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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, 2010  |
|----------|--------------------------------------------------------------------------------------------------------------------------------|

| o   | Transition report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the transition period   from _____________ to ____________ |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Commission File Number 33-92894 |
|---------------------------------|

| Delaware                                                       | 75-2440201                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |

| 6500 Greenville Avenue, Suite 570 Dallas, Texas  75206 | 214-265-9580                                            |
|-----------------------------------------------------------------------|---------------------------------------------------------|
| (Address of principal executive offices, including zip code)          | (Issuer’s telephone number, including area code.) |

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

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

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Table of Contents

Preferred Voice, Inc.

|        |                                                                                                              | 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.     | Removed and Reserved                                                                                              | 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                                                                                           | 11     |
| 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                                                                                                                |

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Item 1:  Business

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|   | · | 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 10 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. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 1A:  Risk Factors

Item 1B:  Unresolved Staff Comments

Item 2:  Properties

Item 3:  Legal Proceedings

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Item 4:  Removed and Reserved

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

| Fiscal 2010      |   | Fiscal 2009 |   |
|------------------|--------|-------------|--------|
|             |   | HIGH        |   |   | LOW |   |   |   | HIGH |   |   | LOW |   |
| 1st Quarter      |   | $           | 0.17   |   |   | $ | 0.15 |   | 1st Quarter |   | $ | 0.70 |   |   | $ | 0.55 |   |
| 2nd Quarter      |   | $           | 0.50   |   |   | $ | 0.15 |   | 2nd Quarter |   | $ | 0.65 |   |   | $ | 0.55 |   |
| 3rd Quarter |   | $           | 0.25   |   |   | $ | 0.12 |   | 3rd Quarter |   | $ | 0.55 |   |   | $ | 0.15 |   |
| 4th Quarter      |   | $           | 0.50   |   |   | $ | 0.17 |   | 4th Quarter |   | $ | 0.49 |   |   | $ | 0.15 |   |

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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|   | · | 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 market developments; |
|--------|--------|---------------------------------------------|

|   | · | 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. |
|--------|--------|-------------------------------------------------------------------------------------|

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Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Item 8.  Financial Statements and Supplementary Data

| Independent Auditors’ Report                | F-1    |
|---------------------------------------------------|--------|
| Financial Statements                              |   |
| Balance Sheets                                    | F-2    |
| Statements of Operations                          | F-4    |
| Statement of Stockholders’ Equity (Deficit) | F-5    |
| Statement of Cash Flows                           | F-6    |
| Notes to Financial Statements                     | F-8    |

Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9A(T). Controls and Procedures

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Item 9B. Other Information

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Item 10. Directors, Executive Officers and Corporate Governance

|  NameMary G. Merritt  |  Age53  |  OfficeDirector, Chief Executive Officer, Executive VP-Finance and Secretary/Treasurer  | Year FirstElected Director1994  |
|---------------------------------|-------------------|---------------------------------------------------------------------------------------------------|--------------------------------------|
| Scott V. Ogilvie                | 56                | Director                                                                                          | 2000                                 |

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Item 11.  Executive Compensation

|   Name &PrincipalPosition |   |   Year |   | Salary($) |    |   | Bonus($) |   |   | StockAwards |   |   | OptionAwards |   |   | Non-EquityIncentivePlanCompensation |   |   | Non-qualifiedDeferredCompensationEarnings |   |   | All OtherCompensation($) |   |   | Total  |   |
|------------------------------------|--------|-------------|--------|-----------|---------|--------|----------|--------|--------|-------------|--------|--------|--------------|--------|--------|-------------------------------------|--------|--------|-------------------------------------------|--------|--------|--------------------------|--------|--------|--------|--------|
| Mary G Merritt                     |   |        |   |      |    |   |     |   |   |        |   |   |         |   |   |                                |   |   |                                      |   |   |                     |   |   |   |   |
| Chief Executive Officer,           |   | 2010        |   | $         | 116,225 |   |     | -      |   |        | -      |   |         | -      |   |                                | -      |   |                                      | -      |   |                     | -      |   |   | $      | 116,225 |   |
| EVP –Finance(1)              |   | 2009        |   | $         | 106,125 |   |     | -      |   |        | -      |   |         | -      |   |                                | -      |   |                                      | -      |   |                     | -      |   |   | $      | 106,125 |   |
|                               |   |        |   |      |    |   |     |   |   |        |   |   |         |   |   |                                |   |   |                                      |   |   |                     |   |   |   |   |   |   |

| Name(a)      |   | Number of securities underlying unexercised options(#)exercisable(b) |    |   | Number of securities underlying unexercised options(#) unexercisable(c) |   |   | Option awards Equity incentive plan awards:Number of securities underlying unexercised unearned options(#)(d) |   |   | Option exercise price($)(e) |   | Option expiration date(f) |
|--------------|--------|----------------------------------------------------------------------|---------|--------|-------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------|--------|---------------------------|
|         |   |                                                                 |    |   |                                                                    |   |   |                                                                                                          |   |   |                        |   |                      |   |   |   |   |
| Mary Merritt |   |                                                                 | 15,000  |   |                                                                    |   | 0      |                                                                                                          |   |   | 0                           |   |                      | $ | 0.60 |   | 6/12/11 |
|         |   |                                                                 | 14,133  |   |                                                                    |   | 0      |                                                                                                          |   |   | 0                           |   |                      | $ | 0.60 |   | 4/2/11 |
|         |   |                                                                 | 150,000 |   |                                                                    |   | 0      |                                                                                                          |   |   | 0                           |   |                      | $ | 0.60 |   | 1/24/12 |

