UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington D.C.
20549




FORM
10-K




[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT




OF
1934




For the
Fiscal Year Ended: December 31, 2008




[
] 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 0-27589







COMMISSION FILE NO.0-27589




ONE
VOICE TECHNOLOGIES, INC.


(Exact
Name of Small Business Issuer as Specified in its Charter)
  NEVADA
                95-4714338(State
      or Other Jurisdiction of
                (I.R.S.
      EmployerIncorporation
      or Organization)
                Identification
      No.)
 
 7825
Fay Avenue, Suite 200, La Jolla CA 92037
 (Address
of principal Executive Offices) (Zip Code)
 
 (866)
      823-1432
                (858)
      754-1276(Issuer's
      Telephone Number)
                (Issuer's
      Facsimile Number)
 
 Securities
registered under Section 12(b) of the Exchange Act: None.
 
 Securities
registered under Section 12(g) of the Exchange Act:
 
 COMMON
STOCK-$.001 PAR VALUE
 (Title
of Class)
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes [_] No [X]
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes [_] No [X]
  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 [X] No [_]
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act.
  Large
Accelerated filer [_]    Accelerated filer [_]   
Non-accelerated filer [_]   Smaller reporting company
[X]
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K  [_]
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [_] No [X]
  Based on
the closing price of June 30, 2008, the aggregate market value of common stock
held by non-affiliates of the registrant was $5,938,241.
  The
number of common shares outstanding of the registrant was 1,290,000,000 as of
May 13, 2009.
  DOCUMENTS
INCORPORATED BY REFERENCE
  NONE.
  Transitional
Small Business Disclosure Format (check one): Yes [_] No [X]





TABLE
OF CONTENTS








PAGEPart
      IItem
      1.  Description of Business
            
            3Item
      2.  Description of Property
            
            7Item
      3.  Legal Proceedings
            
            7Item
      4.  Submission of Matters to a Vote of Security
      Holders
            
            7Part
      IIItem
      5.  Market for Common Equity and Related Stockholder
      Matters
            
            8Item
      6.  Selected Financial Data
            
            10Item
      7.  Management's Discussion and Analysis or Plan of
      Operation
            
            10Item
      7A.  Quantitative and Qualitative Disclosures About Market
    Risk
            
            16Item
      8.  Financial Statements and Supplemental Data
            
            17Item
      8A. Controls and ProceduresItem
      8B. Other InformationPart
      IIIItem
      9.  Directors, Executive Officers, Promoters, Control Persons
      and Corporate Governance;Compliance With Section 16(a) the
      Exchange Act
            
            18Item
      10. Executive Compensation
            
            19Item
      11. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters
            
            22Item
      12. Certain Relationship and Related Transactions, and Director
      Independence
            
            24Item
      13. ExhibitsItem
      14. Principal Accountant Fees and Services







2


PART 1





ITEM 1. DESCRIPTION OF
BUSINESS





INTRODUCTION





One Voice
Technologies, Inc. is a voice recognition technology company with over $43
million invested in Research and Development and deployment of products in both
the telecom and PC multi-media markets. To date, our customers include:
Telefonos de Mexico, S.A.B. de C.V. (TELMEX), Intel Corporation, the Government
of India, Fry's Electronics, Inland Cellular, Nex-Tec Wireless, and several
additional telecom service providers throughout the United States. Our telecom
solutions allow business and consumer phone users to Voice Dial, Group
Conference Call, Read and Send E-Mail and Instant Message, all by voice. We
offer PC Original Equipment Manufacturers (OEM's) the ability to bundle a
complete voice interactive computer assistant which allows PC users to talk to
their computers to quickly play digital media (music, videos, DVD) along with
reading and sending e-mail messages, SMS text messaging to mobile phones,
PC-to-Phone calling (VoIP) and PC-to-PC audio/video. We feel we are strongly
positioned across these markets with our patented voice technology.





The
Company is traded on the NASD OTC Bulletin Board ("OTCBB") under the symbol
ONEVE. One Voice is incorporated in the State of Nevada and commenced operations
on July 14, 1999.





ONE VOICE
OFFERINGS





Network and Enterprise -
Messaging





Email
Access





One
Voice's email access is designed to be the most powerful and versatile solution
on the market. With email access, users take full control of their email account
from any phone worldwide. They can easily find important messages and respond to
one person or groups in seconds. Works with 100% of all handsets for immediate
deployment to your entire subscriber base or enterprise workforce. Supports all
major email providers including: Yahoo! Mail, Hotmail, Gmail, AOL Mail, POP3 and
IMAP.





Voice-to-SMS





One
Voice's Voice-to-SMS solution allows wireless and wireline operators along with
enterprises to offer true mobility for outbound generated text messaging
services. The industry's first completely hand-free text messaging service leads
the way for driver safety legislation with fast accurate message delivery
keeping the drivers eyes on the road at all times. Compose an SMS message by
voice to anyone in your personal address book or corporate directory, simply
speak the message and send it as an SMS text message to a single or multiple
phone(s).





Voicemail-to-SMS





One
Voice's Voicemail-to-SMS solution allows wireless and wireline operators along
with enterprises to offer immediate message delivery of inbound voicemail audio
messages converted to text and sent as an SMS to your phone.





Network and Enterprise -
Voice Communications




Voice
Dialing





One
Voice's Voice Dialing solution allows wireless and wireline operators along with
enterprises to offer 100% hands-free voice dialing of any contacts in your
personal address book. Syncs with Outlook and Lotus Notes allowing for thousands
of contacts to be setup in minutes.





Group
Calling





One
Voice's Group Calling solution allows wireless and wireline operators along with
enterprises to offer spontaneous group calling for up to 64 participants in a
preset group. Targeted for the youth market for easy group chat with powerful
full-duplex acoustic echo-canceling technology for crystal clear
calling.





3


Spontaneous
Audio Conferencing





One
Voice's Group Calling solution allows wireless and wireline operators along with
enterprises to offer spontaneous group calling for up to 64 participants.
Features include: customizable message greeting; moderator touch-tone control;
moderator dial-out during conference; up to 64 participants; available anytime.
Targeted for the mobile professional for reservation less on-the-fly
conferencing to business colleagues, anywhere, anytime with powerful full-duplex
acoustic echo-canceling technology for


crystal
clear calling.





Network and Enterprise -
Directory Assistance





One
Voice's directory assistance is the industry's most powerful411-business and
residential lookup along with corporate enterprise names directory lookup. Our
solution is the only commercially available telephony directory assistance
in-use today that allows for residential names lookup  (White Pages).
One Voice's powerful 411 solutions allow for complex name searches, such as:
"The Smith Family", "Jim and Mary Smith", "James Smith", "Mary and Jim Smith"
and "J and M Smith". No other company has the power of our patented voice search
technology to handle both Yellow and White Pages automated search.





Digital Home - Media Center
Communicator





Imagine
walking into your home and simply speaking to play music, watch TV, read and
send e-mail, call to order a pizza and more. Now, with Media Center
Communicator(, you have full control of your Digital Home using only your
voice.





Voice-Activated
Music





Works
with iTunes and Windows Media Player.





Voice-Activated
Photos





Command
your photos to come alive by simply saying the album name.





Voice-Activated
TV and Movies





Instantly
access your recorded shows and movie collection using only your
voice.





Voice-Activated
Skype





Works
with Skype to place calls anywhere in the world.





Voice-Activated
Email





Works
with most popular email providers.





Media
Center Communicator (MCC) is software, designed specifically for Windows Vista
Media Center, that allows users to simply speak to access the content they
desire using voice recognition. MCC requires No Voice Training and No
Programming so it is ready to use right out of the box.





MSRP
$79.95 and available through the following retailers: Fry's Electronics,
Target.com, Walmart.com, Dell.com, Amazon.com, Office Max,  J&R,
Newegg and Micro Center.





Digital Home -
VoiceTunes





VoiceTunes(TM)
is the ultimate companion to your digital music collection! It works directly
with your existing iTunes and Windows music libraries.





Just
speak commands like "Play Artist The Rolling Stones" or "Play Rock Music" to
enjoy your music without clicking through menus and folders.





VoiceTunes
installs quickly and works right out of the box with no voice training
required!





MSRP
$29.95.





4


Mobility - Intel Based
Mobile Internet Device (MID)





One Voice
has developed a complete suite of voice activated solutions for the new sector
of Mobile Internet Device (MIDs) allowing consumers to play music, view photos,
videos and full Internet searching all through voice control. One Voice is
currently working with Intel and jointly presenting this solution to several
OEM's for mass consumer distribution in 2008.





Mobility - MobileVoice for
StreetDeck





One Voice
has developed a complete voice solution add-on for StreetDeck. StreetDeck is a
leading navigation and infotainment solution for mobile PC's and Ultra Mobile
PC's (UMPC's).





MSRP
$29.95.





INTELLECTUAL
PROPERTY AND PATENT PROTECTION





We own
exclusive rights to three United States patents on our software. We have filed
for international patent protection as well. These patents define the primary
features and unique procedures that comprise our products and solutions. Patent
protection is important to our business. The patent position of companies in the
hi-technology field generally is highly uncertain, involves complex legal and
factual questions, and can be subject of much litigation.





Our
future success and ability to compete depends in part upon the proprietary
technology and trademarks, which we attempt to protect with a combination of
patent, copyright, trademark and trade secret laws, as well as with our
confidentiality procedures and contractual provisions. These legal protections
afford only limited protection and are time-consuming and expensive to obtain
and/or maintain. Further, despite our efforts, we may be unable to prevent third
parties from infringing upon or misappropriating our intellectual
property.





Additionally,
there can be no assurance that others will not develop market and sell products
substantially equivalent to our products or utilize technologies similar to
those used by us. Although we believe that our products do not infringe on any
third-party patents and our patents offer sufficient protection, there can be no
assurance that we will not become involved in litigation involving patents or
proprietary rights. Patent and proprietary rights litigation entails substantial
legal and other costs, and there can be no assurance that we will have the
necessary financial resources to defend or prosecute our rights in connection
with any litigation. Responding to and defending or bringing claims, related to
our intellectual property rights may require our management to redirect its
resources to address these claims, this could have a material adverse effect on
our business, financial condition and results of operations.





It is
possible that other parties have conducted or are conducting research and could
develop processes that would precede any of our processes.





Our
competitive position is also dependent upon unpatented trade secrets. We intend
to implement a policy of requiring our employees, consultants and advisors to
execute proprietary information and invention assignment agreements upon
commencement of employment or consulting relationships with us. These agreements
will provide that all confidential information developed or made known to the
individual during the course of their relationship with us must be kept
confidential, except in specified circumstances. However, we cannot assure you
that these agreements will provide meaningful protection for our trade secrets
or other proprietary information in the event of unauthorized use or disclosure
of confidential information. Additionally, we cannot assure you that others will
not independently develop equivalent proprietary information and techniques or
otherwise gain access to our trade secrets, that such trade secrets will not be
disclosed, or that we can effectively protect our rights to unpatented trade
secrets.





EMPLOYEES





As of
December 31,  2008, we have 5 full-time employees and 2 consultant/
part-time employees. We have no collective bargaining agreements with
our  employees and believe our relations with our employees are strong
and committed  to the best interest of the company. We consider our
relations with our employees to be good.





RISK
FACTORS





This
section summarizes certain risks regarding our business and industry. The
following information should be considered in conjunction with the other
information included and incorporated by reference in this report on Form 10-K
before purchasing shares of our common stock.





WE HAVE A
HISTORY OF LOSSES. WE MAY CONTINUE TO INCUR LOSSES, AND WE MAY NEVER ACHIEVE AND
SUSTAIN PROFITABILITY.





Since
inception, we have incurred significant losses and have negative cash flows from
operations. For the years ended December 31, 2008 and  2007, the
Company incurred a net loss of $1,063,976 and $4,049,133 respectively, an
decrease of $2.985.157 or 74%.




5


As a
result of the rapidly changing nature of the markets in which we
compete, our quarterly and annual revenues and operating results are likely
to fluctuate from period to period. These fluctuations may be caused by a
number of factors, many of which are beyond our control.





For these
reasons, you should not rely solely on period-to-period comparisons of our
financial results, if any, as indications of future results. Our future
operating results could fall below the expectations of public market analysts or
investors and significantly reduce the market price of our common stock.
Fluctuations in our operating results will likely increase the volatility of our
stock price.





The
Company has aggressively sought measures to reduce their monthly
operating  expenditures. Overall cost reduction has come from a series
of measures  including reduction in head-count by eliminating all
part-time workers, placing  some full-time employees on part-time
status, reducing license agreement costs  and reducing additional
operating overhead. Given these cost cutting measures, the Company feels it
can better reach operationally break-even by decreasing operating expenses
while increasing our revenue stream by acquiring additional customers
contracts.





RISKS
RELATING TO OUR COMMON STOCK





IF WE
FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM
THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL
OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN THE
SECONDARY MARKET.





Companies
trading on the OTC Bulletin Board, such as us, must be reporting issuers under
Section 12 of the Securities Exchange Act of 1934, as amended, and must be
current in their reports under Section 13, in order to maintain price quotation
privileges on the OTC Bulletin Board. If we fail to remain current on our
reporting requirements, we could be removed from the OTC Bulletin Board. As a
result, the market liquidity for our securities could be severely adversely
affected by limiting the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary
market.





OUR
COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE TRADING
MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK
CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.





The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require:





o
            That
      a broker or dealer approves a person's account for transactions in penny
      stocks.


o
            The
      broker or dealer receives from the investor a written agreement to the
      transaction, setting forth the identity and quantity of
      the   penny stock to be
  purchased.





In
      order to approve a person's account for transactions in penny stocks, the
      broker or dealer must:





o
            Obtain
      financial information and investment experience objectives of the
      person.


o
            Make
      a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.





The
      broker or dealer must also deliver, prior to any transaction in a penny
      stock, a disclosure schedule prescribed by the Commission relating to the
      penny stock market, which, in highlight
form:





o
            Sets
      forth the basis on which the broker or dealer made the suitability
      determination.


o
            That
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.





Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our
stock.





Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.





6


ITEM 2. DESCRIPTION OF
PROPERTY





FACILITIES





During
the year ended December 31, 2008, the Company’s offices were located at
41250  Executive Square, Suite 770, La Jolla, California. The Company
leased this facility  under a lease that expires in December 2010. The
size of the office was 5,162 square  feet, Subsequent to year end,the
Company terminated this lease and moved its  headquarters to 7825 Fay
Avenue, Suite 200, La Jolla, California. See note 20 for  further
discussion of the lease commencing in 2009





Rent
expense, net of sublease  income, amounted to $130,543 and $147,738
for the years ended December 31, 2008 and 2007, respectively. We believe that
our current office space and  facilities  are sufficient to
meet our present needs and do not anticipate any difficulty  securing
alternative or additional space, as needed, on terms acceptable to
us.





ITEM
3. LEGAL PROCEEDINGS




From time
to time, we may become involved in various lawsuits and legal proceedings, which
arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm business. Except as disclosed below we are
currently not aware of any such legal proceedings or claims that will have,
individually or in the aggregate, a material adverse affect on business,
financial condition or operating results. There has been no bankruptcy,
receivership or similar proceedings.





On August
23, 2007, the Company entered into a Settlement Agreement and Mutual Release
with La Jolla Cove Investors, Inc. ("LJCI") pursuant to which we agreed with
LJCI to forever settle, resolve and dispose of all claims, demands and causes of
action asserted, existing or claimed to exist between the parties because of or
in any way related to a legal proceeding in the San Diego County Superior Court
(the "Court") entitled La Jolla Cove Investors, Inc. vs. One Voice Technologies,
Inc., Case No. GIC850038 (the "Action") for a total amount owed of $408,594.48
(the "Owed Amount"). Under the Settlement Agreement dated August 23, 2007, the
parties reached a final resolution with respect to such Owed Amount whereby (i)
LJCI shall receive $200,000 within 15 days of the date of the Agreement and (ii)
the difference between the Owed Amount and $200,000 shall be payable at a later
date (the "Remaining Owed Amount"). The payment of the Remaining Owed Amount
shall be made to LJCI in the following manner:





o
            Concurrently
      with the execution of the Agreement, the Company shall transfer to an
      independent escrow agent, on behalf of LJCI, all right, title and interest
      to 30,000,000 shares of Common Stock of the Company (the "Escrow Shares"),
      issued in 30 increments of 1,000,000 shares. On the one year anniversary
      of the Agreement, 1,000,000 Escrow Shares shall be released to LJCI
      whereby LJCI shall be able to sell such shares in open market transactions
      provided such sales do not exceed more than 14% of the corresponding daily
      volume of such shares on the trading market on which the Company's
      securities are sold. LJCI shall continue to receive the Escrow Shares,
      provided they satisfy the volume limitation set forth above and LJCI's
      ownership of the Company's common stock does not exceed 4.99% of the
      Company's then issued and outstanding shares of common stock, until the
      Remaining Owed Amount is satisfied;





o
            Upon
      notice from LJCI that the Remaining Owed Amount has been satisfied by the
      sale of the Escrow Shares either (i) Alpha Capital Ansalt ("Alpha") shall
      have the ability within 15 business days to purchase any remaining Escrow
      Shares at a 20% discount to the current market price of the shares or (ii)
      if Alpha does not exercise its right to purchase the shares, the Company
      shall have the ability to redeem the remaining Escrow Shares within 5
      business days.





o
            At
      anytime while the Remaining Owed Amount is outstanding, the Company or
      Alpha may pay in cash to LJCI an amount equal to the Remaining Owed Amount
      and either (i) Alpha shall have the ability within 15 business days to
      purchase any remaining Escrow Shares at a 20% discount to the current
      market price of the shares or (ii) if Alpha does not exercise its right to
      purchase the shares, the Company shall have the ability to redeem the
      remaining Escrow Shares within 5 business
days.





LJCI has
contractually agreed to restrict their ability to exercise the Escrow Shares
such that the number of shares of the Company common stock held by it does not
exceed 4.99% of the Company's then issued and outstanding shares of common
stock.





Upon
receipt of the Owed Amount, LJCI will file a Satisfaction of Judgment in the
appropriate court and grant the Company a release from any and all actions
related to the Action.





ITEM 4.
SUBMISSION FOR MATTERS TO A VOTE OF SECURITY HOLDERS





None.


7


PART II





ITEM 5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDERS MATTERS





Our
common stock is quoted on the OTC Electronic Bulletin Board (OTC BB) under the
symbol ONEV. The OTC BB is sponsored by the National Association of Securities
Dealers (NASD) and is a network of security dealers who buy and sell
stocks.





The
following table sets forth the high and low bid prices per share of common Stock
in the quarters indicated. These prices represent inter-dealer quotations
without retail markup, markdown, or commission and may not necessarily represent
actual transactions.





Low
            High2007First
      Quarter
            .01
            .05Second
      Quarter
            .02
            .04Third
      Quarter
            .02
            .03Fourth
      Quarter
            .01
            .032008First
      Quarter
            .009
            .016Second
      Quarter
            .006
            .011Third
      Quarter
            .003
            .007Fourth
      Quarter
            .001
            .0022009First
      Quarter*
            .001
            .006





*Through
March 25, 2009





As of May
12, 2009, our common stock shares were held by 196 stockholders of record and we
had 1,290,000,000 [c1] shares of common stock issued and outstanding. We believe
that the number of beneficial owners is substantially greater than the number of
record holders because a significant portion of our outstanding common stock is
held of record in broker street names for the benefit of individual investors.
The transfer agent of our common stock is Corporate Stock Transfer, Inc., 3200
Cherry Creek Drive South, Suite 430, Denver, Colorado 80209.





The
holders of common stock do not have cumulative voting rights and are entitled to
one vote per share on all matters to be voted upon by the stockholders. Our
common stock is not entitled to preemptive rights and is not subject to
redemption (including sinking fund provisions) or conversion. Upon our
liquidation, dissolution or winding-up, the assets (if any) legally available
for distribution to stockholders are distributable ratably among the holders of
our common stock. All outstanding shares of our common stock are validly issued,
fully-paid and non assessable. The rights, preferences and privileges of the
holders of our common stock are subject to the preferential rights of all
classes or series of preferred stock that we may issue in the
future.





DIVIDEND
POLICY





We have
not declared any dividends to date. We have no present intention of paying any
cash dividends on our common stock in the foreseeable future, as we intend to
use earnings, if any, to generate growth. The payment, by us, of dividends, if
any, in the future, rests within the discretion of our Board of Directors and
will depend on, among other things, our earnings, our capital requirements and
our financial condition, as well as other relevant factors. There are no
restrictions in our articles of incorporation or bylaws that restrict us from
declaring dividends.





AMENDED AND RESTATED 1999
STOCK OPTION PLAN





Our
Amended and Restated 1999 Stock Option Plan authorizes us to grant to our
directors, employees, consultants and advisors both incentive and non-qualified
stock options to purchase shares of our Common Stock. As of December 31, 2001,
our Board of Directors had reserved 3,000,000 shares for issuance under the 1999
Plan, of which 1,900,500 shares were subject to outstanding options and
1,099,500 shares remained available for future grants. Our Board of Directors or
a committee appointed by the Board (the Plan Administrator) administers the 1999
Plan. The Plan Administrator selects the recipients to whom options are granted
and determines the number of shares to be awarded. Options granted under the
1999 Plan are exercisable at a price determined by the Plan Administrator at the
time of the grant, but in no event will the option price for any incentive stock
option be lower than the fair market value for our Common Stock on the date of
the grant. Options become exercisable at such times and in such installments as
the Plan Administrator provides in the terms of each individual option
agreement. In general, the Plan Administrator is given broad discretion to issue
options and to accept a wide variety of consideration (including shares of our
Common Stock and promissory notes) in payment for the exercise price of options.
The 1999 Plan was authorized by the Board of Directors and
stockholders.





