorporation to remove the voting and conversion rights of the Series A Convertible Preferred Stock. Based on this change, the Company no longer has any voting rights in the stock of B Green Innovations. On February 23, 2010, the Company acquired 1,219 shares of B Green Innovations, Inc.’s Series A 3% Convertible Preferred Stock for $1,218,766 of cash and convertible debt. In addition, on February 23, 2010, B Green Innovations reinstated the conversion rights on their Series A Convertible Preferred Stock. iVoice may, with the consent of B Green Innovation, convert an amount of the Series A Preferred Stock into Class A common stock calculated by dividing the Series A Initial Value by the closing bid price of the Class A common stock on the last trading day immediately prior to the date of the Notice of Conversion and which limits the conversion to Class A common stock to 9.99% of the outstanding shares of B Green Innovations. iVoice will receive no discount to the closing bid price on the conversion. The Company is the primary beneficiary of B Green Innovations, and as such, according to ASC 810, “Consolidation”, iVoice, Inc. continued to consolidate the results of operations of B Green Innovations with those of iVoice, Inc. and its other subsidiary.

 

For the periods ended September 30, 2011, December 31, 2010 and September 30, 2010, the stockholders’ equity for non-controlling interest and net income attributable to non-controlling interest reflects 90% of the non-controlling interest’s portion of B Green Innovations operations, after giving effect of elimination of intra-company transactions.

 

On January 5, 2011, B Green Innovations, Inc. converted $66,104 of the principal amount and accrued interest of the iVoice Note Receivable, dated April 30, 2010 for redemption of 1,057,664 shares of B Green Innovations Series A 3% Preferred Stock in accordance with the terms of the Promissory Note.

 

Since 2004, iVoice has provided administrative services to B Green Innovations and its subsidiary through various agreements. In 2008, the accumulated unpaid receivables were exchanged for Convertible Promissory Notes payable to iVoice by B Green Innovations and its subsidiary. In November 2009, iVoice and B Green Innovations mutually agreed to terminate and extinguish the following agreements:

 

a. The Administrative Services Agreement dated March 1, 2007 by and between B Green Innovations, Inc.(subsidiary) and iVoice, Inc.

b. The Convertible Promissory Note dated May 5, 2008 issued by B Green Innovations, Inc. (subsidiary) payable to iVoice, Inc.

c. The Security Agreement dated May 5, 2008 by and between B Green Innovations, Inc. (subsidiary) and iVoice, Inc.

 

On February 10, 2010, the remaining Administrative Services Agreement with B Green Innovations was terminated, and the Company entered into an Exchange Agreement to exchange the B Green Innovations Convertible Promissory Note, having a principal and accrued interest of approximately $119,000, for 119 shares of the B Green Innovations 3% Convertible Preferred Stock.

 

On February 10, 2010, and as subsequently amended (see below), the Company entered into an administrative services agreement with B Green Innovations to provide iVoice with administrative and financial services and office space. This agreement will continue on a month-to-month basis unless terminated by either party by providing 30 days written notice. In consideration of the services, iVoice will pay B Green $5,000 per month.

 

On March 10, 2011, the Company and iVoice, Inc. entered into a new administrative services agreement which supersedes all prior agreements. The terms of the agreement are as follows: In consideration of the services, iVoice, Inc. will pay B Green $5,000 per month. On March 10, 2011, the agreement was modified to increase the administrative service fee from iVoice from $5,000 to $15,000 per month. This agreement will continue on a month-to-month basis unless terminated by either party by providing 30 days written notice.

 

i.   The agreement is on a month-to-months basis unless terminated by either party providing thirty (30) days advance notice to the non-terminating party. This agreement cannot be terminated until B green has redeemed all of the B Green Series A 3% Preferred Stock that is held by the Company.

ii.   In consideration of the services, iVoice, Inc. will pay B Green $15,000 per month.

iii.   B Green shall receive payment by redeeming the number of B Green Series A 3% Preferred Stock shares held by iVoice using the formula set below:

i.   calculate the number of iVoice Class A Common Stock shares by dividing (x) the dollar value of the fees that B Green is to be paid by fifty percent (50%) of the lowest issue price of iVoice Class A common Stock.

ii.   The iVoice market value shall be equal to the number of iVoice Class A Common Stock shares calculated above multiplied by the highest closing ask price of iVoice Class A Common stock in the previous thirty (30) trading days prior to the date of the calculation.

iii.   The number of B Green Series A 3% Preferred Stock shares to be redeemed hereunder shall be calculated by dividing the iVoice Market value calculated above by the Series A Initial Value, as defined in the B Green Certificate of Incorporation.