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|   Plan Category                                  |   | Number of Securities To be Issued Upon Exercise ofOutstanding Options,Warrants and Rights (a) |           |   | Weighted-Average Exercise Price of Outstanding Options,Warrants and Rights (b) |   |     | Number of Securities Remaining Available For Future Issuance UnderEquity Compensation Plans(excluding securities in column (a)) (c) |   |
|------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|----------------|--------|-------------------------------------------------------------------------------------|--------|----------|------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                       |   |                                                                                                    |           |   |                                                                                |   |     |                                                                                                                                     |   |   |   |   |
| Equity Compensation Plans Approved by Security Holders     |   |                                                                                                    |   814,133 |   |                                                                                | $      | 0.62     |                                                                                                                                     |   |   |   814,133 |   |
|                                                       |   |                                                                                                    |           |   |                                                                                |   |     |                                                                                                                                     |   |   |   |   |
| Equity Compensation Plans Not Approved by Security Holders |   |                                                                                                    |   0       |   |                                                                                |   |   0 |                                                                                                                                     |   |   |   0 |   |
|                                                       |   |                                                                                                    |           |   |                                                                                |   |     |                                                                                                                                     |   |   |   |   |
| Total                                                      |   |                                                                                                    | 814,133        |   |                                                                                | $      | 0.62     |                                                                                                                                     |   |   | 814,133 |   |

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

|  Name of Beneficial Owner | Number ofShares |  Percentage |
|--------------------------------|-----------------|------------------|

|  Mary G. Merritt(3)                                                |  569,999   |  8.81%  |
|-------------------------------------------------------------------------|-----------------|--------------|
|  Scott Ogilvie(4)                                                  |  58,000    |  *      |
|  Todd Parker(5)                                                    |  950,000   |  13.71% |
|  JMG Capital Partners, L.P.(6)                                     |  1,097,817 |  16.55% |
|  JMG Triton Offshore Fund Ltd.(7)                                  |  1,097,217 |  16.54% |
|  J. Steven Emerson(8)                                              |  1,891,316 |  26.55% |
|  Bristol Investment Fund, Ltd.(9)                                  |  966,171   |  14.29% |
|  G. Tyler Runnels(10)                                              |  1,932,767 |  26.46% |
|  All Directors and executive officers as a group (two persons)(11) |  627,999   |  9.75%  |

| * | Less than one percent (1%). |
|---|-----------------------------|

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| 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 11, 2010.  Shares of common stock subject to options that are exercisable within 60 days of June 11, 2010, 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 93,857 shares issuable upon exercise of warrants, 179,133 issuable upon exercise of employee stock options, 63,429 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 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 292,857 shares issuable upon exercise of warrants and 211,429 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 292,857 shares issuable upon exercise of warrants and 211,429 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 148,000 shares issuable upon conversion of notes, 727,057 shares held in Mr. Emerson’s retirement accounts and 250,000 shares issuable upon exercise of warrants held in Mr. Emerson’s retirement accounts, 2,000 shares held by Emerson Partners, 100,000 shares issuable upon exercise of warrants held by Emerson Partners, 148,000 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 148,000 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 314,286 shares issuable upon exercise of warrants and 317,143 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 185,292 shares issuable upon exercise of warrants, 130,000 shares held by The Runnels Family Trust, 285,714 shares issuable upon exercise of warrants held by The Runnels Family Trust and 274,857 shares issuable upon conversion of notes issued to The Runnels Family Trust, 327,259 shares held by High Tide, LLC, 200,000 shares issuable upon exercise of warrants held by High Tide, LLC and 148,000 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 79,351 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 and 4. |
|-----------------|-----------------------------------------------------|

Item 13. Certain Relationships and Related Transactions, and Director Independence

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Item 14.  Principal Accountant Fees and Services

|                   |   | 2010   |   |   | 2009   |   |
|------------------------|--------|--------|--------|--------|--------|--------|
|                   |   |   |   |   |   |   |
| Audit Fees (a)         |   | $      | 40,700 |   |   | $      | 42,100 |   |
|                   |   |   |   |   |   |   |   |   |
| 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 examination assistance. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 15. Exhibits

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

| Exhibit Number                                        | 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3.6^3.7(1)                                       | Certificate of Amendment, filed on April 27, 2007with the Secretary of State of Delaware (Exhibit 3.1)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)10.8(8)10.9(8)10.10(9)10.11(10)10.12(11)  | 2000 Stock Plan for Incentive Stock Options and Other Equity Participation (Exhibit 10.1)Form of Subscription Agreement by and between Preferred Voice, Inc. and certain signatories thereto (Exhibit 10.1)Form of Warrant Certificate, issued by Preferred Voice, Inc. pursuant to the Subscription Agreement filed as Exhibit 10.9 hereto (Exhibit 10.2)Patent License Agreement by and between Preferred Voice, Inc. and KoninKlijkePhilips Electronics N.V.*(Exhibit 10.2)Form of Subscription Agreement, by and between Preferred Voice, Inc. and certain signatories thereto (Exhibit 10.1)Form of Subscription Agreement, by and between Preferred Voice, Inc. and certain signatories thereto (Exhibit 10.1) |
| 23^                                                   | Consent of Philip Vogel & Co. PC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 31.1^32.1^                                            | Section 302 CertificationCertification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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| (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. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

|                                        | Preferred Voice, Inc. |                                                                                                                                   |
|---------------------------------------------|-----------------------|----------------------------------------------------------------------------------------------------------------------------------------|
|                                        | (Registrant)          |                                                                                                                                   |
|                                        |                  |                                                                                                                                   |   |
| Date: June 21, 2010     | By:                   | /s/ Mary G. Merritt                     |   |
|                                        |                  | Mary G. Merritt                                                                                                                        |   |
|                                        |                  | Chairman                                                                                                                               |   |
|                                        |                  |                                                                                                                                   |   |

| SIGNATURE                                                                                                                                                                                                                                         | TITLE                                                                                                                                                                                 | DATE                |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|
|                                                                                                                                                                                                                                              |                                                                                                                                                                                  |                |
| /s/ Mary G. Merritt                                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 21, 2010 |
|                                                                                                                                                                                                                                              |                                                                                                                                                                                  |                |
| /s/ Scott Ogilvie                                    Scott Ogilvie |  Director                                                                                                                                                                        |  June 21, 2010 |

