UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q







x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended March 31, 2011





OR





o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from __________________________ to _____________________________





Commission file number:               000-29341





iVOICE, INC


(Exact name of registrant as specified in its charter)





New Jersey

51-0471976(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)750 Highway 34, Matawan, NJ07747(Address of Principal Executive Offices)(Zip Code)





Registrant’s Telephone Number, Including Area Code:                             (732) 441-7700





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES xNO o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES o  NO x





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated files, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the exchange act.





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





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES    o      NO x





Number of shares of Class A, common stock,
 No par value, outstanding as of May 20, 2011:     6,265,563,493





Table of Contents





iVOICE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011 AND 2010


TABLEOFCONTENTS





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


Table of Contents





ITEM1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
 iVOICE, INC. AND SUBSIDIARIES
 CONDENSEDCONSOLIDATED BALANCE SHEETS
 
 March 31,


December 31,ASSETS

2011


2010(unaudited)CURRENT ASSETSCash and cash equivalents

$
470,623


$
1,488,557Marketable securities


906,014



2,014Accounts receivable, net of allowance for doubtful accounts


11,796



4,284Inventory


502



1,106Prepaid expenses and other current assets


31,532



33,579Total current assets


1,420,467



1,529,540PROPERTY AND EQUIPMENT, net of accumulated depreciationof $267,490 and $247,764, respectively


17,867



37,594OTHER ASSETSIntangible assets, net of accumulated amortization of $3,265 andand $3,081, respectively


107,285



113,181Deposits and other assets


6,666



6,666Total other assets


113,951



119,847TOTAL ASSETS

$
1,552,285


$
1,686,981LIABILITIES AND STOCKHOLDERS’ DEFICITCURRENT LIABILITIESAccounts payable and accrued expenses

$
1,130,644


$
1,092,957Due to related parties


1,135,031



991,934Class A common stock liability


354,157



354,157Deferred revenues


2,503



1,170Total current liabilities


2,622,335



2,440,218NON CURRENT LIABILITIESConvertible debenture payable, net of discounts of $94,028 and$104,076, respectively


421,460



413,624Derivative liability on convertible debentures


565,472



571,941Total current liabilities


986,932



985,565TOTAL LIABILITIES

$
3,609,267


$
3,425,783COMMITMENTS AND CONTINGENCIES
 
 See accompanying notes to condensed consolidated financial statements.
  3
 Table of Contents
  iVOICE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
 (UNAUDITED)
   March 31,


December 31,2011


2010STOCKHOLDERS’ EQUITY (DEFICIT)Stockholders’ equity (deficit):Preferred stock, $1 par value; authorized 1,000,000 shares;no shares issued and outstanding


--



--Common stock, Class A, no par value; authorized 10,000,000,000 shares;2011 – 6,265,563,493 shares issued; 6,265,563,493 shares outstanding2010 – 6,265,563,493 shares issued; 6,265,563,493 shares outstanding


25,225,513



25,225,513Common stock, Class B, $0.01 par value; authorized 50,000,000 shares;no shares issued and outstanding


--



--Additional paid-in capital


719,702



719,702Accumulated other comprehensive income


5,199



1,199Accumulated deficit


(26,302,511
)


(25,536,587
)Treasury stock, 3,000 Class A shares, at cost


(28,800
)


(28,800
)Total iVoice, Inc. stockholders' equity (deficit)


(380,897
)


381,027Noncontrolling interest


(1,676,085
)


(2,119,829
)TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)


(2,056,982
)


(1,738,802
)TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

$
1,552,285


$
1,686,981
 See accompanying notes to condensed consolidated financial statements.
  4
 Table of Contents
 iVOICE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
  For the three monthsEnded March 31,2011


2010SALES

$
41,621


$
42,400COST OF SALES


11,660



25,412GROSS PROFIT


29,961



16,988OPERATING EXPENSESSelling, general and administrative expenses


322,584



323,837Impairment of assets


19,582



-Depreciation and amortization


6,042



3,226Total operating expenses


348,208



327,063LOSS FROM OPERATIONS


(318,247
)


(310,075
)OTHER INCOME (EXPENSE)Other income


14,816



234,676Gain (loss) on revaluation of derivatives


6,469



(285
)Amortization of discount on debt


(7,836
)


(15,041
)Interest expense


(3,731
)


(2,954
)Total other income (expense)


9,718



216,396LOSS FROM OPERATIONS BEFOREPROVISION FOR INCOME TAXES


(308,529
)


(93,679
)PROVISION FOR INCOME TAXES


--



--NET LOSS


(308,529
)


(93,679
)Noncontrolling interest


457,395



96,812NET LOSS APPLICABLE TO iVOICE, INC.

$
(765,924
)

$
(190,491
)NET LOSS PER COMMON SHAREBasic and diluted

$
( 0.00
)

$
( 0.00
)WEIGHTED AVERAGE SHARES OUTSTANDINGBasic and diluted


6,265,563,493



3,401,867,145
 
 See accompanying notes to condensed consolidated financial statements.
 
 5
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  iVOICE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF
 ACCUMULATED OTHER COMPREHENSIVE INCOME (UNAUDITED)
 FOR THE THREE MONTHS ENDED MARCH 31,
 2011



2010Balance at beginning of the period

$
1,199


$
4,658Unrealized gain on securities available for sale:Unrealized gain (loss) arising during the period


4,000



4,668Less: reclassification adjustment and lossesincluded in net loss


-



-Net change for the period


4,000



4,668Balance at end of the period

$
5,199


$
9,326
  See accompanying notes to condensed consolidated financial statements.
 
