----

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|   |                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| x      | Annual      report under Section 13 or 15 (d) of the Securities Exchange Act of 1934      for the fiscal year ended March 31, 2009                            |
| o      | Transition      report under Section 13 or 15 (d) of the Securities Exchange Act of 1934      for the transition period from _____________ to    ____________ |

|                                          |   |                                   |
|-----------------------------------------------|--------|----------------------------------------|
| Delaware                                      |   | 75-2440201                             |
| (State      or Other Jurisdiction of          |   | (I.R.S.      Employer                  |
| Incorporation      or Organization)           |   | Identification      No.)               |
|                                          |   |                                   |
| 6500      Greenville Avenue, Suite 570        |   |                                   |
| Dallas,      Texas 75206                      |   | 214-265-9580                           |
| (Address      of principal executive offices, |   | (Issuer’s      telephone number, |
| including      zip code)                      |   | including      area code.)             |

|                     |   |                                           |
|--------------------------|--------|------------------------------------------------|
| Title      of Each Class |   | Name      of Each Exchange on Which Registered |
| NONE                     |   | N/A                                            |

| Securities      registered under Section 12(g) of the Exchange Act: |                          NONE |
|---------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     |                          |                                               |                                       |
|------------------------------------------|-------------------------------|----------------------------------------------------|--------------------------------------------|
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o                  | Smaller reporting company x |
|                                     |                          | (Do      not check if a smaller reporting company) |                                       |

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|             |   |                                                                                                                        |   |   |
|------------------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|--------|
|             |   |                                                                                                                        |   | Page   |
| PART      I      |   |                                                                                                                        |   |   |
| Item      1.     |   | Business                                                                                                                    |   | 1      |
| Item      1A.    |   | Risk      Factors                                                                                                           |   | 5      |
| Item      1B.    |   | Unresolved      Staff Comments                                                                                              |   | 5      |
| Item      2.     |   | Properties                                                                                                                  |   | 5      |
| Item      3.     |   | Legal      Proceedings                                                                                                      |   | 5      |
| Item      4.     |   | Submission      of Matters to a Vote of Security Holders                                                                    |   | 6      |
|             |   |                                                                                                                        |   |   |
| PART      II     |   |                                                                                                                        |   |   |
| Item      5.     |   | Market      for Registrant’s Common Equity,Related Stockholder Matters and Issuer      Purchases of Equity Securities |   | 7      |
| Item      6.     |   | Selected      Financial Data                                                                                                |   | 7      |
| Item      7.     |   | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                       |   | 7      |
| Item      7A.    |   | Quantitative      and Qualitative Disclosures About Market Risk                                                             |   | 11     |
| Item      8.     |   | Financial      Statements and Supplementary Data                                                                            |   | 11     |
| Item      9.     |   | Changes      In and Disagreements With Accountants on Accounting and Financial      Disclosure                              |   | 11     |
| Item      9A(T). |   | Controls      and Procedures                                                                                                |   | 12     |
| Item      9B.    |   | Other      Information                                                                                                      |   | 12     |
|             |   |                                                                                                                        |   |   |
| PART      III    |   |                                                                                                                        |   |   |
| Item      10.    |   | Directors,      Executive Officers and Corporate Governance                                                                 |   | 13     |
| Item      11.    |   | Executive      Compensation                                                                                                 |   | 14     |
| Item      12.    |   | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                    |   | 15     |
| Item      13.    |   | Certain      Relationships and Related Transactions and Director      Independence                                          |   | 16     |
| Item      14.    |   | Principal      Accountant Fees and Services                                                                                 |   | 17     |
|             |   |                                                                                                                        |   |   |
| PART      IV     |   |                                                                                                                        |   |   |
| Item      15.    |   | Exhibits,      Financial Statement Schedules                                                                                |   | 18     |
|             |   |                                                                                                                        |   |   |
| SIGNATURES       |   |                                                                                                                        |   | 20     |

----

----

|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | Target      Tier II and Tier III carriers. We believe that our experience in      providing enhanced services positions us strongly in carrier markets with      subscriber bases of less than 20 million. Our ability to interconnect with      various types of switches and billing formats gives us the opportunity to      serve these carriers efficiently and      economically.                                                                                                                                |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | ● | Continue      to enhance our phone company customer relationships. We consider      our relationships with our phone company customers to be strategic. Our      long-term revenue sharing agreements allow us to plan a joint, strategic      deployment of services to a contracting phone company’s      subscribers.                                                                                                                                                                                         |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | ● | Develop      strategic alliances. We are working to establish strategic      relationships with other companies around the nation to broaden our      services and provide our customers with additional services that we do not      currently provide. Our hosted network approach has allowed us to      centralize operations and provide services to numerous phone companies      from one location eliminating the need for our equipment to always be      collocated at each phone company’s      site. |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | ● | Technological      enhancements. We believe that we provide high quality, reliable      enhanced services to consumers through phone companies. We intend to      continue to develop services that we believe will enhance the services we      are already providing or for which we believe there is a viable      market.                                                                                                                                                                                          |

----

----

----

----

----

|             |   |             |   |   |   |   |   |   |             |   |   |   |   |
|------------------|--------|------------------|--------|--------|--------|--------|--------|--------|------------------|--------|--------|--------|--------|
|             |   | Fiscal      2009 |   |   |   |   |   |   | Fiscal      2008 |   |   |   |   |
|             |   | HIGH             |   |   | LOW    |   |   |   | HIGH             |   |   | LOW    |   |
| 1st      Quarter |   | $                | 0.70   |   |   | $      | 0.55   |   | 1st      Quarter |   | $      | 1.36   |   |   | $ | 1.00 |   |
| 2nd      Quarter |   | $                | 065    |   |   | $      | 0.55   |   | 2nd      Quarter |   | $      | 1.35   |   |   | $ | 0.65 |   |
| 3rd      Quarter |   | $                | 0.55   |   |   | $      | 0.15   |   | 3rd      Quarter |   | $      | 0.65   |   |   | $ | 0.65 |   |
| 4th      Quarter |   | $                | 0.49   |   |   | $      | 0.15   |   | 4th      Quarter |   | $      | 0.70   |   |   | $ | 0.65 |   |

----

|   | ● | secure      adequate financial and human resources to meet our requirements, including      adequate numbers of technical support staff to provide service for our      phone company customers; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | establish      and maintain relationships with phone companies;                                                                                                                                  |
|   | ● | make      sure the GAP system works with the telephone switches of all of the major      manufacturers;                                                                                          |
|   | ● | achieve      user acceptance for our services;                                                                                                                                                   |
|   | ● | generate      reasonable margins on our services;                                                                                                                                                |
|   | ● | continue      to deploy and install GAP systems on a timely and acceptable      schedule;                                                                                                        |
|   | ● | respond      to competitive marketdevelopments;                                                                                                                                                  |

----

|   | ● | mitigate      risk associated with our technology by obtaining patents and copyrights      and other protections of our intellectual property; and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | continually      update and add to our product offerings to meet the needs of      consumers.                                                      |

----

----

|                                                   |   |
|--------------------------------------------------------|--------|
| Independent      Auditors’ Report                | F-1    |
| Financial      Statements                              |   |
| Balance      Sheets                                    | F-2    |
| Statements      of Operations                          | F-5    |
| Statement      of Stockholders’ Equity (Deficit) | F-6    |
| Statement      of Cash Flows                           | F-8    |
| Notes      to Financial Statements                     | F-9    |

----

----

|                  |   |   |   |                                                                                      |   |   |
|-----------------------|--------|--------|--------|-------------------------------------------------------------------------------------------|--------|--------|
| Name                  |   |   |   | Age                                                                                       |   |   | Office |   |   | Year      FirstElected      Director |
|                  |   |   |   |                                                                                      |   |   |
| Mary      G. Merritt  |   | 52     |   | Director,      Chief Executive Officer, Executive VP-Finance and      Secretary/Treasurer |   | 1994   |
|                  |   |   |   |                                                                                      |   |   |
| Scott      V. Ogilvie |   | 55     |   | Director                                                                                  |   | 2000   |

----

|                             |       |
|----------------------------------|------------|
| Name      &PrincipalPosition | Year       |   | Salary($) |   |   | Bonus($) |   |   | StockAwards |   |   | OptionAwards |   |   | Non-      EquityIncentive      PlanCompensation |   |   | Non-      qualifiedDeferredCompensationEarnings |   |   | All      OtherCompensation($) |   |   | Total |   |
| Mary      G Merritt         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Chief                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Executive                   |  2009 |   | $ | 106,125 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Officer,      EVP –   |  2008 |   | $ | 105,000 |   |   |   | — |   |   |   | — |   |   | $ | 55,839 | (2) |   |   | — |   |   |   | — |   |   |   | — |   |   | $ | 160,839 |   |
| Finance(1)                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|              |   |                                                                  |   |                                                                    |   |                                                                                                                                                                                                                                                                                                                                                |   |                            |   |                          |   |
|-------------------|--------|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|-------------------------------|--------|
| Name(a)           |   | Number      ofsecuritiesunderlyingunexercisedoptions(#)exercisable(b) |   | Number      ofsecuritiesunderlyingunexercisedoptions(#)unexercisable(c) |   |             Option      awards                 Equity incentive            plan      awards:Number      ofsecuritiesunderlyingunexercisedunearned      options(#)(d) |   | Optionexercise      price($)(e) |   | Optionexpiration      date(f) |   |
|              |   |                                                                  |   |                                                                    |   |                                                                                                                                                                                                                                                                                                                                                |   |                            |   |                          |   |
| Mary      Merritt |   |   15,000                                                    |   | 0                                                                       |   | 0                                                                                                                                                                                                                                                                                                                                                   |   | $0.60                           |   | 6/12/10                       |   |
|              |   |   14,133                                                    |   | 0                                                                       |   | 0                                                                                                                                                                                                                                                                                                                                                   |   | $0.60                           |   | 4/2/10                        |   |
|              |   | 150,000                                                               |   | 0                                                                       |   | 0                                                                                                                                                                                                                                                                                                                                                   |   | $0.60                           |   | 1/24/12                       |   |