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INDEPENDENT AUDITORS’ REPORT

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BALANCE SHEETS

|                                                       |   | 2010   |      |   | 2009   |   |
|------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                       |   |   |      |   |   |   |
| Assets                                                     |   |   |      |   |   |   |
|                                                       |   |   |      |   |   |   |
| Current assets:                                            |   |   |      |   |   |   |
| Cash and cash equivalents                                  |   | $      | 600,647   |   |   | $      | 466,187 |   |
| Accounts receivable, net of allowance for doubtful         |   |   |      |   |   |   |   |   |
| accounts of $0 and $10,269, respectively                   |   |   | 601,272   |   |   |   | 654,111 |   |
| Inventory                                                  |   |   | 12,393    |   |   |   | 37,641 |   |
| Prepaid expenses                                           |   |   | -         |   |   |   | 7,500 |   |
| Current portion of deferred loan cost                      |   |   | -         |   |   |   | 4,214 |   |
|                                                       |   |   |      |   |   |   |   |   |
| Total current assets                                       |   | $      | 1,214,312 |   |   | $      | 1,169,653 |   |
|                                                       |   |   |      |   |   |   |   |   |
| Property and equipment:                                    |   |   |      |   |   |   |   |   |
| Computer equipment                                         |   | $      | 325,988   |   |   | $      | 484,898 |   |
| Furniture and fixtures                                     |   |   | 22,317    |   |   |   | 22,317 |   |
| Office equipment                                           |   |   | 17,506    |   |   |   | 19,271 |   |
|                                                       |   |   |      |   |   |   |   |   |
|                                                       |   | $      | 365,811   |   |   | $      | 526,486 |   |
|                                                       |   |   |      |   |   |   |   |   |
| Less accumulated depreciation                              |   |   | 250,998   |   |   |   | 371,254 |   |
|                                                       |   |   |      |   |   |   |   |   |
| Net property and equipment                                 |   | $      | 114,813   |   |   | $      | 155,232 |   |
|                                                       |   |   |      |   |   |   |   |   |
| Other assets:                                              |   |   |      |   |   |   |   |   |
| Capitalized software development costs, net of accumulated |   |   |      |   |   |   |   |   |
| amortization of $1,255,996 and $1,249,024, respectively    |   | $      | 12,114    |   |   | $      | 8,904 |   |
| Deposits                                                   |   |   | 4,485     |   |   |   | 29,485 |   |
| Trademarks and patents, net of accumulated                 |   |   |      |   |   |   |   |   |
| amortization of $47,937 and $39,915, respectively          |   |   | 65,427    |   |   |   | 67,566 |   |
|                                                       |   |   |      |   |   |   |   |   |
| Total other assets                                         |   | $      | 82,026    |   |   | $      | 105,955 |   |
|                                                       |   |   |      |   |   |   |   |   |
| Total assets                                               |   | $      | 1,411,151 |   |   | $      | 1,430,840 |   |

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|                                                 |   | 2010   |        |   | 2009   |   |
|------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                                 |   |   |        |   |   |   |
| Liabilities and stockholders' equity (deficit)       |   |   |        |   |   |   |
|                                                 |   |   |        |   |   |   |
| Current liabilities:                                 |   |   |        |   |   |   |
| Accounts payable                                     |   | $      | 329,753     |   |   | $      | 218,571 |   |
| Accrued vacation                                     |   |   | 10,334      |   |   |   | 4,314 |   |
| Accrued payroll and payroll taxes                    |   |   | 14,860      |   |   |   | 5,044 |   |
| Accrued interest                                     |   |   | 34,808      |   |   |   | 35,100 |   |
| Accrued operating costs                              |   |   | 6,000       |   |   |   | - |   |
| Deferred revenue                                     |   |   | 56,917      |   |   |   | 56,917 |   |
| Debentures payable - net of discounts                |   |   | 1,111,500   |   |   |   | 2,000,504 |   |
|                                                 |   |   |        |   |   |   |   |   |
| Total current liabilities                            |   | $      | 1,564,172   |   |   | $      | 2,320,450 |   |
|                                                 |   |   |        |   |   |   |   |   |
|                                                 |   |   |        |   |   |   |   |   |
| Commitments and contingencies (Note I, J and K)      |   |   |        |   |   |   |   |   |
|                                                 |   |   |        |   |   |   |   |   |
|                                                 |   |   |        |   |   |   |   |   |
| 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  |   |   |   | 20,481,148 |   |
| Accumulated deficit                                  |   |   | (20,638,793 | )      |   |   | (21,375,382 | ) |
| Treasury stock 4,500 shares at cost                  |   |   | (1,506      | )      |   |   | (1,506 | ) |
|                                                 |   |   |        |   |   |   |   |   |
| Total stockholders' equity (deficit)                 |   | $      | (153,021    | )      |   | $      | (889,610 | ) |
|                                                 |   |   |        |   |   |   |   |   |
| Total liabilities and stockholders' equity (deficit) |   | $      | 1,411,151   |   |   | $      | 1,430,840 |   |