8


2005 INCENTIVE STOCK
PLAN





On July
29, 2005 the Company adopted the 2005 Stock Incentive Plan and reserved
60,000,000 shares of the Company's common stock for issuance under the 2005
Plan. Two types of options may be granted under the 2005 Plan: (1) Incentive
Stock Options (also known as Qualified Stock Options) which may only be issued
to employees of the Company and whereby the exercise price of the option is not
less than the fair market value of the common stock on the date it was reserved
for issuance under the Plan; and (2) Nonstatutory Stock Options which may be
issued to either employees or consultants of the Company and whereby the
exercise price of the option is greater than 85% of the fair market value of the
common stock on the date it was reserved for issuance under the plan. Grants of
options may be made to employees and consultants without regard to any
performance measures. All options issued pursuant to the Plan vest at a rate of
at least 20% per year over a 5-year period from the date of the grant or sooner
if approved by the Board of Directors. All options issued pursuant to the Plan
are nontransferable and subject to forfeiture. In addition, Stock Awards and
restricted Stock Purchase Offers may be granted under the 2005 Stock Incentive
Plan.





UNREGISTERED SALES OF EQUITY
SECURITIES





The
securities described below represent our securities sold by us for the period
starting January 1,  2008 and ending December 31,  2008 that
were not registered under the Securities Act of 1933, as amended, all of which
were issued by us pursuant to exemptions under the Securities Act.





SALES OF WARRANTS FOR
CASH





During
the year ended December 31,  2008 , no warrants were
exercised.  As a result the Company received no cash proceeds in
relation to warrants.





ISSUANCE OF WARRANTS ON A
CASHLESS BASIS





From time
to time warrants can be exercised on a cashless basis if certain conditions
exist. If warrants are held for a certain period of time and there is no
effective registration statement for these warrants, the holder of these
warrants may exercise them on a cashless basis. The result is the Company
issuing restricted shares pursuant to rule 144 or 144K, no cash is received by
the Company. The number of shares issued are discounted according the
subscription agreement formula. EX: The Company issues 1,000,000 restricted
shares and the holder forfeits 1,500,000 of their warrants.





During
the year ended December 31, 2008 no warrants were issued on a
cashless  basis and no warrants were forfeited. The shares were issued
pursuant to an  exemption under Section 4(2) of the Securities Act of
1933.





SHARES IN
ESCROW





On August
23, 2007, the Company issued 30,000,000 shares of the Company's restricted
common stock valued at $600,000. The shares were put into an independent 3rd
party escrow account on behalf of La Jolla Cove Investors Inc. These shares
relate to a legal settlement on August 23, 2007 between the Company and La Jolla
Cove Investors Inc. The shares were issued pursuant to an exemption under
Section 4(2) of the Securities Act of 1933.





On May 2,
2008, the company issued 11,878,896 shares of the Company’s
restricted  common stock valued at $113,087. The shares were also put
into an independent 3rd party escrow account on behalf of La Jolla Cove
Investors Inc. These shares relate to a legal settlement on August 23, 2007
between the Company and La Jolla Cove Investors Inc. The shares were issued
pursuant to an exemption under Section 4(2) of the Securities Act of
1933.





See Item
3 Legal Proceedings for additional details.





ISSUANCES
OF STOCK FOR SERVICES OR IN SATISFACTION OF OBLIGATIONS





During
the year ended December 31, 2007, the Company issued a total of 11,443,921
shares of restricted common stock to in exchange for services rendered. The
services are related to monthly licensing fees, outside consulting fees and
interest owed. The services were valued at approximately $220,000. The shares
were issued pursuant to an exemption under Section 4(2) of the Securities Act of
1933.





During
the year ended December 31, 2008, 59,205,359 for services. Services include
Financial advisor fees and consulting. Value is approximately
$552,000.





The above
transactions were granted in lieu of cash payment to satisfy the
debt.


9


ITEM 6. SELECTED FINANCIAL
DATA





Not
Applicable.





ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION





FORWARD-LOOKING
STATEMENTS





The
information in this report contains forward-looking statements. All statements
other than statements of historical fact made in this report are forward
looking. In particular, the statements herein regarding industry prospects and
future results of operations or financial position are forward-looking
statements. These forward-looking statements can be identified by the use of
words such as "believes," "estimates," "could," "possibly," "probably,"
anticipates," "projects," "expects," "may," "will," or "should" or other
variations or similar words. No assurances can be given that the future results
anticipated by the forward-looking statements will be achieved. Forward-looking
statements reflect management's current expectations and are inherently
uncertain. Our actual results may differ significantly from management's
expectations.





The
following discussion and analysis should be read in conjunction with our
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.





OVERVIEW OF THE
BUSINESS





One Voice
Technologies, Inc. is a voice recognition technology company with over $43
million invested in Research and Development and deployment of more than 20
million products worldwide in seven languages. To date, our customers include:
Mahanagar Telephone Nigam Ltd. ("MTNL") of India, Telefonos de Mexico, S.A.B.
de  C.V. (TELMEX), Intel Corporation, Fry's Electronics, Nex-Tec
Wireless, Rural  Independent Networks, Mohave Wireless, Inland
Cellular and several additional  telecom service providers throughout
the United States.





Based on
our patented technology, One Voice offers voice solutions for the Telecom and
Interactive Multimedia markets. Our telecom solutions allow business and
consumer phone users to voice dial, group conference call, read and send e-mail
and instant messages, all by voice. We offer PC Original Equipment Manufacturers
(OEM's) the ability to bundle a complete voice interactive computer assistant
which allows PC users to talk to their computers to quickly play digital media
(music, videos, DVD) along with read and send e-mail messages, SMS text
messaging to mobile phones, PC-to-Phone calling (VoIP) and PC-to-PC audio/video.
We feel we are strongly positioned across these markets with our patented voice
technology.





The
Company believes that the presence of voice technology as an interface in mobile
communications and PC computing is of paramount importance. Voice interface
technology makes portable communications more effective and safer to use and it
makes communicating with a PC to play digital content, such as music, videos and
photos, easier for consumers. One Voice's development efforts currently are
focused on the Telecom and PC multimedia markets and more specifically on mobile
communications from a cell phone, directory assistance and in-home digital media
access.





TELECOM
SECTOR





In the
Telecom sector, we believe that the Mobile Messaging market, which has both
business and consumer market applications including: e-mail, instant messages,
and SMS (Short Message Service), is extremely large and is growing at an
astonishing rate. One Voice solutions enable users to send, route and receive
text messages using voice from any type of phone (wired or wireless) anywhere in
the world.





The
Company's strategy, in the telecom sector, is to continue aggressive sales and
marketing activities for our voice solutions, which we believe, may result in
increased deployments and revenue stream. The product offerings will encompass
both MobileVoice(TM) suite of solutions as well as our Directory Assistance 411
service.





In  2006,
the Company signed a deployment contract with the residential group within
TELMEX for deployment of One Voice's MobileVoice solutions to the over 19
million TELMEX subscribers throughout Mexico. The MobileVoice service was
launched to TELNOR subscribers, a TELMEX subsidiary, in October,  2007
as a TELNOR branded service called IRIS. For information on IRIS visit
http://www.yosoyiris.com or http://www.telnor.com. The MobileVoice (IRIS)
service has tested and performed very well as anticipated. We are working
closely with TELNOR to ensure the IRIS service is very successful and the
feedback to date has been very positive. We are currently working with TELNOR
to  relaunch IRIS as a standard bundle included with all new and
existing TELNOR  Package customers and anticipate this happening
during 2009.  Subsequent to this  relaunch within TELNOR,
TELMEX will evaluate the results and make a determination  regarding a
national launch as a bundle to all TELMEX Package customers.





10


In
October  2007 both the Company and Mantec Consultants ("Mantec")
entered into a contract with Mahanagar Telephone Nigam Ltd. ("MTNL") of India to
provide MobileVoice services to MTNL's over 6 million subscribers. Mantec is One
Voice's local sales associate in India. MTNL is owned and operated by the
Government of India. The Company and Mantec are currently working on deployment
of hardware and systems integration with MTNL. According to MTNL, the
MobileVoice service will be made available to MTNL's existing 6.13 million
subscribers for MobileVoice email by phone service and the total expected
customers for this service is .92 million within the first two years. MTNL has
set the monthly subscription price of $Rs. 50/- (Rupees) monthly per subscriber
out of which the Company has a 30% share. We anticipate the MTNL revenue stream
to grow as we launch additional MobileVoice services including voice dialing,
group call and voice-to-SMS services. In order to expedite the launch with MTNL
we decided to initially launch email by phone and the revenue projections given
by the marketing department of MTNL reflect the email by phone service only. We
anticipate this revenue projection to grow as additional MobileVoice services
are launched to MTNL subscribers. We are planning on having our service
launched  by MTNL in May, 2009





The
revenue generated from this launch with MTNL should have a material impact on
the Company.





The
Company has finalized initial system and acceptance testing with a domestic
US  based carrier with over 10 million subscribers.  We are
currently negotiating terms  and conditions and anticipate a national
launch in 2009.





EMBEDDED
SECTOR





On August
15,  2007 the Company signed a Memorandum of Understanding ("MOU")
with Intel Corporation in which both companies will work together to add One
Voice's voice technology to a Linux based handheld device. The Company sees a
potential opportunity with this mass consumer electronics (CE) device and will
apply the necessary resources to co-develop this project. We have been working
closely with
Intel engineers to add voice control to their Moblin operating system. We have
recently demonstrated this capability in the Intel booth at the
2007





Consumer
Electronics Show, Mobile World Congress and the upcoming Intel Developers Forum.
We have also ported our software to RedFlag Linux. Both RedFlag Linux and Moblin
are the primary operating systems used on Mobile Internet Devices (MIDs). Both
One Voice and Intel have jointly presented our voice solution to several MID
OEM's worldwide. Currently the MID market is very  small and has not
gained enough traction for One Voice to focus resources on
this  market.  One Voice is currently focusing all our
resources on Telecom launches  during 2009 and will wait until the MID
market matures and gains industry acceptance  before we readdress this
market.  We have evaluated launching applications on
the  iPhone and BlackBerry but the current state for voice control
applications for these  devices from competitors offering free
software is not in line with our focus on  near-term revenue
generating opportunities that we currently have in the Telecom
sector.





PC
SECTOR





In the PC
sector, we believe that digital in-home entertainment is rapidly growing with
the wide acceptance of digital photography, MP3 music and videos, along with
plasma and LCD TV's. We believe that companies including Apple, Microsoft and
Intel are actively creating products and technology, which allow consumers to
experience the next-generation of digital entertainment. The Company's Media
Center Communicator(TM) product works with Microsoft Windows XP Media Center
Edition 2005 and Microsoft Windows Vista to add voice-navigation and a full
suite of communication features allowing consumers to talk to their Media Center
PC to play music, view photo slideshows, watch and record TV, place
Voice-Over-IP (VoIP) phone calls, read and send e-mail and Instant Message
friends and family, all by voice. The company recently launched a new retail
product called VoiceTunes. VoiceTunes allows users to voice control their entire
music library including Apple iTunes and Windows Media. This product is similar
to our flagship product Media Center Communicator but is very focused on music.
In addition, the Company launched a voice controlled PC gaming software
called  Say2Play. Say2Play gives gamers a tremendous advantage by
adding voice command for common game macros while allowing the gamer to
keep their hands and fingers  on the keyboard and mouse for rapid
motion movements. Say2Play has recently  received several very
positive editorial reviews and is available for purchase online.





The
Company has changed our focus from in-store on-shelf retail sales to
only  offering online downloadable retail versions.  The
Company’s retail products are  now available for immediate purchase
and download on the new Dell Download Store at
http://downloadstore.dell.com as the only products in the category of Voice
Control.





In
summary, since the beginning of 2007, the Company has deployed services with
telecom carriers and began recognizing a recurring revenue stream. Management
believes the Company's transition into the revenue recognition phase is very
important as it signifies acceptance of our solutions and the value they deliver
to the customer and their subscribers.





The
management team remains committed to generating short and long-term revenues
significant enough to fund daily operations, expand the intellectual property
portfolio and development of cutting edge solutions and applications for the
emerging speech recognition market sector which should build shareholder
value.





11


CRITICAL ACCOUNTING
POLICIES





Our
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosures of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates, including those related to impairment
of property, plant and equipment, intangible assets, deferred tax assets, fair
value of derivative liabilities and fair value of options or warrants
computation using Black Scholes option pricing model. We base our estimates on
historical experience and on various other assumptions, such as the trading
value of our common stock and estimated future undiscounted cash flows, that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions; however, we believe
that our estimates, including those for the above-described items, are
reasonable.





The
following is a discussion that relates to certain financial transactions and the
results of operations for the years ended December 31,  2008
and  2007.





RESULTS
OF OPERATION FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007.








ONE VOICE
TECHNOLOGIES INC.


SELECTED
STATEMENT OF OPERATIONS INFORMATION




YEAR
      ENDEDDECEMBER 31,
            
            
            FAV/(UN
      FAV)
            
            
            %2008
            
            
            2007
            
            
            CHANGE
            
            
            CHANGENet
      Revenue
            
            $
            646,862
            
            
            $
            702,430
            
            
            $
            (
      55,568
            )
            
            
            8%Cost
      of goods sold
            
            
            331,378
            
            
            
            392,581
            
            
            
            61,203
            
            
            
            16%GROSS
      PROFIT
            
            
            315,484
            
            
            
            309,849
            
            
            
            5,635
            
            
            
            2%General
      and administrative
            
            
            2,815,023
            
            
            
            2,548,963
            
            
            
            (266,060
            )
            
            
            (10%
            )Other
      income/ (expense)
            
            
            1,436,363
            
            
            
            (1,809,219
            )
            
            
            3,243,982
            
            
            
            179%NET
      LOSS BEFORE INCOME TAX(1,063,176
            )
            
            
            (4,048,333
            )
            
            
            2,983,557
            
            
            
            74%Income
      tax expense
            
            
            800
            
            
            
            800
            
            
            
            -
            
            
            
            0%Net
      loss
            
            $
            (1,063,976
            )
            
            $
            (4,049,133
            )
            
            $
            2,983,557
            
            
            
            74%





REVENUES





Net
revenues totaled $646,862 and $702,430 for the years ended December 31, 2008
and 2007, respectively. Decreased revenues of $55,568 or 8% due to
certain Telecom contracts expired in 2008 after their initial 3-year
term.





COST OF GOODS
SOLD





Cost of
goods sold for the years ended December 31, 2008 and 2007 totaled $331,378 and
$392,581, respectively. The decrease in cost of goods sold of $61,203 or 16%
between the two periods was due to the decrease in revenues
during  the year and a decreased employee headcount. These expenses
specifically relate  to licensing agreements and telecommunication
expenses that allow the voice recognition products offered to be
functional.





GENERAL AND ADMINISTRATIVE
EXPENSE





General
and administrative expenses totaled $2,815,023 and $2,548,963 for the years
ended December 31, 2008 and 2007, respectively. The increase of
$266,060 or 10% between the two periods was due to debt issue costs
in 2008.




12


SALARY AND
COMPENSATION





Salary
and wage expenses totaled $993,033 and $1,183,612 for the years ended December
31, 2008 and 2007, respectively. The decrease of $190,579 or 16% between the two
periods was due to headcount reductions, which increased the overall efficiency
of the Company.





OTHER INCOME
(EXPENSE)





Other
income/ (expense), including taxes of $800, totaled $1,435,563 and
($1,810,019)  for the years ended December 31, 2008 and 2007,. An
expense decrease of $3,245,582 or 179%.





See
details below.




OTHER
      INCOME / (EXPENSE) SUMMARYDecember
      31,2008
            
            
            2007Interest
      expense
            
            $
            (687,011
            )
            
            $
            (1,151,648
            )Gain
      (loss) on warrant and debt derivative
            
            
            2,086,049
            
            
            
            (679,584
            )Other
      income / (expense)
            
            
            36,525
            
            
            
            21,213TOTAL
      OTHER (EXPENSE)
            
            $
            1,435,563
            
            
            $
            (1,810,019
            )




INTEREST
      EXPENSE SUMMARYDecember
      31,2008
            
            
            2007Debt
      issue cost
            
            $
            31,939
            
            
            $
            357,896Discount
      amortization
            
            
            407,418
            
            
            
            614,016Interest
            
            
            247,654
            
            
            
            174,000Other
      / penalties
            
            
            --
            
            
            
            5,736TOTAL
            
            $
            687,011
            
            
            $
            1,151,648





For years
ended December 31, 2008 and 2007, interest expense was $687,011
compared  to $1,151,648. The decrease of $464,637 or 40% between the
two periods was due to:





o
            The
      amount and timing of debt conversions into equity which effect both issue
      cost and discount amortization expenses. Conversions of debt accelerate
      the amortization of both the issue cost and
  discount.





Upon
conversion of convertible debt into equity, both the debt issue cost and
discount costs associated are prorated accordingly and expensed immediately. If
no conversions occur, the debt issue cost and discount costs are expensed over
the life of the convertible debt using the straight line method.





Interest
expense is composed of three very distinct transactions, which vary in their
financial treatment. Below is a brief explanation of the nature and treatment of
these expenses.





1.
Monthly amortization of debt issue costs related to securing convertible debt
Financing (legal fees etc...).





This
represents a cash related transaction.






13




For the
years ended December 31, 2008 and 2007, interest expense related to debt issue
costs was $31,939 compared to $357,896.





2.
Monthly amortization of the embedded discount features within convertible debt
financing.





This
represents a non-cash transaction.




For the
years ended December 31, 2008, and 2007, interest expense related to the
amortization of discount was $407,418 compared to $614,016.





3.
Monthly accrued interest related to notes payable and convertible notes payable
financing.





This
represents a future cash transaction if the convertible interest accrued is not
converted into common stock. No accrued interest related to convertible notes
payable has been paid in cash during the years ended December 31, 2008 and
2007.





For the
years ended December 31, 2008 and 2007, interest expense related to notes
payable and convertible notes payable was $247,654 compared to
$174,000.





4. Other
/ misc. interest expense for the years ended December 31, 2008 and 2007, was
approximately $0 compared to $5,736.





GAIN ON WARRANT
DERIVATIVES





For the
years ended December 31, 2008 and 2007, gains recorded on warrant derivatives
were $2,286,474 compared to $643,937.





See Note
10 in the accompanying notes to the financial statements for a brief description
of the nature of warrant derivative transactions.





OTHER INCOME
(EXPENSE)





For the
years ended December 31, 2008 and 2007, other income (expense), net was
approximately $36,525 compared to other income of $21,213, respectively. The
increase over the prior period was due to the adjustment of the retirement
liability due to La Jolla Cove.





LIQUIDITY AND CAPITAL
RESOURCES





NON-CASH EXPENSES EFFECTING
THE COMPANYS NET (LOSS)





Non-cash
related expense items of $1,548,251 and $1,985,133 are reflected in the years
ended December 31,  2008 and  2007 respectively, consisted
of the following items:





YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Depreciation
      and amortization
            
            $
            166,308
            
            
            $
            79,183Stock
      compensation expense
            
            
            89,920
            
            
            
            208,913Stock
      issuance for exchange of debt and other obligations
            
            
            552,407
            
            
            
            220,534Stock
      issuance for interest conversion
            
            
            -
            
            
            
            8,903Amortization
      of note discount & issue costs
            
            
            439,358
            
            
            
            614,016Interest
      payable related to convertible debt
            
            
            123,833
            
            
            
            174,000Loss
      on warrant and debt derivatives
            
            
            176,425
            
            
            
            679,584TOTAL
      NON-CASH RELATED EXPENSES
            
            $
            1,548,251
            
            
            $
            1,985,133





The above
information is intended to illustrate the impact that these specific expenses
have on the Company's net (loss). There are no cash transactions that related to
these expenses. More specifically, this table is shown to demonstrate the impact
that the re-valuation of warrant and debt derivatives have on the income
statement. Please note that this table is not in conformity with auditing
standards generally accepted in the United States of America.





At
December 31, 2008, the Company had a working capital deficit of $7,534,123 as
compared with a working capital deficit of $7,412,770 at December
31,  2007. The increase in working capital deficit of $121,353
consists primarily of the following:





o    Increase
in derivative liability of $176,425


o    Decrease
in warrant derivative liability of $(2,286,474)


o    Increase
in revolving line of credit of $878,159


o    Increase
in license agreement liability of $155,500





Net cash
used for operating activities is $1,123,490 for the year ended December 31, 2008
compared to $1,495,417 for the year ended December 31, 2007. As a result, we
experienced an increase in operating cash flows during 2008 as compared to 2007.
This is primarily due to differences in the timing of our cash disbursements
during the two years. During 2008, we were able to extend our payables, which
were not paid until 2009. During 2007, we experienced a higher percentage of our
payables during the third quarter of the year which were subsequently paid
during the fourth quarter, resulting in an increase in cash from
operations.