 

For the nine months ended September 30, 2011 the Company and B Green Innovations recorded administrative service fees of $116,500 as compared to $45,000 for the nine months ended September 30, 2010.

 

All transactions between the Company and B Green Innovations, Inc. are eliminated in consolidation.

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COMMON STOCK
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
COMMON STOCK

 

Class A Common Stock

Class A common stock consists of 10,000,000,000 shares of authorized common stock with no par value. As of September 30, 2011, 6,265,563,493 shares were issued and outstanding.

 

Each holder of Class A common stock is entitled to one vote for each share held of record.  Holders of our Class A common stock have no preemptive, subscription, conversion, or redemption rights.  Upon liquidation, dissolution or winding-up, the holders of Class A common stock are entitled to receive our net assets pro rata.  Each holder of Class A common stock is entitled to receive ratably any dividends declared by our board of directors out of funds legally available for the payment of dividends.  The Company has not paid any dividends on its common stock and management does not contemplate doing so in the foreseeable future.  The Company anticipates that any earnings generated from operations will be used to finance growth. There were no shares issued for the nine months ended September 30, 2011.

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INCOME TAXES
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
INCOME TAXES

 

The tax effect of temporary differences, primarily net operating loss carryforwards, asset reserves and accrued liabilities give rise to a deferred tax asset. Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse. Because of the current uncertainty of realizing the benefit of the tax carry forward, a valuation allowance equal to the tax benefit for deferred taxes has been established. The full realization of the tax benefit associated with the carry forward depends predominantly upon the Company's ability to generate taxable income during the carry forward period.

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DUE TO RELATED PARTIES
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
DUE TO RELATED PARTIES

From time to time, iVoice, Inc. has entered into various loan agreements and employment agreements with Jerome R. Mahoney, President and Chief Executive Officer of the Company. As of September 30, 2011, the balances due to Mr. Mahoney were: a) accrued interest of $5,285 and b) deferred compensation of $862,379. Amounts due to Mr. Mahoney are convertible into either (i) one Class B common stock share of iVoice, Inc., $.01 par value, for each dollar owed, or (ii) the number of Class A common stock shares of iVoice, Inc. calculated by dividing (x) the sum of the principal and interest that the Note holder has decided to prepay by (y) fifty percent (50%) of the lowest issue price of Series A common stock since the first advance of funds under this Note, whichever the Note holder chooses, or (iii) payment of the principal of the Note, before any repayment of interest.  The Board of Directors of the Company maintains control over the issuance of shares and may decline the request for conversion of the repayment into shares of the Company.

 

In August 2005, B Green Innovations had assumed an outstanding promissory demand note in the amount of $190,000 payable to Jerome Mahoney, then, the Non-Executive Chairman of the Board of B Green Innovations.  The note bears interest at the rate of prime plus 2.0% per annum (5.25% at September 30, 2011 and December 31, 2010) on the unpaid balance until paid.  Under the terms of the Promissory Note, at the option of the Note holder, principal and interest can be converted into either (i) one share of Class B Common Stock of B Green Innovations, Inc., par value $.01, for each dollar owed, (ii) the number of shares of Class A Common Stock of B Green Innovations, Inc. calculated by dividing (x) the sum of the principal and interest that the Note holder has requested to have prepaid by (y) eighty percent (80%) of the lowest issue price of Class A Common Stock since the first advance of funds under this Note, or (iii) payment of the principal of this Note, before any repayment of interest. The Board of Directors of B Green Innovations maintains control over the issuance of shares and may decline the request for conversion of the repayment into shares of the B Green Innovations. During the nine months ended September 30, 2011 and 2010, Mr. Mahoney did not receive any payments against this loan. As of September 30, 2011 and December 31, 2010, the outstanding balances were $3,003, plus accrued interest $126,546 and $113,394, respectively.