 6
 Table of Contents
 
 iVOICE, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 FOR THE THREE MONTHS ENDED MARCH 31,
  2011


2010CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(308,529
)

$
(93,679
)Adjustments to reconcile net loss to net cash:Depreciation of fixed assets and amortization of intangibles


6,042



3,226Amortization of discount on debt conversion


7,836



15,041Impairment of assets


19,582



-Gain on sales of securities available for sale


(13,470
)


-(Gain) loss on revaluation of derivatives


(6,469
)


285Stock issue to noncontrolling shareholders for services


(15,168
)


-Changes in certain assets and liabilities:(Increase) in accounts receivable


(7,512
)


(4,058
)Decrease in inventory


604



-Decrease in prepaid expenses and other assets


2,047



3,211Increase in accounts payable and accrued liabilities


39,203



140,854Increase (decrease) in deferred revenues


1,333



(1,212
)Increase (decrease) in related party liabilities


143,097



(10,331
)Net cash provided by (used in) operating activities


(131,404
)


53,337CASH FLOWS FROM INVESTING ACTIVITIES:Investment in marketable securities


(900,000
)


--Net proceeds from sales of securities available for sale


13,470



--Net cash used in investing activities


(886,530
)


--NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(1,017,934
)


53,337CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD


1,488,557



1,842,801CASH AND CASH EQUIVALENTS – END OF PERIOD

$
470,623


$
1,896,138CASH PAID DURING THE PERIOD FOR:Interest expense

$
-


$
-Income taxes

$
-


$
-
  See accompanying notes to condensed consolidated financial statements.
  7
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iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Presentation
 These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.  It is suggested that these condensed consolidated financial statements be read in conjunction with the December 31, 2010 audited financial statements and the accompanying notes thereto.
 
 Principles of Consolidation
 The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, iVoice Innovations, Inc. and its Variable Interest Entity, B Green Innovations. All significant intra/inter-company transactions and balances have been eliminated in consolidation.
 
 B Green Innovations is considered a Variable Interest Entity by the Company because iVoice, Inc. is the primary beneficiary of B Green Innovations. Additionally, iVoice has provided more than half the equity of B Green Innovations, and iVoice’s Board of Directors and B Green Innovations’ Board of Directors are the same, and therefore have the power to direct the activities of B Green Innovations, the Variable Interest Equity.  As such, according to provisions of FASB Accounting Standards Codification (“ASC”) Topic 810 “Consolidation”, iVoice, Inc. continued to consolidate the results of operations of B Green Innovations with those of iVoice and its other subsidiary. The Company reclassified certain accounts in the stockholders’ deficit section to conform to the current year presentation. The reclassifications had no effect on operations or cash flows.
 
 Revenue and Cost Recognition
 The parent Company obtains its income primarily from the sales or licensing of its patents and patent applications. Revenues for the sales of our patents are recorded upon transfer of title. The patent revenues are reported net of any broker fees or commissions.
 
 The Company also is reporting revenues for B Green Innovations which primarily derives revenues from the shipments of “green products” which are recognized at the time of shipment to, or acceptance by customer, provided title and risk of loss is transferred to the customer. Provisions, when appropriate, are made where the right of return exists. B Green Innovation also derives revenues from the customer support (maintenance) service contracts for its IVR software product for one-year periods. Deferred revenues are recorded when the company receives payment and then revenues are recorded over the maintenance period.
 
 Concentration of Credit Risk
 The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits. The balances exceed FDIC insured limits. The Company has not experienced any losses in such accounts.
 
 Fair Value of Financial Instruments
 The Company estimates that the fair value of all financial instruments at March 31, 2011 and December 31, 2010, as defined in ASC 320-10-35, “Subsequent Measurement of Investment Securities”, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed consolidated balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
  8
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 iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  Income (Loss) Per Share
 ASC 260, “Earnings Per Share” requires presentation of basic earnings per share (“basic EPS”) and diluted earnings per share (“diluted EPS”).The computation of basic EPS is computed by dividing income available to common stockholders by the weighted average number of outstanding Common shares during the period.  Diluted earnings per share gives effect to all dilutive potential Common shares outstanding during the period. The computation of diluted EPS for the three months ended March 31, 2011 and 2010 does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.
 
 The shares used in the computations are as follows:
  Three months ended March 31,2011


2010Net (loss) applicable to iVoice, Inc.

$
(765,924
)

$
(190,491
)Weighted average shares outstanding - basic


6,265,563,493



3,401,867,145Weighted average shares outstanding - diluted


6,265,593,493



3,401,867,145Net (loss) per common share - basic

$
(0.00
)

$
(0.00
)Net (loss) per common share - diluted

$
(0.00
)

$
(0.00
)
  As of March 31, 2011, the Company has common stock equivalents of 3,304,726,252 issuable upon conversion of the YA Global Convertible Debentures and an obligation to issue 274,901,691 shares of common stock outstanding. As of March 31, 2010, the Company had common stock equivalents of 6,740,170,940 issuable upon conversion of the YA Global Convertible Debentures and an obligation to issue 655,728,382 shares of common stock outstanding. The computation of diluted EPS in the periods ended March 31, 2011 and 2010 do not include the common stock equivalents because these would have an anti-dilutive effect on loss per share.
  Accumulated Other Comprehensive Income
 Comprehensive income (loss) includes net income (loss) and other revenues, expenses, gains and losses that are excluded from net income (loss) but are included as a component of total stockholders’ equity (deficit). Comprehensive income (loss) for the three months ended March 30, 2011 and 2010 was $4,000 and $4,668, respectively. The difference between comprehensive income (loss) and net income (loss) results primarily from the effect of unrealized gains and losses determined in accordance with FASB ASC 320, “Investments – Debts and Equity Securities”.  As of March 31, 2011 and December 31, 2010, the accumulated balance of unrealized gains and losses excluded from net income (loss) was $5,199 and $1,199, respectively. These amounts are presented as “Accumulated other comprehensive income” in the balance sheet.
 