14


Net cash
used for investing activities is $3,223 for the year ended December 31, 2008
compared to $15,772 for the year ended December 31, 2007.





Net cash
provided by financing activities is $1,112,500 for the year ended December 31,
2008 compared to $1,491,483 for the year ended December 31, 2007. This decrease
primarily consisted of proceeds from warrant exercise and convertible notes
during 2007.  There were no proceeds from warrant exercise and
convertible notes during 2008.  These proceeds were partially offset
by payment for debt issue costs during 2007.





See
financing transaction details





FINANCING
TRANSACTIONS





The
following is a discussion that summarizes the net financing and conversion
activities for the years ended December 31,  2008
and  2007.





NET CASH PROCEEDS RECEIVED
DUE TO FINANCING ACTIVITY





YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Private
      placement
            
            $
            -
            
            
            $
            -Warrant
      exercise
            
            
            -
            
            
            
            253,360Convertible
      debt financing
            
            
            -
            
            
            
            195,000Revolving
      line of credit net of pay down
            
            
            1,112,500
            
            
            
            1,256,462TOTAL
      FINANCING ACTIVITY
            
            $
            1,112,500
            
            
            $
            1,704,822





ISSUANCE OF CONVERTIBLE
NOTES PAYABLE SUMMARY





ISSUANCE
SUMMARY


YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Principal
            
            $
            -
            
            
            $
            420,000Warrants
      issued A&B
            
            
            -
            
            
            
            10,000,000





CONVERSION
SUMMARY


YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Principal
      and interest Converted
            
            $
            1,304,671
            
            
            $
            481,359Shares
      converted
            
            
            406,250,697
            
            
            
            49,190,842Average
      share conversion price
            
            $
            0.003
            
            
            $
            0.010





See Note
14 in the accompanying notes to the financial statements for additional
detail.





15


COMMON
STOCK





The
following is a summary of transactions that had an impact on
equity:




YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007AVERAGE
            
            
            
            
            
            
            
            
            AVERAGESHARES
            
            
            SHARE
            
            
            
            
            
            SHARES
            
            
            SHAREISSUED
            
            
            PRICE
            
            
            VALUE
            
            
            ISSUED
            
            
            PRICE
            
            
            VALUEDebt
      conversions
            
            
            406,250,697
            
            
            
            0.003
            
            
            
            1,304,671
            
            
            
            49,190,842
            
            
            
            0.010
            
            
            
            481,359Issuance
      of stock in exchange for services
            
            
            59,205,359
            
            
            
            0.010
            
            
            
            552,407
            
            
            
            11,443,921
            
            
            
            0.019
            
            
            
            220,534Stock
      to be issued in exchange for interest conversion
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            8,903Warrant
      exercise
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            39,126,855
            
            
            
            0.006
            
            
            
            253,360Warrant
      exercise cashless
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            23,971,458
            
            
            
            -
            
            
            
            -Private
      placement
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Liquidated
      damages
            
            
            3,000,000
            
            
            
            0.008
            
            
            
            24,000
            
            
            
            -
            
            
            
            -
            
            
            
            -Shares
      in escrow
            
            
            11,878,896
            
            
            
            0.010
            
            
            
            113,087
            
            
            
            30,000,000
            
            
            
            0.020
            
            
            
            600,000Total
            
            
            480,334,952
            
            
            
            0.004
            
            
            
            1,994,165
            
            
            
            153,733,076
            
            
            
            0.013
            
            
            
            1,564,156








REVOLVING CREDIT NOTE
PAYABLE





On
December 21, 2006, the Company completed a private placement pursuant to a
Revolving Credit Note Agreement which the Company entered into with several
institutional investors, pursuant to which the Investors subscribed to advance
up to a maximum amount of $640,000 bearing an interest rate of 7%. The term of
the agreement shall be effective as of December 21, 2006 and shall be in
full force and effect until the earliest to occur of (a) 12 months from December
21, 2006 (B) a date not less than thirty days after Lender gives notice of
termination to the Company.





The
original Revolving Credit Note agreement has been amended fourteen times as of
December 31, 2008. The amendments increased the maximum borrowing by the
Company to an amount of $2,560,000.





Since
inception the Company has borrowed $2,433,159 against the revolving note. During
the same period the Company paid $58,538 against the outstanding balance for a
total net borrowing of $2,374,621 since inception. As of December 31, 2008 the
Company has $185,379 available to borrow against in the future. All
borrowings  are used to cover recurring operating expenses by the
Company.





As of
December 31, 2008 the outstanding principal amount owed to the Investors is
$2,374,621. Interest accrued on the outstanding principal is $385,129 as of
December 31, 2008.





See Note
12 in the accompanying notes to the financial statements for additional
detail.





FUTURE CAPITAL
OUTLOOK





The
Company will continue to rely heavily on our current method of convertible debt
and equity funding, proceeds borrowed from the revolving line of credit and the
sale of warrants. The losses through the year ended December 31, 2008 are due to
minimal revenues and recurring operating expenses, with a majority of expenses
in the areas of: salaries, accounting fees, legal fees and licensing costs. The
Company faces considerable risk in completing each of our business plan steps,
including, but not limited to: a lack of funding or available credit to continue
development and undertake product rollout; potential cost overruns; a lack of
interest in its solutions in the market on the part of wireless carriers or
other customers; potential reduction in wireless carriers which could lead to
significant delays in consummating revenue bearing contracts; and/or a shortfall
of funding due to an inability to raise capital in the securities market. Since
further funding is required, and if none is received, we would be forced to rely
on our existing cash in the bank, collection of monthly accounts receivable or secure
short-term loans. This may hinder our ability to complete our product
development until such time as necessary funds could be raised. In such a
restricted cash flow scenario, we would delay all cash intensive activities
including certain product development and strategic initiatives described
above.





OFF BALANCE SHEET
ARRANGEMENTS





We do not
have any off balance sheet arrangements that are reasonably likely to have a
current or future effect on our financial condition, revenues, results of
operations, liquidity or capital expenditures.








ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not
Applicable.





16


ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA







ONE VOICE
TECHNOLOGIES INC.





FINANCIAL
STATEMENTS





FOR THE
YEARS ENDED





DECEMBER
31, 2008 AND 2007





CONTENTS











PageREPORTS
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTING FIRMS
            F-1Balance
      Sheets
            F-2Statements
      of Operations
            F-3Statements
      of Stockholders' (Deficit)
            F-4Statements
      of Cash Flows
            F-5Notes
      to Financial Statements
            F-6 -
      F-29











17


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM






To the
Board of Directors


One Voice
Technologies, Inc.




We have
audited the accompanying balance sheets of One Voice Technologies, Inc. (“the
Company”) as of December 31, 2008 and 2007, and the related statements of
operations, stockholders’ equity  and cash flows for the years then
ended.  These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.




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




In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of One Voice Technologies, Inc. at
December 31, 2008 and 2007, and the results of its operations, stockholders’
equity and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has reported recurring losses from operations and had a
working capital deficit at December 31, 2008. These factors raise substantial
doubt about One Voice's ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.








/s/ PMB
Helin Donovan, LLP





PMB Helin
Donovan, LLP


Certified
Public Accountants


San
Francisco, California





May 11,
2009





F-1


ONE
VOICE TECHNOLOGIES INC.


BALANCE
SHEETS





YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            666
            
            
            $
            14,879Accounts
      Receivable, net
            
            
            95,840
            
            
            
            87,528Inventories
            
            
            20,479
            
            
            
            1,200Prepaid
      expenses
            
            
            41,130
            
            
            
            33,886TOTAL
      CURRENT ASSETS
            
            
            158,115
            
            
            
            137,493Property
      and equipment, net
            
            
            26,455
            
            
            
            164,294Patents
      and trademarks, net
            
            
            26,024
            
            
            
            51,273TOTAL
      FIXED AND INTANGIBLE ASSETS
            
            
            52,479
            
            
            
            215,567Deposits
            
            
            4,732
            
            
            
            22,180Deferred
      debt issue costs
            
            
            -
            
            
            
            31,939TOTAL
      ASSETS
            
            $
            215,326
            
            
            $
            407,179




LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      Liabiliteis:Accounts
      payable
            
            $
            539,562
            
            
            $
            337,711Accrued
      expenses
            
            
            821,452
            
            
            
            419,097Settlement
      agreement liability
            
            
            173,091
            
            
            
            208,594License
      agreement liability
            
            
            1,267,500
            
            
            
            1,112,000Note
      payable
            
            
            133,264
            
            
            
            29,602Debt
      derivative liability
            
            
            1,805,482
            
            
            
            1,629,057Warrant
      derivative liability
            
            
            31,266
            
            
            
            2,317,740Convertible
      notes payable, net
            
            
            546,000Revolving
      line of credit
            
            
            2,374,621
            
            
            
            1,496,462TOTAL
      CURRENT LIABILITIES
            
            
            7,692,238
            
            
            
            7,550,263





LONG
      TERM LIABILITIES:Note
      payable
            
            
            67,742
            
            
            
            169,070Convertible
      notes payable, net
            
            
            -
            
            
            
            1,136,801Deferred
      rent
            
            
            -
            
            
            
            2,721TOTAL
      LIABILITIES
            
            
            7,759,980
            
            
            
            8,858,855




STOCKHOLDERS'
      DEFICIT:Preferred
      stock; $.001 par value, 10,000,000 shares authorized, no shares
      issued and outstandingCommon
      stock; $.001 par value, 1,290,000,000 shares authorized,
      1,218,581,701 and 738,246,749 shares issued and outstanding
      at December 31, 2008 and December 31, 2007,
      respectively
            
            
            1,218,582
            
            
            
            738,247Additional
      paid-in capital
            
            
            43,920,439
            
            
            
            42,316,689Escrow
      shares
            
            
            (713,087
            )
            
            
            (600,000
            )Accumulated
      deficit
            
            
            (51,970,588
            )
            
            
            (50,906,612
            )TOTAL
      STOCKHOLDERS' DEFICIT
            
            
            (7,544,654
            )
            
            
            (8,451,676
            )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $
            215,326
            
            
            $
            407,179




THE
ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.


F-2


ONE VOICE TECHNOLOGIES
INC.


STATEMENTS
OF OPERATIONS





YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Net
      Revenue
            
            $
            646,862
            
            
            $
            702,430Cost
      of goods sold
            
            
            (331,378
            )
            
            
            392,581Gross
      profit
            
            
            315,484
            
            
            
            309,849General
      and administrative expenses
            
            
            2,815,023
            
            
            
            2,548,963Net
      loss from operations
            
            
            (2,499,539
            )
            
            
            (2,239,114
            )Other
      income / (expense)Interest
      expense
            
            
            (687,011
            )
            
            
            (1,151,648
            )Gain
      / (Loss) on warrant and debt derivatives
            
            
            2,086,049
            
            
            
            (679,584
            )Other
      income, net
            
            
            36,525
            
            
            
            21,213Total
      other income / (expense)
            
            
            1,435,563
            
            
            
            (1,810,019
            )Net
      loss
            
            
            (1,063,976
            )
            
            $
            (4,049,133
            )Basic
      loss per share
            
            
            (0.01
            )
            
            $
            (0.01
            )Basic
      weighted average shares outstanding
            
            
            968,727,217
            
            
            
            661,398,000




THE
ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.





F-3


ONE
VOICE TECHNOLOGIES INC.


STATEMENTS
OF STOCKHOLDERS' (DEFICIT)





COMMON
      STOCK
                
                
                ADDITIONAL
                  PAID IN
                
                
                ESCROW
                
                
                ACCUMULATED
                
                
                TOTAL
      STOCKHOLDERS'SHARES
                
                
                AMOUNT
                
                
                CAPITAL
                
                
                SHARES
                
                
                (DEFICIT)
                
                
                (DEFICIT)BALANCE
      AT DECEMBER 31,  2006
                
                
                584,513,673
                
                
                $
                585,327
                
                
                $
                40,696,540
                
                
                
                --
                
                
                $
                (46,857,479
                )
                
                $
                (5,575,612
                )Issuance
      of common stock in connection  for exchange of services rendered
      and other obligations
                
                
                11,443,921
                
                
                
                10,631
                
                
                
                209,903
                
                
                
                
                
                
                
                
                
                
                
                220,534Issuance
      of common stock in connection  with interest
      conversion
                
                
                --
                
                
                
                --
                
                
                
                8,903
                
                
                
                
                
                
                
                
                
                
                
                8,903Cashless
      exercise of warrants
                
                
                23,971,458
                
                
                
                23,971
                
                
                
                (23,971
                )
                
                
                
                
                
                
                
                
                
                
                --Exercise
      of warrants for cash
                
                
                39,126,855
                
                
                
                39,127
                
                
                
                214,233
                
                
                
                
                
                
                
                
                
                
                
                253,360Expenses
      incurred in connection with stock option compensation
                
                
                --
                
                
                
                --
                
                
                
                208,913
                
                
                
                
                
                
                
                
                
                
                
                208,913Conversion
      of debt to equity - Alpha Capital
                
                
                30,465,592
                
                
                
                30,466
                
                
                
                210,267
                
                
                
                
                
                
                
                
                
                
                
                240,733Conversion
      of debt to equity - Bristol Investments
                
                
                12,465,754
                
                
                
                12,466
                
                
                
                155,315
                
                
                
                
                
                
                
                
                
                
                
                167,781Conversion
      of debt to equity - Centurion Microcap
                
                
                782,289
                
                
                
                782
                
                
                
                7,980
                
                
                
                
                
                
                
                
                
                
                
                8,762Conversion
      of debt to equity - Osher Capital
                
                
                5,477,207
                
                
                
                5,477
                
                
                
                58,606
                
                
                
                
                
                
                
                
                
                
                
                64,083Escrow
      shares issued to La Jolla Cove Investors
                
                
                30,000,000
                
                
                
                30,000
                
                
                
                570,000
                
                
                
                (600,000
                )
                
                
                
                
                
                
                --Net
      loss for the year ended December 31, 2007
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (4,049,133
                )
                
                
                (4,049,133
                )BALANCE
      AT DECEMBER 31, 2007
                
                
                738,246,749
                
                
                $
                738,247
                
                
                $
                42,316,689
                
                
                
                (600,000
                )
      $
                
                
                (50,906,612
                )
                
                $
                (8,451,676
                )Issuance
      of common stock in connection for exchange of services rendered and other
      obligations
                
                
                59,205,359
                
                
                
                59,205
                
                
                
                493,202
                
                
                
                
                
                
                
                
                
                
                
                552,407Issuance
      of common stock in connection with liquidating damages
                
                
                3,000,000
                
                
                
                3,000
                
                
                
                21,000
                
                
                
                
                
                
                
                
                
                
                
                24,000Expenses
      incurred in connection with stock option compensation
                
                
                --
                
                
                
                --
                
                
                
                89,920
                
                
                
                
                
                
                
                
                
                
                
                89,920Conversion
      of debt to equity - Alpha Capital
                
                
                100,833,362
                
                
                
                100,833
                
                
                
                119,167
                
                
                
                
                
                
                
                
                
                
                
                220,000Conversion
      of debt to equity - Bristol Investments
                
                
                14,464,544
                
                
                
                14,465
                
                
                
                87,594
                
                
                
                
                
                
                
                
                
                
                
                102,059Conversion
      of debt to equity - Centurion Microcap
                
                
                59,419,642
                
                
                
                59,420
                
                
                
                78,080
                
                
                
                
                
                
                
                
                
                
                
                137,500Conversion
      of debt to equity – Ellis International
                
                
                36,934,523
                
                
                
                36,935
                
                
                
                113,065
                
                
                
                
                
                
                
                
                
                
                
                150,000Conversion
      of debt to equity - Osher Capital
                
                
                29,115,501
                
                
                
                29,115
                
                
                
                70,885
                
                
                
                
                
                
                
                
                
                
                
                100,000Conversion
      of debt to equity – Whalehaven Capital
                
                
                165,483,125
                
                
                
                165,483
                
                
                
                429,629
                
                
                
                
                
                
                
                
                
                
                
                595,112Escrow
      shares issued to La Jolla Cove Investors
                
                
                11,878,896
                
                
                
                11,879
                
                
                
                101,208
                
                
                
                (113,087
                )
                
                
                
                
                
                
                --Net
      loss for the year ended December 31, 2008
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,063,976
                )
                
                
                (1,063,976
                )BALANCE
      AT DECEMBER 31, 2008
                
                
                1,218,581,701
                
                
                $
                1,218,582
                
                
                $
                43,920,439
                
                
                
                (713,087
                )
                
                $
                (51,970,588
                )
                
                $
                (7,544,654
                )





THE
ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.





F-4


ONE
VOICE TECHNOLOGIES INC.


STATEMENTS
OF CASH FLOWS





YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007






CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
            
            $
            (1,063,976
            )
            
            $
            (4,049,133
            )ADJUSTMENTS
      TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING
    ACTIVITIESDepreciation
      and amortization
            
            
            166,308
            
            
            
            79,183Amortization
      of debt discount and debt issue costs
            
            
            439,358
            
            
            
            941,912(Gain)
      loss  on debt derivative liability
            
            
            176,425
            
            
            
            1,372,562(Gain)
      loss on warrant derivative liability
            
            
            (2,286,474
            )
            
            
            (490,568
            )Common
      stock issued in exchange for services
            
            
            552,407
            
            
            
            220,534Common
      stock issued for liquidated damages
            
            
            24,000
            
            
            
            -Share
      based compensation expense
            
            
            89,920
            
            
            
            208,913Issuance
      of common stock interest conversion
            
            
            -
            
            
            
            8,903Gain
      on sale of equipment
            
            
            -
            
            
            
            (21,940
            )License
      agreement (accounts payable converted into
              note
      payable)
            
            
            155,500
            
            
            
            138,000CHANGES
      IN CERTAIN ASSETS AND LIABILITIESAccounts
      receivable
            
            
            1,402
            
            
            
            11,583Inventories
            
            
            (19,278
            )
            
            
            3,641Prepaid
      expenses
            
            
            (16,958
            )
            
            
            (5,101
            )Deposits
            
            
            17,448
            
            
            
            (3,515
            )Accounts
      payable
            
            
            204,096
            
            
            
            47,229Accrued
      expenses
            
            
            474,556
            
            
            
            193,082Settlement
      agreement liability
            
            
            (35,503
            )
            
            
            (141,406
            )Deferred
      rent
            
            
            (2,721
            )
            
            
            (9,296
            )NET
      CASH USED IN OPERATING ACTIVITIES
            
            
            (1,123,490
            )
            
            
            (1,495,417
            )CASH
      FLOW FROM INVESTING ACTIVITIESPurchase
      of property and equipment
            
            
            (3,223
            )
            
            
            (40,772
            )Proceeds
      from sale of property & equipment
            
            
            -
            
            
            
            25,000Purchase
      of intangible assets
            
            
            
            
            
            
            -NET
      CASH USED IN INVESTING ACTIVITIES
            
            
            (3,223
            )
            
            
            (15,772
            )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from warrant exercise
            
            
            -
            
            
            
            253,360Proceeds
      from convertible notes net of issue cost
            
            
            -
            
            
            
            195,000Payment
      for debt issue cost
            
            
            -
            
            
            
            (202,405
            )Proceeds
      from revolving credit line, net of
              repayment
            
            
            1,112,500
            
            
            
            1,256,462Repayment
      of note payable
            
            
            -
            
            
            
            (10,934
            )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            1,112,500
            
            
            
            1,491,483Net
      increase (decrease) in cash
            
            
            (14,213
            )
            
            
            (19,706
            )Cash
      and cash equivalents, beginning of period
            
            
            14,879
            
            
            
            34,585CASH
      AND CASH EQUIVALENTS, END OF PERIOD
            
            $
            666
            
            
            $
            14,879SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      paid
            
            $
            -
            
            
            $
            934Income
      taxes paid
            
            $
            800
            
            
            $
            800SUPPLEMENTAL
      DISCLOSURE OF NON-CASH FINANCING ACTIVITIESIssuance
      of warrant derivative in connection withprivate
      placement and debt financing, initialvaluation
            
            
            -
            
            
            $
            153,369Beneficial
      conversion feature of convertible debt,initial
      valuation
            
            
            -
            
            
            $
            170,604Common
      stock issued upon conversion of debt andinterest
            
            
            1,304,671
            
            
            $
            481,359Shares
      in escrow issued in connection with a legalsettlement
            
            
            113,087
            
            
            $
            600,000Note
      payable (accounts payable converted into notepayable
      ST and LT)
            
            
            -
            
            
            $
            98,672




THE
ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE FINANCIAL
STATEMENTS.





F-5


ONE VOICE TECHNOLOGIES,
INC.