 

B Green Innovations, Inc. entered into a five-year employment agreement with Jerome Mahoney to serve as Non-Executive Chairman of the Board of Directors, effective August 1, 2004. On March 9, 2009, the term of the employment agreement between the Company and Mr. Mahoney, the Company’s CEO, was extended to July 31, 2016.  B Green will compensate Mr. Mahoney with a base salary of $85,000 for the first year with annual increases based on the Consumer Price Index. Mr. Mahoney had a consulting agreement with the Company’s former subsidiary B Green Innovations for annual compensation of $24,000 and upon every annual anniversary thereafter, at the rate based on the increase in the Consumer Price Index for All Urban Consumers (New York-Northern N.J.-Long Island). Effective January 1, 2010, this amount was added to Mr. Mahoney’s base salary. On June 15, 2010, Mr. Mahoney’s employment agreement was amended to increase the base salary to $195,000 effective July 1, 2010. All other terms of the Employment Agreement shall remain in full force and effect. A portion of Mr. Mahoney’s compensation shall be deferred until such time that the Board of Directors determines that B Green has sufficient financial resources to pay his compensation in cash.

 

B Green’s Board has the option to pay Mr. Mahoney’s compensation in the form of Class B Common Stock. Mr. Mahoney will also be entitled to certain bonuses based on mergers and acquisitions completed by the Company. Pursuant to the terms of the Class B Common Stock, a holder of Class B Common Stock has the right to convert each share of Class B Common Stock into the number of shares of Class A Common Stock determined by dividing the number of Class B Common Stock being converted by a 20% discount of the lowest price for which the Company had ever issued its Class A Common Stock. As of September 30, 2011 and December 31, 2010, total deferred compensation due to Mr. Mahoney was $447,987 and $312,750 respectively.

 

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
9 Months Ended
Sep. 30, 2011
Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net loss$ (826,318)$ (719,745)
Adjustments to reconcile net loss to net cash:  
Depreciation of fixed assets and amortization of intangibles12,2929,906
Amortization of discount on debt conversion23,50745,122
Beneficial interest0207,900
Impairment of assets19,5820
Gain on sales of securities available for sale(26,490)(29,814)
(Gain) loss on revaluation of derivatives(34,278)(172,341)
Stock issue to noncontrolling shareholders for services4,05015,570
Gain from settlement of note receivable previously written-off0(3,570)
Changes in certain assets and liabilities:  
(Increase) in accounts receivable(13,733)(5,120)
(Increase) decrease in inventory(4,793)(879)
Decrease in prepaid expenses and other assets13,5288,739
Increase in accounts payable and accrued liabilities86,706205,640
Increase (decrease) in deferred revenues6,340(1,210)
Increase in related party liabilities453,265206,857
Net cash used in operating activities(286,342)(232,945)
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchase of property and equipment0(14,137)
Investment in marketable securities(907,139)0
Net proceeds from sales of securities available for sale23,29837,581
Net cash provided by (used in) investing activities(883,841)23,444
CASH FLOWS FROM FINANCING ACTIVITIES  
Repurchase of BGI common stock(26,797)0
Net cash used in financing activities(26,797)0
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(1,196,980)(209,501)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD1,488,5571,842,801
CASH AND CASH EQUIVALENTS - END OF PERIOD291,5771,633,300
CASH PAID DURING THE PERIOD FOR:  
Interest expense00
Income taxes$ 0$ 0
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GOING CONCERN
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
GOING CONCERN

 

The Company has negative cash flows from operations, negative working capital and recurring losses from operations. These issues raise substantial doubt about the Company’s ability to continue as a going concern. Therefore, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn, is dependent upon the Company’s ability to raise capital and/or generate positive cash flow from operations.

 

Since the spin-off of the three operating subsidiaries in 2005, the Company has transitioned itself into a company focused on the development and licensing of proprietary technologies. Following the sales of patents to Lamson Holdings LLC, the Company has 2 remaining patent applications, which have been awarded or are pending.  These applications include various versions of the “Wirelessly Loaded Speaking Medicine Container”, which is also filed internationally and “Wireless Methodology for Talking Consumer Products” which is also filed internationally.