----

|                                                                    |   |                                                                                                             |   |                                                                                        |              |                                                                                                                                                   |   |
|-------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Plan      Category                                                      |   | Number      of Securities To beIssued      Upon Exercise ofOutstanding      Options,Warrants      and Rights (a) |   | Weighted-Average      ExercisePrice      of OutstandingOptions,Warrants      and Rights (b) |              | Number      of Securities RemainingAvailable      For Future Issuance UnderEquity      Compensation Plans(excluding      securities in column (a)) (c) |   |
| Equity      CompensationPlans      Approved bySecurity      Holders     |   |        844,133                                                                                              |   |                                                                                        |        $0.62 |                                                                                                                                                   |   |        844,133 |   |   |
|                                                                    |   |                                                                                                             |   |
|                                                                    |   |                                                                                                             |   |
|                                                                    |   |                                                                                                             |   |                                                                                        |              |                                                                                                                                                   |   |
| Equity      CompensationPlans      Not Approved bySecurity      Holders |   |        0                                                                                                    |   |                                                                                        |        0     |                                                                                                                                                   |   |        0 |   |   |
|                                                                    |   |                                                                                                             |   |
|                                                                    |   |                                                                                                             |   |
|                                                                    |   |                                                                                                             |   |                                                                                        |              |                                                                                                                                                   |   |
| Total                                                                   |   |  844,133                                                                                                    |   |                                                                                        |  $0.62       |                                                                                                                                                   |   |  844,133 |   |   |

|                                                                   |   |                 |      |       |   |
|------------------------------------------------------------------------|--------|----------------------|-----------|------------|--------|
|  Name      of Beneficial Owner                                    |   | Number      ofShares |      | Percentage |   |
|                                                                   |   |                 |      |       |   |
| Mary G. Merritt(3)                                                     |   |                 | 642,284   |       | 9.82   | % |
|                                                                   |   |                 |      |       |   |   |
| Scott Ogilvie(4)                                                       |   |                 | 58,000    |       | *      |   |
|                                                                   |   |                 |      |       |   |   |
| Todd Parker(5)                                                         |   |                 | 1,050,000 |       | 14.94  | % |
|                                                                   |   |                 |      |       |   |   |
| JMG Capital      Partners, L.P.(6)                                     |   |                 | 1,592,102 |       | 22.33  | % |
|                                                                   |   |                 |      |       |   |   |
| JMG Triton Offshore      Fund Ltd.(7)                                  |   |                 | 1,591,502 |       | 22.33  | % |
|                                                                   |   |                 |      |       |   |   |
| J. Steven      Emerson(8)                                              |   |                 | 2,797,316 |       | 34.84  | % |
|                                                                   |   |                 |      |       |   |   |
| Bristol Investment      Fund, Ltd.(9)                                  |   |                 | 1,357,599 |       | 18.98  | % |
|                                                                   |   |                 |      |       |   |   |
| G. Tyler      Runnels(10)                                              |   |                 | 2,666,339 |       | 33.18  | % |
|                                                                   |   |                 |      |       |   |   |
| All Directors and      executive officers as a group (two persons)(11) |   |                 | 700,284   |       | 10.76  | % |
| *     Less      than one percent (1%).        |   |                 |      |       |   |   |

----

| 1)  | SEC      rules provide that, for purposes hereof, a person is considered the      “beneficial owner” of shares with respect to which the person, directly or      indirectly, has or shares the voting or investment power, irrespective of      his/her/its economic interest in the shares. Unless otherwise noted, each      person identified possesses sole voting and investment power over the      shares listed, subject to community property laws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2)  | Based      on 6,130,184 shares outstanding on June 12, 2009. Shares of common stock      subject to options that are exercisable within 60 days of June 12, 2009,      are deemed beneficially owned by the person holding such options for the      purposes of calculating the percentage of ownership of such person but are      not treated as outstanding for the purpose of computing the percentage of      any other person.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3)  | Includes      143,857 shares issuable upon exercise of warrants, 179,133 issuable upon      exercise of employee stock options, 85,714 shares issuable upon conversion      of notes, and 6,000 shares held by minor children.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 4)  | Includes      58,000 shares issuable upon exercise of warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 5)  | Includes      100,000 shares issuable upon exercise of warrants and 800,000 shares      issuable upon exercise of warrants held by Hidden River, LLC for which Mr.      Parker has voting power over the shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 6)  | Includes      442,857 shares issuable upon exercise of warrants and 555,714 shares      issuable upon conversion of notes. JMG Capital Partners’ address is 11601      Wilshire Blvd, Suite 2180, Los Angeles, California 90025. JMG Capital      Partners has advised us that Jonathan M. Glaser is the member-manager of      JMG Capital Management, LLC, which is the general partner of JMG Capital      Partners, and is the natural person with sole voting power over the shares      held by JMG Capital Partners.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 7)  | Includes      442,857 shares issuable upon exercise of warrants and 555,714 shares      issuable upon conversion of notes. JMG Triton Offshore Fund Ltd.’s address      is Citco Building, Wickhams Cay, Road Town, Tortola, British Virgin      Islands. We have been informed by JMG Triton Offshore Fund Ltd. that      Jonathan M. Glaser is the member-manager of Pacific Assets Management,      LLC, which is the general partner of JMG Triton Offshore Fund Ltd., and he      is the natural person who has sole voting power over the shares held by      JMG Triton Offshore Fund Ltd.                                                                                                                                                                                                                                                                                                                                                                                                               |
| 8)  | Includes      100,000 shares issuable upon exercise of warrants, and 200,000 shares      issuable upon conversion of notes, 727,057 shares held in Mr. Emerson’s      retirement accounts, 550,000 shares issuable upon exercise of warrants      held in Mr. Emerson’s retirement accounts and 450,000 shares issuable upon      conversion of notes issued to Mr. Emerson’s retirement account, 2,000      shares held by Emerson Partners, 100,000 shares issuable upon exercise of      warrants held by Emerson Partners, 200,000 shares issuable upon conversion      of notes issued to Emerson Partners, for which Mr. Emerson has voting      power over the shares held by Emerson Partners, 100,000 shares issuable      upon exercise of warrants held by Emerson Family Foundation, and 200,000      shares issuable upon conversion of notes issued to Emerson Family      Foundation, for which Mr. Emerson has voting power over the shares held by      Emerson Family Foundation. |
| 9)  | Includes      414,286 shares issuable upon exercise of warrants and 608,572 shares      issuable upon conversion of notes. Bristol Investment Fund, Ltd’s address      is Caledonian House, Jennett Street, Georgetown, Grand Cayman, Cayman      Islands. Bristol Capital Advisors, LLC (“BCA”) is the investment advisor      to Bristol Investment Fund, Ltd. (“Bristol”). As manager of BCA and a      director of Bristol, Paul Kessler has voting and investment power over the      shares held by Bristol. Mr. Kessler disclaims beneficial ownership of such      shares.                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10) | Includes      273,292 shares issuable upon exercise of warrants, 130,000 shares held by      The Runnels Family Trust, 350,714 shares issuable upon exercise of      warrants held by The Runnels Family Trust and 551,429 shares issuable upon      conversion of notes issued to The Runnels Family Trust, 327,259 shares      held by High Tide, LLC, 250,000 shares issuable upon exercise of warrants      held by High Tide, LLC and 380,000 shares issuable upon conversion of      notes issued to High Tide, LLC for which Mr. Runnels has sole voting power      over the shares held by High Tide, LLC and 272,456 held by T.R. Winston      & Company Incorporated and 101,351 issuable upon exercise of warrants      held by T.R. Winston & Company Incorporated for which Mr. Runnels has      voting power over the shares held by T.R. Winston & Company      Incorporated.                                                                                                              |
| 11) | Includes      the shares described in footnotes 3 and4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

----

|                        |   |   |   |   |   |   |
|-----------------------------|--------|--------|--------|--------|--------|--------|
|                        |   | 2009   |   |   | 2008   |   |
|                        |   |   |   |   |   |   |
| Audit      Fees (a)         |   | $      | 42,100 |   |   | $      | 29,000 |   |
|                        |   |   |   |   |   |   |   |   |
| Audit-Related      Fees (b) |   | $      | 0      |   |   | $      | 0 |   |
|                        |   |   |   |   |   |   |   |   |
| Tax      Fees (c)           |   | $      | 0      |   |   | $      | 0 |   |
|                        |   |   |   |   |   |   |   |   |
| All      Other Fees         |   | $      | 0      |   |   | $      | 0 |   |

|   | (a) | Includes      fees for services related to the audits of our annual financial statements      and the reviews of our interim financial statements and assistance with      SEC filings. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Includes      fees for services related to transaction due diligence and consultations      with respect to compliance with Section 404 of the Sarbanes-Oxley      Act.                 |
|   | (c) | Includes      fees for services related to tax compliance, preparation and planning      services (including U.S. federal, state and local returns) and tax      examinationassistance. |