NOTES TO FINANCIAL
STATEMENTS





1. DESCRIPTION OF BUSINESS
and BASIS OF PRESENTATION





One Voice
Technologies, Inc. is a voice recognition technology company with over $43
million invested in Research and Development and deployment of products in both
the telecom and PC multi-media markets. To date, our customers include:
Telefonos de Mexico, S.A.B. de C.V. (TELMEX), Intel Corporation, Alltel
Wireless, Inland Cellular, Nex-Tec Wireless and several additional telecom
service providers throughout the United States. Our telecom solutions allow
business and consumer phone users to Voice Dial, Group Conference Call, Read and
Send E-Mail and Instant Message, all by voice. We offer PC Original Equipment
Manufacturers (OEM's) the ability to bundle a complete voice interactive
computer assistant which allows PC users to talk to their computers to quickly
play digital media (music, videos, DVD) along with reading and sending e-mail
messages, SMS text messaging to mobile phones, PC-to-Phone calling (VoIP) and
PC-to-PC audio/video. We feel we are strongly positioned across these markets
with our patented voice technology.





One Voice
Technologies, Inc., ("The Company"), is incorporated under the laws of the State
of Nevada. The Company develops voice recognition software and it commenced
operations in 1999. The Company's telecom solutions allow business and consumer
phone users to Voice Dial, Group Conference Call, Read and Send E-Mail and
Instant Message, all by voice. We offer PC Original Equipment Manufacturers
(OEM's) the ability to bundle a complete voice interactive computer assistant
which allows PC users to talk to their computers to quickly play digital media
(music, videos, DVD) along with reading and sending e-mail messages, SMS text
messaging to mobile phones, PC-to-Phone calling (VoIP) and PC-to-PC
audio/video.





The
Company is traded on the NASD OTC Bulletin Board ("OTCBB") under the symbol
ONEV. One Voice is incorporated in the State of Nevada and commenced operations
on July 14, 1999.





2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:





GOING
CONCERN





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company has incurred significant losses since inception of $51,970,588 and used
cash from operations of $1,123,490 during the year ended December 31, 2008.
The Company also has a working capital deficit of $7,534,123 of which $1,836,748
represents non-cash warrant and debt derivative liabilities.





The
Company also has a stockholders' deficit of $7,544,654 as of December
31, 2008. These factors raise substantial doubt about the Company's ability
to continue as a going concern. Management has instituted a cost reduction
program that included a reduction in labor and fringe costs. Historically,
management has been able to obtain capital through either the issuance of equity
or debt, and is currently seeking such financing. There can be no assurance as
to the availability or terms upon which such financing and capital might be
available. Additionally, management is currently pursuing revenue-bearing
contracts utilizing various applications of its technology including wireless
technology. The financial statements do not include any adjustments that might
be necessary if the Company is unable to continue as a going
concern.





RECLASSIFICATIONS





Certain
reclassifications have been made to prior year's amounts to conform to current
year classifications. These reclassifications did not have an effect on the
previously reported results of operations or retained earnings.





USE OF
ESTIMATES





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the amount of revenue and expense reported during
the period. Significant estimates include valuation of derivative and warrant
liabilities. Actual results could differ from those estimates.





FAIR
VALUE





The
Company's financial instruments consist principally of cash and cash
equivalents, accounts receivable, accounts payable, notes payable and
convertible debt. The carrying value of cash and cash equivalents, accounts
receivable and accounts payable, approximates their fair value due to their
short term nature. The carrying value of notes payable and convertible debt
approximate their fair value, as interest approximates market
rates.





F-6


ONE VOICE TECHNOLOGIES,
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED):





CASH AND CASH
EQUIVALENTS





For
purposes of the statement of cash flows, cash equivalents include all highly
liquid debt instruments with original maturities of three months or less which
are not securing any corporate obligations.





CONCENTRATION





The
Company maintains its cash in bank deposit accounts which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.





ACCOUNTS
RECEIVABLE





Trade
accounts receivable are stated at amounts billed to and due from clients, net of
an allowance for doubtful accounts. Credit is extended based on evaluation of a
client’s financial condition, and collateral is not required. In determining the
adequacy of the allowance, management identifies specific receivables for which
collection is not certain and estimates the potentially uncollectible amount
based on the most recently available information. We write off accounts
receivable when they are determined to be uncollectible, and payments
subsequently received on such receivables are credited to the allowance for
doubtful accounts. As of December 31, 2008 and 2007, the Company had a reserve
for doubtful accounts of 135,289 and zero, respectively. Additionally, at
December 31, 2008, the Company determined that $13,850 of its accounts
receivable were uncollectible.





INVENTORY


Inventory
is stated the lower of cost or market. Cost is determined on a first in, first
out (FIFO) basis. Our inventory consists of our software products.





REVENUE
RECOGNITION





The
Company recognizes revenue when persuasive evidence of a sale arrangement
exists, delivery has occurred or services have been rendered, the sales price is
fixed or determinable, and collectability is reasonably assured in accordance
with SEC Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial
Statements" ("SAB 104").





In most
cases, revenue from hardware and software product sales is recognized when title
passes to the customer. Based upon the Company's standard shipping terms, FOB
The Company, title passes upon shipment to the customer. The Company ships
a portion of its hardware and software products on consignment. Revenue for
these products is recognized when title passes to the end consumer. These
products are included in the Company’s inventory totals for the years ended
December 31, 2008 and 2007.





Revenue
is recognized on service contracts using the proportional-performance
method. The
Company uses the proportional-performance method when a service contract
involves an unspecified number of acts over a fixed time period for
performance.  Revenue is recognized over the period during which the
acts will be performed by using the straight-line method.





TRADEMARKS AND
PATENTS





The
Company's trademark costs consist of legal fees paid in connection with
trademarks. The Company amortizes trademarks using the straight-line method over
the period of estimated benefit, generally four years.





The
Company's patent costs consist of legal fees paid in connection with patents
pending. The Company amortizes patents using the straight-line method over the
period of estimated benefit, generally five years. Yearly patent renewal fees
are expensed in the year incurred.





F-7





ONE VOICE TECHNOLOGIES,
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





TRADEMARKS
AND PATENTS  (CONTINUED)





In
accordance with SFAS No. 142, the Company evaluates its operations to ascertain
if a triggering event has occurred which would impact the value of finite-lived
intangible assets (e.g., patents). Examples of such triggering events include a
significant disposal of a portion of such assets, an adverse change in the
market involving the business employing the related asset, a significant
decrease in the benefits realized from an asset





As of
December 31, 2008, no such triggering event has occurred. An impairment test
involves a comparison of undiscounted cash flows against the carrying value of
the asset as an initial test. If the carrying value of such asset exceeds the
undiscounted cash flow, the asset would be deemed to be impaired. Impairment
would then be measured as the difference between the fair value of the fixed or
amortizing intangible asset and the carrying value to determine the amount of
the impairment. The Company determines fair value generally by using the
discounted cash flow method. To the extent that the carrying value is greater
than the asset's fair value, an impairment loss is recognized for the
difference.





CONVERTIBLE NOTES AND
FINANCIAL INSTRUMENTS WITH EMBEDDED FEATURES





The
Company accounts for conversion options embedded in convertible notes in
accordance with Statement of Financial Accounting Standard ("SFAS) No. 133
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") and
EITF 00-19 "Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock" ("EITF 00-19"). SFAS 133
generally requires Companies to bifurcate conversion features embedded in
convertible notes from their host instruments and to account for them as free
standing derivative financial instruments in accordance with EITF 00-19. SFAS
133 provides for an exception to this rule when convertible notes, as host
instruments, are deemed to be conventional as that term is described in the
implementation guidance under Appendix A to SFAS 133 and further clarified in
EITF 05-2 "The Meaning of "Conventional Convertible Debt Instrument" in Issue
No. 00-19.





The
Company accounts for convertible notes (if deemed conventional) in accordance
with the provisions of Emerging Issues Task Force Issue ("EITF")98-5 "Accounting
for Convertible Securities with Beneficial Conversion Features," ("EITF 98-5"),
EITF 00-27 "Application of EITF 98-5 to Certain Convertible Instruments,"
Accordingly, the Company records, as a discount to convertible notes, the
intrinsic value of such conversion options based upon the differences between
the fair value of the underlying common stock at the commitment date of the note
transaction and the effective conversion price embedded in the note. Debt
discounts under these arrangements are amortized over the term of the related
debt to their earliest date of redemption.





The
Company’s convertible notes do host conversion features and other features that
are deemed to be embedded derivatives financial instruments or beneficial
conversion features based on the commitment date fair value of the underlying
common stock.





COMMON STOCK PURCHASE
WARRANTS AND OTHER DERIVATIVE FINANCIAL INSTRUMENTS





The
Company accounts for the issuance of common stock purchase warrants issued and
other free standing derivative financial instruments in accordance with the
provisions of EITF 00-19. Based on the provisions of EITF 00-19, the Company
classifies as equity any contracts that (i) require physical settlement or
net-share settlement or (ii) gives the Company a choice of net-cash settlement
or settlement in its own shares (physical settlement or net-share settlement).
The Company classifies as assets or liabilities any contracts that (i) require
net-cash settlement (including a requirement to net cash settle the contract if
an event occurs and if that event is outside the control of the Company) (ii)
give the counterparty a choice of net-cash settlement or settlement in shares
(physical settlement or net-share settlement).





DEFERRED DEBT ISSUE
COST





The costs
relating to obtaining and securing debt financing are capitalized and is
expensed over the term of the debt instrument. In the event of settlement in
part or whole of such debt in advance of the maturity date, an expense is
recognized for the remaining unamortized deferred debt issue cost.





For the
years ended December 31, 2008 and December 31, 2007, the estimated the estimated
fair value of the Company's deferred debt issue cost were $0 and $31,939
respectively.





F-8


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





NET LOSS PER COMMON
SHARE





Basic
earnings per share ("EPS") is calculated using the weighted-average number of
outstanding common shares during the period. Diluted earnings per share is
calculated using the weighted-average number of outstanding common shares and
dilutive common equivalent shares outstanding during the period, using either
the as-converted method for convertible notes and convertible preferred stock or
the treasury stock method for options and warrants.





The net
income / (loss) per common share for the years ended December 31, 2008 and 2007
is based on the weighted average number of shares of common stock outstanding
during the periods. Potentially dilutive securities include options, warrants
and convertible debt; however, such securities have not been included in the
calculation of the net loss per common share as their effect is anti
dilutive.





The
following table is a reconciliation of the numerator (net loss) and the
denominator (number of shares) used in the basic and diluted EPS calculations
and sets forth potential shares of common stock that are not included in the
diluted net loss per share calculation as the effect is
antidilutive:




YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Numerator
      - basic and diluted
            
            $
            (1,063,976
            )
            
            $
            (4,049,133
            )Denominator
      - basic or dilutedWeighted
      average common shares outstanding
            
            
            968,727,217
            
            
            
            661,398,000Weighted
      average unvested common share  shares subject to
      repurchase-
            
            
            
            -Total
            
            
            968,727,217
            
            
            
            661,398,000Net
      loss per share - basic and diluted
            
            $
            (0.01
            )
            
            $
            (0.01
            )





Potentially
dilutive securities for years ended December 31, 2008 and 2007 are:





YEAR
      ENDEDDECEMBER
      31,2008
              
              
              2007POTENTIALLY
      DILUTIVE SECURITIES:Convertible
      debentures
              
              
              5,389,809,783
              
              
              
              287,615,893Options
              
              
              62,934,000
              
              
              
              62,934,000Warrants
              
              
              275,906,909
              
              
              
              276,052,744Escrow
      shares
              
              
              41,878,896
              
              
              
              30,000,000TOTAL
      ANTI-DILUTIVE SHARES
              
              
              5,770,529,588
              
              
              
              656,602,637





INCOME
TAXES





Deferred
income taxes are reported using the asset/liability method. Deferred tax assets
are recognized for deductible temporary differences and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred


tax
assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.





In
June  2007, the Financial Accounting Standards Board has published
FASB Interpretation No. 48 (FIN No. 48), "Accounting for Uncertainty in Income
Taxes," to address the non-comparability in reporting tax assets and liabilities
resulting from a lack of specific guidance in FASB Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes," on the
uncertainty in income taxes recognized in an enterprise's financial
statements.





F-9


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





Specifically,
FIN No. 48 prescribes (a) a consistent recognition threshold and (b) a
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return,
and  provides related guidance on derecognition, classification,
interest and penalties, accounting interim periods, disclosure and transition.
FIN No. 48 will apply to fiscal years beginning after December 15, 2007,
with earlier adoption permitted.





The
Company files federal income tax returns in the U.S. The Company is no longer
subject to U.S. state, or non-U.S. income tax examinations by tax authorities
for years before 2001. Certain U.S. Federal returns for years 1999 and following
are not closed by relevant statutes of limitation due to unused net operating
losses reported on those returns.





The
Company adopted the provisions of FIN 48 on January 1, 2007. As a result of
the implementation of FIN 48, the Company had no changes in the carrying value
of its tax assets or liabilities for any unrecognized tax benefits.





ACCOUNTING FOR STOCK-BASED
COMPENSATION





Effective
January 2, 2006, the Company adopted the provisions of SFAS No. 123 (revised
2004), “Share-Based Payment” (“SFAS No. 123(R)”).  SFAS No. 123(R)
establishes accounting for stock-based awards exchanged for employee services.
Accordingly, stock-based compensation cost is measured at grant date, based on
the fair value of the award, and is recognized as expense over the employee
requisite service period.





Prior to
January 1, 2006, The Company applied Accounting Principles Board (“APB”) Opinion
No. 25, “Accounting for Stock Issued to Employees,” and related interpretations
and provided the required pro forma disclosures of SFAS No. 123, “Accounting for
Stock-Based Compensation.”





During
the years ended December 31, 2008 and  2007, the Company recorded
$89,920 and $208,913 respectively in non-cash charges for stock based
compensation.





The fair
value of each option and warrant award is estimated on the date of grant using
the Black-Scholes option-pricing model, with the following assumptions expected
volatility of 115%, expected term of 5 years, risk-free interest rate of 4.74%
and an expected dividend yield of 0%. The Black-Scholes option valuation model
expected volatility is based on the historical volatilities of the Company's
common stock. The expected life of employee stock options is determined using
guidance from SAB 107. As such, the expected life of the options and warrants is
the average of the vesting term and the  full contractual term of the
options and warrants. The risk free interest rate is based on the U.S. Treasury
notes for the expected life of the stock option.





STOCK WARRANT
ACTIVITY





The fair
value of each option and warrant award is estimated on the date of grant using
the Black-Scholes option-pricing model. Black-Scholes
option valuation model was developed for use in estimating the fair value of
traded options. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's stock options and warrants have characteristics significantly
different from those of traded options, and because changes in the subjective
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options and warrants. The expected
dividend yield assumption is based on the Company's expectation of dividend
payouts. Expected volatilities are based on historical volatility of the
Company's stock. The average risk-free interest rate is based on the U.S.
treasury yield curve in effect as of the grant date. The expected life is
primarily determined using guidance from SAB 107. As such, the expected life of
the options and warrants is the average of the vesting term and the full
contractual term of the options and warrants.





The
Company accounts for stock options and warrants issued to third parties for
services in accordance with the provisions of the Emerging Issues Task Force
("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling Goods or
Services". Under the provisions of EITF 96-18, because none of the Company's
agreements have a disincentive for nonperformance, the Company records a charge
for the fair value of the portion of the stock options and warrants earned from
the point in time when vesting of the stock options and warrants becomes
probable. Final determination of fair value of the stock options and warrants
occurs upon actual vesting.





COMPREHENSIVE
INCOME





The
Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," which establishes standards for reporting
comprehensive income and its components in the financial statements.
Comprehensive income consists of net income and other gains and losses affecting
shareholders' equity that, under generally accepted accounting principles, are
excluded from net income. For the years ended December 31, 2008 and 2007, the
Company's comprehensive income (loss) had equaled its net loss. Accordingly, a
statement of comprehensive loss is not presented.


F-10


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





COMMITMENTS AND
CONTINGENCIES





Certain
conditions may exist as of the date the financial statements are issued, which
may result in a loss to the Company but which will only be resolved when one or
more future events occur or fail to occur. The Company's management and its
legal counsel assess such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related to
legal proceedings that are pending against the Company or unasserted claims that
may result in such proceedings, the Company's legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims as well as the
perceived merits of the amount of relief sought or expected to be sought
therein.





If the
assessment of a contingency indicates that it is probable that a material loss
has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company's financial statements. If
the assessment indicates that a potentially material loss contingency is not
probable, but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material, would be
disclosed.





Loss
contingencies considered remote are generally not disclosed unless they involve
guarantees, in which case the nature of the guarantee would be
disclosed.





SEGMENT





The
Company operates in a single business segment that includes the design and
development of its products.





RECENT ACCOUNTING
PRONOUNCEMENTS





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities--Including an amendment of FASB
Statement No. 115" ("SFAS 159"). SFAS 159 expands the use of fair value
accounting but does not affect existing standards which require assets or
liabilities to be carried at fair value. Under SFAS 159, a company may elect to
use fair value to measure accounts and loans receivable, available-for-sale and
held-to-maturity securities, equity method investments, accounts payable,
guarantees and issued debt. Other eligible items include firm commitments for
financial instruments that otherwise would not be recognized at inception and
non-cash warranty obligations where a warrantor is permitted to pay a third
party to provide the warranty goods or services. If the use of fair value is
elected, any upfront costs and fees related to the item must be recognized in
earnings and cannot be deferred, e.g., debt issue costs. The fair value election
is irrevocable and generally made on an instrument-by-instrument basis, even if
a company has similar instruments that it elects not to measure based on fair
value. At the adoption date, unrealized gains and losses on existing items for
which fair value has been elected are reported as a cumulative adjustment to
beginning retained earnings. Subsequent to the adoption of SFAS 159, changes in
fair value are recognized in earnings. SFAS 159 is effective for fiscal years
beginning after November 15,  2008 and is required to be adopted by
the Company in the first quarter of fiscal 2008. The Company currently is
determining whether fair value accounting is appropriate for any of its eligible
items and cannot estimate the impact, if any, which SFAS 159 will have on its
consolidated results of operations and financial condition.





In
June 2007, the FASB ratified Emerging Issues Task Force (EITF) Issue No.
06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment
Awards." EITF 06-11 provides for the recognition and classification of deferred
taxes associated with dividends or dividend equivalents on nonvested equity
shares or nonvested equity share units (including restricted stock units (RSUs))
that are paid to employees and charged to retained earnings. This issue is
effective for annual periods beginning after September 15,  2008. Also
in June 2008, the EITF ratified EITF Issue No. 07-3, "Accounting for Advance
Payments for Goods or Services to Be Used in Future Research and Development
Activities." EITF 07-3 provides that nonrefundable advance payments made for
goods or services to be used in future research and development activities
should be deferred and capitalized until such time as the related goods or
services are delivered or are performed, at which point the amounts would be
recognized as an


expense.





This
issue is effective for fiscal years beginning after December 15, 2008. The
Company has evaluated the potential impact of these issues and anticipate that
they will have no material impact on our financial position and results of
operations.





In
December 2007, the FASB issued SFAS 141 (revised), Business Combinations
("SFAS 141(R)"). The standard changes the accounting for business combinations
including the measurement of acquirer shares issued in consideration for a
business combination, the recognition of contingent consideration, the
accounting for preacquisition gain and loss contingencies, the recognition of
capitalized in-process research and development, the accounting for
acquisition-related restructuring cost accruals, the treatment of acquisition
related transaction costs and the recognition of changes in the acquirer's
income tax valuation allowance. SFAS 141(R) is effective for fiscal years
beginning after December 15, 2008, with early adoption prohibited. The Company
has completed its evaluation and has concluded that SFAS 141 ( R )does not have
an impact on the financial statements.





F-11


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 ("SFAS 160"). The
standard changes the accounting for noncontrolling (minority) interests in
consolidated financial statements including the requirements to classify
noncontrolling interests as a component of consolidated stockholders' equity,
and the elimination of "minority interest" accounting in results of operations
with earnings attributable to noncontrolling interests reported as part of
consolidated earnings. Additionally, SFAS 160 revises the accounting for both
increases and decreases in a parent's controlling ownership interest. SFAS 160
is effective for fiscal years beginning after December 15, 2008, with early
adoption prohibited. The Company is currently evaluating the impact that the
pending adoption of SFAS 160 will have on its financial statements.





In April
2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly.” This FSP
provides additional guidance for estimating fair value in accordance with FASB
Statement No. 157, Fair Value Measurements, when the volume and level of
activity for the asset or liability have significantly decreased. This FSP also
includes guidance on identifying circumstances that indicate a transaction is
not orderly. This FSP emphasizes that even if there has been a significant
decrease in the volume and level of activity for the asset or liability and
regardless of the valuation technique(s) used, the objective of a fair value
measurement remains the same. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction (that
is, not a forced liquidation or distressed sale) between market participants at
the measurement date under current market conditions. FSP FAS 157-4 is effective
for interim and annual reporting periods ending after June 15, 2009, and is
applied prospectively. We do not believe that the implementation of this
standard will have a material impact on our financial statements.





In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value
of Financial Instruments”. This FSP amends FASB Statement No. 107, “Disclosures about Fair Value of
Financial Instruments” to require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. This FSP also amends APB Opinion No.
28, Interim Financial Reporting, to require those disclosures in summarized
financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1
are effective for interim and annual reporting periods ending after June 15,
2009. We do not believe that the implementation of this standard will have a
material impact on our financial statements.