  

The Company also continues to search for potential merger candidates with or without compatible technology and products, which management feels may make financing more appealing to potential investors.

 

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

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FAIR VALUE MEASUREMENTS
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
FAIR VALUE MEASUREMENTS

 

ASC 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 

ASC 820 classifies these inputs into the following hierarchy:

 

  Level 1 Inputs– Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 

  Level 2 Inputs– Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

 

  Level 3 Inputs– Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

  

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of September 30, 2011 and December 31, 2010. As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

 

September 30, 2011

 

Assets   Level I     Level II     Level III     Total  
                         
Securities available for sale   $ 899,645     $ -     $ -     $ 899,645  
Total Assets   $ 899,645     $ -     $ -     $ 899,645  
                                 
Derivative liabilities   $ -     $ 537,663     $ -     $ 537,663  
Total Liabilities   $ -     $ 537,663     $ -     $ 537,663  

 

December 31, 2010

 

Assets   Level I     Level II     Level III     Total  
                         
Securities available for sale   $ 2,014     $ -     $ -     $ 2,014  
Total Assets   $ 2,014     $ -     $ -     $ 2,014  
                                 
Derivative liabilities   $ -     $ 571,941     $ -     $ 571,941  
Total Liabilities   $ -     $ 571,941     $ -     $ 571,941  

 

 

Valuation methods:

The Company’s securities available for sale are valued using quoted security prices based on the market on which they are traded.

 

The Company’s derivatives are classified within Level 2 of the valuation hierarchy. The Company’s derivatives are valued using internal models that use as their basis readily observable market inputs, such as time value, forward interest rates, and volatility factors. Refer to Note 6 for more discussion on derivatives.

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CONVERTIBLE DEBENTURES PAYABLE
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
CONVERTIBLE DEBENTURES PAYABLE

On November 12, 2009, the Company issued an Amended and Restated convertible debenture for the principal amount of $671,600 due on May 25, 2014. This debenture is secured with a $370,000 secured convertible debenture dated January 6, 2006 held by the Company, which has been fully reserved, and issued by Thomas Pharmaceuticals, Ltd.  Additionally, under the terms of the Settlement Agreement, YA Global released its security interest on the other assets of the Company, terminated the outstanding warrants previously issued by the Company in favor of YA Global and both parties executed releases fully releasing each other from any and all claims through the date of the Settlement Agreement. This debenture has no interest rate and the Company imputed an effective interest rate of 5.25% and recorded imputed interest of $141,043 which is being amortized over the term of the debenture. The Company amortized $23,507 of this interest during the nine months ended September 30, 2011 and 2010. The Company can redeem a portion or all amounts outstanding under the YA Global Debentures at any time upon three business days advanced written notice.  The Company 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 three (3) trading days immediately preceding the conversion date.

 

The aggregate principal value of the remaining debentures at September 30, 2011 and December 31, 2010 is $518,100. These amounts are shown on the balance sheet net of imputed interest of $80,969 and $104,476, respectively. This amount is being amortized over the life of the debenture and is being amortized as interest expense on the statement of operations. 

 XML 25 R5.htm IDEA: XBRL DOCUMENT v2.3.0.15
Accumulated Other Comprehensive Income (USD $)
9 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Accumulated Other Comprehensive Income  
Balance at beginning of the period$ 1,199$ 4,658
Unrealized gain (loss) arising during the period(154)27,595
Less: reclassification adjustment and losses included in net loss0(29,814)
Net change for the period(154)(2,219)
Balance at end of the period$ 1,045$ 2,439
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.  It is suggested that these condensed consolidated financial statements be read in conjunction with the December 31, 2010 audited financial statements and the accompanying notes thereto.

 

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, iVoice Innovations, Inc. and its Variable Interest Entity, B Green Innovations. All significant intra/inter-company transactions and balances have been eliminated in consolidation.