 Reclassification of accounts
 Certain prior year amounts have been reclassified to conform to the adoption of these provisions. The reclassifications have had no effect on operations or cash flows for the three months ended March 31, 2010.
  9
 Table of Contents
  iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  Recent Accounting Pronouncements
 In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2010-29, “Business Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations.” The amendments in this ASU affect any public entity as defined by ASC Topic 805 that enters into business combinations that are material on an individual or aggregate basis. The amendments in this ASU specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of ASU 2010-29 did not have a material impact on the Company’s results of operations or financial condition.
  In December 2010, the FASB issued ASU 2010-28, “Intangibles — Goodwill and Other (ASC Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The adoption of ASU 2010-28 did not have a material impact on the Company’s results of operations or financial condition.
 
 In April 2010, the FASB issued ASU 2010-17, Revenue Recognition — Milestone Method (“ASU 2010-17”). ASU 2010-17 provides guidance on the criteria that should be met for determining whether the milestone method of revenue recognition is appropriate. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. The following criteria must be met for a milestone to be considered substantive. The consideration earned by achieving the milestone should (i) be commensurate with either the level of effort required to achieve the milestone or the enhancement of the value of the item delivered as a result of a specific outcome resulting from the vendor’s performance to achieve the milestone; (ii) be related solely to past performance; and (iii) be reasonable relative to all deliverables and payment terms in the arrangement. No bifurcation of an individual milestone is allowed and there can be more than one milestone in an arrangement. Accordingly, an arrangement may contain both substantive and non-substantive milestones. ASU 2010-17 is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The adoption of ASU 2010-17 did not have a material effect on the Company’s results of operations or financial condition.
 
 In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements, (amendments to FASB ASC Topic 605, Revenue Recognition ) (“ASU 2009-13”). ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-13 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The adoption of ASU 2009-13 did not have a material impact on the Company’s results of operations or financial condition.
 
 Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
  10
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  iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 NOTE 2 – CONSOLIDATED FINANCIAL STATEMENTS AND NON-CONTROLLING INTEREST
 
 On March 12, 2008, the Company acquired 1,444.44 shares of B Green Innovations, Inc. (f/k/a iVoice Technology, Inc.) Series A 3% Secured Convertible Preferred Stock for $1,444,444.  At the time that the Company acquired these shares, the holder of each share of Series A Preferred Stock had the right to one vote for each share of Common Stock into which such Series A Preferred Stock could then be converted, and the holders of the Series A Preferred Stock shall not have in the aggregate more than seventy percent (70%) of the total votes of all classes of voting stock of the Corporation that would vote at a meeting of shareholders. These securities are also secured by the assets of B Green Innovations. On March 6, 2009, B Green Innovations amended its Certificate of Incorporation to remove the voting and conversion rights of the Series A Convertible Preferred Stock. Based on this change, the Company no longer has any voting rights in the stock of B Green Innovations. On February 23, 2010, the Company acquired 1,219 shares of B Green Innovations, Inc.’s Series A 3% Convertible Preferred Stock for $1,218,766 of cash and convertible debt. In addition, on February 23, 2010, B Green Innovations reinstated the conversion rights on their Series A Convertible Preferred Stock. iVoice may, with the consent of B Green Innovation, convert an amount of the Series A Preferred Stock into Class A common stock calculated by dividing the Series A Initial Value by the closing bid price of the Class A common stock on the last trading day immediately prior to the date of the Notice of Conversion and which limits the conversion to Class A common stock to 9.99% of the outstanding shares of B Green Innovations. iVoice will receive no discount to the closing bid price on the conversion. The Company is the primary beneficiary of B Green Innovations, and as such, according to ASC 810, “Consolidation”, iVoice, Inc. continued to consolidate the results of operations of B Green Innovations with those of iVoice, Inc. and its other subsidiary.
 
 For the period ended March 31, 2011, the stockholders’ equity for non-controlling interest and net income attributable to non-controlling interest reflects 90% of the non-controlling interest’s portion of B Green Innovations operations, after giving effect of elimination of intra-company transactions. For the period ended March 31, 2010, the non-controlling interest reflects 100% of the non-controlling interest’s portion of B Green Innovations operations, after giving effect of elimination of intra-company transactions.
 
 On January 5, 2011, B Green Innovations, Inc. converted $66,104 of the principal amount and accrued interest of the iVoice Note Receivable, dated April 30, 2010 for redemption of 1,057.664 shares of B Green Innovations Series A 3% Preferred Stock in accordance with the terms of the Promissory Note. For the three months ended March 31, 2011 the Company recorded administrative service fees of $26,500 which is included in other income in the accompanying statement of operations as compared to $15,000 for the three months ended March 31, 2010.
 