----

| (a) | Exhibits |
|-----|----------|

|          |                                                                                                                                                                                    |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ExhibitNumber |                                                                                                                                                                                    | Description      of Exhibit |   |
| 3.1(1)        | Certificate      of Incorporation, filed on August 3, 1992 with the Secretary of State of      Delaware (Exhibit 3.1)                                                                   |
| 3.2(1)        | Certificate      of Amendment, filed on May 2, 1994 with the Secretary of State of Delaware      (Exhibit 3.2)                                                                     |
| 3.3(1)        | Certificate      of Amendment, filed on March 21, 1995 with the Secretary of State of      Delaware (Exhibit 3.3)                                                                       |
| 3.4(2)        | Certificate      of Amendment, filed on July 27, 1995 with the Secretary of State of      Delaware (Exhibit 3.5)                                                                        |
| 3.5(3)        | Certificate      of Amendment, filed on March 7, 1997 with the Secretary of State of      Delaware (Exhibit 3.5)                                                                        |
| 3.6†    | Certificate      of Amendment, filed on April 27, 2007with the Secretary of State of      Delaware (Exhibit 3.1)                                                                        |
| 3.7(1)        | Bylaws      of the registrant (Exhibit 3.4)                                                                                                                                             |
|          |                                                                                                                                                                                    |
| 10.1(4)       | Form      of Warrant Certificate and Schedule of Warrant Certificates (Exhibit      10.1)                                                                                               |
| 10.2(6)       | Form      of Subscription Agreement between Preferred Voice, Inc. and certain      purchasers of Preferred Voice, Inc. common stock (Exhibit      10.1)                                 |
| 10.3(6)       | Form      of Warrant Certificate (Exhibit 10.2)                                                                                                                                         |
| 10.4(6)       | Warrant      No. 122 issued to Stifel, Nicolaus & Company, Inc. (Exhibit      10.3)                                                                                                 |
| 10.5(5)       | Second      Amendment to Lease between Dallas Office Portfolio, L.P., as successor in      interest to Greenville Avenue Properties, Ltd. and Preferred Voice, Inc.      (Exhibit 10.3) |
| 10.6(1)       | Preferred/telecom,      Inc. 1994 Stock Plan for Incentive and Non-Qualified Stock Options      (Exhibit 10.5)                                                                     |
| 10.7(7)       | 2000      Stock Plan for Incentive Stock Options and Other Equity Participation      (Exhibit 10.1)                                                                                     |
| 10.8(8)       | Form      of Subscription Agreement by and between Preferred Voice, Inc. and certain      signatories thereto (Exhibit 10.1)                                                            |
| 10.9(8)       | Form      of Warrant Certificate, issued by Preferred Voice, Inc. pursuant to the      Subscription Agreement filed as Exhibit 10.9 hereto (Exhibit      10.2)                          |
| 10.10(9)      | Patent      License Agreement by and between Preferred Voice, Inc. and      KoninKlijkePhilips Electronics N.V.*(Exhibit 10.2)                                                          |
| 10.11(10)     | Form      of Subscription Agreement, by and between Preferred Voice, Inc. and      certain signatories thereto (Exhibit 10.1)                                                      |
| 10.12(11)     | Form      of Subscription Agreement, by and between Preferred Voice, Inc. and      certain signatories thereto (Exhibit 10.1)                                                      |
| 23†     | Consent      of Philip Vogel & Co. PC                                                                                                                                               |
| 31.1†   | Section      302 Certification                                                                                                                                                          |
| 32.1†   | Certification      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of2002.                                                        |

----

| †   | Filed      herewith.                                                                                                                                                                                                             |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)       | Incorporated      by reference to the exhibit shown in parenthesis to our Registration      Statement on Form S-1, filed with the Securities and Exchange Commission      on June 15, 1995.                                      |
| (2)       | Incorporated      by reference to the exhibit shown in parenthesis to Amendment No. 1 to our      Registration Statement, filed with the Securities and Exchange Commission      on August 7, 1995.                              |
| (3)       | Incorporated      by reference to the exhibit shown in parenthesis to our Annual Report on      Form 10-KSB for the period ended March 31, 1999, filed by us with the      Securities and Exchange Commission.                   |
| (4)       | Incorporated      by reference to the exhibit shown in parenthesis to our Registration      Statement on Form SB-2, filed with the Securities Exchange Commission on      March 8, 2001                                          |
| (5)       | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on September      15, 2000.                                         |
|  (6) | Incorporated      by reference to the exhibit shown in parenthesis to our Quarterly Report      on Form 10-QSB for the quarter ended December 31, 2000, filed by us with      the Securities and Exchange Commission.            |
| (7)       | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on May 7,      2001.                                                |
| (8)       | Incorporated      by reference to the exhibit shown in parenthesis to our Quarterly Report      on Form 10-QSB for the quarter ended September 30, 2001, filed      by us with the Securities and Exchange Commission. |
| (9)       | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on      November 21, 2001.                                |
| (10)      | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on May      18,2004.                                           |

----

| (11) | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on      February 24, 2005. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (12) | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on April      5, 2005.     |
| (13) | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on      November 1, 2005.  |
| (14) | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on      January 25, 2006.  |
| (15) | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on      October 3, 2006.   |
| (16) | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on      November 15, 2006. |
| (17) | Incorporated      by reference to the exhibit shown in parenthesis to our Current Report on      Form 8-K, filed with the Securities and Exchange Commission on      February 23,2009.  |

----

|                     |   | Preferred      Voice, Inc. |                           |
|--------------------------|--------|----------------------------|--------------------------------|
|                     |   | (Registrant)               |                           |
|                     |   |                       |                           |
| Date:      June 16, 2009 |   | By:                   | /s/      Mary G. Merritt       |   |
|                     |   |                       | Mary      G. Merritt, Chairman |   |

|                     |      |   |                                                                                                                                                                                                  |   |               |   |   |   |   |   |
|--------------------------|-----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|--------|--------|--------|
|                     | SIGNATURE |   |                                                                                                                                                                                                  |   | TITLE              |   |   |   | DATE   |   |
|                     |      |   |                                                                                                                                                                                                  |   |
| /s/      Mary G. Merritt |      |   | Chairman      and Chief Executive Officer (Principal Executive Officer) Secretary,      Treasurer, Executive Vice President of Finance and Director (Principal      Financial and Accounting Officer) |   | June      16, 2009 |
| Mary      G. Merritt     |      |   |                                                                                                                                                                                                  |
|                     |      |   |                                                                                                                                                                                                  |
|                     |      |   |                                                                                                                                                                                                  |   |
| /s/      Scott Ogilvie   |      |   | Director                                                                                                                                                                                              |   | June      16, 2009 |
| Scott      Ogilvie       |      |   |                                                                                                                                                                                                  |   |

----

|               |                              |
|--------------------|-----------------------------------|
|               | PHILIP      VOGEL & CO. PC    |
|               |                              |
|               |                              |
|               |                                   |
|               | Certified      Public Accountants |
|               |                              |
| Dallas,      Texas |                              |
|               |                              |
| June      12, 2009 |                              |

----

|                                                                                                                         |   |   |      |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                                                         |   | 2009   |      |   | 2008   |   |
|                                                                                                                         |   |   |      |   |   |   |
| Assets                                                                                                                       |   |   |      |   |   |   |
|                                                                                                                         |   |   |      |   |   |   |
| Current      assets:                                                                                                         |   |   |      |   |   |   |
| Cash      and cash equivalents                                                                                               |   | $      | 466,187   |   |   | $      | 283,220 |   |
| Accounts      receivable, net of allowance for doubtful accounts of $10,269 and $0,      respectively                        |   |   | 654,111   |   |   |   | 638,210 |   |
| Inventory                                                                                                                    |   |   | 37,641    |   |   |   | 84,567 |   |
| Prepaid      expenses                                                                                                        |   |   | 7,500     |   |   |   | — |   |
| Current      portion of deferred loan cost                                                                                   |   |   | 4,214     |   |   |   | 8,428 |   |
|                                                                                                                         |   |   |      |   |   |   |   |   |
| Total      current assets                                                                                                    |   | $      | 1,169,653 |   |   | $      | 1,014,425 |   |
|                                                                                                                         |   |   |      |   |   |   |   |   |
| Property      and equipment:                                                                                                 |   |   |      |   |   |   |   |   |
| Computer      equipment                                                                                                      |   | $      | 484,898   |   |   | $      | 572,392 |   |
| Furniture      and fixtures                                                                                                  |   |   | 22,317    |   |   |   | 22,317 |   |
| Office      equipment                                                                                                        |   |   | 19,271    |   |   |   | 19,271 |   |
|                                                                                                                         |   |   |      |   |   |   |   |   |
|                                                                                                                         |   | $      | 526,486   |   |   | $      | 613,980 |   |
|                                                                                                                         |   |   |      |   |   |   |   |   |
| Less      accumulated depreciation                                                                                           |   |   | 371,254   |   |   |   | 421,190 |   |
|                                                                                                                         |   |   |      |   |   |   |   |   |
| Net      property and equipment                                                                                              |   | $      | 155,232   |   |   | $      | 192,790 |   |
|                                                                                                                         |   |   |      |   |   |   |   |   |
| Other      assets:                                                                                                           |   |   |      |   |   |   |   |   |
| Capitalized      software development costs, net of accumulated amortization of $1,249,024      and $1,228,026, respectively |   | $      | 8,904     |   |   | $      | 29,902 |   |
| Deposits                                                                                                                     |   |   | 29,485    |   |   |   | 34,485 |   |
| Noncurrent      portion deferred loan cost, net of accumulated amortization of $0 and      $12,642, respectively             |   |   | —   |   |   |   | 4,214 |   |
| Trademarks      and patents, net of accumulated amortization of $39,915 and $31,926,      respectively                       |   |   | 67,566    |   |   |   | 68,763 |   |
|                                                                                                                         |   |   |      |   |   |   |   |   |
| Total      other assets                                                                                                      |   | $      | 105,955   |   |   | $      | 137,364 |   |
|                                                                                                                         |   |   |      |   |   |   |   |   |
| Total      assets                                                                                                            |   | $      | 1,430,840 |   |   | $      | 1,344,579 |   |

----

|                                                                                                                        |   | 2009   |        |   | 2008   |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                                                                                                        |   |   |        |   |   |   |
| Liabilities      and stockholders’ equity (deficit)                                                                   |   |   |        |   |   |   |
|                                                                                                                        |   |   |        |   |   |   |
| Current      liabilities:                                                                                                   |   |   |        |   |   |   |
| Accounts      payable                                                                                                       |   | $      | 218,571     |   |   | $      | 245,553 |   |
| Accrued      vacation                                                                                                       |   |   | 4,314       |   |   |   | 7,859 |   |
| Accrued      payroll and payroll taxes                                                                                      |   |   | 5,044       |   |   |   | 19,735 |   |
| Accrued      interest                                                                                                       |   |   | 35,100      |   |   |   | 35,100 |   |
| Deferred      revenue                                                                                                       |   |   | 56,917      |   |   |   | 43,417 |   |
| Current      portion debentures payable - net of discounts                                                                  |   |   | 2,000,504   |   |   |   | 975,000 |   |
|                                                                                                                        |   |   |        |   |   |   |   |   |
| Total      current liabilities                                                                                              |   | $      | 2,320,450   |   |   | $      | 1,326,664 |   |
|                                                                                                                        |   |   |        |   |   |   |   |   |
| Long-term      liabilities:                                                                                                 |   |   |        |   |   |   |   |   |
|                                                                                                                        |   |   |        |   |   |   |   |   |
| Debentures      payable - net of discounts                                                                                  |   | $      | —     |   |   | $      | 1,029,012 |   |
|                                                                                                                        |   |   |        |   |   |   |   |   |
| Total      long-term liabilities                                                                                            |   | $      | —     |   |   | $      | 1,029,012 |   |
|                                                                                                                        |   |   |        |   |   |   |   |   |
| Commitments      and contingencies (Note J, K and L)                                                                        |   |   |        |   |   |   |   |   |
|                                                                                                                        |   |   |        |   |   |   |   |   |
| Stockholders’      equity (deficit):                                                                                  |   |   |        |   |   |   |   |   |
| Common      stock, $.001 par value; 100,000,000 shares authorized; 6,130,184 and      6,130,184 shares issued, respectively |   | $      | 6,130       |   |   | $      | 6,130 |   |
| Additional      paid-in capital                                                                                             |   |   | 20,481,148  |   |   |   | 20,403,278 |   |
| Accumulated      deficit                                                                                                    |   |   | (21,375,382 | )      |   |   | (21,418,999 | ) |
| Treasury      stock 4,500 shares at cost                                                                                    |   |   | (1,506      | )      |   |   | (1,506 | ) |
|                                                                                                                        |   |   |        |   |   |   |   |   |
| Total      stockholders’ equity (deficit)                                                                             |   | $      | (889,610    | )      |   | $      | (1,011,097 | ) |
|                                                                                                                        |   |   |        |   |   |   |   |   |
| Total      liabilities and stockholders’ equity (deficit)                                                             |   | $      | 1,430,840   |   |   | $      | 1,344,579 |   |