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STATEMENTS OF OPERATIONS

|                                              |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|---------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                              |   |   |      |   |   |   |      |   |   |
| Net sales                                         |   | $      | 4,827,761 |   |   | $      | 4,007,014 |   |   | $ | 3,541,586 |   |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Cost of sales                                     |   |   | 2,621,598 |   |   |   | 2,038,081 |   |   |   | 2,043,454 |   |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Gross profit                                      |   | $      | 2,206,163 |   |   | $      | 1,968,933 |   |   | $ | 1,498,132 |   |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| General and administrative expenses               |   | $      | 1,318,554 |   |   | $      | 1,699,903 |   |   | $ | 1,881,043 |   |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Income (loss) from operations                     |   | $      | 887,609   |   |   | $      | 269,030   |   |   | $ | (382,911 | ) |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Other income (expense):                           |   |   |      |   |   |   |      |   |   |   |   |   |
| Interest expense                                  |   | $      | (140,314  | )      |   | $      | (223,266  | )      |   | $ | (366,644 | ) |
| Gain on sale of assets                            |   |   | 1,687     |   |   |   | -         |   |   |   | 1,739 |   |
| Impairment expense                                |   |   | (12,393   | )      |   |   | -         |   |   |   | - |   |
| Other income (expense)                            |   |   | -         |   |   |   | (2,147    | )      |   |   | - |   |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Total other income (expense)                      |   | $      | (151,020  | )      |   | $      | (225,413  | )      |   | $ | (364,905 | ) |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Income (loss) from operations before income taxes |   | $      | 736,589   |   |   | $      | 43,617    |   |   | $ | (747,816 | ) |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Provision for income taxes                        |   |   | -         |   |   |   | -         |   |   |   | - |   |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Net income (loss)                                 |   | $      | 736,589   |   |   | $      | 43,617    |   |   | $ | (747,816 | ) |
|                                              |   |   |      |   |   |   |      |   |   |   |   |   |
| Per share amounts:                                |   |   |      |   |   |   |      |   |   |   |   |   |
| Net income (loss) per share                       |   | $      | 0.12      |   |   | $      | 0.01      |   |   | $ | (0.12 | ) |

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STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

|                                         |   | Shares of common stock |        | Amounts |   |   |      |        |
|----------------------------------------------|--------|------------------------|-------------|---------|--------|--------|-----------|-------------|
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   | Common |   |   |   |   |   | Additional |   |   |   |   |   | Total |   |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   | stock $0.001 |   |   | Treasury |   |   | paid-in |   |   | Accummulated |   |   | stockholders' |   |
|                                         |   | Authorized             |        |    | Issued |   |      | Outstanding |   |   | In treasury |   |   | par value |   |   | stock |   |   | capital |   |   | deficit |   |   | equity |   |
| Balance - March 31, 2007                     |   |                   | 100,000,000 |    |   |   | 6,130,184 |        |   |   | 6,125,684 |   |   |   | 4,500 |   |   | $ | 6,130 |   |   | $ | (1,506 | ) |   | $ | 20,105,677 |   |   | $ | (20,671,183 | ) |   | $ | (560,882 | ) |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Compensation expense recognized on           |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| vested employee stock options                |   |                   | -           |    |   |   | -         |        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 297,601 |   |   |   | - |   |   |   | 297,601 |   |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the year ended March 31, 2008   |   |                   | -           |    |   |   | -         |        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (747,816 | ) |   |   | (747,816 | ) |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance - March 31, 2008                     |   |                   | 100,000,000 |    |   |   | 6,130,184 |        |   |   | 6,125,684 |   |   |   | 4,500 |   |   | $ | 6,130 |   |   | $ | (1,506 | ) |   | $ | 20,403,278 |   |   | $ | (21,418,999 | ) |   | $ | (1,011,097 | ) |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants issued for consulting services      |   |                   | -           |    |   |   | -         |        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 77,870 |   |   |   | - |   |   |   | 77,870 |   |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income for the year ended March 31, 2009 |   |                   | -           |    |   |   | -         |        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 43,617 |   |   |   | 43,617 |   |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance - March 31, 2009                     |   |                   | 100,000,000 |    |   |   | 6,130,184 |        |   |   | 6,125,684 |   |   |   | 4,500 |   |   | $ | 6,130 |   |   | $ | (1,506 | ) |   | $ | 20,481,148 |   |   | $ | (21,375,382 | ) |   | $ | (889,610 | ) |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income for the year ended March 31, 2010 |   |                   | -           |    |   |   | -         |        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 736,589 |   |   |   | 736,589 |   |
|                                         |   |                   |        |    |   |   |      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance - March 31, 2010                     |   |                   | 100,000,000 |    |   |   | 6,130,184 |        |   |   | 6,125,684 |   |   |   | 4,500 |   |   | $ | 6,130 |   |   | $ | (1,506 | ) |   | $ | 20,481,148 |   |   | $ | (20,638,793 | ) |   | $ | (153,021 | ) |