 Since 2004, iVoice has provided administrative services to B Green Innovations and its subsidiary through various agreements. In 2008, the accumulated unpaid receivables were exchanged for Convertible Promissory Notes payable to iVoice by B Green Innovations and its subsidiary. In November 2009, iVoice and B Green Innovations mutually agreed to terminate and extinguish the following agreements:
  a.
The Administrative Services Agreement dated March 1, 2007 by and between B Green Innovations, Inc.(subsidiary) and iVoice, Inc.
 b.
The Convertible Promissory Note dated May 5, 2008 issued by B Green Innovations, Inc. (subsidiary) payable to iVoice, Inc.
 c.
The Security Agreement dated May 5, 2008 by and between B Green Innovations, Inc. (subsidiary) and iVoice, Inc.
  11
 Table of Contents
  iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 On February 10, 2010, the remaining Administrative Services Agreement with B Green Innovations was terminated, and the Company entered into an Exchange Agreement to exchange the B Green Innovations Convertible Promissory Note, having a principal and accrued interest of approximately $119,000, for 119 shares of the B Green Innovations 3% Convertible Preferred Stock.
 
 On February 10, 2010, and as subsequently amended (see below), the Company entered into an administrative services agreement with B Green Innovations to provide iVoice with administrative and financial services and office space. This agreement will continue on a month-to-month basis unless terminated by either party by providing 30 days written notice. In consideration of the services, iVoice will pay B Green $5,000 per month.
 
 On March 10, 2011, the Company and iVoice, Inc. entered into a new administrative services agreement which supersedes all prior agreements. The terms of the agreement are as follows: In consideration of the services, iVoice, Inc. will pay B Green $5,000 per month. On March 10, 2011, the agreement was modified to increase the administrative service fee from iVoice from $5,000 to $15,000 per month. This agreement will continue on a month-to-month basis unless terminated by either party by providing 30 days written notice.
 
 i.
The agreement is on a month-to-months basis unless terminated by either party providing thirty (30) days advance notice to the non-terminating party. This agreement cannot be terminated until B green has redeemed all of the B Green Series A 3% Preferred Stock that is held by the Company.
 ii.
In consideration of the services, iVoice, Inc. will pay B Green $15,000 per month.
 iii.
B Green shall receive payment by redeeming the number of B Green Series A 3% Preferred Stock shares held by iVoice using the formula set below:
 i.
calculate the number of iVoice Class A Common Stock shares by dividing (x) the dollar value of the fees that B Green is to be paid by fifty percent (50%) of the lowest issue price of iVoice Class A common Stock.
 ii.
The iVoice market value shall be equal to the number of iVoice Class A Common Stock shares calculated above multiplied by the highest closing ask price of iVoice Class A Common stock in the previous thirty (30) trading days prior to the date of the calculation.
 iii.
The number of B Green Series A 3% Preferred Stock shares to be redeemed hereunder shall be calculated by dividing the iVoice Market value calculated above by the Series A Initial Value, as defined in the B Green Certificate of Incorporation.
 
 All transactions between the Company and B Green Innovations, Inc. are eliminated in consolidation. .
 
 NOTE 3 – GOING CONCERN
 
 The Company has negative cash flows from operations, negative working capital and recurring losses from operations. These issues raise substantial doubt about the Company’s ability to continue as a going concern. Therefore, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn, is dependent upon the Company’s ability to raise capital and/or generate positive cash flow from operations.
 
 Since the spin-off of the three operating subsidiaries in 2005, the Company has transitioned itself into a company focused on the development and licensing of proprietary technologies. Following the sales of patents to Lamson Holdings LLC, the Company has 9 remaining patent applications, which have been awarded or are pending.  These applications include various versions of the “Wirelessly Loaded Speaking Medicine Container”, which is also filed internationally, the “Voice Activated Voice Operated Copier”, the “Voice Activated Voice Operational Universal Remote Control”, “Wireless Methodology for Talking Consumer Products” which is also filed internationally, “Product Identifier and Receive Spoken Instructions” and “Traffic Signal System with Countdown Signaling with Advertising and/or News Message”.
 
 12
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  iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  The Company also continues to search for potential merger candidates with or without compatible technology and products, which management feels may make financing more appealing to potential investors.
 
 The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
 
 NOTE 4 – FAIR VALUE MEASUREMENTS
 
 ASC 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
 
 ASC 820 classifies these inputs into the following hierarchy:
 
 Level 1 Inputs– Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
 
 Level 2 Inputs– Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
 
 Level 3 Inputs– Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
  13
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  iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of March 31, 2011 and December 31, 2010. As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
 
 March 31, 2011
 
 Assets

Level I


Level II


Level III


TotalSecurites available for sale

$
906,014


$
-


$
-


$
906,014Total Assets

$
906,014


$
-


$
-


$
906,014Derivative liabilities

$
-


$
565,472


$
-


$
565,472Total Liabilities

$
-


$
565,472


$
-


$
565,472
 December 31, 2010
 Assets

Level I


Level II


Level III


TotalSecurites available for sale

$
2,014


$
-


$
-


$
2,014Total Assets

$
2,014


$
-


$
-


$
2,014Derivative liabilities

$
-


$
571,941


$
-


$
571,941Total Liabilities

$
-


$
571,941


$
-


$
571,941
 
 Valuation methods:
 The Company’s securities available for sale are valued using quoted stock prices based on the OTC BB quotation system for the periods ended in the tables above.
 