----

|                                                   |   | 2009   |      |   | 2008   |   |      | 2007   |   |
|--------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                   |   |   |      |   |   |   |      |   |   |
| Net      sales                                         |   | $      | 4,007,014 |   |   | $      | 3,541,586 |   |   | $ | 1,254,634 |   |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Cost      of sales                                     |   |   | 2,038,081 |   |   |   | 2,043,454 |   |   |   | 716,937 |   |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Gross      profit                                      |   | $      | 1,968,933 |   |   | $      | 1,498,132 |   |   | $ | 537,697 |   |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| General      and administrative expenses               |   | $      | 1,699,903 |   |   | $      | 1,881,043 |   |   | $ | 1,321,912 |   |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Income      (loss) from operations                     |   | $      | 269,030   |   |   | $      | (382,911  | )      |   | $ | (784,215 | ) |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Other      income (expense):                           |   |   |      |   |   |   |      |   |   |   |   |   |
| Interest      expense                                  |   | $      | (223,266  | )      |   | $      | (366,644  | )      |   | $ | (544,231 | ) |
| Gain      on sale of assets                            |   |   | —   |   |   |   | 1,739     |   |   |   | 4,108 |   |
| Impairment      expense                                |   |   | —   |   |   |   | —   |   |   |   | (32,014 | ) |
| Other      income (expense)                            |   |   | (2,147    | )      |   |   | —   |   |   |   | 10,059 |   |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total      other income (expense)                      |   | $      | (225,413  | )      |   | $      | (364,905  | )      |   | $ | (562,078 | ) |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Income      (loss) from operations before income taxes |   | $      | 43,617    |   |   | $      | (747,816  | )      |   | $ | (1,346,293 | ) |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Provision      for income taxes                        |   |   | —   |   |   |   | —   |   |   |   | — |   |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Net      income (loss)                                 |   | $      | 43,617    |   |   | $      | (747,816  | )      |   | $ | (1,346,293 | ) |
|                                                   |   |   |      |   |   |   |      |   |   |   |   |   |
| Per      share amounts:                                |   |   |      |   |   |   |      |   |   |   |   |   |
| Net      income (loss) per share                       |   | $      | 0.01      |   |   | $      | (0.12     | )      |   | $ | (0.22 | ) |

----

|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |
|------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|--------|--------|-----------|-------------|--------|--------|------------------|--------|
|                                                                               |   | Shares      of common stock |        |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |
|                                                                               |   | Authorized                  |        |   | Issued |   |      | Outstanding |   |   | In      treasury |   |
| Balance      - March 31, 2006                                                      |   |                        | 50,000,000  |   |   |   | 5,963,166 |        |   |   | 5,958,666        |   |   |   | 4,500 |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Increase      in authorized shares of common stock                                 |   |                        | 50,000,000  |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
| Issuance      of stock for accrued interest payable on convertible      debentures |   |                        | —     |   |   |   | 167,143   |        |   |   | 167,143          |   |   |   | — |   |
| Decrease      in common stock for fractional shares                                |   |                        | —     |   |   |   | (125      | )           |   |   | (125             | )      |   |   | — |   |
| Intrinsic      value of beneficial conversion feature                              |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
| Warrants      issued for goods and services                                        |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
| Compensation      expense recognized on vested employee stock options              |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
| Proceeds      from the issuance of the debentures allocated to the    warrants     |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Net      loss for the year ended March 31, 2007                                    |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Balance      - March 31, 2007                                                      |   |                        | 100,000,000 |   |   |   | 6,130,184 |        |   |   | 6,125,684        |   |   |   | 4,500 |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Compensation      expense recognized on vested employee stock options              |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Net      loss for the year ended March 31, 2008                                    |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Balance      - March 31, 2008                                                      |   |                        | 100,000,000 |   |   |   | 6,130,184 |        |   |   | 6,125,684        |   |   |   | 4,500 |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Warrants      issued for consulting services                                       |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Net      income for the year ended March 31, 2009                                  |   |                        | —     |   |   |   | —   |        |   |   | —          |   |   |   | — |   |
|                                                                               |   |                        |        |   |   |   |      |        |   |   |             |   |   |   |   |   |
| Balance      - March 31, 2009                                                      |   |                        | 100,000,000 |   |   |   | 6,130,184 |        |   |   | 6,125,684        |   |   |   | 4,500 |   |

----

| Amounts                               |    |   |          |   |
|---------------------------------------|---------|--------|---------------|--------|
| Commonstock      $0.001par      value |    |   | Treasurystock |   |   | Additionalpaid-incapital |   |   | Accummulateddeficit |   |   | Totalstockholders’equity |   |
| $                                     | 5,963   |   |          | $      | (1,506 | ) |   | $ | 19,424,477 |   |   | $ | (19,324,890 | ) |   | $ | 104,044 |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | 167     |   |          |   | — |   |   |   | 58,332 |   |   |   | — |   |   |   | 58,499 |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|                                  | — |   |          |   | — |   |   |   | 257,500 |   |   |   | — |   |   |   | 257,500 |   |
|                                  | — |   |          |   | — |   |   |   | 25,285 |   |   |   | — |   |   |   | 25,285 |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | 58,106 |   |   |   | — |   |   |   | 58,106 |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | 281,977 |   |   |   | — |   |   |   | 281,977 |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | — |   |   |   | (1,346,293 | ) |   |   | (1,346,293 | ) |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                                     | 6,130   |   |          | $      | (1,506 | ) |   | $ | 20,105,677 |   |   | $ | (20,671,183 | ) |   | $ | (560,882 | ) |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | 297,601 |   |   |   | — |   |   |   | 297,601 |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | — |   |   |   | (747,816 | ) |   |   | (747,816 | ) |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                                     | 6,130   |   |          | $      | (1,506 | ) |   | $ | 20,403,278 |   |   | $ | (21,418,999 | ) |   | $ | (1,011,097 | ) |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | 77,870 |   |   |   | — |   |   |   | 77,870 |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | — |   |          |   | — |   |   |   | — |   |   |   | 43,617 |   |   |   | 43,617 |   |
|                                  |    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                                     | 6,130   |   |          | $      | (1,506 | ) |   | $ | 20,481,148 |   |   | $ | (21,375,382 | ) |   | $ | (889,610 | ) |

----

|                                                         |   |   |       |   |   |   |       |   |   |
|--------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                         |   | 2009   |       |   | 2008   |   |       | 2007   |   |
|                                                         |   |   |       |   |   |   |       |   |   |
| Cash      flows from operating activities:                   |   |   |       |   |   |   |       |   |   |
| Cash      received from customers                            |   | $      | 3,991,113  |   |   | $      | 3,289,360  |   |   | $ | 1,079,042 |   |
| Cash      paid to suppliers and employees                    |   |   | (3,551,597 | )      |   |   | (3,289,958 | )      |   |   | (1,887,403 | ) |
| Interest      paid                                           |   |   | (129,274   | )      |   |   | (130,179   | )      |   |   | (62,163 | ) |
|                                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| Net      cash provided (used) by operating activities        |   | $      | 310,242    |   |   | $      | (130,777   | )      |   | $ | (870,524 | ) |
|                                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash      flows from investing activities:                   |   |   |       |   |   |   |       |   |   |   |   |   |
| Capital      expenditures                                    |   | $      | (29,775    | )      |   | $      | (57,581    | )      |   | $ | (99,311 | ) |
| Proceeds      from sale of assets                            |   |   | —    |   |   |   | 25,523     |   |   |   | 50,568 |   |
|                                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| Net      cash used by investing activities                   |   | $      | (29,775    | )      |   | $      | (32,058    | )      |   | $ | (48,743 | ) |
|                                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash      flows from financing activities:                   |   |   |       |   |   |   |       |   |   |   |   |   |
| Proceeds      from issuance of convertible debt and warrants |   | $      | —    |   |   | $      | —    |   |   | $ | 1,170,000 |   |
| Repayment      of notes payable                              |   |   | (97,500    | )      |   |   | —    |   |   |   | (14,144 | ) |
|                                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| Net      cash (used) provided by financing activities        |   | $      | (97,500    | )      |   | $      | —    |   |   | $ | 1,155,856 |   |
|                                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents    |   | $      | 182,967    |   |   | $      | (162,835   | )      |   | $ | 236,589 |   |
|                                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash      and cash equivalents:                              |   |   |       |   |   |   |       |   |   |   |   |   |
| Beginning      of year                                       |   |   | 283,220    |   |   |   | 446,055    |   |   |   | 209,466 |   |
|                                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| End      of year                                             |   | $      | 466,187    |   |   | $      | 283,220    |   |   | $ | 446,055 |   |