In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments”. This FSP amends the
other-than-temporary impairment guidance for debt securities to make the
guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments in the financial statements. The most
significant change the FSP brings is a revision to the amount of
other-than-temporary loss of a debt security recorded in earnings. FSP FAS 115-2
and FAS 124-2 are effective for interim and annual reporting periods ending
after June 15, 2009. We do not believe that the implementation of this standard
will have a material impact on our financial statements.





In
November of 2008, the SEC released a proposed roadmap regarding the potential
use by U.S. issuers of financial statements prepared in accordance with
International Financial Reporting Standards (“IFRS”). IFRS is a comprehensive
series of accounting standards published by the International Accounting
Standards Board (“IASB”). Under the proposed roadmap, the Company may be
required in fiscal 2015 to prepare financial statements in accordance with IFRS.
However, the SEC will make a determination in 2011 regarding the mandatory
adoption of IFRS. We are currently assessing the impact that this potential
change would have on our consolidated financial statements, and we will continue
to monitor the development of the potential implementation of IFRS.




In March
2009, FASB unanimously voted for the FASB “Accounting Standards
Codification” (the “Codification”) to be effective beginning on
July 1, 2009. Other than resolving certain minor inconsistencies in current
United States Generally Accepted Accounting Principles (“GAAP”), the
Codification is not supposed to change GAAP, but is intended to make it easier
to find and research GAAP applicable to particular transactions or specific
accounting issues. The Codification is a new structure which takes accounting
pronouncements and organizes them by approximately ninety accounting topics.
Once approved, the Codification will be the single source of authoritative U.S.
GAAP. All guidance included in the Codification will be considered authoritative
at that time, even guidance that comes from what is currently deemed to be a
non-authoritative section of a standard. Once the Codification becomes
effective, all non-grandfathered, non-SEC accounting literature not included in
the Codification will become non-authoritative.





The
Company has adopted all recently issued accounting pronouncements. The adoption
of the accounting pronouncements, including those not yet effective, is not
anticipated to have a material effect on the financial position or results of
operations of the Company.





Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force ("EITF")), the American Institute of Certified Public
Accountants ("AICPA"), and the SEC did not or are not believed by management to
have a material impact on the Company's present or future financial
statements.








F-12





ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





3. PREPAID
EXPENSES


YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Rents
            
            $
            8,514
            
            
            $
            9,736Business
      and health insurance
            
            
            8,971
            
            
            
            172Engineering
            
            
            -
            
            
            
            14,264Assets
      held for use in 2009 Launch
            
            
            23,645Other
            
            
            -
            
            
            
            9,714TOTAL
            
            $
            41,130
            
            
            $
            33.886





4. PROPERTY AND EQUIPMENT
AND INTANGIBLE ASSETS


YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Computer
      equipment
            
            $
            731,281
            
            
            $
            728,061Website
      development
            
            
            38,524
            
            
            
            38,524Equipment
            
            
            1,565
            
            
            
            1,562Furniture
      and fixtures
            
            
            9,430
            
            
            
            9,430Telephone
      equipment
            
            
            5,365
            
            
            
            5,365Molds
      and tooling
            
            
            120,214
            
            
            
            120,215TOTAL
            
            
            906,379
            
            
            
            903,157(Less)
      accumulated depreciation
            
            
            (879,924
            )
            
            
            (738,863
            )NET
      PROPERTY AND EQUIPMENT
            
            $
            26,455
            
            
            $
            164,294








YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Patents
            
            $
            212,062
            
            
            $
            212,062Trademarks
            
            
            243,259
            
            
            
            243,259Software
      licensing
            
            
            1,145,322
            
            
            
            1,145,322Software
      development costs
            
            
            1,675,601
            
            
            
            1,675,601TOTAL
            
            
            3,276,244
            
            
            
            3,276,244Less
      accumulated amortization
            
            
            (3,250,220
            )
            
            
            (3,224,971
            )NET
      INTANGIBLE ASSETS
            
            $
            26,024
            
            
            $
            51,273





Depreciation
and amortization expense totaled $166,308 and $79,183 for the yearS ended
December 31, 2008 and 2007, respectively.





5. DEFERRED DEBT ISSUE
COSTS





These
costs relate to obtaining and securing debt financing and financing agreements.
These costs are amortized over the term of the debt agreement using the straight
line method. During the year ended December 31, 2008, the
Company  incurred expenses of $31,939 which were related to a
convertible debt financing  agreement entered into dated September 7,
2007. Deferred debt issue costs have been fully amortized as of December 31,
2008.





F-13








ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





6. ACCRUED
EXPENSES


YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Accrued
      salaries
            
            $
            260,154
            
            
            $
            17,594Accrued
      vacation & 401k
            
            
            101,468
            
            
            
            82,006Accrued
      interest
            
            
            385,129
            
            
            
            221,684Accrued
      commission
            
            
            1,026
            
            
            
            -Accrued
      taxes
            
            
            25,917
            
            
            
            -Accrued
      payables (other)
            
            
            47,758
            
            
            
            97,813TOTAL
            
            $
            821,452
            
            
            $
            419,097





7. SETTLEMENT AGREEMENT
LIABILITY





On August
23,  2006, One Voice Technologies, Inc. (the "Company") entered into a
Settlement Agreement and Mutual Release with La Jolla Cove Investors, Inc.
("LJCI") pursuant to which we agreed with LJCI to forever settle, resolve and
dispose of all claims, demands and causes of action asserted, existing or
claimed to exist between the parties because of or in any way related to a legal
proceeding in the San Diego County Superior Court (the "Court") entitled La
Jolla Cove Investors, Inc. vs. One Voice Technologies, Inc., Case No. GIC850038
(the "Action"). LJCI received a judgment in its favor against the Company in
connection with the Action whereby the Company owes LJCI an amount equal to
$408,594.48 (the "Owed Amount"). Under the Settlement Agreement, the parties
reached a final resolution with respect to such Owed Amount whereby (i) LJCI
shall receive $200,000 within 15 days of the date of the Agreement and (ii) the
difference between the Owed Amount and $200,000 shall be payable at a later date
(the "Remaining Owed Amount"). The payment of the Remaining amount owed of
$208,594 shall be made to LJCI in the following manner:





o
            Concurrently
      with the execution of the Agreement, the Company shall transfer to an
      independent escrow agent, on behalf of LJCI, all right, title and interest
      to 30,000,000 shares of Common Stock of the Company (the "Escrow Shares"),
      issued in 30 increments of 1,000,000 shares. On the one year anniversary
      of the Agreement, 1,000,000 Escrow Shares shall be released to LJCI
      whereby LJCI shall be able to sell such shares in open market transactions
      provided such sales do not exceed more than 14% of the corresponding daily
      volume of such shares on the trading market on which the Company's
      securities are sold. LJCI shall continue to receive the Escrow Shares,
      provided they satisfy the volume limitation set forth above and LJCI's
      ownership of the Company's common stock does not exceed 4.99% of the
      Company's then issued and outstanding shares of common stock, until the
      Remaining Owed Amount is satisfied;





o
            Upon
      notice from LJCI that the Remaining Owed Amount has been satisfied by the
      sale of the Escrow Shares either (i) Alpha Capital Ansalt ("Alpha") shall
      have the ability within 15 business days to purchase any remaining Escrow
      Shares at a 20% discount to the current market price of the shares or (ii)
      if Alpha does not exercise its right to purchase the shares, the Company
      shall have the ability to redeem the remaining Escrow Shares within 5
      business days.





o
            At
      anytime while the Remaining Owed Amount is outstanding, the Company or
      Alpha may pay in cash to LJCI an amount equal to the Remaining Owed Amount
      and either (i) Alpha shall have the ability within 15 business days to
      purchase any remaining Escrow Shares at a 20% discount to the current
      market price of the shares or (ii) if Alpha does not exercise its right to
      purchase the shares, the Company shall have the ability to redeem the
      remaining Escrow Shares within 5 business
days.





LJCI has
contractually agreed to restrict their ability to exercise the Escrow Shares
such that the number of shares of the Company common stock held by it does not
exceed 4.99% of the Company's then issued and outstanding shares of common
stock.





Upon
receipt of the Owed Amount, LJCI will file a Satisfaction of Judgment in the
appropriate court and grant the Company a release from any and all actions
related to the Action.





During
the year ended December 31, 2008, the Company placed an additional
11,878,896  shares of the Company’s restricted common stock into
Escrow, as related to this settlement agreement.





F-14





ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





8. LICENSE AGREEMENT
LIABILITY





In March
2000 the Company entered into a Software License Agreement ("License Agreement")
with Philips Speech Processing, a division of Philips Electronics North America
("Philips"). Pursuant to the License Agreement, the Company received a
world-wide, limited, nonexclusive license to certain speech recognition software
owned by Philips. The initial term of the License Agreement was three (3) years,
and the License Agreement included an extended term provision under which the
License Agreement was automatically renewable for successive one (1) year
periods, unless terminated by either party upon a minimum of sixty (60) days
written notice prior to the expiration of the initial term or any extended
term.





The
License Agreement provides for the Company to pay a specified commission on
revenues from products incorporating licensed software, and includes minimum
royalty payment obligations over the initial three (3) year term of the License
Agreement in the aggregate amount of $1,100,000.





The
License Agreement has been amended as follows:





The first
amendment to the License Agreement was entered into during March
2002.





o        The
initial term of the License Agreement was extended for two (2)
years.





o        The
aggregate minimum royalty payment was increased from $1,100,000 to
$1,500,000.





The
amendment also included a revised payment schedule of the minimum royalty
payment obligation due that provided for semi-annual payments of $250,000 (due
on June 30th and December 31st of each year). In lieu of scheduled payments, in
May, 2003, based on a verbal agreement with the Company and Philips, the Company
began making monthly payments of $15,000, of which $10,000 is being applied
against the remaining minimum royalty payment due and $5,000 is being applied as
interest.





The
second amendment to the License Agreement was entered into on February
1,  2007.





The
following payment terms are as follows:





The  2006
past due amounts owed by the Company of $70,000 were allocated as
follows:





o
            The
      Company paid $20,000 on February 23,2008 to
  Philips.





o
            The
      remaining balance of $50,000 is to be paid in the form of a non-interest
      bearing note payable to Philips Speech
  Processing.





o
              During
      the period of January 1, 2008 thru December 31,  2008 the
      following payments will be allocated as follows: $6,000 isto
      be paid monthly by the Company to Philips Speech Processing. The monthly
      remaining balance of $11,500 due to Philips Speech Processing is to be
      paid by the Company in the form of a non-interest bearing note payable to
      Philips Speech Processing.





As of
December 31, 2008 the note payable balance due Philips Speech Processing was
$1,267,500





9. SHORT TERM NOTE
PAYABLE





On June
8, 2008 the Company entered into agreement with Maguire Properties-Regents
Square LLC. ("Landlord"). The agreement relates to past due office rents owed by
the Company to the Landlord. The landlord has agreed to accept payment in the
form of a promissory note for $103,605.59. The promissory note has a term of 42
months and bears an interest rate of 10.0% per annum, due December 1, 2010.
Monthly payments of $2,933.78 are to be paid to the Landlord. All rent expenses
related to the note have been fully expensed in the proper periods.





On August
8, 2003 the Company entered into a note payable in the amount of $100,000, with
principal and interest at 8.0% per annum, due on August 8, 2008. As of December
31, 2008, the Company is on default on this note.





As of
December 31, 2008 the short term note payable balance due Maguire
Properties-Regents Square LLC. was $33,264, with the remaining balance
classified as long term notes payable. The Company has not made any payments
towards this note in 2008, but has continued to accrue interest at the stated
rate of 10% per annum.





F-15





ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





10. DEBT DERIVATIVE
LIABILITY





Since
inception, the Company has entered into several convertible debt financing
agreements with several institutional investors. Embedded within these
convertible financing transactions are derivatives which require special
treatment pursuant with SFAS No. 133 and EITF 00-19. The derivatives include but
are not limited to the following characteristics:





o    Beneficial
conversion features


o    Early
redemption option


o    Registration
rights and associated liquidated damage clauses





As a
result of the valuation conducted as of December 31, 2008 the Company has
incurred a net non-cash loss of $176,425 for the year ended December 31,
2008.





The
liability valuation calculated at December 31, 2008 and 2007, resulted in the
fair value of the debt derivative liability being $1,805,482 and $1,629,057
respectively.





11. WARRANT DERIVATIVE
LIABILITY





Since
inception, the Company has issued warrants in connection with convertible debt
financing agreements and private placements that
required analysis in accordance with EITF 00-19. EITF 00-19 specifies the
conditions which must be met in order to classify warrants issued in a company's
own stock as either equity or as a derivative liability. Evaluation of these
conditions under EITF 00-19 resulted in the determination that these warrants
are classified as a derivative liability. In accordance with EITF 00-19,
warrants which are determined to be classified as derivative liabilities are
marked-to-market each reporting period, with a corresponding non-cash gain or
loss charged to the current period. The Company valued all warrant derivative
liabilities as of December 31,  2008 using a Black-Scholes option
pricing model using the following assumptions: expected dividend yield of 0.0%,
expected stock price volatility of 96%, risk free interest rate of 3.07% and a
remaining contractual life ranging from .28 years to 3.68 years.





As a
result of the valuation conducted, the Company incurred a net non-cash gain of
$2,286,474 for the year ended December 31,  2008.





The
liability valuation calculated at December 31, 2008 and 2007, resulted in the
fair value of the warrant derivative liability being $31,266 and $2,317,740,
respectively.





12.REVOLVING CREDIT NOTE
PAYABLE





On
December 21, 2006, the Company completed a private placement pursuant to a
Revolving Credit Note Agreement which the Company entered into with several
institutional Investors, pursuant to which the Investors subscribed to advance
up to a maximum amount of $640,000 bearing an interest rate of 7%. The term of
the agreement shall be effective as of December 21,  2008 and shall be
in full force and effect until the earliest to occur of (a) 12 months from
December 21,  2006 (B) a date not less than thirty days after Lender
gives notice of termination to the Company. In connection with the Revolving
Credit Note Agreement, the Company also issued 20,000,000 shares of its common
stock to the related investors. Interest shall be calculated daily on the
outstanding principal balance due, and is to be reimbursed to the Investors a
monthly basis. The reimbursement of the interest shall be in the form of the
Company's restricted shares of common stock. The stock is to be valued at the
month end stock closing price. The advances to the Company are to be based on an
amount of up to 75% of the face value of the current and future invoices
"Receivables" submitted for borrowing. All proceeds paid relating to the
previously mentioned invoices are to be deposited into a lockbox [c1] account
belonging to Investors. The lockbox proceeds are to be 100% applied towards any
outstanding principal amount owed by the Company. On January 10, 2008 the
lockbox was terminated and subsequently all future "Receivables" go directly to
the Company and the Company is no longer obligated to apply any Receivables
towards paying outstanding amount owed.  In addition, the Company's
obligation to repay all principal and accrued and unpaid interest under the
convertible notes is secured by the Company's assets pursuant to a certain
Security Agreement dated February 16,  2006, which also secures the
remaining unconverted principal amount of the Company's convertible notes in the
aggregate amount of $1,114,220 which the Company issued on March 18, 2005, July
13, 2005, March 17,  2006 May 5,  2006, July
6,  2006 and August 29,  2006 to certain of the investors
participating in this new private placement.





The
original Revolving Credit Note agreement has been amended fifteen times since
inception. The amendments increased the maximum borrowing by the Company to an
amount of $2,560,000. On the second amendment the principal and interest payment
terms by the Company to the lender had changed. The original note payment terms
were that all outstanding principal and interest were to be paid in cash by the
Company upon maturity of the note.





F-16


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





12. REVOLVING CREDIT NOTE
PAYABLE (CONTINUED):





The
amendment provided an option to convert the outstanding balance into common
shares of the Company's common stock. The following conversion privileges
apply:





The
lender may elect to convert at a conversion rate of the lower of (i)$0.015 or
(ii)80% of the lowest 3 day trading price of the past 30 trading
days.





Since
inception the Company has borrowed $2,433,159 against the revolving note. During
the same period the Company paid $58,538 against the outstanding balance for a
total net borrowing of $2,374,621 since inception. As of December
31,  2008 the Company has $185,379 to borrow against in the future.
All borrowings are used to cover recurring operating expenses by the
Company.





As of
December 31, 2008 the outstanding principal amount owed to the Investors is
$2,374,621. Interest accrued on the outstanding principal is $385,129 as of
December 31, 2008.





13. LONG TERM NOTES
PAYABLE





On June
8, 2007 the Company entered into agreement with Maguire Properties-Regents
Square LLC. ("Landlord"). The agreement relates to past due office rents owed by
the Company to the Landlord. The landlord has agreed to accept payment in the
form of a promissory note for $103,606. The promissory note has a term of 42
months and bears an interest rate of 10.0% per annum, due December 1, 2010.
Monthly payments of $2,933.78 are to be paid to the Landlord. All rent expenses
related to the note have been fully expensed in the proper periods. As of
December 31,  2008 the long term note payable balance due Maguire
Properties-Regents Square LLC. was $67,742 with the remaining balance classified
as short term notes payable.





At
December 31, 2008 and December 31, 2007 the principal balance on the
non current notes payable was $67,742 and $169,070,
respectively.





14. CONVERTIBLE NOTES
PAYABLE SUMMARY





ISSUANCE
      SUMMARYYEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Principal
            
            $
            -
            
            
            $
            420,000Warrants
      issued A&B
            
            
            -
            
            
            
            10,000,000CONVERSION
      SUMMARY




YEAR
      ENDEDDECEMBER
      31,2008
            
            
            2007Principal
      Converted
            
            $
            1,304,671
            
            
            $
            481,359Shares
      converted
            
            
            406,250,697
            
            
            
            49,190,842Average
      share conversion price
            
            $
            0.003
            
            
            $
            0.010





During
the years ended December 31, 2008 and 2007, $1,304,671 and $481,359
of  notes payable and accrued interest was converted into 406,250,697
and 49,190,842 shares of the Company's common stock at an average
conversion price of $0.003 and $0.010 per share,
respectively





On March
17, 2006, the Company completed a private placement pursuant to
a Subscription Agreement which the Company entered into with several
institutional investors, pursuant to which the investors subscribed to
purchase an aggregate  principal amount of $700,000 in 6% secured
convertible promissory notes and one Class A common stock purchase warrant
for each one share which would be issued on the closing date assuming full
conversion of the secured convertible notes issued on the closing
date.





F-17


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





14. CONVERTIBLE NOTES
PAYABLE SUMMARY (CONTINUED)





The
secured convertible notes bear simple interest at 6% per annum payable June
1, 2006 and semi-annually thereafter, and mature 2 years after the
date of issuance. Each investor shall have the right to convert the secured
convertible notes after the date of issuance and at any time, until paid in full
into shares of our common stock. The conversion price per share shall be the
lower of (i) $0.043 or (ii) 80% of the
average of the three lowest closing bid prices for our common stock for the 30
trading days prior to, but not including, the conversion date as reported by
Bloomberg, L.P. on any principal market or exchange where our common stock is
listed or traded. The conversion price is adjustable in the event of any stock
split or reverse stock split, stock dividend, reclassification of common stock,
recapitalization, merger or consolidation. In addition, the conversion price of
the secured convertible notes will be adjusted in the event that we spin off or
otherwise divest ourselves of a material part of our business or operations or
dispose all or a portion of our assets. Our obligation to repay all principal
and accrued and unpaid interest under the convertible notes is secured by all of
our assets pursuant to a certain Security Agreement dated February
16, 2006, which also secures the remaining principal amount of our
convertible notes in the aggregate amount of $1,115,000 which we issued on March
18, 2005 and July 13, 2005 to certain of the investors participating in this new
private placement.





The
Company issued an aggregate of 50,972,111 Class A common stock purchase warrants
to the investors, representing one Class A warrant issued for each one share
which would be issued on the closing date assuming full conversion of the
secured convertible notes issued on the closing date. The Class A warrants are
exercisable until four years from the closing date at an exercise price of
$0.045 per share. The exercise price of the Class A warrants will be adjusted in
the event of any stock split or reverse stock split, stock dividend,
reclassification of common stock, recapitalization, merger or consolidation. In
addition, the exercise price of the warrants will be adjusted in the event that
we spin off or otherwise divest ourselves of a material part of our business or
operations or dispose all or a portion of our assets. The fair value of the
warrants of $457,000 using the Black Scholes option pricing model is recorded as
a derivative liability. The beneficial conversion feature of approximately
$243,000 will be amortized over the life of the debt using the effective
interest method.





On May
5, 2006, the Company completed a private placement pursuant to a
Subscription Agreement which we entered into with several institutional
investors, pursuant to which the investors subscribed to purchase an aggregate
principal amount of $324,000 in 6% secured convertible promissory notes. The
secured convertible notes bear simple interest at 6% per annum payable June
1, 2006 and semi-annually thereafter, and mature 2 years after the date of
issuance. Each investor shall have the right to convert the secured convertible
notes after the date of issuance and at any time, until paid in full into shares
of our common stock. The conversion price per share shall be the lower of (i)
$0.043 or (ii) 80% of the average of the three lowest closing bid prices for our
common stock for the 30 trading days prior to, but not including, the conversion
date as reported by Bloomberg, L.P. on any principal market or exchange where
our common stock is listed or traded. The conversion price is adjustable in the
event of any stock split or reverse stock split, stock dividend,
reclassification of common stock, recapitalization, merger or consolidation. In
addition, the conversion price of the secured convertible notes will be adjusted
in the event that we spin off or otherwise divest ourselves of a material part
of our business or operations or dispose all or a portion of our
assets.