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STATEMENTS OF CASH FLOWS

|                                                 |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                 |   |   |       |   |   |   |       |   |   |
| Cash flows from operating activities:                |   |   |       |   |   |   |       |   |   |
| Cash received from customers                         |   | $      | 4,880,600  |   |   | $      | 3,991,113  |   |   | $ | 3,289,360 |   |
| Cash paid to suppliers and employees                 |   |   | (3,692,747 | )      |   |   | (3,551,597 | )      |   |   | (3,289,958 | ) |
| Interest paid                                        |   |   | (93,610    | )      |   |   | (129,274   | )      |   |   | (130,179 | ) |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net cash provided (used) by operating activities     |   | $      | 1,094,243  |   |   | $      | 310,242    |   |   | $ | (130,777 | ) |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash flows from investing activities:                |   |   |       |   |   |   |       |   |   |   |   |   |
| Capital expenditures                                 |   | $      | (25,521    | )      |   | $      | (29,775    | )      |   | $ | (57,581 | ) |
| Proceeds from sale of assets                         |   |   | 1,738      |   |   |   | -          |   |   |   | 25,523 |   |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net cash used by investing activities                |   | $      | (23,783    | )      |   | $      | (29,775    | )      |   | $ | (32,058 | ) |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash flows from financing activities:                |   |   |       |   |   |   |       |   |   |   |   |   |
| Repayment of notes payable                           |   | $      | (936,000   | )      |   | $      | (97,500    | )      |   | $ | - |   |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net cash used by financing activities                |   | $      | (936,000   | )      |   | $      | (97,500    | )      |   | $ | - |   |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents |   | $      | 134,460    |   |   | $      | 182,967    |   |   | $ | (162,835 | ) |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash and cash equivalents:                           |   |   |       |   |   |   |       |   |   |   |   |   |
| Beginning of year                                    |   |   | 466,187    |   |   |   | 283,220    |   |   |   | 446,055 |   |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| End of year                                          |   | $      | 600,647    |   |   | $      | 466,187    |   |   | $ | 283,220 |   |

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|                                                                           |   | 2010   |      |   | 2009   |   |    | 2008   |   |
|--------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|
|                                                                           |   |   |      |   |   |   |    |   |   |
| Reconciliation of net income (loss) to net                                     |   |   |      |   |   |   |    |   |   |
|  cash (used) provided by operating activities:                            |   |   |      |   |   |   |    |   |   |
| Net income (loss)                                                              |   | $      | 736,589   |   |   | $      | 43,617  |   |   | $ | (747,816 | ) |
|                                                                           |   |   |      |   |   |   |    |   |   |   |   |   |
| Adjustments to reconcile net income (loss) to net cash                         |   |   |      |   |   |   |    |   |   |   |   |   |
| (used) provided by operating activities:                                       |   |   |      |   |   |   |    |   |   |   |   |   |
| Depreciation and amortization                                                  |   | $      | 69,032    |   |   | $      | 97,956  |   |   | $ | 172,163 |   |
| Gain on sale of assets                                                         |   |   | (1,687    | )      |   |   | -       |   |   |   | (1,739 | ) |
| Compensation recognized from issuance of stock options                         |   |   | -         |   |   |   | -       |   |   |   | 297,601 |   |
| Fair value of stock warrants issued for consulting services                    |   |   | -         |   |   |   | 77,870  |   |   |   | - |   |
|                                                                           |   |   |      |   |   |   |    |   |   |   |   |   |
|                                                                           |   |   |      |   |   |   |    |   |   |   |   |   |
|   Changes in operating assets and liabilities:                       |   |   |      |   |   |   |    |   |   |   |   |   |
|       Decrease (increase) in accounts receivable |   |   | 52,839    |   |   |   | (15,901 | )      |   |   | (252,226 | ) |
|       Decrease in inventory                      |   |   | 25,248    |   |   |   | 46,926  |   |   |   | 37,199 |   |
|       Decrease (increase) in prepaid expenses    |   |   | 7,500     |   |   |   | (7,500  | )      |   |   | - |   |
|       Decrease (increase) in deposits            |   |   | 25,000    |   |   |   | 5,000   |   |   |   | (30,000 | ) |
|      (Decrease) increase in accounts payable          |   |   | 111,182   |   |   |   | (26,982 | )      |   |   | 129,741 |   |
|       Increase in deferred revenue               |   |   | -         |   |   |   | 13,500  |   |   |   | 43,417 |   |
|      (Decrease) increase in accrued expenses          |   |   | 68,540    |   |   |   | 75,756  |   |   |   | 220,883 |   |
|                                                                           |   |   |      |   |   |   |    |   |   |   |   |   |
| Total adjustments                                                              |   | $      | 357,654   |   |   | $      | 266,625 |   |   | $ | 617,039 |   |
|                                                                           |   |   |      |   |   |   |    |   |   |   |   |   |
| Net cash (used) provided by operating activities                               |   | $      | 1,094,243 |   |   | $      | 310,242 |   |   | $ | (130,777 | ) |
|                                                                           |   |   |      |   |   |   |    |   |   |   |   |   |
| Supplemental schedule of non-cash investing and                                |   |   |      |   |   |   |    |   |   |   |   |   |
| financing activities                                                           |   |   |      |   |   |   |    |   |   |   |   |   |
| Fair value of stock warrants issued in exchange for services                   |   | $      | -         |   |   | $      | 77,870  |   |   | $ | - |   |

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Note A - General organization:

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

| Year ending |   |   |   |
|-------------|--------|--------|--------|
| March 31,   |   | Amount |   |
| 2011        |   | $      | 5,609  |   |
| 2012        |   |   | 3,394  |   |
| 2013        |   |   | 3,111  |   |
| 2014        |   |   | -      |   |
| 2015        |   |   | -      |   |
| Total       |   | $      | 12,114 |   |

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| Year ending |   |   |   |
|-------------|--------|--------|--------|
| March 31,   |   | Amount |   |
| 2011        |   | $      | 8,022  |   |
| 2012        |   |   | 8,022  |   |
| 2013        |   |   | 6,200  |   |
| 2014        |   |   | 4,263  |   |
| 2015        |   |   | 3,892  |   |
| Total       |   | $      | 30,399 |   |