 The Company’s derivatives are classified within Level 2 of the valuation hierarchy. The Company’s derivatives are valued using internal models that use as their basis readily observable market inputs, such as time value, forward interest rates, and volatility factors. Refer to Note 6 for more discussion on derivatives.
  14
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 iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  NOTE 5 - CONVERTIBLE DEBENTURES PAYABLE
 
 On November 12, 2009, the Company issued an Amended and Restated convertible debenture for the principal amount of $671,600 due on May 25, 2014. This debenture is secured with a $370,000 secured convertible debenture dated January 6, 2006 held by the Company, which has been fully reserved, and issued by Thomas Pharmaceuticals, Ltd.  Additionally, under the terms of the Settlement Agreement, YA Global released its security interest on the other assets of the Company, terminated the outstanding warrants previously issued by the Company in favor of YA Global and both parties executed releases fully releasing each other from any and all claims through the date of the Settlement Agreement. This debenture has no interest rate and the Company imputed an effective interest rate of 5.25% and recorded imputed interest of $141,043 which is being amortized over the term of the debenture. The Company amortized $7,836 of this interest during the three months ended March 31, 2011 and 2010. The Company can redeem a portion or all amounts outstanding under the YA Global Debentures at any time upon three business days advanced written notice.  The Company shall pay 20% redemption premium on the principal amount being redeemed. YA Global may, at its discretion, convert the outstanding principal and accrued interest, in whole or in part, into a number of shares of our Class A Common Stock equal to the quotient obtained by dividing (x) the outstanding amount of the YA Global Debentures to be converted by (y) 90% of the lowest closing bid price of our shares of Class A Common Stock during the three (3) trading days immediately preceding the conversion date.
 
 The aggregate principal value of the remaining debentures at March 31, 2011 and December 31, 2010 is $518,100. These amounts are shown on the balance sheet net of imputed interest of $94,028 and $104,076, respectively. This amount is being amortized over the life of the debenture and is being amortized as debt discount on the statement of operations.
 
 NOTE 6 - DERIVATIVE LIABILITY
 
 In accordance with ASC 815, "Derivatives and Hedging", the conversion feature associated with the YA Global Secured Convertible Debentures represents embedded derivatives. In May 2006, the Company had initially recognized embedded derivatives in the amount of $6,908,078 as a derivative liability in the accompanying condensed consolidated balance sheet, and at March 31, 2010 is measured at its estimated fair value of $565,472.
 
 The estimated fair value of the embedded derivative has been calculated based on a Black-Scholes pricing model using the following assumptions:
  At 3/31/11


At 12/31/10Fair market value of stock

$
0.00019


$
0.00013Exercise price

$
0.00017


$
0.00012Dividend yield


0.00
%


0.00
%Risk free interest rate


1.2
%


1.2
%Expected volatility


263.55
%


291.98
%Expected life

3.17 years


3.42 years
  Changes in the fair value of the embedded derivatives are calculated at each reporting period and recorded in gain (loss) on revaluation of derivatives in the condensed consolidated statements of operations. During the three months ended March 31, 2011, there was a change in the fair value of the embedded derivatives, which resulted in a gain of $6,469.
 
 In accordance with ASC 820, the fair market value of the derivatives and warrants are bifurcated from the convertible debentures as a debt discount.  The debt discount is being amortized over the life of the convertible debentures. The consolidated amortization expense on the debt discount on the convertible debentures for the three months ended March 31, 2011 and 2010 was $-0- and $15,041, respectively.
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  iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 NOTE 7 – DUE TO RELATED PARTIES
 
 From time to time, iVoice, Inc. has entered into various loan agreements and employment agreements with Jerome R. Mahoney, President and Chief Executive Officer of the Company. As of March 31, 2011, the balances due to Mr. Mahoney were: a) accrued interest of $5,285 and b) deferred compensation of $657,288. Amounts due to Mr. Mahoney are convertible into either (i) one Class B common stock share of iVoice, Inc., $.01 par value, for each dollar owed, or (ii) the number of Class A common stock shares of iVoice, Inc. calculated by dividing (x) the sum of the principal and interest that the Note holder has decided to prepay by (y) fifty percent (50%) of the lowest issue price of Series A common stock since the first advance of funds under this Note, whichever the Note holder chooses, or (iii) payment of the principal of the Note, before any repayment of interest.  The Board of Directors of the Company maintains control over the issuance of shares and may decline the request for conversion of the repayment into shares of the Company.
  In August 2005, B Green Innovations had assumed an outstanding promissory demand note in the amount of $190,000 payable to Jerome Mahoney, then, the Non-Executive Chairman of the Board of B Green Innovations.  The note bears interest at the rate of prime plus 2.0% per annum (5.25% at March 31, 2011 and December 31, 2010) on the unpaid balance until paid.  Under the terms of the Promissory Note, at the option of the Note holder, principal and interest can be converted into either (i) one share of Class B Common Stock of B Green Innovations, Inc., par value $.01, for each dollar owed, (ii) the number of shares of Class A Common Stock of B Green Innovations, Inc. calculated by dividing (x) the sum of the principal and interest that the Note holder has requested to have prepaid by (y) eighty percent (80%) of the lowest issue price of Class A Common Stock since the first advance of funds under this Note, or (iii) payment of the principal of this Note, before any repayment of interest. The Board of Directors of B Green Innovations maintains control over the issuance of shares and may decline the request for conversion of the repayment into shares of the B Green Innovations. During the three months ended March 31, 2011 and 2010, Mr. Mahoney did not receive any payments against this loan. As of March 31, 2011 and December 31, 2010, the outstanding balances were $3,003, plus accrued interest $117,122 and $113,394, respectively.
 