----

|                                                                                  |   |   |    |   |   |   |     |   |   |
|---------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|----------|--------|--------|
|                                                                                  |   | 2009   |    |   | 2008   |   |     | 2007   |   |
|                                                                                  |   |   |    |   |   |   |     |   |   |
| Reconciliation      of net income (loss) to net cash used by operating    activities: |   |   |    |   |   |   |     |   |   |
| Net      income (loss)                                                                |   | $      | 43,617  |   |   | $      | (747,816 | )      |   | $ | (1,346,293 | ) |
|                                                                                  |   |   |    |   |   |   |     |   |   |   |   |   |
| Adjustments      to reconcile net loss to net cash used by operating      activities: |   |   |    |   |   |   |     |   |   |   |   |   |
| Depreciation      and amortization                                                    |   | $      | 97,956  |   |   | $      | 172,163  |   |   | $ | 264,298 |   |
| Gain      on sale of assets                                                           |   |   | — |   |   |   | (1,739   | )      |   |   | (4,108 | ) |
| Compensation      recognized from issuance of stock options                           |   |   | — |   |   |   | 297,601  |   |   |   | 58,106 |   |
| Impairment      of assets                                                             |   |   | — |   |   |   | —  |   |   |   | 32,014 |   |
| Intrinsic      value of beneficial interest                                           |   |   | — |   |   |   | —  |   |   |   | 257,500 |   |
| Fair      value of stock warrants issued for consulting services                      |   |   | 77,870  |   |   |   | —  |   |   |   | — |   |
|                                                                                  |   |   |    |   |   |   |     |   |   |   |   |   |
| Changes      in operating assets and liabilities:                                     |   |   |    |   |   |   |     |   |   |   |   |   |
| Increase      in accounts receivable                                                  |   |   | (15,901 | )      |   |   | (252,226 | )      |   |   | (175,592 | ) |
| Decrease      (increase) in inventory                                                 |   |   | 46,926  |   |   |   | 37,199   |   |   |   | (121,766 | ) |
| (Increase)      in prepaid expenses                                                   |   |   | (7,500  | )      |   |   | —  |   |   |   | — |   |
| Decrease      (increase) in deposits                                                  |   |   | 5,000   |   |   |   | (30,000  | )      |   |   | — |   |
| (Decrease)      increase in accounts payable                                          |   |   | (26,982 | )      |   |   | 129,741  |   |   |   | (75,335 | ) |
| Increase      in deferred revenue                                                     |   |   | 13,500  |   |   |   | 43,417   |   |   |   | — |   |
| (Decrease)      increase in accrued expenses                                          |   |   | 75,756  |   |   |   | 220,883  |   |   |   | 240,652 |   |
|                                                                                  |   |   |    |   |   |   |     |   |   |   |   |   |
| Total      adjustments                                                                |   | $      | 266,625 |   |   | $      | 617,039  |   |   | $ | 475,769 |   |
|                                                                                  |   |   |    |   |   |   |     |   |   |   |   |   |
| Net      cash used by operating activities                                            |   | $      | 310,242 |   |   | $      | (130,777 | )      |   | $ | (870,524 | ) |
|                                                                                  |   |   |    |   |   |   |     |   |   |   |   |   |
| Supplemental      schedule of non-cash investing and financing activities             |   |   |    |   |   |   |     |   |   |   |   |   |
| Issuance      of stock for accrued interest payable on convertible      debentures    |   | $      | — |   |   | $      | —  |   |   | $ | 58,500 |   |
| Fair      value of stock warrants issued in exchange for services                     |   | $      | 77,870  |   |   | $      | —  |   |   | $ | 25,284 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Note      A - General organization:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                Preferred Voice, Inc. (the “Company”) is a Delaware corporation      incorporated in 1992. On February 25, 1997, the Company’s stockholders      approved changing the name of the Company to better reflect the nature of      the Company’s business. The Company commenced business on May 13, 1994,      and was in the development stage until August 1, 1995. The Company      provides enhanced services to the telecommunications industry throughout      the United States and maintains its principal offices in Dallas,      Texas. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Note      B - Summary of significant accounting policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Use      of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | The      preparation of financial statements in conformity with generally accepted      accounting principles requires management to make estimates and      assumptions that affect the amounts reported in the financial statements      and accompanying notes. Actual results could differ from these      estimates.                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Cash      and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | For      purposes of reporting cash flows, cash and cash equivalents include all      amounts due from banks with original maturities of three months or      less.                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | The      Company maintains cash balances at a financial institution located in      Dallas, Texas, which at times may exceed federally insured limits. The      Company has not experienced any losses in such accounts and believes it is      not exposed to any significant credit risk on cash and cash      equivalents.                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Receivables      and credit policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | The      Company has adopted the provisions of the American Institute of Certified      Public Accountants (AICPA) Statement of Position (SOP) No. 01-06, Accounting      by Certain Entities (Including Entities with Trade Receivables) That Lend      to or Finance the Activities of Others. This SOP provides certain      presentation and disclosure changes for entities with trade receivables      and is effective for periods beginning January 1, 2002, and      thereafter.                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Accounts      receivable are uncollateralized customer obligations due under normal      trade terms requiring payment within 30 days from the invoice date. Unpaid      accounts receivable with invoice dates over 30 days old bear no interest.      Accounts receivable are stated at the amount billed to the customer.      Customer account balances with invoices dated over 90 days are considered      delinquent. Payments of accounts receivable are allocated to the specific      invoices identified on the customer’s remittance advice or, if      unspecified, are applied to the earliest unpaidinvoice. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | The      Company estimates the allowance for doubtful accounts based on an analysis      of specific customers, taking into consideration the age of past due      accounts and an assessment of the customer’s ability to    pay.                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Inventory,      consisting of ringback platforms and their related components was $12,854      and $68,355 and digital signage and their related components was $24,787      and $16,212 for the years ended March 31, 2009 and 2008 respectively.      Inventory is stated at the lower of cost or market. Cost is determined      using the first-in, first-out method.                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Property      and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | The      cost of property and equipment is depreciated over the estimated useful      lives of the related assets. Depreciation is computed on the straight-line      method for financial reporting purposes and the double declining method      for income tax purposes. Maintenance and repairs are charged to operations      when incurred. Betterments and renewals are  capitalized.                                                                                                                                                                                                                                      |

----

|   |                        |         |
|--------|-----------------------------|--------------|
|   | Computer      equipment     | 5      years |
|   | Furniture      and fixtures | 5      years |
|   | Office      equipment       | 5      years |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Capitalized      software development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      Company has adopted the provisions of FASB No. 86,      Accounting for the Costs of Computer Software to Be Sold, Leased, or      Otherwise Marketed, to account for its internally developed      software costs since the Company is dependent on the software to provide      the enhanced services. Under the provisions of FASB No. 86, costs incurred      prior to the product’s technological feasibility are expensed as incurred.      The capitalization of software development costs begins when a product’s      technological feasibility has been established and ends when the product      is available for use and released to customers. Capitalized software      development costs include direct costs incurred subsequent to      establishment of technological feasibility for significant product      enhancements. Amortization is computed on an individual product basis      using the straight-line method over the estimated economic life of the      product, generally three years. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | During      the years ended March 31, 2009, 2008 and 2007, software development costs      capitalized were $-0-, $8,224, and $19,058, respectively. The amortization      of capitalized software development costs for the years ended March 31,      2009, 2008 and 2007 was $20,997, $70,509, and $106,757,      respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      estimated aggregate amortization expense for capitalized software      development costs for each of the five succeeding fiscal years is as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

| Year      endingMarch      31, |   | Amount |    |
|--------------------------------|--------|--------|---------|
|                           |   |   |    |   |
| 2010                           |   | $      | 6,690   |   |
| 2011                           |   |   | 2,214   |   |
| 2012                           |   |   | — |   |
| 2013                           |   |   | — |   |
| 2014                           |   |   | — |   |
| Total                          |   | $      | 8,904   |   |

|   | Trademarks      and patents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Trademarks      and patents are recorded at cost. Amortization is computed on the      straight-line method over the identifiable lives of the trademarks and      patents. The Company has adopted the provisions of Statement of Financial      Accounting Standards (SFAS) No. 142, Goodwill      and Other Intangible Assets, effective for periods beginning      January 1, 2002, and thereafter. SFAS 142 addresses financial accounting      and reporting for acquired goodwill and other intangible assets and      supersedes APB Opinion No. 17, Intangible      Assets. Specifically, the statement addresses how intangible assets      that are acquired should be accounted for in financial statements upon      their acquisition, as well as how goodwill and other intangible assets      should be accounted for after they have been initially recognized in the      financial statements. The statement requires intangible assets to be      reviewed for impairment whenever events or changes in circumstances      indicate that their carrying amounts may not be recoverable and that a      loss shall be recognized if the carrying amount of an intangible exceeds      its fair value. The Company tested its intangible assets for impairment as      of March 31, 2009 and found no event or changes in circumstance that have      impaired its intangibleassets. |

----

|           |   |   |   |   |
|----------------|--------|--------|--------|--------|
| March      31, |   | Amount |   |
|           |   |   |   |   |
| 2010           |   | $      | 8,022  |   |
| 2011           |   |   | 8,022  |   |
| 2012           |   |   | 8,022  |   |
| 2013           |   |   | 6,200  |   |
| 2014           |   |   | 4,263  |   |
| Total          |   | $      | 34,529 |   |

|   | Advertising      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The      Company expenses advertising costs when the advertisement occurs. Total      advertising expense amounted to $-0- for the years ended March 31, 2009,      2008 and 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Fair      value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The      Company defines the fair value of a financial instrument as the amount at      which the instrument could be exchanged in a current transaction between      willing parties. Financial instruments included in the Company’s financial      statements include cash and cash equivalents, trade accounts receivable,      other receivables, other assets, notes payable and long-term debt. Unless      otherwise disclosed in the notes to the financial statements, the carrying      value of financial instruments is considered to approximate fair value due      to the short maturity and characteristics of those instruments. The      carrying value of long-term debt approximates fair value as terms      approximate those currently available for similar debt      instruments. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Concentration      of business, market and credit risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | In      the normal course of business, the Company extends unsecured credit to its      customers with payment terms generally 30 days. Because of the credit risk      involved, management provides an allowance for doubtful accounts that      reflects its opinion of amounts that will eventually become uncollectible.      In the event of complete nonperformance by the Company’s customers, the      maximum exposure to the Company is the outstanding accounts receivable      balance at the date of nonperformance.                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | During      the years ended March 31, 2009, 2008 and 2007, approximately $2,458,790      (61.0%), $1,843,144 (52.0%), and $963,000 (76.7%), respectively, of the      Company’s total sales were derived from one customer. At March 31, 2009      one customer’s balance of approximately $501,800 (75%), for March 31, 2008      two customer’s balances of approximately $552,412 (86%), and for March 31,      2007 one customer’s balance of approximately $358,000 (93%) accounted for      a material portion of accounts receivable.                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The      Company maintains accounts with financial institutions which periodically      exceed federally insured amounts. The excess balance at March 31, 2009,      was approximately $331,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