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| Product and Service                |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                               |   |   |      |   |   |   |      |   |   |
| Voice Activated Dialing            |   | $      | 929       |   |   | $      | 9,972     |   |   | $ | 33,806 |   |
| Telephone Receptionist             |   |   | -         |   |   |   | -         |   |   |   | 449 |   |
| Smart Business Line                |   |   | -         |   |   |   | -         |   |   |   | 494 |   |
| Digital Signage                    |   |   | 59,680    |   |   |   | 205,704   |   |   |   | 482,515 |   |
| Content Sales                      |   |   | 2,764,625 |   |   |   | 1,732,743 |   |   |   | 1,370,671 |   |
| Ringback Service                   |   |   | 1,656,560 |   |   |   | 1,391,518 |   |   |   | 943,952 |   |
| Platform Sales                     |   |   | 251,717   |   |   |   | 563,514   |   |   |   | 664,949 |   |
| Maintenance and Support Agreements |   |   | 79,000    |   |   |   | 70,000    |   |   |   | 19,750 |   |
| Customer Applications              |   |   | 15,250    |   |   |   | 33,563    |   |   |   | 25,000 |   |
| Total revenue                      |   | $      | 4,827,761 |   |   | $      | 4,007,014 |   |   | $ | 3,541,586 |   |

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| Exercise of future grants of stock options and stock appreciation rights under the 2000 stock option plan |   |   | 814,133   |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
| Exercise of stock warrants and debt conversion                                                            |   |   | 8,310,786 |   |
|                                                                                                      |   |   | 9,124,919 |   |
|                                                                                                      |   |   |      |   |

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|                    |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                    |   |   |   |   |   |   |   |   |   |
| Expected dividend yield |   |   | N/A    |   |   |   | N/A    |   |   |   | 0.00 | % |
| Risk-free interest rate |   |   | N/A    |   |   |   | N/A    |   |   |   | 4.54 | % |
| Expected life           |   |   | N/A    |   |   |   | N/A    |   |   | 5 years |
| Expected volatility     |   |   | N/A    |   |   |   | N/A    |   |   |   | 140 | % |

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Table of Contents

|                               |   | 2000 stock award and incentive plan (2000 Plan) |    |
|------------------------------------|--------|-------------------------------------------------|---------|
|                               |   | 2010                                            |    |   | 2009 |   |   | 2008 |   |
|                               |   |                                            |    |   | Weighted |   |   |   |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                               |   |                                            |    |   | average |   |   |   |   |   | average |   |   |   |   |   | average |   |
|                               |   | Number of                                       |    |   | exercise |   |   | Number of |   |   | exercise |   |   | Number of |   |   | exercise |   |
|                               |   | shares                                          |    |   | price |   |   | shares |   |   | price |   |   | shares |   |   | price |   |
| Outstanding at beginning of year   |   |                                            | 844,133 |   |   | $ | 0.62 |   |   |   | 899,133 |   |   | $ | 0.60 |   |   |   | 910,933 |   |   | $ | 0.60 |   |
| Granted                            |   |                                            | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 50,000 |   |   |   | 1.25 |   |
| Exercised                          |   |                                            | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeited                          |   |                                            | (30,000 | ) |   |   | 0.60 |   |   |   | (55,000 | ) |   |   | 0.91 |   |   |   | (30,000 | ) |   |   | 0.60 |   |
| Cancelled                          |   |                                            | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Expired                            |   |                                            | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (31,800 | ) |   |   | 0.60 |   |
|                               |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding at end of year         |   |                                            | 814,133 |   |   | $ | 0.62 |   |   |   | 844,133 |   |   | $ | 0.60 |   |   |   | 899,133 |   |   | $ | 0.60 |   |
|                               |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options exercisable at end of year |   |                                            | 814,133 |   |   | $ | 0.62 |   |   |   | 844,133 |   |   | $ | 0.62 |   |   |   | 874,133 |   |   | $ | 0.62 |   |
| Weighted average fair value        |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of options granted during the year |   |                                            |    |   |   | $ | - |   |   |   |   |   |   | $ | - |   |   |   |   |   |   | $ | 0.49 |   |

| Employee warrants                   |   |      |     |   |     |   |   |      |   |   |     |   |   |      |   |   |     |   |
|-------------------------------------|--------|-----------|----------|--------|----------|--------|--------|-----------|--------|--------|----------|--------|--------|-----------|--------|--------|----------|--------|
|                                |   | 2010      |     |   | 2009     |   |   | 2008      |   |
|                                |   |      |     |   | Weighted |   |   |      |   |   | Weighted |   |   |      |   |   | Weighted |   |
|                                |   |      |     |   | average  |   |   |      |   |   | average  |   |   |      |   |   | average  |   |
|                                |   | Number of |     |   | exercise |   |   | Number of |   |   | exercise |   |   | Number of |   |   | exercise |   |
|                                |   | shares    |     |   | price    |   |   | shares    |   |   | price    |   |   | shares    |   |   | price    |   |
| Outstanding at beginning of year    |   |      | 412,000  |   |     | $      | 0.67   |      |   |   | 412,000  |   |   | $         | 0.67   |   |     |   | 432,000 |   |   | $ | 0.67 |   |
| Granted                             |   |      | -        |   |     |   | -      |      |   |   | -        |   |   |      | -      |   |     |   | - |   |   |   | - |   |
| Exercised                           |   |      | -        |   |     |   | -      |      |   |   | -        |   |   |      | -      |   |     |   | - |   |   |   | - |   |
| Forfeited                           |   |      | -        |   |     |   | -      |      |   |   | -        |   |   |      | -      |   |     |   | - |   |   |   | - |   |
| Expired                             |   |      | (216,000 | )      |     |   | 0.72   |      |   |   | -        |   |   |      | -      |   |     |   | (20,000 | ) |   |   | 0.60 |   |
|                                |   |      |     |   |     |   |   |      |   |   |     |   |   |      |   |   |     |   |   |   |   |   |   |   |
| Outstanding at end of year          |   |      | 196,000  |   |     | $      | 0.63   |      |   |   | 412,000  |   |   | $         | 0.67   |   |     |   | 412,000 |   |   | $ | 0.67 |   |
|                                |   |      |     |   |     |   |   |      |   |   |     |   |   |      |   |   |     |   |   |   |   |   |   |   |
| Warrants exercisable at end of year |   |      | 196,000  |   |     | $      | 0.63   |      |   |   | 412,000  |   |   | $         | 0.67   |   |     |   | 412,000 |   |   | $ | 0.67 |   |
| Weighted average fair value         |   |      |     |   |     |   |   |      |   |   |     |   |   |      |   |   |     |   |   |   |   |   |   |   |
| of warrants granted during the year |   |      |     |   |     | $      | -      |      |   |   |     |   |   | $         | -      |   |     |   |   |   |   | $ | - |   |