On July
6,  2006, we completed a private placement pursuant to a Subscription
Agreement which we entered into with several institutional investors,
pursuant to which the investors subscribed to purchase an aggregate principal
amount of $550,000 in 6% secured convertible promissory notes and one Class A
common stock purchase warrant which would be issued on the closing date assuming
full conversion of the secured convertible notes issued on the closing
date.





The
secured convertible notes bear simple interest at 6% per annum payable August
1, 2006 and semi-annually thereafter, and mature 2 years after the date of
issuance. Each investor shall have the right to convert the secured convertible
notes after the date of issuance and at any time,
until paid in full into shares of our common stock. The conversion price per
share shall be the lower of (i) $0.015 or (ii) 80% of the average of the three
lowest closing bid prices for our common stock for the 30 trading days prior to,
but not including, the conversion
date as reported by Bloomberg, L.P. on any principal market or exchange where
our common stock is listed or traded. The conversion price is adjustable in the
event of any stock split or reverse stock split, stock dividend,
reclassification of common stock, recapitalization, merger or consolidation. In
addition, the conversion price of the secured convertible notes will be adjusted
in the event that we spin off or otherwise divest ourselves of a material part
of our business or operations or dispose all or a portion of our assets. Our
obligation to repay all principal and accrued and unpaid interest under the
convertible notes is secured by all of our assets pursuant to a certain Security
Agreement dated February 16, 2006, which also secures the remaining
principal amount of our convertible notes in the aggregate amount of $1,827,354
which we issued on March 18, 2005 July 13, 2005 March 17, 2006 May
5, 2006 July 6, 2006 and August 29, 2006 to certain of the
investors participating in this new private placement.





We issued
an aggregate of 48,530,839 Class A common stock purchase warrants to the
investors, representing one Class A warrant issued for each one share which
would be issued on the closing date assuming full conversion of the secured
convertible notes issued on the closing date. The Class A warrants are
exercisable until four years from the closing date at an exercise price of
$0.015 per share. The exercise price of the Class A warrants will be adjusted in
the event of any stock split or reverse stock split, stock dividend,
reclassification of common stock,
recapitalization, merger or consolidation. In addition, the exercise price of
the warrants will be adjusted in the event that we spin off or otherwise divest
ourselves of a material part of our business or operations or dispose all or a
portion of our assets. The fair value of the warrants of $298,000 using the
Black Scholes option pricing model is recorded as a derivative liability. The
beneficial conversion
feature of approximately $226,000 will be amortized over the life of the debt
using the interest method.





F-18


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





14. CONVERTIBLE NOTES
PAYABLE SUMMARY (CONTINUED)





On August
29,  2006, we completed a private placement pursuant to a Subscription
Agreement which we entered into with several institutional investors, pursuant
to which the investors subscribed to purchase an aggregate principal amount of
$420,000 in 6% secured convertible promissory notes and one Class A common stock
purchase warrant which would be issued on the closing date assuming full
conversion of the secured convertible notes issued on the closing
date.





The
secured convertible notes bear simple interest at 6% per annum payable September
1,  2006 and semi-annually thereafter, and mature 2 years
after the date of issuance. Each investor shall have the right to convert the
secured convertible notes after the date of issuance and at any time,
until paid in full into shares of our common stock. The conversion price per
share shall be the lower of (i) $0.015 or (ii) 80% of the average of the three
lowest closing bid prices for our common stock for the 30 trading days prior to,
but not including, the conversion date as reported by Bloomberg, L.P. on any
principal market or exchange where our common stock is listed or traded. The
conversion price is adjustable in the event of any stock split or reverse stock
split, stock dividend, reclassification of common stock, recapitalization,
merger or consolidation. In addition, the conversion price of the secured
convertible notes will be adjusted in the event that we spin off or otherwise
divest ourselves of a material part of our business or operations or dispose all
or a portion of our assets. Our obligation to repay all principal and accrued
and unpaid interest under the convertible notes is secured by all of our assets
pursuant to a certain Security Agreement dated February 16, 2006, which also
secures the remaining principal amount of our convertible notes in the aggregate
amount of $1,827,354 which we issued on March 18, 2005 July 13, 2005 March 17,
2006 May 5, 2006 July 6, 2006 and August 29, 2006 to certain of the investors
participating in this new private placement.





We issued
an aggregate of 42,708,334 Class A common stock purchase warrants to the
investors, representing one Class A warrant issued for each one share which
would be issued on the closing date assuming full conversion of the secured
convertible notes issued on the closing date. The Class A warrants are
exercisable until four years from the closing date at an exercise price of
$0.015 per share. The exercise price of the Class A warrants will be adjusted in
the event of any stock split or reverse stock split, stock dividend,
reclassification of common stock, recapitalization, merger or consolidation. In
addition, the exercise price of the warrants will be adjusted in the event that
we spin off or otherwise divest ourselves of a material part of our business or
operations or dispose all or a portion of our assets. The fair value of the
warrants of $186,000 using the Black Scholes option pricing model is recorded as
a derivative liability. The beneficial conversion feature of approximately
$18,000 will be amortized over the life of the debt using the interest
method.





On
September 7, 2007, the Company entered into a
subscription  Agreement (the "Agreement") with accredited investors
and/or qualified institutional
investors (the "Investors") pursuant to which the investors subscribed to
purchase an aggregate principal amount of $420,000 in  convertible
promissory notes for an aggregate purchase price of $210,000.  The
Company also issued 10,000,000 Class A common stock purchase warrants to
the Investors. The Class A warrants are exercisable until four
years  from the closing date at an exercise price of $0.02 per share.
The exercise  price of the Class A warrants will be adjusted in the
event of any stock split or reverse stock split, stock dividend,
reclassification of common stock, recapitalization, merger or consolidation. In
addition, the exercise price of the warrants will be adjusted in the event
that we spin off or  otherwise divest ourselves of a material part of
our business or operations or dispose all or a portion of our assets. The
initial discount of $412,410 will be expensed over the term of the
agreement using the straight line method. The fair value of the warrants of
$153,369 using the Black Scholes option pricing model is recorded as a
derivative liability. The proceeds of the offering were used to make payment
towards a legal settlement agreement.





The
secured convertible notes mature 1 year after the date of issuance. Each
investor shall have the right to convert the secured convertible notes after the
date of issuance and at any time, until paid in full, at the election of the
investor into fully paid and nonassessable shares of our common stock. The
conversion price per share shall be the lower of (i) $0.015 or (ii) 80% of the
average of the three lowest closing bid prices for our common stock for the 30
trading days prior to, but not including, the conversion date as reported by
Bloomberg, L.P. on any principal market or exchange where our common stock is
listed or traded. The conversion price is adjustable in the event of any stock
split or reverse stock split, stock dividend, reclassification of common stock,
recapitalization, merger or consolidation. In addition, the conversion price of
the secured convertible notes will be adjusted in the event that we spin off or
otherwise divest ourselves of a material part of our business or operations or
dispose all or a portion of our assets.





Refer to
Note 7 in the accompanying notes to the financial statements for additional
details on the Settlement Agreement Liability.








F-19


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





15. COMMON
STOCK





The
following is a summary of transactions that had an impact on
equity:





YEAR
      ENDEDDECEMBER 31,2008
            
            
            2007AVERAGE
            
            
            
            
            
            
            
            
            AVERAGESHARES
            
            
            SHARE
            
            
            
            
            
            SHARES
            
            
            SHAREISSUED
            
            
            PRICE
            
            
            VALUE
            
            
            ISSUED
            
            
            PRICE
            
            
            VALUEDebt
      conversions
            
            
            406,250,697
            
            
            
            0.003
            
            
            
            1,304,671
            
            
            
            49,190,842
            
            
            
            0.010
            
            
            
            481,359Issuance
      of stock in exchange for services
            
            
            59,205,359
            
            
            
            0.009
            
            
            
            552,407
            
            
            
            11,443,921
            
            
            
            0.019
            
            
            
            220,534Stock
      issued for liquidated damages
            
            
            3,000,000
            
            
            
            0.007
            
            
            
            24,000
            
            
            
            -
            
            
            
            -Stock
      to be issued in exchange for interest conversion
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            8,903Warrant
      exercise
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            39,126,855
            
            
            
            0.006
            
            
            
            253,360Warrant
      exercise cashless
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            23,971,458
            
            
            
            -
            
            
            
            -Private
      placement
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Shares
      in escrow
            
            
            11,878,896
            
            
            
            0.010
            
            
            
            113,087
            
            
            
            30,000,000
            
            
            
            0.020
            
            
            
            600,000Total
            
            
            480,334,952
            
            
            
            0.004
            
            
            
            1,994,165
            
            
            
            153,733,076
            
            
            
            0.013
            
            
            
            1,564,156






CONVERTIBLE DEBT CONVERSION
BY INVESTOR





During
the year ended December 31, 2008, Alpha Capital converted $220,000 of notes
payable and accrued interest into 100,833,362 shares of the Company's common
stock at an average conversion price of $0.002.





During
the year ended December 31, 2008, Bristol Investment Fund converted $102,059 of
notes payable and accrued interest into 14,464,544 shares of the Company's
common stock at an average conversion price of $0.007.





During
the year ended December 31, 2008, Osher Capital Inc. converted $100,000 of notes
payable and accrued interest into 29,115,501 shares of the Company's common
stock at an average conversion price of $0.003.





During
the year ended December 31, 2008, Centurion Microcap LP. converted $137,500 of
notes payable and accrued interest into 59,419,642 shares of the Company's
common stock at an average conversion price of $0.002.





During
the year ended December 31, 2008, Whalehaven Fund, Limited converted $595,112 of
notes payable and accrued interest into 165,483,125 shares of the Company's
common stock at an average conversion price of $0.004.





During
the year ended December 31, 2008, Ellis International Ltd. converted $150,000 of
notes payable and accrued interest into 36,934,523 shares of the Company's
common stock at an average conversion price of $0.004.





During
the year ended December 31, 2007, Alpha Capital Akteingesellschaft
converted $240,733 of notes payable and accrued interest into 30,465,592 shares
of the Company's common stock at an average conversion price of
$0.008.





During
the year ended December 31, 2007, Bristol Investment Fund converted
$167,781 of notes payable and accrued interest into 12,465,754 shares of the
Company's common stock at an average conversion price of $0.013.





F-20


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





15. COMMON STOCK
(CONTINUED)





CONVERTIBLE DEBT CONVERSION
BY INVESTOR





During
the year ended December 31, 2007, Osher Capital Inc. converted $64,083 of
notes payable and accrued interest into 5,477,207 shares of the Company's common
stock at an average conversion price of $0.012.





During
the year ended December 31, 2007, Centurion Microcap LP. converted $8,762
of notes payable and accrued interest into 782,289 shares of the Company's
common stock at an average conversion price of $0.011.





WARRANT EXERCISE FOR
CASH





During the year ended December 31,
2008, there were no warrants exercised for cash.





During
the year ended December 31, 2007 a total of 39,126,855 warrants were
exercised at an average price of $0.006. As a result the Company received cash
proceeds of $253,360





ISSUANCE OF WARRANTS ON A
CASHLESS BASIS





From time
to time warrants can be exercised on a cashless basis if certain conditions
exist. If warrants are held for a certain period of time and there is no
effective registration statement for these warrants, the holder of these
warrants may exercise them on a cashless basis. The result is the Company
issuing restricted shares pursuant to rule 144 or 144K. The number of warrants
issued are discounted according the subscription agreement formula. EX: The
Company issues 1,000,000 restricted shares and the holder forfeits 1,500,000
shares.





During
the year ended December 31, 2007 approximately 23,971,458 warrants were issued
on a cashless basis and 34,566,902 warrants were forfeited. Additional warrants
of 10,595,444 were forfeited due the discounted feature embedded in cashless
exercise price.





During the year ended December 31,
2008, there were no warrants issued on a  cashless basis.





PRIVATE
PLACEMENT





During the years ended December 31, 2008 & 2007 the
Company did not engage in any private placement activity.





ISSUANCE OF COMMON STOCK IN
EXCHANGE OF SERVICES





During
the year ended December 31, 2008 the Company issued 59,205,359 shares of its
restricted common stock having a market value of $552,407 in exchange for
services rendered.





During
the year ended December 31, 2007 the Company issued 11,443,921 shares of its
restricted common stock having a market value of$220,534 in exchange for
services rendered.





SHARES IN
ESCROW





On May 2,
2008 and August 23, 2007 the Company issued 11,878,896 and 30,000,000 shares of
the Company's restricted common stock valued at $600,000 and 113,087,
respectively. The shares were put into an  independent 3rd party
escrow account on behalf of La Jolla Cov Investors Inc. These shares relate to a
legal settlement on August 23, 2007 between the Company and La Jolla Cove
Investors Inc.





Refer to
Note 7 in the accompanying notes to the financial statements for additional
details.





SHARES TO BE ISSUED IN
EXCHANGE FOR INTEREST OWED





During
the period of January 1, 2007 thru December 31,  2007 the
investors elected to convert $8,903 in accrued interest related to the revolving
credit note. Approximately 270,000 shares of the Company's restricted stock are
to be issued. As of December 31, 2008 these shares have not yet been
issued.





F-21


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





16. OTHER INCOME
(EXPENSE)





Other
income (expense) totaled $1,435,563 and ($1,810,019) for the years ended
December 31, 2008 and 2007, respectively.





See
details below.





OTHER
      INCOME / (EXPENSE) SUMMARY
            
            YEAR
      ENDED
                DECEMBER
      31,2008
            
            
            2007Interest
      expense
            
            $
            (687,011
            )
            
            $
            (1,151,648
            )Gain
      / (Loss) on warrant and debt derivatives
            
            
            2,086,049
            
            
            
            (679,584
            )Other
      income
            
            
            36,525
            
            
            
            21,213Total
      other income / (expense)
            
            $
            1,435,563
            
            
            $
            (1,810,019





INTEREST
EXPENSE





INTEREST
      EXPENSE SUMMARY
            
            YEAR
      ENDED
                DECEMBER
      31,2008
            
            
            2007Debt
      issue cost
            
            $
            31,939
            
            
            $
            357,896Discount
      amortization
            
            
            407,419
            
            
            
            614,016Interest
            
            
            247,653
            
            
            
            174,000Other
      / penalties
            
            
            
            
            
            
            5,736TOTAL
            
            $
            687,011
            
            
            $
            1,151,648




For years
ended December 31, 2008 and 2007, interest expense was $687,011 compared to
$1,151,648, respectively. The decrease of $464,637 or 40% between the two
periods was due to:





o
            The
      amount and timing of debt conversions into equity which effect both issue
      cost and discount amortization expenses. Conversions of debt accelerate
      the amortization of both the issue cost and
  discount.





Upon
conversion of convertible debt into equity, both the debt issue cost and
discount costs associated are prorated accordingly and expensed immediately. If
no conversions occur, the debt issue cost and discount costs are expensed over
the life of the convertible debt using the straight line method.





Interest
expense is composed of three very distinct transactions, which vary in their
financial treatment. Below is a brief explanation of the nature and treatment of
these expenses.





1.
Monthly amortization of debt issue costs related to securing convertible debt
Financing (legal fees etc...).





This
represents a cash related transaction.





For the
years ended December 31, 2008 and 2007, interest expense related to debt
issue costs was $31,939 compared to $357,896.





2.
Monthly amortization of the embedded discount features within convertible debt
financing.





This
represents a non-cash transaction.





For the
years ended December 31, 2008, and 2007, interest expense related to the
amortization of discount was $407,419 compared to $614,016.





3.
Monthly accrued interest related to notes payable and convertible notes payable
financing.





This
represents a future cash transaction if the convertible interest accrued is not
converted into common stock. No accrued interest related to convertible notes
payable has been paid in cash during the years ended December 31, 2008
and 2007.





For the
years ended December 31, 2008 and 2007, interest expense related to notes
payable and convertible notes payable was $247,653 compared to
$174,000.





F-22


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





16. OTHER INCOME (EXPENSE)
(CONTINUED)





4. Other
/ misc. interest expense for the years ended December 31, 2008 and 2007, was
approximately $0 compared to $5,736.





(LOSS) ON DEBT
DERIVATIVES





For the
years ended December 31, 2008 and 2007, losses recorded on debt derivatives were
($176,425) and ($1,323,521).





See Note
10 in the accompanying notes to the financial statements for a full description
of the nature of debt derivative transactions.





GAIN ON WARRANT
DERIVATIVES





For the
years ended December 31, 2008 and 2007, gains recorded on warrant derivatives
were $2,286,474, compared to $643,937.





See Note
11 in the accompanying notes to the financial statements for a brief description
of the nature of warrant derivative transactions.





OTHER
INCOME





For the
years ended December 31, 2008 and 2007, other income was $36,525
compared  to $21,213 in 2007 The increase over the prior period was
due to an adjustment to  the fair value of the settlement liability,
due to additional shares put in Escrow  during 2008. See note 7 for
further discussion of this settlement transaction.





17. INCOME
TAXES





At
December 31, 2008 and 2007 the Company had net operating loss carry forwards
available to reduce future taxable income, if any, of approximately
$42,934,000and $40,375,000 respectively, for Federal income tax purposes. It
also had net operating loss carry forwards available to reduce future taxable
income, if any, of approximately $39,276,000 and $36,716,000 for state purposes
at December 31, 2008 and 2007 respectively. The Federal and state net
operating loss carryforwards will begin expiring in 2018 and 2009, respectively.
The carry forward may be limited if a cumulative change in ownership of more
than 50% occurs within a three year period.





The
expected income tax provision, computed based on the Company's pre-tax loss and
the statutory Federal income tax rate, is reconciled to the actual tax provision
reflected in the accompanying financial statements as follows:


YEAR
      ENDED
                    DECEMBER
      31,2008
            
            
            2007Expected
      tax provision (benefit) at statutory rates
            
            
            (1,063,176
            )
            
            $
            (4,048,333
            )Taxes
      at federal statutory rate
            
            
            (361,480
            )
            
            
            (1,375,433
            )Meals
      & Entertainment
            
            
            1,960
            
            
            
            951Change
      in valuation allowance
            
            
            504,703
            
            
            
            1,698,161Derivative
      liability (gain) / loss
            
            
            -
            
            
            
            -Stock
      based compensation
            
            
            -
            
            
            
            -Prior
      period adjustments
            
            
            -
            
            
            
            (82,327
            )State
      taxes, net of federal benefit
            
            
            (62,858
            )
            
            
            (240,352
            )Amortization
      of note discount
            
            
            -
            
            
            
            -TOTALS
            
            
            (980,850
            )
            
            $
            (4,047,333
            )





The
provision (benefit) for income taxes in 2008 and 2007 consist of the
following:


DECEMBER
      31,
              
              
              DECEMBER
      31,2008
              
              
              2007CURRENT:Federal
              
              $
              --
              
              
              $
              --State
              
              
              800
              
              
              
              800TOTALS
              
              
              800
              
              
              
              800DEFERRED:Federal
              
              $
              --
              
              
              $
              --State
              
              $
              --
              
              
              $
              --TOTALS
              
              $
              --
              
              
              $
              --TOTALS
              
              $
              --
              
              
              $
              --


F-23


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





17. INCOME TAXES
(CONTINUED)





Significant
components of the Company's deferred tax asset and liabilities as of December
31, 2008 and 2007 are shown below:




DECEMBER
      31,
              
              
              DECEMBER
      31,2008
              
              
              2007DEFERRED
      TAX ASSETS:Accrued
      vacation
              
              $
              21,152
              
              
              $
              35,263Stock
      compensation expense
              
              
              128,498
              
              
              
              104,069Derivative
      liability
              
              
              (604,780
              )
              
              
              187,744Note
      discount
              
              
              397,689
              
              
              
              264,027Deferred
      rent
              
              
              (5,167
              )
              
              
              1,170Net
      operating loss
              
              
              17,904,455
              
              
              
              17,031,838Depreciation
      and amortization
              
              
              21,112
              
              
              
              207,238TOTALS
              
              
              17,862,959
              
              
              
              17,831,363DEFERRED
      TAX LIABILITIES:Deferred
      state taxes
              
              
              (156,743
              )
              
              
              (1,179,860
              )Gain
      on disposal of asset
              
              
              (9,433
              )
              
              
              (11,684
              )Fixed
      assets
              
              
              --
              
              
              
              --TOTALS
              
              
              (166,176
              )
              
              
              (1,191,543
              )Deferred
      tax asset (liability)
              
              
              17,696,783
              
              
              
              16,639,820Valuation
      allowance
              
              
              (17,696,783
              )
              
              
              (16,639,820
              )NET
      DEFERRED TAX ASSET (LIABILITY)
              
              $
              --
              
              
              $
              --


The
reconciliations of the Federal income tax rate to our effective tax rate as of
December 31, 2007 and 2006 are as follows:





DECEMBER
      31,
              
              
              DECEMBER
      31,2008
              
              
              2007Federal
      income tax rate
              
              
              34.0
              %
              
              
              
              34.0
              %Increase
      (reduction) in taxes:State
      and local income taxes, net of Federal tax benefits
              
              
              5.9
              
              
              
              
              5.9Non-deductible
      entertainment
              
              
              0.0
              
              
              
              
              0.0Derivative
      gain
              
              
              0.0
              
              
              
              
              0.0Stock
      based compensation
              
              
              0.0
              
              
              
              
              0.0Amortization
      of note discount
              
              
              0.0
              
              
              
              
              0.0Prior
      period adjustments
              
              
              2.0
              
              
              
              
              2.0Change
      in deferred tax asset valuation allowance
              
              
              (41.9
              )
              
              
              
              (41.9
              )Effective
      tax rate
              
              
              0.0
              %
              
              
              
              0.0
              %




18. COMMITMENTS AND
CONTINGENCIES





The
Company leases its facilities and certain equipment under leases that expire at
various times through 2010. The following is a schedule, by year, of future
minimum rental payments required under operating leases that have non cancelable
lease terms in excess of one year as of December 31, 2008:





2009
                  
                  $
                  109,6182010
                  
                  
                  112,960$
                  222,578




Rent
expense including parking, net of sublease income, amounted to $130,543 and
$147,738 for the years ended December 31, 2008 and 2007
respectively.