----

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Revenue      recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | For      recognizing revenue, the Company applies the provisions of SEC Staff      Accounting Bulletin (SAB) No. 104, Revenue      Recognition which was issued in December 2003. In most cases, the      services being performed do not require significant production,      modification or customization of the Company’s software or services;      therefore, revenues are recognized when evidence of a completed      transaction exists, generally when services have been rendered. In      situations where the Company receives an initial payment for future      services, the Company defers recognition of revenue, and recognizes the      revenue over the life of the respective contract. SAB No. 104 codified,      revised and rescinded certain sections of Staff Accounting Bulletin (SAB)      No. 101, Revenue      Recognition in Financial Statements, in order to make this      interpretive guidance consistent with current authoritative accounting      guidance and SEC rules and regulations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | During      the years ended March 31, 2009 and 2008, the majority of the Company’s      revenue consisted of platform sales, ringback service sales, and      entertainment content sales. The Ringback product is a service that allows      for the playing of a song, message, or other audible during the usual      “ring ring” heard until a phone is answered.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The      amount of sales by product segment for the years ended March 31, 2009,      2008 and 2007 was as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

| Product      and Service                |   | 2009   |      |   | 2008   |   |      | 2007   |   |
|-----------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                    |   |   |      |   |   |   |      |   |   |   |   |   |
| Voice      Activated Dialing            |   | $      | 9,972     |   |   | $      | 33,806    |   |   | $ | 214,581 |   |
| Telephone      Receptionist             |   |   | —   |   |   |   | 449       |   |   |   | 643 |   |
| Smart      Business Line                |   |   | —   |   |   |   | 494       |   |   |   | 2,314 |   |
| Digital      Signage                    |   |   | 205,704   |   |   |   | 482,515   |   |   |   | — |   |
| Content      Sales                      |   |   | 1,732,743 |   |   |   | 1,370,671 |   |   |   | 364,641 |   |
| Ringback      Service                   |   |   | 1,391,518 |   |   |   | 943,952   |   |   |   | 271,200 |   |
| Platform      Sales                     |   |   | 563,514   |   |   |   | 664,949   |   |   |   | 271,638 |   |
| Maintenance      and Support Agreements |   |   | 70,000    |   |   |   | 19,750    |   |   |   | 66,500 |   |
| Customer      Applications              |   |   | 33,563    |   |   |   | 25,000    |   |   |   | 63,117 |   |
| Total      revenue                      |   | $      | 4,007,014 |   |   | $      | 3,541,586 |   |   | $ | 1,254,634 |   |

|   | Income      taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Income      taxes are accounted for under the asset and liability method. Deferred tax      assets and liabilities are recognized for the future tax consequences      attributable to differences between the financial statement carrying      amounts of existing assets and liabilities and their respective tax basis.      Deferred tax assets and liabilities are measured using enacted tax rates      that will apply in the years in which those temporary differences are      expected to be recovered or settled. The effect on deferred tax assets and      liabilities of a change in tax rates is recognized in income in the period      that includes the enactment date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      Company adopted the provisions of FASB Interpretation No. 48,      Accounting for Uncertainty in Income Taxes (“FIN 48”), on December 1,      2007. Previously, the Company had accounted for tax contingencies in      accordance with SFAS No. 5, Accounting for Contingencies. As required      by Interpretation 48, which clarifies SFAS No. 109, Accounting for      Income Taxes, the Company recognizes the financial statement benefit of a      tax position only after determining that the relevant tax authority would      more likely than not sustain the position following an audit. For tax      positions meeting this standard, the amount recognized in the financial      statements is the largest benefit that has a greater than 50 percent      likelihood of being realized upon ultimate settlement with the relevant      tax authority. At the adoption date, the Company applied Interpretation 48      to all tax positions for which the statute of limitations remained open.      The adoption of FIN 48 did not have a material impact in the financial      statements during the year ended March 31, 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Stock      based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | On      April 1, 2006, the Company adopted SFAS No. 123R, Share-Based      Payment, which is a revision of SFAS No. 123, Accounting      for Stock-Based Compensation, and supersedes APB No. 25, Accounting      for Stock Issued to Employees. This statement requires the Company      to recognize compensation costs related to stock-based payment      transactions (i.e. granting of stock options and warrants) in the      financial statements. With limited exceptions, the amount of compensation      cost is measured based on the grant-date fair value of the equity or      liability instruments issued. In addition, liability awards will be      remeasured each reporting period. Compensation cost will be recognized      over the period that an employee provides services in exchange for the      award.                                                                                                                                                                                                                                                                                                                                        |

----

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The      Company adopted SFAS 123R using the modified prospective transition      method. Stock-based compensation expense recognized under SFAS 123R for      the year ended March 31, 2009, 2008 and 2007 was $-0-, $297,601, and      $58,106 respectively. As of March 31, 2009, there were no unrecognized      compensation costs related to non-vested share-based compensation      arrangements. Disclosures required by this statement are in Notes F and      G.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Income      or loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      Company adopted the provisions of Statement of Financial Accounting      Standards (SFAS) No. 128, Earnings      per Share. SFAS No. 128 reporting requirements replace primary and      fully-diluted earnings per share (EPS) with basic and diluted EPS. Basic      EPS is calculated by dividing net income or loss (available to common      stockholders) by the weighted average number of common shares outstanding      for the period. Diluted EPS reflects the potential dilution that could      occur if securities or other contracts to issue common stock, such as      stock options, warrants, convertible preferred stock and convertible      debentures, were exercised or converted into common stock. For 2009, 2008      and 2007, potential dilutive securities had an anti-dilutive effect and      were not included in the calculation of diluted net loss per common      share.                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Loss      per share is based on the weighted average number of shares outstanding of      6,130,184, for the years ended March 31, 2009 and 2008, and 6,129,844 for      the year ended March 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Reporting      comprehensive income and operating  segments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      Company has adopted the provisions of SFAS No. 130, Reporting      Comprehensive Income and SFAS No. 131, Disclosures      about Segments of an Enterprise and Related Information. SFAS No.      130 requires that an enterprise report, by major components and as a      single total, the change in its net assets during the period from      non-owner sources. SFAS No. 131 establishes annual and interim reporting      standards for an enterprise’s operating segments and related disclosures      about its products, services, geographic areas and major customers.      Adoption of these statements has had no impact on the Company’s financial      position, results of operations, cash flow or related      disclosures.                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Comprehensive      income is the total of (1) net income plus (2) all other changes in net      assets arising from non-owner sources, which are referred to as other      comprehensive income. In accordance with SFAS No. 130, the Company      presents a statement of operations that includes other comprehensive      income when applicable. An analysis of changes in components of      accumulated other comprehensive income is presented in the statement of      changes in stockholders’ equity. There were no transactions related to      other comprehensive income for the two years ended March 31,      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Impairment      of long-lived assets and long-lived assets to be disposed      of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      Company previously adopted the provisions of SFAS No. 121, Accounting      for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be      Disposed Of. This statement requires that long-lived assets and      certain identified intangibles be reviewed for impairment whenever events      or changes in circumstances indicate that the carrying amount of an asset      may not be recoverable. Recoverability of assets to be held and used is      measured by a comparison on the carrying amount of an asset to future net      cash flows expected to be generated by the asset. If such assets are      considered to be impaired, the impairment to be recognized is measured by      the amount by which the carrying amount of the assets exceeds the fair      value of the assets. Assets to be disposed of are reported at the lower of      the carrying amount or fair value less costs to sell. An impairment loss      in the amount of $-0-, $-0-, and $1,577, was recognized during the years      ended March 31, 2009, 2008, and 2007,  respectively. |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | The      Company adopted the provisions of SFAS No. 144, Accounting      for the Impairment or Disposal of Long-Lived Assets effective for      periods beginning January 1, 2002 and thereafter. SFAS 144 replaces SFAS      121 and, among other matters, addresses financial accounting and reporting      for the impairment or disposal of long-lived assets. SFAS 144 retains the      basic provisions of SFAS 121, but broadens its scope and establishes a      single model for long-lived assets to be disposed of by    sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Recent      accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | In      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”      (“SFAS 157”). This statement defines fair value, establishes a framework      for measuring fair value in generally accepted accounting principles      (“GAAP”), and expands disclosures about fair value measurements. This      statement applies under other accounting pronouncements that require or      permit fair value measurements, the FASB having previously concluded in      those accounting pronouncements that fair value is a relevant measurement      attribute. Accordingly, this statement does not require any new fair value      measurements. However, for some entities, the application of this      statement will change current practices. This statement is effective for      financial statements for fiscal years beginning after November 15, 2007.      Earlier application is permitted provided that the reporting entity has      not yet issued financial statements for that fiscal year. In November      2007, the FASB agreed to a one-year deferral of the effective date for      non-financial assets and liabilities that are recognized or disclosed at      fair value on a recurring basis. Management is currently evaluating the      provisions of SFAS 157 to determine the future impact on the Company’s      consolidated financial statements.                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | On      February 15, 2007, the FASB issued Statement of Financial Accounting      Standards No. 159, “The Fair Value Option for Financial Assets and      Financial Liabilities – Including an Amendment of FASB Statement No. 115”      (“SFAS 159”). This standard permits an entity to measure financial      instruments and certain other items at estimated fair value. Most of the      provisions of SFAS 159 are elective; however, the amendment to FASB No.      115, “Accounting for Certain Investments in Debt and Equity Securities,”      applies to all entities that own trading and available-for-sale      securities. The fair value option created by SFAS 159 permits an entity to      measure eligible items at fair value as of specified election dates. The      fair value option (a) may generally be applied instrument by instrument,      (b) is irrevocable unless a new election date occurs, and (c) must be      applied to the entire instrument and not to only a portion of the      instrument. SFAS 159 is effective as of the beginning of the first fiscal      year that begins after November 15, 2007. Early adoption is permitted as      of the beginning of the previous fiscal year provided that the entity (i)      makes that choice in the first 120 days of that year, (ii) has not yet      issued financial statements for any interim period of such year, and (iii)      elects to apply the provisions of SFAS 157. Management is currently      evaluating the provisions of SFAS 159 to determine the future impact on      the Company’s consolidated financial statements. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Note      C - Notes payable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| An      unsecured note was paid off in March of 2007. Interest expense charged to      operations related to this note was $-0-, $-0-, and $467, for the years      ended March 31, 2009, 2008 and 2007, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Note      D - Convertible debt and warrants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| On      March 31, 2005, the Company closed a Securities Purchase Agreement and      issued $975,000 in principal amount of 6% Convertible Debentures due March      31, 2008 and subsequently extended to June 30, 2009, (the “Debentures”),      to a group of institutional and high net worth investors. On March 31,      2009, the company made a 10% repayment of the principal balance to each of      the Debenture holders leaving an outstanding balance of $877,500. All but      $90,000 of the debentures have been extended to June 30, 2009. The      Debentures pay an interest rate of 6% on an annual basis and are      convertible into 1,755,000 shares of the Company’s common stock at a price      of $0.50 per share. The Company recorded the intrinsic value of the      beneficial conversion of $257,500 as interest expense as the shareholders      approved an increase in its authorized shares to 100,000,000 shares on      April 27, 2006. The investors also received warrants to purchase an      additional 975,000 shares of common stock with an exercise price of $0.60      pershare. |