 B Green Innovations, Inc. entered into a five-year employment agreement with Jerome Mahoney to serve as Non-Executive Chairman of the Board of Directors, effective August 1, 2004. On March 9, 2009, the term of the employment agreement between the Company and Mr. Mahoney, the Company’s CEO, was extended to July 31, 2016.  B Green will compensate Mr. Mahoney with a base salary of $85,000 for the first year with annual increases based on the Consumer Price Index. Mr. Mahoney had a consulting agreement with the Company’s former subsidiary B Green Innovations for annual compensation of $24,000 and upon every annual anniversary thereafter, at the rate based on the increase in the Consumer Price Index for All Urban Consumers (New York-Northern N.J.-Long Island). Effective January 1, 2010, this amount was added to Mr. Mahoney’s base salary. On June 15, 2010, Mr. Mahoney’s employment agreement was amended to increase the base salary to $195,000 effective July 1, 2010. All other terms of the Employment Agreement shall remain in full force and effect. A portion of Mr. Mahoney’s compensation shall be deferred until such time that the Board of Directors determines that B Green has sufficient financial resources to pay his compensation in cash.
 
 B Green’s Board has the option to pay Mr. Mahoney’s compensation in the form of Class B Common Stock. Mr. Mahoney will also be entitled to certain bonuses based on mergers and acquisitions completed by the Company. Pursuant to the terms of the Class B Common Stock, a holder of Class B Common Stock has the right to convert each share of Class B Common Stock into the number of shares of Class A Common Stock determined by dividing the number of Class B Common Stock being converted by a 20% discount of the lowest price for which the Company had ever issued its Class A Common Stock. As of March 31, 2011 and December 31, 2010, total deferred compensation due to Mr. Mahoney was $352,333 and $312,750 respectively.
 
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  iVOICE, INC. AND SUBSIDIARIES
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  NOTE 8 - COMMON STOCK
 
 Class A Common Stock
 Class A common stock consists of 10,000,000,000 shares of authorized common stock with no par value. As of March 31, 2011, 6,265,563,493 shares were issued and outstanding.
 
 Each holder of Class A common stock is entitled to one vote for each share held of record.  Holders of our Class A common stock have no preemptive, subscription, conversion, or redemption rights.  Upon liquidation, dissolution or winding-up, the holders of Class A common stock are entitled to receive our net assets pro rata.  Each holder of Class A common stock is entitled to receive ratably any dividends declared by our board of directors out of funds legally available for the payment of dividends.  The Company has not paid any dividends on its common stock and management does not contemplate doing so in the foreseeable future.  The Company anticipates that any earnings generated from operations will be used to finance growth. There were no shares issued for the three months ended March 31, 2011.
 
 NOTE 9 – INCOME TAXES
 
 The tax effect of temporary differences, primarily net operating loss carryforwards, asset reserves and accrued liabilities give rise to a deferred tax asset. Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse. Because of the current uncertainty of realizing the benefit of the tax carry forward, a valuation allowance equal to the tax benefit for deferred taxes has been established. The full realization of the tax benefit associated with the carry forward depends predominantly upon the Company's ability to generate taxable income during the carry forward period.
 
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 ITEM2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 Some information included in this Quarterly Report on Form 10-Q and other materials filed by us with the Securities and Exchange Commission, or the SEC, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of us. For a discussion of material risks and uncertainties that the Company faces see the discussion in the Form 10−K for the fiscal year ended December 31, 2009 entitled “Risk Factors”.  This discussion and analysis of financial condition and plan of operations should be read in conjunction with our Condensed Consolidated Financial Statements included herein.
 
 Overview
 
 Since 2005, the Company has transitioned itself into a company focused on the development and licensing of proprietary technologies. As an example, in March 2006 we sold four of our voice activated product and item locator patents to Lamson Holdings LLC for net proceeds of $136,000 and on December 6, 2007 we were issued Patent 7,305,344 for a patent for Methodology for Talking Consumer Products with Voice Instructions via Wireless Technology. On January 8, 2008, the Company entered into a Technology Transfer Agreement with GlynnTech to market its recently issued patent. GlynnTech will provide assistance in developing a DVD of the patents capabilities. GlynnTech will also be obligated to solicit licensing opportunities and/or acquisition of the patent.
 
 The Company also continues to search for potential merger candidates with or without compatible technology and products, which management feels may make financing more appealing to potential investors.
 
 On March 12, 2008, the Company acquired 1,444.44 shares of iVoice Technology, Inc. (n/k/a B Green Innovations, Inc) Series A 10% Convertible Preferred Stock for $1,444,444.  At the time that the Company acquired these shares, the holder of each share of Series A Preferred Stock had the right to one vote for each share of Common Stock into which such Series A Preferred Stock could then be converted, and the holders of the Series A Preferred Stock shall not have in the aggregate more than seventy percent (70%) of the total votes of all classes of voting stock of the Corporation that would vote at a meeting of shareholders. As a result of this transaction, the Company consolidated the results of operations of B Green Innovations, Inc. On March 6, 2009, iVoice Technology amended their Certificate of Incorporation to remove the voting and conversion rights of the Series A Convertible Preferred Stock. Based on this change, the Company no longer has any voting rights in the stock of iVoice Technology. In February 2010, the Company filed with the State of New Jersey an Amendment to the Certificate that revised the rights of the holders of the Company’s Series A 10% Secured Convertible Preferred Stock. The revisions included:
 