 

B Green Innovations is considered a Variable Interest Entity by the Company because iVoice, Inc. is the primary beneficiary of B Green Innovations. Additionally, iVoice has provided more than half the equity of B Green Innovations, and iVoice’s Board of Directors and B Green Innovations’ Board of Directors are the same, and therefore have the power to direct the activities of B Green Innovations, the Variable Interest Equity.  As such, according to provisions of FASB Accounting Standards Codification (“ASC”) Topic 810 “Consolidation”, iVoice, Inc. continued to consolidate the results of operations of B Green Innovations with those of iVoice and its other subsidiary. The Company reclassified certain accounts in the stockholders’ deficit section to conform to the current year presentation. The reclassifications had no effect on operations or cash flows.

 

Revenue and Cost Recognition

The parent Company obtains its income primarily from the sales or licensing of its patents and patent applications. Revenues for the sales of our patents are recorded upon transfer of title. The patent revenues are reported net of any broker fees or commissions.

 

The Company also is reporting revenues for B Green Innovations which primarily derives revenues from the shipments of “green products” which are recognized at the time of shipment to, or acceptance by customer, provided title and risk of loss is transferred to the customer. Provisions, when appropriate, are made where the right of return exists. B Green Innovation also derives revenues from the customer support (maintenance) service contracts for its IVR software product for one-year periods. Deferred revenues are recorded when the company receives payment and then revenues are recorded over the maintenance period.

 

Concentration of Credit Risk

The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits. The balances exceed FDIC insured limits. The Company has not experienced any losses in such accounts.

 

Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at September 30, 2011 and December 31, 2010, as defined in ASC 320-10-35, “Subsequent Measurement of Investment Securities”, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed consolidated balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

 

Income (Loss) Per Share

ASC 260, “Earnings Per Share” requires presentation of basic earnings per share (“basic EPS”) and diluted earnings per share (“diluted EPS”).The computation of basic EPS is computed by dividing income available to common stockholders by the weighted average number of outstanding Common shares during the period.  Diluted earnings per share gives effect to all dilutive potential Common shares outstanding during the period. The computation of diluted EPS for the nine months ended September 30, 2011 and 2010 does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.

 

The shares used in the computations are as follows:

 

    Nine months ended September 30,  
    2011     2010  
   Net (loss) applicable to iVoice, Inc.   $ (1,421,353 )   $ (584,349 )
                 
   Weighted average shares outstanding - basic     6,265,563,493       4,678,876,888  
   Weighted average shares outstanding - diluted     6,265,593,493       4,678,876,888  
                 
   Net (loss) per common share - basic   $ (0.00 )   $ (0.00 )
   Net (loss) per common share - diluted   $ (0.00 )   $ (0.00 )

 

As of September 30, 2011, the Company has common stock equivalents of 4,428,205,128 issuable upon conversion of the YA Global Convertible Debentures and an obligation to issue 274,901,691 shares of common stock outstanding. As of September 30, 2010, the Company had common stock equivalents of 4,428,205,128 issuable upon conversion of the YA Global Convertible Debentures and an obligation to issue 553,559,410 shares of common stock outstanding. The computation of diluted EPS in the periods ended September 30, 2011 and 2010 do not include the common stock equivalents because these would have an anti-dilutive effect on loss per share.

 

Accumulated Other Comprehensive Income

Comprehensive income (loss) includes net income (loss) and other revenues, expenses, gains and losses that are excluded from net income (loss) but are included as a component of total stockholders’ equity (deficit). Comprehensive income (loss) for the nine months ended September 30, 2011 and 2010 was ($154) and ($2,219), respectively. The difference between comprehensive income (loss) and net income (loss) results primarily from the effect of unrealized gains and losses determined in accordance with FASB ASC 320, “Investments – Debts and Equity Securities”.  As of September 30, 2011 and December 31, 2010, the accumulated balance of unrealized gains and losses excluded from net income (loss) was $1,045 and $1,199, respectively. These amounts are presented as “Accumulated other comprehensive income” in the balance sheet.

  

Recent Accounting Pronouncements

 

In May 2011, the Financial Accounting Standards Board (FASB) issued ASU 2011-04, guidance to improve consistency in application of existing fair value measurement and disclosure requirements.  The standard is intended to clarify the application of the requirements, not to establish valuation standards or affect valuation practices outside of financial reporting.  The guidance is effective for interim and annual periods beginning on or after December 15, 2011, with early adoption prohibited.  We do not expect adoption of this guidance to have an impact on our consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, guidance to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  The standard eliminates the current option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity.  The amendment requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  The amendment does not affect how earnings per share is calculated or presented.  The guidance is effective for interim and annual periods beginning after December 15, 2011.  Early adoption is permitted.