19. INCENTIVE AND
NONQUALIFIED STOCK OPTION PLAN





The
Company applies SFAS No. 123 (revised 2004). Share-Based Payment, which is a
revision of SFAS No. 123, Accounting for Stock- Based Compensation. SFAS No.
123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees
and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS
No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS
No. 123(R) requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the income statement based on their
fair values. Pro forma disclosure is no longer an alternative.





F-24





ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





19. INCENTIVE AND
NONQUALIFIED STOCK OPTION PLAN





On July
14, 1999, the Company adopted an Incentive and Nonqualified Stock Option Plan
(the "Plan") for its employees and consultants under which a maximum of
3,000,000 options (Amendment to increase the available shares from 1,500,000 to
3,000,000 approved by the shareholders in December 2001) and approved by the
shareholders may be granted to purchase common stock of the Company. On July 29,
2005 the Company adopted the 2005 Stock Incentive Plan and reserved 60,000,000
shares of the Company's common stock for issuance under the 2005
Plan.





Two types
of options may be granted under the 2005 Plan: (1) Incentive Stock Options (also
known as Qualified Stock Options) which may only be issued to employees of the
Company and whereby the exercise price of the option is not less than the fair
market value of the common stock on the date it was reserved for issuance under
the Plan; and (2) Nonstatutory Stock Options which may be issued to either
employees or consultants of the Company and whereby the exercise price of the
option is greater than 85% of the fair market value of the common stock on the
date it was reserved for issuance under the plan. Grants of options may be made
to employees and consultants without regard to any performance measures. All
options issued pursuant to the Plan vest at a rate of at least 20% per year over
a 5-year period from the date of the grant or sooner if approved by the Board of
Directors. All options issued pursuant to the Plan are nontransferable and
subject to forfeiture.





Upon
termination of employment or service contract, all options vested or non-vested
expire unless the options have been exercised in full, or in part within 90 days
of such event. Management reserves the right to extend vested options under
certain circumstances, given approval by the Board of Directors.





On
September 12, 2007 the Company granted 15,000,000 stock options to its
employees and Board of Directors. The stock options issued are pursuant to the
2005 stock option plan.





A total
of 1,500,000 options were terminated during the year ended December 31,
2008.





The total
intrinsic value of vested options relating to employee and director compensation
at December 31, 2008. The intrinsic value of $0 is due to the closing stock
price at December 31, 2008 of $0.0010 being lower than any vested option
grant price.





For the
years ended December 31, 2008 and 2007, there was approximately $89,920 and
$208,913 of total compensation expense recorded by the Company related to
share-based compensation.





As of
December 31, 2008, there was approximately $43,200 of total unrecognized
compensation cost related to share-based compensation arrangements with
employees, directors and contractors. The entire $43,200 is expected to be
recognized throughout 2009.





The
Company’s closing stock price reported by NASDAQ listed under symbol ONEV at
December 31,2008 was $0.001 per share.








STOCK
OPTIONS ACTIVITY





The
following table is a summary of the activity for the two stock compensation
plans adopted by the Company as of December 31, 2008.




YEAR
      ENDED DECEMBER 31, 2008NUMBER
      OF
                  SHARES
                
                
                NUMBER
      OF
                  SHARES
                
                
                NUMBER
      OF
                  SHARES
      AVAILABLEAUTHORIZED
                
                
                OUTSTANDING
                
                
                FOR
      GRANTYear
      1999 plan
                
                
                3,000,000
                
                
                
                3,000,000
                
                
                
                --Year
      2005 plan
                
                
                60,000,000
                
                
                
                59,934,000
                
                
                
                66,000TOTAL
                
                
                63,000,000
                
                
                
                62,934,000
                
                
                
                66,000


F-25


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





19. INCENTIVE AND
NONQUALIFIED STOCK OPTION PLAN (CONTINUED)





A summary
of the Company's stock option activity and related information is as follows for
the year ending December 31, 2008 and 2007, respectively.


YEAR
      ENDED
                      DECEMBER
      31,2008
                
                
                2007WEIGHTED
                
                
                
                
                
                WEIGHTEDNUMBER
      OF
                
                
                AVERAGE
                
                
                NUMBER
      OF
                
                
                AVERAGESHARES
                
                
                EXERCISE
                
                
                SHARES
                
                
                EXERCISEOUTSTANDING
                
                
                PRICE
                
                
                OUTSTANDING
                
                
                PRICEOutstanding
      at beginning of year
                
                
                62,934,000
                
                
                $
                0.054
                
                
                
                58,059,000
                
                
                $
                0.060Options
      granted
                
                
                -
                
                
                
                N/A
                
                
                
                15,000,000
                
                
                
                0.019Options
      exercised
                
                
                -
                
                
                
                N/A
                
                
                
                0
                
                
                
                N/AOptions
      terminated
                
                
                (1,500,000
                )
                
                
                N/A
                
                
                
                (10,125,000
                )
                
                
                N/AOPTIONS
      OUTSTANDING AT END OF YEAR
                
                
                61,434,000
                
                
                
                0.054
                
                
                
                62,934,000
                
                
                
                0.054OPTIONS
      EXERCISABLE AT END OF YEAR
                
                
                56,600,667
                
                
                $
                0.017
                
                
                
                37,420,111
                
                
                $
                0.079





The
following table summarizes the number of options authorized by the plan and
available for distribution as of December 31,2008 and 2007,
respectively.


YEAR
      ENDED
                      DECEMBER
      31,2008
                
                
                2007NUMBER
      OF
                
                
                NUMBER
      OFSHARES
                
                
                SHARESBeginning
      options available for grant
                
                
                66,000
                
                
                
                4,941,000Add:
      Additional options authorized
                
                
                -
                
                
                
                -Less:
      Options granted
                
                
                -
                
                
                
                (15,000,000
                )Add:
      Options terminated
                
                
                1,500,000
                
                
                
                10,125,000ENDING
      OPTIONS AVAILABLE FOR DISTRIBUTION
                
                
                1,566,000
                
                
                
                66,000




The
following tables summarize the number of option shares, the weighted average
exercise price and the weighted average life (by years) by price range for both
total outstanding options and total exercisable options as of December
31, 2008 and  2007, respectively. All of these options relate to
employees, directors, and contractor compensation as of December 31, 2008 and
2007:


FOR
      THE YEAR ENDED DECEMBER 31, 2008TOTAL
      OUTSTANDING
              
              
              TOTAL
      EXERCISABLEWEIGHTED
              
              
              
              
              
              
              
              
              WEIGHTEDAVERAGE
              
              
              
              
              
              
              
              
              AVERAGEEXERCISE
              
              
              
              
              
              
              
              
              EXERCISEPRICE
      RANGE
              
              
              #
      OF SHARES
              
              
              PRICE
              
              
              LIFE
              
              
              #
      OF SHARES
              
              
              PRICE
              
              
              LIFE$6.08
      - $ 12.80
              
              
              
              240,000
              
              
              $
              7.158
              
              
              
              2.63
              
              
              
              240,000
              
              
              $
              7.158
              
              
              
              2.63$0.32
      - $2.00
              
              
              
              694,000
              
              
              
              0.867
              
              
              
              3.53
              
              
              
              694,000
              
              
              
              0.867
              
              
              
              3.53$0.016
      - $0.19
              
              
              
              60,500,000
              
              
              
              0.017
              
              
              
              7.23
              
              
              
              54,666,667
              
              
              
              0.017
              
              
              
              7.57TOTAL
              
              
              
              61,434,000
              
              
              $
              0.054
              
              
              
              7.17
              
              
              
              56,600,667
              
              
              $
              0.054
              
              
              
              7.46




FOR
      THE YEAR ENDED DECEMBER 31, 2007TOTAL
      OUTSTANDING
            
            
            TOTAL
      EXERCISABLEWEIGHTED
            
            
            
            
            
            
            
            
            WEIGHTEDAVERAGE
            
            
            
            
            
            
            
            
            AVERAGEEXERCISE
            
            
            
            
            
            
            
            
            EXERCISEPRICE
      RANGE
            
            
            #
      OF SHARES
            
            
            PRICE
            
            
            LIFE
            
            
            #
      OF SHARES
            
            
            PRICE
            
            
            LIFE$6.08
      - $ 12.80
            
            
            
            240,000
            
            
            $
            7.158
            
            
            
            2.63
            
            
            
            240,000
            
            
            $
            7.158
            
            
            
            2.63$0.32
      - $2.00
            
            
            
            694,000
            
            
            
            0.867
            
            
            
            3.53
            
            
            
            694,000
            
            
            
            0.867
            
            
            
            3.53$0.016
      - $0.19
            
            
            
            62,000,000
            
            
            
            0.017
            
            
            
            7.23
            
            
            
            36,486,111
            
            
            
            0.017
            
            
            
            7.57TOTAL
            
            
            
            62,934,000
            
            
            $
            0.054
            
            
            
            7.17
            
            
            
            37,420,111
            
            
            $
            0.079
            
            
            
            7.46





F-26


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





19. INCENTIVE AND
NONQUALIFIED STOCK OPTION PLAN (CONTINUED)





A summary
of the status of the Company's non-vested option shares relating to employee and
director compensation as of December 31, 2008 and 2007, and changes
during the period ended December 31, 2008 and 2007, respectively is
presented below:




YEAR
      ENDED
                  DECEMBER
      31, 2008WEIGHTEDAVERAGEGRANT-DATENON
      VESTED OPTIONS RELATING TO EMPLOYEE,CONSULTANTS AND DIRECTOR
      COMPENSATION
              
              SHARES
              
              
              FAIR
      VALUEOutstanding
      at beginning of year
              
              
              25,513,889
              
              
              $
              0.016Options
      granted
              
              
              -
              
              
              
              N/AOptions
      exercised
              
              
              -
              
              
              
              N/AOptions
      vested
              
              
              (19,180,556
              )
              
              
              0.005Options
      terminated
              
              
              (1,500,000
              )
              
              
              0.016NON-VESTED
      AT END OF YEAR 2008
              
              
              4,833,333
              
              
              $
              0.009




YEAR
      ENDED DECEMBER 31, 2007WEIGHTEDAVERAGEGRANT-DATENON
      VESTED OPTIONS RELATING TO EMPLOYEE,CONSULTANTS AND DIRECTOR
      COMPENSATION
              
              SHARES
              
              
              FAIR
      VALUEOutstanding
      at beginning of year
              
              
              58,059,000
              
              
              $
              0.060Options
      granted
              
              
              15,000,000
              
              
              
              0.019Options
      exercised
              
              
              -
              
              
              
              N/AOptions
      vested
              
              
              (37,420,111
              )
              
              
              0.089Options
      terminated
              
              
              (10,125,000
              )
              
              
              0.016NON-VESTED
      AT END OF YEAR 2007
              
              
              25,513,889
              
              
              $
              0.016




In
addition to the assumptions as described below, the Company applies a
forfeiture-rate assumption in its estimate of fair value that is primarily based
on historical annual forfeiture rates of the Company.





Expected
      dividend yield
                
                0.00%Expected
      volatility
                
                113.00%Average
      risk-free interest rate
                
                4.74%Expected
      life (in years)
                
                2.16-8.07





The above
options carry vesting date's as follows: 1/3 of the options vest on the grant
date, 1/3 of the options vest one year after the grant date, the final 1/3 of
the options vest two years after the grant date.





On July
14, 1999, the Company adopted an Incentive and Nonqualified Stock Option Plan
(the "Plan") for its employees and consultants under which a maximum of3,000,000
options (Amendment to increase the available shares from 1,500,000 to 3,000,000
approved by the shareholders in December 2001) and approved by the shareholders
may be granted to purchase common stock of the Company. On July 29, 2005 the
Company adopted the 2005 Stock Incentive Plan and reserved 60,000,000 shares of
the Company's common stock for issuance under the 2005 Plan.





Stock
options: The Company generally grants stock options to employees at exercise
prices equal to the fair market value of the Company's stock at the dates of
grant. Stock options may be granted throughout the year, vest immediately, vest
based on years of continuous service, or vest upon completion of specified
performance conditions. Stock options granted prior to September 12, 2007
expire 10 years following the initial grant date. Stock
options  granted on or after September 12, 2007 expire 5 years
following the initial grant date. The Company recognizes compensation expense
for the fair value of the stock options over the requisite service period
for each separate vesting portion of the stock option award, or, for awards with
performance conditions, when the performance condition is met.





Warrants:
The Company generally grants stock warrants to directors and consultants at
exercise prices equal to the fair market value of the Company's stock at the
dates of grant. Stock options may be granted throughout the year, vest
immediately, vest based on years of continuous service, or vest upon completion
of specified performance conditions, and expire 10 years following the initial
grant date. The Company recognizes compensation expense for the fair value of
the stock options over the requisite service period for each separate vesting
portion of the stock option award, or, for awards with performance conditions,
when the performance condition is met.





F-27


ONE VOICE TECHNOLOGIES
INC.


NOTES TO FINANCIAL
STATEMENTS (CONTINUED)





19.  INCENTIVE AND
NONQUALIFIED STOCK OPTION PLAN (CONTINUED)





The fair
value of each option and warrant award is estimated on the date of grant using
the Black-Scholes option-pricing model that uses the assumptions noted in the
following table. The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options. In addition, option valuation
models require the input of highly subjective assumptions including the expected
stock price volatility. Because the Company's stock options and warrants have
characteristics significantly different from those of traded options, and
because changes in the subjective assumptions can materially affect the fair
value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its stock
options and warrants. The expected dividend yield assumption is based on the
Company's expectation of dividend payouts. Expected volatilities are based on
historical volatility of the Company's stock. The average risk-free interest
rate is based on the U.S. treasury yield curve in effect as of the grant date.
The expected life is primarily determined using guidance from SAB 107. As such,
the expected life of the options and warrants is the average of the vesting term
and the full contractual term of the options and warrants.





20.
WARRANTS





As a
normal business practice, the Company grants warrants to Investors who
participate in the financing of the Company. Warrants issued are an additional
incentive to the Investors and also provide additional cashflow for the Company
upon exercise.





At
December 31, 2008, the Company had warrants outstanding that allow the holders
to purchase up to 5,906,909 shares of common stock.





At
December 31, 2008, the weighted average remaining contractual life of the
warrants was approximately 25 months.





The
number and weighted average exercise prices of the warrants for the years ended
December 31, 2008 and 2007 are as follows:





YEAR
      ENDED
                    DECEMBER
      31,2008
              
              
              2007WEIGHTED
      AVERAGE
              
              
              
              
              
              WEIGHTED
      AVERAGEEXERCISE
              
              
              
              
              
              EXERCISENUMBER
              
              
              PRICE
              
              
              NUMBER
              
              
              PRICEOutstanding
      at beginning of year
              
              
              276,052,744
              
              
              $
              0.02
              
              
              
              339,979,838
              
              
              $
              0.02Warrants
      granted
              
              
              -
              
              
              
              N/A
              
              
              
              10,000,000
              
              
              
              N/AWarrants
      exercised / forfeited-
              
              
              -
              
              
              
              0.005
              
              
              
              (73,693,757
              )
              
              
              0.01Warrants
      terminated
              
              
              (145,835
              )
              
              
              N/A
              
              
              
              (233,337
              )
              
              
              N/AWARRANTS
      OUTSTANDING AT END OF THE YEAR
              
              
              5,906,909
              
              
              $
              0.016
              
              
              
              276,052,744
              
              
              $
              0.02WARRANTS
      EXERCISABLE AT END OF THE YEAR
              
              
              5,906,909
              
              
              $
              0.016
              
              
              
              276,052,744
              
              
              $
              0.02




During
the year ended December 31, 2008 no warrants were issued or
exercised.





During
the years ended December 31, 2008 and 2007, the Company issued zero and
10,000,000 warrants to Stockholders, respectively.





21. SUBSEQUENT
EVENTS





●
            CONVERTBLE
      DEBT CONVERSIONS
              
              Subsequent
      to December 31, 2008, accredited investors converted $60,709 of
      convertible debt and accrued interest into 60,709,252 shares of the
      Company’s common stock




●
            AMENDMENTS
      OF LOAN AGREEMENT AND REVOLVING CREDIT NOTE
              
              Subsequent
      to December 31, 2008, the Company entered into the 15th,
      16th,
      and 17th
      amendments of the original Loan Agreement and Revolving Credit Note dated
      December 21, 2006, with Alpha Capital Anstalt and Whalehaven Capital Fund
      Limited. The amendments state that in the aggregate, the principal sums as
      defined in the preamble of the notes issued to Alpha Capital Anstalt and
      Whalehaven Capital Fund Limited shall be amended to $1,206,000 and
      $1,416,500, respectively.




F-28


21. SUBSEQUENT EVENTS
(CONTINUED)





●
            OFFICE
      LEASES
              
              Subsequent
      to December 31, 2008, the Company entered into a lease for office space,
      commencing March 1, 2009 and extending for 6 months, with an automatic
      renewal for another 6 months upon expiration of the initial term. This
      lease requires monthly rental payments of $2,700, which will increase by 3
      1/2% upon extension for an additional 6 months. Concurrent with entering
      into this new lease, the Company terminated its existing lease, with no
      penalty incurred and no future rental payments
  due.




On April
14, 2009, the Company filed a Definitive Proxy Statement on Schedule 14A which
was subsequently mailed to all shareholders of record as of April 8, 2009,
giving notice of a Special Meeting of Stockholders to be held on May 22, 2009
(the “Special Meeting”).  At the Special Meeting, stockholders of
record will be asked to vote upon a proposal to amend the Articles of
Incorporation to implement a reverse stock split of the Company’s common stock,
par value $01.001 per share, at a ratio of one for twenty.





F-29


ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





During
the Company's two most recent fiscal years and the subsequent interim periods
through March 31, 2008, there were no disagreements with the current accountant
on any matters of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.





ITEM 9A. CONTROLS AND
PROCEDURES




We
maintain "disclosure controls and procedures," as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange
Act"), that are designed to ensure that information required to be disclosed by
us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in
Securities and Exchange Commission rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating our disclosure
controls and procedures, management recognized that disclosure controls and
procedure, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the disclosure
controls and procedures are met. Additionally, in designing disclosure controls
and procedures, our management was required to apply its judgment in evaluating
the cost-benefit relationship of possible disclosure controls and procedures.
The design of any disclosure controls and procedures also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions.




As of
December 31, 2008, we carried out an evaluation, under the supervision and with
the participation of our Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were
ineffective of ensuring that information required to be disclosed by us in our
periodic reports is recorded, processed, summarized and reported, within the
time periods specified for each report and that such information is accumulated
and communicated to our management, including our principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.




MANAGEMENT'S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING




The
management of One Voice Technologies, Inc. is responsible for establishing and
maintaining adequate internal control over financial reporting. Internal control
over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated
under the Securities Exchange Act of 1934 as a process designed by, or under the
supervision of, the company's principal executive and principal financial
officers and effected by the company's board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures
that:




o
              Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      company;
  o
              Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with accounting
      principles generally accepted in the United States of America and that
      receipts and expenditures of the company are being made only in accordance
      with authorizations of management and directors of the company;
      and
  o
              Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the company's assets that
      could have a material effect on the financial
  statements.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.




Management
assessed the effectiveness of the Company's internal control over financial
reporting as of December 31, 2008. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.




Based on
its assessment, management concluded that, as of December 31, 2008, the
Company's internal control over financial reporting is have material weaknesses
and ineffective controls  based on those criteria.




18




This
annual report does not include an attestation report of the Company's registered
accounting firm regarding internal control over financial reporting. The
management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission





Changes
in Internal Control Over Financial Reporting





There
have been no changes in the Company's internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15 (f) under the Exchange
Act) during the fourth quarter of 2008 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.





9B. ITEM OTHER
INFORMATION





None.





PART III





ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE





GOVERNANCE; COMPLIANCE WITH
SECTION 16 A. OF THE EXCHANGE ACT





DIRECTORS AND
      EXECUTIVE OFFICERSName
              Age
              PositionDean
      Weber
              46
              Chairman
      of the Board, President, Chief
                Executive
      Officer, Interim Chief Financial
                  Officer
      and Director and SecretaryBradley
      J. Ammon
              44
              DirectorRahoul
      Sharan
              46
              Director





Directors
serve until the next annual meeting and until their successors are elected and
qualified. Officers are appointed to serve for one year until the meeting of the
board of directors following the annual meeting of stockholders and until their
successors have been elected and qualified. There are no family relationships
between any of our directors or officers.