 a. The preferred stock will be referred to in the Company’s Certificate of Incorporation as: “Series A 3% Preferred Stock”.
 b. The holders of the preferred stock will have a new dividend rate of 3%.
 c. The holders of the Series A 3% Preferred Stock shall have no voting rights.
 d. Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof with the consent of B Green Innovations, Inc., (“B Green”) at any time after the date of issuance of such share into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Series A Initial Value, as may be adjusted from time to time, by the Conversion Price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The "Conversion Price” per share shall be calculated as the closing bid price of the Class A Common stock on the last trading day immediately prior to the date that the Notice of Conversion is tendered to B Green, subject to certain adjustments.
 e. The holders of shares of Series A Preferred Stock shall be prohibited from converting shares of Series A Preferred Stock, and B Green shall not honor any attempted conversion of Series A Preferred Stock, if, and to the extent, the shares of Common Stock held by such converting holder of Series A Preferred Stock following any attempted conversion would exceed 9.99% of the outstanding shares of Common Stock of B Green after giving effect to such conversion.
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 Table of Contents
  On November 16, 2009, iVoice Technology completed a merger with its wholly owned subsidiary B Green Innovations, Inc, and renamed the company B Green Innovations, Inc. (“B Green Innovations”). The Company is the primary beneficiary of B Green Innovations, and as such, according to provisions of FASB Accounting Standards Codification (“ASC”) Topic 810 “Consolidation”, iVoice, Inc. continued to consolidate the results of operations of B Green Innovations with those of iVoice and its other subsidiary.
 
 On March 9, 2011, iVoice, Inc. (“iVoice”) entered into an Agreement and Plan of Merger (the “Agreement”) with Hydra Fuel Cell Corporation (“Hydra”).  Hydra is a wholly owned subsidiary of American Security Resources Corporation.   Under the terms of the Agreement, Hydra will merge into iVoice with iVoice being the surviving company.  All of the common stock of Hydra will be exchanged for 1 million shares of iVoice Series A Preferred Stock with each such share having super-voting rights equal to 10,000 votes for every one vote granted to iVoice Class A Common Stock and each such share being convertible, at the holder's option, into 153.5 shares of Class A Common Stock.  Based upon the present number of iVoice Class A Common Stock shares outstanding, the Hydra shareholders will hold 61.48% of the voting shares of iVoice.
 
 The closing for this contemplated transaction is expected upon:  (i) completion of due diligence, (ii) certain specific conditions as set forth in the Agreement and the approval of this transaction by the Hydra and iVoice shareholders.  iVoice will prepare and file with the Securities and Exchange Commission an Information Statement on Schedule 14C.
 
 Results of Operations
 
 Three months ended March 31, 2011 compared to three months ended March 31, 2010
 
 Total revenues decreased $779 (1.8%) for the three months ended March 31, 2011 to $41,621 as compared to $42,400 for the same period in the prior year. An increase in maintenance services for the IVR business was offset by a decrease in revenues for our “green” products. Lower and more competitive prices of our “green products.”  was mostly offset by the substantial increase in volume attributed to the lower prices. The Company continues to evaluate additional products to its product line as well as expanding its distribution channels. Recently, the Company released its new 100% Degradable / Biodegradable Compactor Bags. The Company continues its efforts to market and sell its products through a distribution network. B Green has entered into distribution agreements with reputable distributors that have proven themselves within their territories and industry segments.
 
 Gross profit increased $12,973 (76.4%) for the three months ended March 31, 2011 to $29,961 as compared to $16,988 for the same for the same period in the prior year as a result of the lower manufacturing costs of the “green” products and the increase in revenues on IVR maintenance services which has a high gross profit.
  Total operating expenses for the three months ended March 31, 2011 and 2010, were $348,208 and $327,063, respectively, for an increase of $21,145 (6.5%).  The increase is primarily attributable to the expenses of B Green for the staffing and roll-out of the new “green” products offset by small decreases in insurance and other overhead and office expenses.
  Total other income (expense) for the three months ended March 31, 2011 was an income of $9,718 as compared to income of $216,396 for the three months ended March 31, 2010. This change was primarily the result of a $232,491 gain on sale of tax losses in the NJEDA program in 2010 that did not occur in 2011.
  The net losses for the three months ending March 31, 2011 and 2010 were $308,529 and $93,679, respectively. The changes were the result of the factors discussed above.
  The net loss attributable to non-controlling interest for the three months ended March 31, 2011 was $765,924 as compared to net income of $96,812 for the three months ended March 31, 2010 reflect the non-controlling interest’s portion of the operating income and losses recorded by B Green Innovations, after effect of elimination of intra-company transactions, which is included in our consolidation for the three months ended March 31, 2011 and 2010, respectively.
  19
 Table of Contents
  Liquidity and Capital Resources
 
 We are currently seeking additional operating income opportunities through potential acquisitions or investments. Such acquisitions or investments may consume cash reserves or require additional cash or equity. Our working capital and additional funding requirements will depend upon numerous factors, including: (i) strategic acquisitions or investments; (ii) an increase to current Company personnel; (iii) the level of resources that we devote to sales and marketing capabilities; (iv) technological advances; and (v) the activities of competitors.
 
 During the three months ended March 31, 2011 and the year ended December 31, 2010, we had incurred consolidated losses from operations of $316,732 and $1,653,701, respectively, and had cash flow deficiencies from operations of $131,405 and $379,647, respectively. These matters raise substantial doubt about our ability to generate cash flows internally through our current operating activities sufficient enough that its existence can be sustained without the need for external financing. Our primary need for cash is to fund our ongoing operations until such time that we can identify sales opportunities for new products or identify strategic acquisitions that generate enough revenue to fund operations.  There can be no assurance as to the receipt or timing of revenues from operations.  We expect to fund ongoing operations from cash on hand or otherwise from the sale of equity or debt securities.  We believe that we have sufficient funds on-hand to fund our operations for at least 18 months.
 