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Table of Contents

|                    |   | 2010   |   |   | 2009   |      |   | 2008   |   |
|-------------------------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|
|                    |   |   |   |   |   |      |   |   |   |
| Expected dividend yield |   |   | N/A    |   |   |      | 0.00%  |   |   |   | N/A |   |
| Risk-free interest rate |   |   | N/A    |   |   |      | 0.89   |   |   |   | N/A |   |
| Expected life           |   |   | N/A    |   |   | 2.5 years |   |   |   | N/A |   |
| Expected volatility     |   |   | N/A    |   |   |      | 159%   |   |   |   | N/A |   |

| Non-employees                       |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |     |   |
|-------------------------------------|--------|-----------|-----------|--------|----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|----------|--------|
|                                |   | 2010      |      |   | 2009     |   |   | 2008      |   |
|                                |   |      |      |   | Weighted |   |   |      |   |   | Weighted  |   |   |      |   |   | Weighted |   |
|                                |   |      |      |   | average  |   |   |      |   |   | average   |   |   |      |   |   | average  |   |
|                                |   | Number of |      |   | exercise |   |   | Number of |   |   | exercise  |   |   | Number of |   |   | exercise |   |
|                                |   | shares    |      |   | price    |   |   | shares    |   |   | price     |   |   | shares    |   |   | price    |   |
| Outstanding at beginning of year    |   |      | 1,007,143 |   |     | $      | 0.50   |      |   |   | 207,143   |   |   | $         | 0.50   |   |     |   | 207,143 |   |   | $ | 0.50 |   |
| Granted                             |   |      | -         |   |     |   | -      |      |   |   | 800,000   |   |   |      | 0.50   |   |     |   | - |   |   |   | - |   |
| Exercised                           |   |      | -         |   |     |   | -      |      |   |   | -         |   |   |      | -      |   |     |   | - |   |   |   | - |   |
| Forfeited                           |   |      | -         |   |     |   | -      |      |   |   | -         |   |   |      | -      |   |     |   | - |   |   |   | - |   |
| Expired                             |   |      | (40,000   | )      |     |   | 0.50   |      |   |   | -         |   |   |      | -      |   |     |   | - |   |   |   | - |   |
|                                |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |     |   |   |   |   |   |   |   |
| Outstanding at end of year          |   |      | 967,143   |   |     | $      | 0.50   |      |   |   | 1,007,143 |   |   | $         | 0.50   |   |     |   | 207,143 |   |   | $ | 0.50 |   |
|                                |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |     |   |   |   |   |   |   |   |
| Warrants exercisable at end of year |   |      | 967,143   |   |     | $      | 0.50   |      |   |   | 1,007,143 |   |   | $         | 0.50   |   |     |   | 207,143 |   |   | $ | 0.50 |   |
| Weighted average fair value         |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |     |   |   |   |   |   |   |   |
| of warrants granted during the year |   |      |      |   |     |   | -      |      |   |   |      |   |   | $         | 0.50   |   |     |   |   |   |   |   | - |   |

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Table of Contents

| Stock and debenture offerings       |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |
|-------------------------------------|--------|-----------|-----------|--------|----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|
|                                |   | 2010      |      |   | 2009     |   |   | 2008      |   |
|                                |   |      |      |   | Weighted |   |   |      |   |   | Weighted  |   |   |      |   |   | Weighted |   |
|                                |   |      |      |   | average  |   |   |      |   |   | average   |   |   |      |   |   | average |   |
|                                |   | Number of |      |   | exercise |   |   | Number of |   |   | exercise  |   |   | Number of |   |   | exercise |   |
|                                |   | shares    |      |   | price    |   |   | shares    |   |   | price     |   |   | shares    |   |   | price |   |
| Outstanding at beginning of year    |   |      | 3,971,928 |   |     | $      | 0.56   |      |   |   | 3,971,928 |   |   | $         | 0.56   |   |   |   | 3,971,928 |   |   | $ | 0.56 |   |
| Granted                             |   |      | -         |   |     |   | -      |      |   |   | -         |   |   |      | -      |   |   |   | - |   |   |   | - |   |
| Exercised                           |   |      | -         |   |     |   | -      |      |   |   | -         |   |   |      | -      |   |   |   | - |   |   |   | - |   |
| Forfeited                           |   |      | -         |   |     |   | -      |      |   |   | -         |   |   |      | -      |   |   |   | - |   |   |   | - |   |
| Expired                             |   |      | -         |   |     |   | -      |      |   |   | -         |   |   |      | -      |   |   |   | - |   |   |   | - |   |
|                                |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |
| 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 |   |      |      |   |     |   | -      |      |   |   |      |   |   |      | -      |   |   |   |   |   |   |   | - |   |