----

|                                                                                                                     |   |   |       |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|
| Exercise of future      grants of stock options and stock appreciation      rights under the 2000 stock option      plan |   |   | 844,133    |   |
| Exercise      of stock warrants and debt conversion                                                                      |   |   | 10,488,929 |   |
|                                                                                                                     |   |   | 11,333,062 |   |

----

| Note      F – Employee stock option plans:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 2000      Plan |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | On      September 29, 2000, the Company adopted an incentive stock option and      other equity participation plan (“2000 Plan”) which permits the issuance      of stock purchase agreements, stock awards, incentive stock options,      non-qualified stock options and stock appreciation rights to selected      employees and independent contractors of the Company. The 2000 Plan      reserved 400,000 shares of common stock for grant and provides that the      term of each award be determined by the committee of the Board of      Directors (Committee) charged with administering the Plan. In February      2006, the Committee revised the plan to reserve 1,000,000 shares of common      stock for grant. These stock options vest over a period of one to two      years and expire five years from the grant date. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Under      the terms of the 2000 Plan, options granted may be either nonqualified or      incentive stock options, and the exercise price, determined by the      Committee, may not be less than the fair market value of a share on the      date of the grant. Stock appreciation rights granted in tandem with an      option shall be exercisable only to the extent the underlying option is      exercisable and the grant price shall be equal to the exercise price of      the underlying option. At March 31, 2009, options to purchase 844,133      shares at an exercise price of $0.60 to $1.25 per share were outstanding.      No stock appreciation rights had been granted at March 31,      2009. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | As      of March 31, 2009, 41,667 options have been exercised, 426,965 have been      forfeited, 109,550 expired, 844,133 remain outstanding, and 844,133 were      vested and exercisable. At March 31, 2009, the remaining weighted average      contractual life was 2.6 years. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Employee      warrants |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | As      of March 31, 2009, none of the employee warrants have been exercised or      forfeited, 731,000 expired, 412,000 remain outstanding, and 412,000 were      vested and exercisable. At March 31, 2009, the remaining weighted average      contractual life was approximately 1.4 years. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
| Note      G - Information related to employee stock options and  warrants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
| The      Company used the Black-Scholes option-pricing model (“Black-Scholes”) as      its method of valuation under SFAS 123R in fiscal year 2009. This fair      value is then amortized on a straight-line basis over the requisite      service periods of the awards, which is generally the vesting period.      Black-Scholes was also previously used for our pro forma information      required under SFAS 123 for periods prior to fiscal year 2007. The fair      value of share-based payment awards on the date of grant as determined by      the Black-Scholes model is affected by our stock price as well as other      assumptions. The following weighted-average assumptions were used in the      pricing model: |

|                         |   | 2009         |   | 2008   |         | 2007   |
|------------------------------|--------|--------------|--------|--------|--------------|--------|
|                         |   |         |   |   |         |   |   |   |   |
| Expected      dividend yield |   | 0.00         | %      |   | 0.00         | %      |   | 0.00 | % |
| Risk-free      interest rate |   | N/A          |   |   | 4.54         | %      |   | 4.73%      - 4.81 | % |
| Expected      life           |   | 5      years |   |   | 5      years |   |   | 5      years |   |
| Expected      volatility     |   | N/A          |   |   | 140          | %      |   | 146%      - 151 | % |

----

|                                                                |   |                                                 |    |   |                         |   |    |                 |   |   |                         |   |   |                 |    |   |                         |   |
|---------------------------------------------------------------------|--------|------------------------------------------------------|---------|--------|------------------------------|--------|---------|----------------------|--------|--------|------------------------------|--------|--------|----------------------|---------|--------|------------------------------|--------|
|                                                                |   | 2000      stock award and incentive plan (2000 Plan) |    |
|                                                                |   | 2009                                                 |    |   | 2008                         |   |    | 2007                 |   |
|                                                                |   | Number      ofshares                                 |    |   | Weightedaverageexerciseprice |   |    | Number      ofshares |   |   | Weightedaverageexerciseprice |   |   | Number      ofshares |    |   | Weightedaverageexerciseprice |   |
| Outstanding      at beginning of year                               |   |                                                 | 899,133 |   |                         | $      | 0.60    |                 |   |   | 910,933                      |   |   | $                    | 0.60    |   |                         |   | 294,733 |   |   | $ | 0.60 |   |
| Granted                                                             |   |                                                 | — |   |                         |   | — |                 |   |   | 50,000                       |   |   |                 | 1.25    |   |                         |   | 745,000 |   |   |   | 0.60 |   |
| Exercised                                                           |   |                                                 | — |   |                         |   | — |                 |   |   | —                      |   |   |                 | — |   |                         |   | — |   |   |   | — |   |
| Forfeited                                                           |   |                                                 | (55,000 | )      |                         |   | 0.91    |                 |   |   | (30,000                      | )      |   |                 | 0.60    |   |                         |   | (110,000 | ) |   |   | 0.60 |   |
| Cancelled                                                           |   |                                                 | — |   |                         |   | — |                 |   |   | —                      |   |   |                 | — |   |                         |   | — |   |   |   | — |   |
| Expired                                                             |   |                                                 | — |   |                         |   | — |                 |   |   | (31,800                      | )      |   |                 | 0.60    |   |                         |   | (18,800 | ) |   |   | 0.60 |   |
|                                                                |   |                                                 |    |   |                         |   |    |                 |   |   |                         |   |   |                 |    |   |                         |   |   |   |   |   |   |   |
| Outstanding      at end of year                                     |   |                                                 | 844,133 |   |                         | $      | 0.60    |                 |   |   | 899,133                      |   |   | $                    | 0.60    |   |                         |   | 910,933 |   |   | $ | 0.60 |   |
|                                                                |   |                                                 |    |   |                         |   |    |                 |   |   |                         |   |   |                 |    |   |                         |   |   |   |   |   |   |   |
| Options      exercisable at end of year                             |   |                                                 | 844,133 |   |                         | $      | 0.62    |                 |   |   | 874,133                      |   |   | $                    | 0.62    |   |                         |   | 165,993 |   |   | $ | 0.60 |   |
| Weighted      average fair value of options granted during the year |   |                                                 |    |   |                         | $      | — |                 |   |   |                         |   |   | $                    | 0.49    |   |                         |   |   |   |   | $ | 0.45 |   |

|                                                                 |   | 2009                 |    |   | 2008                         |   |    | 2007                 |   |
|----------------------------------------------------------------------|--------|----------------------|---------|--------|------------------------------|--------|---------|----------------------|--------|
|                                                                 |   | Number      ofshares |    |   | Weightedaverageexerciseprice |   |    | Number      ofshares |   |   | Weightedaverageexerciseprice |   |   | Number      ofshares |   |   | Weightedaverageexerciseprice |   |
| Outstanding      at beginning of year                                |   |                 | 412,000 |   |                         | $      | 0.67    |                 |   |   | 432,000 |   |   | $ | 0.67 |   |   |   | 532,000 |   |   | $ | 0.70 |   |
| Granted                                                              |   |                 | — |   |                         |   | — |                 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Exercised                                                            |   |                 | — |   |                         |   | — |                 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Forfeited                                                            |   |                 | — |   |                         |   | — |                 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Expired                                                              |   |                 | — |   |                         |   | — |                 |   |   | (20,000 | ) |   |   | 0.60 |   |   |   | (100,000 | ) |   |   | 0.88 |   |
|                                                                 |   |                 |    |   |                         |   |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      at end of year                                      |   |                 | 412,000 |   |                         | $      | 0.67    |                 |   |   | 412,000 |   |   | $ | 0.67 |   |   |   | 432,000 |   |   | $ | 0.67 |   |
|                                                                 |   |                 |    |   |                         |   |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants      exercisable at end of year                             |   |                 | 412,000 |   |                         | $      | 0.67    |                 |   |   | 412,000 |   |   | $ | 0.67 |   |   |   | 432,000 |   |   | $ | 0.67 |   |
| Weighted      average fair value of warrants granted during the year |   |                 |    |   |                         | $      | — |                 |   |   |   |   |   | $ | — |   |   |   |   |   |   | $ | — |   |