In September 2011, the FASB issued ASU 2011-08, “Intangibles — Goodwill and Other (Topic 350).” The objective of this Update is to simplify how entities test goodwill for impairment. This Update permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The Update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011. We do not anticipate any material impact from this Update.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

 

 XML 27 R16.htm IDEA: XBRL DOCUMENT v2.3.0.15
SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
SUBSEQUENT EVENTS

 

On March 9, 2011, iVoice, Inc. entered into an Agreement and Plan of Merger (the “Agreement”) with Hydra Fuel Cell Corporation (“Hydra”).  Hydra is a wholly owned subsidiary of American Security Resources Corporation.

 

On November 8, 2011, iVoice and Hydra entered into an Amended and Restated Agreement and Plan of Merger (the “Amended Agreement”) that superseded the previously executed Agreement and Plan of Merger.  Pursuant to the terms of the Amended Agreement Hydra, will merge into a wholly owned subsidiary of iVoice, iVoice Innovations, Inc.

 

In exchange for the common stock of Hydra, the sole shareholder of Hydra, American Security Resources Corporation (“ASRC”) will receive 1 million shares of iVoice Series A Preferred Stock (the “Preferred Stock”) with each share of Preferred Stock convertible into 153.5 shares of iVoice Class A Common Stock.  However, the Preferred Stock will have no voting rights.  Pursuant to the Amended Agreement, the Preferred Stock will not be delivered to ASRC until the following conditions are met:  (i) Delivery by Hydra of the audited financial statements of Hydra for the fiscal year ended December 31, 2010 and certain other conditions set forth on Exhibit C of the Amended Agreement.

 XML 28 R2.htm IDEA: XBRL DOCUMENT v2.3.0.15
Condensed Consolidated Balance Sheet (USD $)
Sep. 30, 2011
Dec. 31, 2010
CURRENT ASSETS  
Cash and cash equivalents$ 291,577$ 1,488,557
Marketable securities899,6452,014
Accounts receivable, net of allowance for doubtful accounts18,0174,284
Inventory5,8991,106
Prepaid expenses and other current assets20,05133,579
Total current assets1,235,1891,529,540
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $272,349 and $247,764, respectively13,00937,594
OTHER ASSETS  
Intangible assets, net of accumulated amortization of $8,045 and and $3,081, respectively105,892113,181
Deposits and other assets6,6666,666
Total other assets112,558119,847
TOTAL ASSETS1,360,7561,686,981
CURRENT LIABILITIES  
Accounts payable and accrued expenses1,179,6631,092,957
Due to related parties1,445,199991,934
Class A common stock liability354,157354,157
Deferred revenues7,5101,170
Total current liabilities2,986,5292,440,218
NON CURRENT LIABILITIES  
Convertible debenture payable, net of discounts of $80,969 and $104,476, respectively437,131413,624
Derivative liability on convertible debentures537,663571,941
Total current liabilities974,794985,565
TOTAL LIABILITIES3,961,3233,425,783
STOCKHOLDERS' EQUITY (DEFICIT)  
Preferred stock, $1 par value; authorized 1,000,000 shares; no shares issued and outstanding00
Common stock, Class A, no par value authorized 10,000,000,000 shares; 2011 - 6,265,566,493 shares issued; 6,265,563,493 shares outstanding 2010 - 6,265,566,493 shares issued; 6,265,563,493 shares outstanding25,225,51325,225,513
Common stock, Class B, $0.01 par value; authorized 50,000,000 shares; no shares issued and outstanding00
Additional paid-in capital719,702719,702
Accumulated other comprehensive income1,0451,199
Accumulated deficit(26,957,940)(25,536,587)
Treasury stock, 3,000 Class A shares, at cost(28,800)(28,800)
Total iVoice, Inc. stockholders' equity (deficit)(1,040,480)381,027
Noncontrolling interest(1,560,087)(2,119,829)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)(2,600,567)(1,738,802)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)$ 1,360,756$ 1,686,981
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