 During the three months ended March 31, 2011, the Company had a net decrease in cash of $1,017,934. The Company’s principal sources and uses of funds in the three months ended March 31, 2011 were as follows:
 
 Cash flows from operating activities.  The Company used $131,404 in cash from operations in the three months ended March 31, 2010 as compared to providing $53,337 from operations in the three months ended March 31, 2010.  This decrease was primarily attributed to a $232,491 gain on sale of tax losses in the NJEDA program in 2010 that did not occur in 2011.
  Cash flows from investing activities.  The Company used $886,530 in investing activities for the three months ended March 31, 2010, primarily for investment in marketable securities
  Below is a description of iVoice’s principal sources of funding:
 
 On May 11, 2006 we issued to YA Global a $5,544,110 secured convertible debenture due on May 11, 2008 with an interest of 7.5%. This debenture replaced a promissory note with a principal balance of $5,000,000 and $544,110 of accrued interest due to YA Global from June 15, 2005. On May 12, 2008, the remaining principal balance of $4,796,510 was repaid in cash from the proceeds of the Smith Barney short term loans.
  On May 25, 2006, we issued to YA Global a $1,250,000 secured convertible debenture due on May 25, 2008 with an interest of 7.5% per annum pursuant to a Securities Purchase Agreement entered into between us and YA Global. On February 21, 2008, this debenture was amended to extend the maturity date until May 25, 2011 and to raise the interest rate to 15% per annum. On November 12, 2009, the Company and YA Global reached a settlement agreement whereby the Company made a cash payment of $500,000 and issued an Amended and Restated convertible debenture for the sum of $671,600.
  On March 7, 2008 and May 8, 2008, the Company received proceeds from an Express Creditline Loan from Smith Barney that were collateralized by the proceeds available from the sales of the auction rate preferred shares. The interest rate charged on the loan is tied to the dividend rates earned on the auction rate preferred shares. When an auction rate preferred shares were sold in October 2008, a portion of the proceeds is applied to pay down the short term loan and the balance was deposited into interest bearing savings account at our primary banking center.
  20
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  We can redeem a portion or all amounts outstanding under the YA Global Debentures at any time upon three business days advanced written notice.  A 20% redemption premium on the principal amount being redeemed is required. YA Global may, at its discretion, convert the outstanding principal and accrued interest, in whole or in part, into a number of shares of our Class A Common Stock equal to the quotient obtained by dividing (x) the outstanding amount of the YA Global Debentures to be converted by (y) 90% of the lowest closing bid price of our shares of Class A Common Stock during the three (3) trading days immediately preceding the conversion date.
  We cannot predict the actual number of shares of Class A Common Stock that will be issued pursuant to the YA Global Debentures, in part, because the conversion price of the YA Global Debentures will fluctuate based on prevailing market prices.  If we are unable to issue enough shares to meet our obligations, then YA Global could request cash payments, which could have a material impact on our long-term growth strategy.
  There is no assurance that the future funding, if any, offered by YA Global or from other sources will enable us to raise the requisite capital needed to implement our long-term growth strategy.  Current economic and market conditions have made it very difficult to raise required capital for us to implement our business plan.
  Off Balance Sheet Arrangements
 
 During the three months ended March 31, 2011, we did not engage in any material off-balance sheet activities nor have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide additional funding to any such entities.
 
 Forward Looking Statements - Cautionary Factors
 
 Certain information included in this Form 10-Q and other materials filed or to be filed by us with the Securities and Exchange Commission (as well as information included in oral or written statements made by us or on our behalf), may contain forward-looking statements about our current and expected performance trends, growth plans, business goals and other matters.  These statements may be contained in our filings with the Securities and Exchange Commission, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers.  Information set forth in this discussion and analysis contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements.  The reader is cautioned that such forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements.  Forward-looking statements speak only as of the date the statement was made.  We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.  Forward-looking statements are typically identified by the use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “should,” “will,” and similar words, although some forward-looking statements are expressed differently.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct.
  21
 Table of Contents
  ITEM4 - CONTROLS AND PROCEDURES
 
 Controls and Procedures.
 
 Management of the Company has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of the Company had concluded that the Company's disclosure controls and procedures as of the period covered by this Quarterly Report on Form 10-Q were not effective for the following reasons:
  a) The Company has limited segregation of duties amongst its employees with respect to the Company's control activities. This deficiency is the result of the Company's limited number of employees. This deficiency may affect management's ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.
 b) The Company's has a limited number of external board members. This deficiency may give the impression to the investors that the board is not independent from management. Management and the Board of Directors are required to apply their judgment in evaluating the cost-benefit relationship of possible changes in the organization of the Board of Directors.
 
 Changes in internal control over financial reporting.
 
 Management of the Company has also evaluated, with the participation of the Chief Executive Officer of the Company, any change in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q and determined that there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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 PART II – OTHER INFORMATION
 
 
 ITEM6 - EXHIBITS
 
 10.1
Agreement and Plan of Merger by and between iVoice, Inc. and Hydra Fuel Cell Corporation dated March 9, 2011 filed as Exhibit 10.1 with the Commission on Form 8-K dated March 9, 2011 incorporated by reference herein.
 
 31.1
Certification of the Chief Executive Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
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 SIGNATURES
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 iVoice, Inc.Date:  May 23, 2011
By:
/s/ Jerome R. MahoneyJerome R. MahoneyPresident, Chief Executive Officer and

Principal Financial Officer
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 Table of Contents
 
 
 Index of Exhibits
 
 10.1
Agreement and Plan of Merger by and between iVoice, Inc. and Hydra Fuel Cell Corporation dated March 9, 2011 filed as Exhibit 10.1 with the Commission on Form 8-K dated March 9, 2011 incorporated by reference herein.
 
 31.1
Certification of the Chief Executive Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.