| Summary                             |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |     |   |
|-------------------------------------|--------|-----------|-----------|--------|----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|----------|--------|
|                                |   | 2010      |      |   | 2009     |   |   | 2008      |   |
|                                |   |      |      |   | Weighted |   |   |      |   |   | Weighted  |   |   |      |   |   | Weighted |   |
|                                |   |      |      |   | average  |   |   |      |   |   | average   |   |   |      |   |   | average  |   |
|                                |   | Number of |      |   | exercise |   |   | Number of |   |   | exercise  |   |   | Number of |   |   | exercise |   |
|                                |   | shares    |      |   | price    |   |   | shares    |   |   | price     |   |   | shares    |   |   | price    |   |
| Outstanding at beginning of year    |   |      | 5,391,071 |   |     | $      | 0.56   |      |   |   | 4,591,071 |   |   | $         | 0.57   |   |     |   | 4,611,071 |   |   | $ | 0.57 |   |
| Granted                             |   |      | -         |   |     |   | -      |      |   |   | 800,000   |   |   |      | 0.50   |   |     |   | - |   |   |   | - |   |
| Exercised                           |   |      | -         |   |     |   | -      |      |   |   | -         |   |   |      | -      |   |     |   | - |   |   |   | - |   |
| Forfeited                           |   |      | -         |   |     |   | -      |      |   |   | -         |   |   |      | -      |   |     |   | - |   |   |   | - |   |
| Expired                             |   |      | (256,000  | )      |     |   | 0.68   |      |   |   | -         |   |   |      | -      |   |     |   | (20,000 | ) |   |   | 0.60 |   |
|                                |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |     |   |   |   |   |   |   |   |
| Outstanding at end of year          |   |      | 5,135,071 |   |     | $      | 0.55   |      |   |   | 5,391,071 |   |   | $         | 0.56   |   |     |   | 4,591,071 |   |   | $ | 0.57 |   |
|                                |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |     |   |   |   |   |   |   |   |
| Warrants exercisable at end of year |   |      | 5,135,071 |   |     | $      | 0.55   |      |   |   | 5,391,071 |   |   | $         | 0.56   |   |     |   | 4,591,071 |   |   | $ | 0.57 |   |
| Weighted average fair value         |   |      |      |   |     |   |   |      |   |   |      |   |   |      |   |   |     |   |   |   |   |   |   |   |
| of warrants granted during the year |   |      |      |   |     |   | -      |      |   |   |      |   |   | $         | 0.50   |   |     |   |   |   |   |   | - |   |

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Table of Contents

|                                   |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                   |   |   |   |   |   |   |   |   |   |
| Current income taxes                   |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |
| Change in deferred income taxes due to |   |   |   |   |   |   |   |   |   |   |   |   |
|  temporary differences            |   |   | -      |   |   |   | -      |   |   |   | - |   |
|                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |

|                                        |   | 2010   |     |   | 2009   |   |    | 2008   |   |
|---------------------------------------------|--------|--------|----------|--------|--------|--------|---------|--------|--------|
|                                        |   |   |     |   |   |   |    |   |   |
| Computed “expected” tax benefit |   | $      | 251,000  |   |   | $      | 15,000  |   |   | $ | (254,000 | ) |
| Nondeductible items                         |   |   | 1,000    |   |   |   | 2,000   |   |   |   | 2,000 |   |
| Temporary differences                       |   |   | 4,000    |   |   |   | 13,000  |   |   |   | 28,000 |   |
| Net operating loss carry-forward            |   |   | (256,000 | )      |   |   | (30,000 | )      |   |   | 224,000 |   |
|                                        |   |   |     |   |   |   |    |   |   |   |   |   |
| Provision for income taxes                  |   | $      | -        |   |   | $      | -       |   |   | $ | - |   |

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|                                       |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|--------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                       |   |   |       |   |   |   |       |   |   |
| Accounts receivable                        |   | $      | -          |   |   | $      | (3,000     | )      |   | $ | - |   |
| Accumulated depreciation                   |   |   | (149,000   | )      |   |   | (145,000   | )      |   |   | (135,000 | ) |
|                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Gross deferred tax liabilities             |   | $      | (149,000   | )      |   | $      | (148,000   | )      |   | $ | (135,000 | ) |
|                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Net operating loss carry-forward           |   | $      | 6,613,000  |   |   | $      | 6,888,000  |   |   | $ | 7,045,000 |   |
|                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Gross deferred tax assets                  |   | $      | 6,613,000  |   |   | $      | 6,888,000  |   |   | $ | 7,045,000 |   |
| Valuation allowance                        |   |   | (6,464,000 | )      |   |   | (6,740,000 | )      |   |   | (6,910,000 | ) |
|                                       |   |   |       |   |   |   |       |   |   |   |   |   |
|                                       |   | $      | 149,000    |   |   | $      | 148,000    |   |   | $ | 135,000 |   |
|                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Net deferred tax assets                    |   |   |       |   |   | $      | -          |   |   | $ | - |   |
|                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| The change in the deferred tax valuation   |   |   |       |   |   |   |       |   |   |   |   |   |
|    allowance is as follows: |   | $      | (276,000   | )      |   | $      | (170,000   | )      |   | $ | 196,000 |   |

| Year ending |   |   |    |
|-------------|--------|--------|---------|
| March 31,   |   | Amount |    |
|        |   |   |    |
| 2011        |   | $      | 43,446  |   |
| 2012        |   |   | 45,652  |   |
| 2013        |   |   | 35,595  |   |
| 2014        |   |   | -       |   |
| 2015        |   |   | -       |   |
|        |   | $      | 124,693 |   |

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