----

|   |                         |   |           |   |   |   |   |   |         |   |
|--------|------------------------------|--------|----------------|--------|--------|--------|--------|--------|--------------|--------|
|   |                         |   | 2009           |   | 2008   |   | 2007   |
|   |                         |   |           |   |   |   |   |   |         |   |
|   | Expected      dividend yield |   | 0.00           | %      |   | 0.00   | %      |   | 0.00         | %      |
|   | Risk-free      interest rate |   | 0.89           |   |   | 0      |   |   | 4.67         |   |
|   | Expected      life           |   | 2.5      years |   |   | N/A    |   |   | 5      years |   |
|   | Expected      volatility     |   | 159            | %      |   | 0      | %      |   | 56           | %      |

|                                                                 |                 |   |                         |    |                 |    |                         |   |                 |   |                         |   |   |    |
|----------------------------------------------------------------------|----------------------|--------|------------------------------|---------|----------------------|---------|------------------------------|--------|----------------------|--------|------------------------------|--------|--------|---------|
|                                                                 | 2009                 |   | 2008                         |    | 2007                 |
|                                                                 | Number      ofshares |   | Weightedaverageexerciseprice |    | Number      ofshares |    | Weightedaverageexerciseprice |   | Number      ofshares |   | Weightedaverageexerciseprice |
| Outstanding      at beginning of year                                | 207,143              |   | $                            | 0.50    |                 | 207,143 |                         | $      | 0.50                 |   | 100,107                      |   | $      | 6.05    |
| Granted                                                              | 800,000              |   |                         | 0.50    |                 | — |                         |   | —              |   | 167,143                      |   |   | 0.50    |
| Exercised                                                            | —              |   |                         | — |                 | — |                         |   | —              |   | —                      |   |   | — |
| Forfeited                                                            | —              |   |                         | — |                 | — |                         |   | —              |   | —                      |   |   | — |
| Expired                                                              | —              |   |                         | — |                 | — |                         |   | —              |   | (60,107                      | )      |   | 9.74    |
|                                                                 |                 |   |                         |    |                 |    |                         |   |                 |   |                         |   |   |    |
| Outstanding      at end of year                                      | 1,007,143            |   | $                            | 0.50    |                 | 207,143 |                         | $      | 0.50                 |   | 207,143                      |   | $      | 0.50    |
|                                                                 |                 |   |                         |    |                 |    |                         |   |                 |   |                         |   |   |    |
|                                                                 |                 |   |                         |    |                 |    |                         |   |                 |   |                         |   |   |    |
| Warrants      exercisable at end of year                             | 1,007,143            |   | $                            | 0.50    |                 | 207,143 |                         | $      | 0.50                 |   | 207,143                      |   | $      | 0.50    |
| Weighted      average fair value of warrants granted during the year |                 |   | $                            | 0.50    |                 |    |                         |   | —              |   |                         |   | $      | 0.15    |

----

|   |                                                                 |                 |   |                         |    |                 |      |                         |   |                 |   |                         |   |   |    |
|--------|----------------------------------------------------------------------|----------------------|--------|------------------------------|---------|----------------------|-----------|------------------------------|--------|----------------------|--------|------------------------------|--------|--------|---------|
|   |                                                                 | 2009                 |   | 2008                         |    | 2007                 |
|   |                                                                 | Number      ofshares |   | Weightedaverageexerciseprice |    | Number      ofshares |      | Weightedaverageexerciseprice |   | Number      ofshares |   | Weightedaverageexerciseprice |
|   | Outstanding      at beginning of year                                | 3,971,928            |   | $                            | 0.56    |                 | 3,971,928 |                         | $      | 0.56                 |   | 2,616,350                    |   | $      | 1.55    |
|   | Granted                                                              | —              |   |                         | — |                 | —   |                         |   | —              |   | 1,671,428                    |   |   | 0.50    |
|   | Exercised                                                            | —              |   |                         | — |                 | —   |                         |   | —              |   | —                      |   |   | — |
|   | Forfeited                                                            | —              |   |                         | — |                 | —   |                         |   | —              |   | —                      |   |   | — |
|   | Expired                                                              | —              |   |                         | — |                 | —   |                         |   | —              |   | (315,850                     | )      |   | 8.42    |
|   |                                                                 |                 |   |                         |    |                 |      |                         |   |                 |   |                         |   |   |    |
|   | Outstanding      at end of year                                      | 3,971,928            |   | $                            | 0.56    |                 | 3,971,928 |                         | $      | 0.56                 |   | 3,971,928                    |   | $      | 0.56    |
|   |                                                                 |                 |   |                         |    |                 |      |                         |   |                 |   |                         |   |   |    |
|   | Warrants      exercisable at end of year                             | 3,971,928            |   | $                            | 0.56    |                 | 3,971,928 |                         | $      | 0.56                 |   | 3,971,928                    |   | $      | 0.56    |
|   | Weighted      average fair value of warrants granted during the year |                 |   |                         | — |                 |      |                         |   | —              |   |                         |   | $      | 0.50    |

|   |                                                                 |                 |   |                         |    |                 |      |                         |   |                 |   |                         |   |   |    |
|--------|----------------------------------------------------------------------|----------------------|--------|------------------------------|---------|----------------------|-----------|------------------------------|--------|----------------------|--------|------------------------------|--------|--------|---------|
|   |                                                                 | 2009                 |   | 2008                         |    | 2007                 |
|   |                                                                 | Number      ofshares |   | Weightedaverageexerciseprice |    | Number      ofshares |      | Weightedaverageexerciseprice |   | Number      ofshares |   | Weightedaverageexerciseprice |
|   | Outstanding      at beginning of year                                | 4,591,071            |   | $                            | 0.57    |                 | 4,611,071 |                         | $      | 0.57                 |   | 3,248,457                    |   | $      | 1.55    |
|   | Granted                                                              | 800,000              |   |                         | 0.50    |                 | —   |                         |   | —              |   | 1,838,571                    |   |   | 0.50    |
|   | Exercised                                                            | —              |   |                         | — |                 | —   |                         |   | —              |   | —                      |   |   | — |
|   | Forfeited                                                            | —              |   |                         | — |                 | —   |                         |   | —              |   | —                      |   |   | — |
|   | Expired                                                              | —              |   |                         | — |                 | (20,000   | )                            |   | 0.60                 |   | (475,957                     | )      |   | 7.00    |
|   |                                                                 |                 |   |                         |    |                 |      |                         |   |                 |   |                         |   |   |    |
|   | Outstanding      at end of year                                      | 5,391,071            |   | $                            | 0.56    |                 | 4,591,071 |                         | $      | 0.57                 |   | 4,611,071                    |   | $      | 0.57    |
|   |                                                                 |                 |   |                         |    |                 |      |                         |   |                 |   |                         |   |   |    |
|   | Warrants      exercisable at end of year                             | 5,391,071            |   | $                            | 0.56    |                 | 4,591,071 |                         | $      | 0.57                 |   | 4,611,071                    |   | $      | 0.57    |
|   | Weighted      average fair value of warrants granted during the year |                 |   | $                            | 0.50    |                 |      |                         |   | —              |   |                         |   | $      | 0.50    |

----

|                                                              |   |   |    |   |   |   |    |   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                              |   | 2009   |    |   | 2008   |   |    | 2007   |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Current      income taxes                                         |   | $      | — |   |   | $      | — |   |   | $ | — |   |
| Change      in deferred income taxes due to temporary differences |   |   | — |   |   |   | — |   |   |   | — |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
|                                                              |   | $      | — |   |   | $      | — |   |   | $ | — |   |

|                                             |   |   |    |   |   |   |     |   |   |
|--------------------------------------------------|--------|--------|---------|--------|--------|--------|----------|--------|--------|
|                                             |   | 2009   |    |   | 2008   |   |     | 2007   |   |
|                                             |   |   |    |   |   |   |     |   |   |   |   |   |
| Computed      “expected” tax benefit |   | $      | 15,000  |   |   | $      | (254,000 | )      |   | $ | (458,000 | ) |
| Nondeductible      items                         |   |   | 2,000   |   |   |   | 2,000    |   |   |   | 88,000 |   |
| Temporary      differences                       |   |   | 13,000  |   |   |   | 28,000   |   |   |   | 11,000 |   |
| Net      operating loss carry-forward            |   |   | (30,000 | )      |   |   | 224,000  |   |   |   | 359,000 |   |
|                                             |   |   |    |   |   |   |     |   |   |   |   |   |
| Provision      for income taxes                  |   | $      | — |   |   | $      | —  |   |   | $ | — |   |

----

|                                                                      |   |   |       |   |   |   |       |   |   |
|---------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                                      |   | 2009   |       |   | 2008   |   |       | 2007   |   |
|                                                                      |   |   |       |   |   |   |       |   |   |
| Accounts      receivable                                                  |   | $      | (3,000     | )      |   | $      | —    |   |   | $ | — |   |
| Accumulated      depreciation                                             |   |   | (145,000   | )      |   |   | (135,000   | )      |   |   | (107,000 | ) |
|                                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
| Gross      deferred tax liabilities                                       |   | $      | (148,000   | )      |   | $      | (135,000   | )      |   | $ | (107,000 | ) |
|                                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
| Net      operating loss carry-forward                                     |   | $      | 6,888,000  |   |   | $      | 7,045,000  |   |   | $ | 6,821,000 |   |
|                                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
| Gross      deferred tax assets                                            |   | $      | 6,888,000  |   |   | $      | 7,045,000  |   |   | $ | 6,821,000 |   |
| Valuation      allowance                                                  |   |   | (6,740,000 | )      |   |   | (6,910,000 | )      |   |   | (6,714,000 | ) |
|                                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                      |   | $      | 148,000    |   |   | $      | 135,000    |   |   | $ | 107,000 |   |
|                                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
| Net      deferred tax assets                                              |   | $      | —    |   |   | $      | —    |   |   | $ | — |   |
|                                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
| The      change in the deferred tax valuation allowance is as    follows: |   | $      | (170,000   | )      |   | $      | 196,000    |   |   | $ | 314,000 |   |

|   |                           |   |   |    |   |
|--------|--------------------------------|--------|--------|---------|--------|
|   | Year      endingMarch      31, |   | Amount |    |
|   |                           |   |   |    |   |
|   | 2010                           |   | $      | 43,318  |   |
|   | 2011                           |   |   | 461     |   |
|   | 2012                           |   |   | — |   |
|   | 2013                           |   |   | — |   |
|   | 2014                           |   |   | — |   |
|   |                           |   | $      | 43,779  |   |

----