The
principal occupations for the past five years (and, in some instances, for prior
years) of each of our executive officers and directors, followed by our key
employees, are as follows:





Dean
Weber - Chairman of the board, president, chief executive officer, interim chief
financial officer and director and Secretary. Dean Weber has served as Chairman
of the board, president, chief executive officer and director since the
inception of the Company in July 1999. Mr. Weber brings an extensive background
to our company with over 20 years of technology and management experience. He is
responsible for developing our strategic vision and pioneering our products,
patented technology and business strategies. He was elected to our Board of
Directors in July of 1999 as Chairman. Before founding our company in 1998, Mr.
Weber played key roles in many high profile technology companies including
Northrop, United Technologies and Xerox. Throughout his career, Mr. Weber has
developed a comprehensive knowledge of Human Computer Interaction, Cognitive
Science, Artificial Intelligence and Natural Language Processing. Mr. Weber
currently has numerous patents in Artificial Intelligence, Natural Language
Processing and other related technologies. As our CEO, Mr. Weber has been
instrumental in the growth and development of the company, successfully raising
over $30 million of institutional funding, taking us public, winning the
Deloitte and Touche Technology Fast 50 award, and has been featured in Forbes,
Time, and on CNN. Mr. Weber holds a Bachelor of Science degree in Computer
Science from Central Connecticut State University.





Bradley
J. Ammon - Director, Chairman of both the Audit and Compensation Committee.
Bradley J. Ammon is a tax attorney in the Washington, D.C. office of Deloitte
Tax LLP. Mr. Ammon specializes in international tax planning, including
restructuring of international operations, domestic mergers and acquisitions,
and developing business plans to minimize worldwide taxation. Prior to joining
the firm, Mr. Ammon was with SAIC as an International Tax Manager. He previously
was with KPMG, LLP in the International Corporate Services department since 1998
where his principal practice consisted of clients in the information,
communications and entertainment ("ICE") industry. Prior to joining KPMG, Mr.
Ammon worked from 1995 to 1998 at Deloitte & Touche, LLP in their tax
services department where he provided corporate, partnership, and personal tax
and business planning services to clients. Mr. Ammon also worked several years
as a staff
accountant where his responsibilities included the compilation and consolidation
of monthly financial statements for multiple subsidiaries. Mr. Ammon has a Juris
Doctor and a Master's of Law in taxation (LL.M.) from the University of San
Diego, and received his undergraduate degree from the University of California,
San Diego. He is admitted to the California Bar. Mr. Ammon was appointed to our
Board on June 9, 2000.





19




Rahoul
Sharan - Director. Rahoul Sharan brings over 18 years of finance and accounting
experience to our company. He was elected to our Board of Directors in July of
1999. Prior to joining our, Mr. Sharan was a partner of the S&P Group, which
specializes in investment financing for venture capital projects, real estate
development and construction. At S&P Group, Mr. Sharan led the successful
financing efforts for over 15 companies in several industries. Mr. Sharan was
also the President of KJN Management Ltd., which provides a broad range of
administrative, management and financial services. He also worked in public
accounting for six years with Coopers & Lybrand. At C&L, Mr. Sharan
worked in both the tax and audit groups for a wide variety of large and small
clients. Mr. Sharan holds a Bachelor of Commerce degree from the University of
British Columbia and is a member of the Institute of Chartered Accountants of
British Columbia.





COMMITTEES OF THE
BOARD





Audit
Committee





As set
forth in the audit committee charter adopted by the board of directors, a copy
of which is included in our Definitive Proxy Statement filed with the SEC on
November 29, 2001 as Exhibit A. The primary function of the Audit Committee is
to assist the Board of Directors in fulfilling its oversight responsibilities by
reviewing (1) the financial information provided to shareholders and others, (2)
systems of internal controls established by management and the Board of
Directors and (3) the audit process. Mr. Bradley J. Ammon is the chairman the
audit committee and is "independent" as that term is defined in Rule 4200(a)(14)
of the National Association of Securities Dealers' listing
standards.





The Audit
Committee has reviewed our audited financial statements for the fiscal
Year  2008 and has discussed them with management.





Our
independent auditors, PMB Helin Donovan, LLP, have communicated with the Audit
Committee matters such as the auditors' role and responsibility in connection
with an audit of our financial statements, significant accounting policies, the
reasonableness of significant judgments and accounting estimates, significant
audit adjustments, and such other matters as are required to be communicated
with the Audit Committee under generally accepted auditing
standards.





The Audit
Committee has received from PMB Helin Donovan, LLP written disclosures regarding
all relationships between PMB Helin Donovan, LLP and its related entities and us
and our related entities that in the professional judgment of PMB Helin Donovan,
LLP may reasonably be thought to bear on independence. PMB Helin Donovan, LLP
has confirmed that, in its professional judgment, it is independent of the
Company within the meaning of the Securities Act of 1933, as amended, and the
Audit Committee has communicated such matters with PMB Helin Donovan,
LLP.





The Audit
Committee, based on the review and discussions above, recommended to the Board
of Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,


2008
for filing with the Securities and Exchange Commission.





Director
Bradley J. Ammon serves as the sole member and Chairman of our Audit Committee.
The Board of Directors believes that Mr. Ammon qualifies as an "Audit Committee
Financial Expert" as that term is defined by applicable SEC rules.





Compensation
committee:





The
primary function of the Compensation Committee is to establish and administer
our executive compensation programs. Mr. Bradley J. Ammon is the Chairman of the
Compensation Committee and is "independent" as that term is defined in Rule
4200(a)(14) of the National Association of Securities Dealers' listing
standards.





Governance and Nominating
Committee:





The Board
of Directors has established a Governance and Nominating Committee for purposes
of nominating directors and for all other purposes outlined in the Governance
and Nominating Committee Charter, including nominees submitted to the Board of
Directors by shareholders. The Governance and Nominating Committee is composed
of Bradley Ammon. The Board has determined that each of the members of the
Governance and Nominating Committee is unrelated, an outside member with no
other affiliation with us and independent as defined by the American Stock
Exchange.





NOMINATION OF
DIRECTORS





As
provided in its charter and our company's corporate governance principles, the
Governance and Nominating Committee is responsible for identifying individuals
qualified to become directors. The Governance and Nominating Committee seeks to
identify director candidates based on input provided by a number of sources,
including (1) the Governance and Nominating Committee members, (2) our other
directors, (3) our stockholders, (4) our Chief Executive Officer or Chairman,
and (5) third parties such as professional search firms. In evaluating potential
candidates for director, the Nominating and Corporate Governance Committee
considers the entirety of each candidate's credentials.





20


Qualifications
for consideration as a director nominee may vary according to the particular
areas of expertise being sought as a complement to the existing composition of
the Board of Directors. However, at a minimum, candidates for director must
possess:




o
              high
      personal and professional ethics and
integrity;
 o
              the
      ability to exercise sound judgment;
 o
              the
      ability to make independent analytical
  inquiries;
 o
              a
      willingness and ability to devote adequate time and resources to
      diligently perform Board and committee
duties;
 o
              the
      appropriate and relevant business experience and
  acumen.


In
addition to these minimum qualifications, the Governance and Nominating
Committee also takes into account when considering whether to nominate a
potential director candidate the following factors:




o
              whether
      the person possesses specific industry expertise and familiarity with
      general issues affecting our
business;
 o
              whether
      the person's nomination and election would enable the Board to have a
      member that qualifies as an "audit committee financial expert" as such
      term is defined by the Securities and Exchange Commission (the "SEC") in
      Item 401 of Regulation S-K;
 o
              whether
      the person would qualify as an "independent" director under the listing
      standards of the American Stock
Exchange;
 o
              the
      importance of continuity of the existing composition of the Board of
      Directors to provide long term stability and experienced oversight;
      and
 o
              the
      importance of diversified Board membership, in terms of both the
      individuals involved and their various experiences and areas of
      expertise.




Governance
and Nominating Committee will consider director candidates recommended by
stockholders provided such recommendations are submitted in accordance with the
procedures set forth below. In order to provide for an orderly and informed
review and selection process for director candidates, the Board of Directors has
determined that stockholders who wish to recommend director candidates for
consideration by the Governance and Nominating Committee must comply with the
following:




o
              The
      recommendation must be made in writing to the Corporate Secretary, Dean
      Weber.
 o
              The
      recommendation must include the candidate's name, home and business
      contact information, detailed biographical data and qualifications,
      information regarding any relationships between the candidate and the
      Company within the last three years and evidence of the recommending
      person's ownership of our common
stock.
 o
              The
      recommendation shall also contain a statement from the recommending
      shareholder in support of the candidate; professional references,
      particularly within the context of those relevant to Board membership,
      including issues of character, judgment, diversity, age, independence,
      expertise, corporate experience, length of service, other commitments and
      the like; and personal references.
 o
              A
      statement from the shareholder nominee indicating that such nominee wants
      to serve on the Board and could be considered "independent" under the
      Rules and Regulations of the American Stock Exchange and the Securities
      and Exchange Commission ("SEC"), as in effect at that time. All candidates
      submitted by stockholders will be evaluated by the Governance and
      Nominating Committee according to the criteria discussed above and in the
      same manner as all other director
candidates.




DIRECTOR
COMPENSATION





Non-employee directors receive $1,000 for
each Board of Directors meetingattended. The
Company will pay all out-of-pocket expenses of attendance. Nocompensation
was paid out in the year 2008.





INDEBTEDNESS OF EXECUTIVE
OFFICERS AND DIRECTORS





No
executive officer, director or any member of these individuals' immediate
families or any corporation or organization with whom any of these individuals
is an affiliate is or has been indebted to us since the beginning of our last
fiscal year.





FAMILY
RELATIONSHIPS





There are
no family relationships among our executive officers and directors.





LEGAL
PROCEEDINGS





As of the
date of this prospectus, there are no material proceedings to which any of our
directors, executive officers, affiliates or stockholders is a party adverse to
us.





CODE OF
ETHICS





We have
adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-B of
the Securities Exchange Act of 1934. This Code of Ethics applies to our chief
executive officer and our senior financial officers.





21


SECTION 16(A) BENEFICIAL
OWNERSHIP COMPLIANCE





Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who beneficially own more than ten percent of a
registered class of our equity securities to file with the SEC initial reports
of ownership and reports of change in ownership of common stock and other equity
securities of our company. Officers, directors and greater than ten percent
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. Based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to us under Rule 16a-3(e) during the fiscal year
ended December 31, 2008, and Forms 5 and amendments thereto furnished to us
with respect to the fiscal year ended December 31, 2008, we believe that
during the year ended December 31,  2008, our executive officers,
directors and all persons who own more than ten percent of a registered class of
our equity securities have complied with all Section 16(a) filing
requirements.





ITEM 11. EXECUTIVE
COMPENSATION





The
following table sets forth information concerning the total compensation that
the Company has paid or that has accrued on behalf of chief executive officer
and other executive officers with annual compensation exceeding $100,000 during
the years ended December 31, 2008 and 2007.





SUMMARY COMPENSATION
TABLE


Name
      &Principal Position
              Year
              
              Salaray
                ($)
              
              
              Bonus
      Commissions
                ($)
              
              
              Stock
      Awards
                ($)
              
              
              Option
      Awards
                ($)
              
              
              Non-Equity
      Incentive Plan Compensation
                ($)
              
              
              Change
      in Penstion Value and Non-Qualified Deferred
      Compensation Earnings ($)
              
              
              All
      Other Compensation
                ($)
              
              
              Total
                ($)Dean
      Weber
              2008
              
              $
              340,000
              
              
              
              --
              
              
              
              --
              
              
              $
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              $
              340,000CEO,
      President
              2007
              
              $
              340,000
              
              
              $
              15,967
              
              
              
              --
              
              
              $
              69,292
              (1)
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              $
              425,259




(1)    On
September 12, 2007, One Voice Technologies issued Dean Weber, CEO and
President of One Voice Technologies Inc. 8,000,000 common stock options. To date
One Voice Technologies recorded stock compensation expense of
$69,292.





OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR-END TABLE





The
following table sets forth information with respect to grants of options to
purchase our common stock under the Company's 2005 Stock Incentive Plan to the
named executive officers during the fiscal year ended December 31, 2008
and 2007 respectively.


Name
              
              Number
      of Securities Underlying Unexercised Options
                (#)Exercisable
              
              
              Number
      of Securities Underlying Unexercised Options
                (#)
                Unexercisable
              
              
              Incentive
      Plan Awards: Number of Securities Underlying Unexercised Unearned
      Options(#)
              
              
              Option
      Exercise Price
                ($)
              
              Option
      Expiration Date
              
              
              Number
      of Shares or Units of Stock That Have Not Vested
                (#)
              
              
              Market
      Value of Shares or Units of Stock That Have Not Vested
                ($)
              
              
              Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      That Have Not Vested
                (#)
              
              
              Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
      Other Rights That Have Not Vested
                ($)(1)
      Dean Weber CEO, President
              
              24,000,000
              
              
              --
              
              
              --
              
              
              $
              0.016
              
              01/24/2016
              
              
              --
              
              
              --
              
              
              --
              
              
              --(2)
      Dean Weber CEO, President
              
              5,333,333
              
              
              2,666,667
              
              
              --
              
              
              $
              0.0185
              
              09/12/2012
              
              
              --
              
              
              --
              
              
              --
              
              
              --




(1)    On
January 24,  2006, One Voice Technologies issued Dean Weber, CEO and
President of One Voice Technologies Inc. 24,000,000 common stock options. To
date One Voice Technologies has recorded stock compensation expense of
$193,576.





(2)    On
September 12,  2007, One Voice Technologies issued Dean Weber, CEO and
President of One Voice Technologies Inc. 8,000,000 common stock options. To date
One Voice Technologies has recorded stock compensation expense of
$69,292.





The above
options carry vesting date's as follows: 1/3 of the options vest on the grant
date, 1/3 of the options vest one year after the grant date, the final 1/3 of
the options vest two years after the grant date.





22


DIRECTOR
COMPENSATION





The
following table sets forth with respect to the named director, compensation
information inclusive of equity awards and payments made in the year end
December 31,  2008.





Change
      inPensionValue
      andNon-Equity
              
              NonqualifiedFees
      Earned
              
              
              
              
              
              
              Incentive
      Plan
              
              Deferred
              
              All
      Otheror
      Paid in
              
              Stock
              
              Option
              
              Compensation
              
              Compensation
              
              CompensationName
              Cash
      ($)
              
              Awards
      ($)
              
              Awards
      ($)
              
              ($)
              
              Earnings
              
              ($)
              
              
              Total
      ($)(a)
              (b)
              
              (c)
              
              (d)
              
              (e)
              
              (f)
              
              (g)
              
              
              (h)Rahoul
      Sharan
              --
              
              
              (1
              )
              
              $
              3,850
              
              --
              
              --
              
              --
              
              
              $
              3,850Brad
      Ammon
              --
              
              
              (2
              )
              
              $
              3,850
              
              --
              
              --
              
              --
              
              
              $
              3,850





(1)  On
September 12, 2007, One Voice Technologies issued Rahoul Sharan a member of
the Board of Directors of One Voice Technologies Inc. 1,000,000 common stock
options. During 2008, One Voice Technologies has recorded a total stock
compensation expense of $3,850 related to these options.





(2)  On
September 12, 2007, One Voice Technologies issued Brad Ammon a member of
the Board of Directors of One Voice Technologies Inc. 1,000,000 common stock
options. During 2008, One Voice Technologies has recorded a total stock
compensation expense of $3,850. Related to these options





At
December 31, 2008, aggregate stock option awards outstanding, as issued to the
two above directors, was 8,585,000. The grant date fair value of these options
totaled $695,188. The expense related to the portion of these options that
remained unvested at December 31, 2008 was $5,774, all of which is expected to
be recognized in expense during 2009.





EMPLOYMENT
AGREEMENTS





On April
1, 2007, we entered into an Employment Agreement with Dean Weber, our Chief
Executive Officer. Pursuant to the Employment Agreement, we will employ Mr.
Weber unless the Agreement is terminated by either party as set forth
therein.





Mr. Weber
will be paid the following:





An annual
base salary of $340,000 (the "Base Salary")





1.  Receive
a 3% commission on revenue generating MobileVoice accounts and 8% commission on
other revenue generating products.





In
addition, Mr. Weber will be eligible to earn an annual cash bonus as may be
deemed appropriate by our Board of Directors. Further, Mr. Weber may be awarded
incentive stock options pursuant to the Company's stock option plan as may be
deemed appropriate by our Board of Directors.





If the
Employment Agreement is terminated as set forth therein, Mr. Weber will be
entitled to a severance package equal to no more than 100% of his Base Salary
for up to two years after the date of termination. In addition, all unvested
stock options shall immediately vest on the date of termination. During the term
of his employment, Mr. Weber will be subject to non-competition and
non-solicitation provisions, subject to standard exceptions.





23


ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED
STOCKHOLDER MATTERS




The
following table sets forth certain information regarding beneficial ownership of
our common stock as of December 31,  2008 (i) by each person who is
known by us to beneficially own more than 5% of our common stock; (ii) by each
of our officers and directors; and (iii) by all of our officers and directors as
a group. Each person's address is c/o One Voice Technologies, Inc., 7825 Fay
Avenue,  Suite 200, La Jolla, California 92037.





We
believe that all persons named in the table have sole voting and investment
power with respect to all shares of common stock beneficially owned by them. A
person is deemed to be the beneficial owner of securities that can be acquired
by him within 60 days from December 31,  2008 upon the exercise of
options, warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants or convertible
securities that are held by him, but not those held by any other person, and
which are exercisable within 60 days of December 31, 2008 have been
exercised and converted.





Note:
Applicable percentage ownership is based on 738,246,749 shares outstanding as of
December 31,  2008 and 558,364,818 fully diluted shares assuming 100%
convertible debt conversion and the exercise of 100% of warrants and options
currently held for a total of 1,296,611,567 shares.





Shares
      Beneficially Owned (1)Name
      and Address of Beneficial Owner
              
              Number
              
              PercentDean
      Weber, CEO, President and Chairman of the Board
              
              35,957,800
              
              2.80%Rahoul
      Sharan, Director
              
              4,900,000
              
              0.40%Bradley
      J. Ammon, Director
              
              3,600,000
              
              0.30%Alpha
      Capital Akteingesellschaft
              
              227,434,922
              
              17.50%Whalehaven
      Capital Fund Limited
              
              159,813,857
              
              12.30%Bristol
      Investments Fund Limited
              
              31,118,579
              
              2.40%Stonestreet
      Limited Partnership
              
              33,102,373
              
              2.60%Ellis
      International
              
              45,610,855
              
              3.50%Centurion
      Microcap LLP
              
              27,480,245
              
              2.10%Osher
      Capital Partners LLC
              
              8,912,738
              
              0.70%Momona
      Capital Corp.
              
              9,171,830
              
              0.70%Total
      shares held by officers and directors (3) persons:
              
              44,457,800
              
              3.40%





ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





There
were no material related party transactions during the year.





ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES UPDATE





AUDIT
FEES





The
Company has appointed PMB Helin Donovan, L.L.P. ("PMB"), as its independent
auditors to perform the audit of the Company's financial statements for the year
2008. The estimated audit fees for the audit of the 2008 financial
statementsare
$51,000with
an additional fee of between $5000 and $10,000 related to a review of the
internal controls "SOX 404". During the year 2008 the Company also incurred fees
of approximately $36,000relating
to the filing of form’s 10QSB for Q1, Q2 and Q3 2008.





24





AUDIT
RELATED FEES





During
the year  2008 the company incurred fees of approximately $9,000 by
PMB that related to the filing of Form POS AM (Post Effective Amendment to Form
SB-2).





TAX
FEES





The estimated fees for the year 2008
for tax products and services related to preparation of Company's 2008
state and federal tax returns provided by Burt R. Shapiro Accountancy Corp. is
$7,500.





The
Company is not aware that any significant amount of the work done during the
course of the audits of the Company's 2008 and 2007 Financial
Statements was performed by persons other than full-time, permanent and
employees of PMB.





The Board
of Directors have reviewed and approved 100% the above service
agreements





ITEM 15.
EXHIBITS





NO
DESCRIPTION





PLANS OF
ACQUISITION





2.1
Merger Agreement and Plan of Reorganization with Conversational Systems, Inc.
dated June 22, 1999.





ARTICLES OF INCORPORATION
AND BYLAWS





3.1
Articles of Incorporation of Belridge Holdings Corp. filed with the Nevada
Secretary of State on August 23, 1995 (incorporated by reference to Exhibit 3(i)
to our Form 10-SB filed October 7, 1999).





3.2
Certificate of Amendment of Articles of Incorporation of Belridge Holdings Corp.
changing its name to Dead On, Inc. (incorporated by reference to Exhibit 3(i) to
our Form 10-SB filed October 7, 1999). The Certificate originally filedon
September 25, 1998, was canceled and re-filed with the Nevada Secretary of State
on June 10, 1999.





3.3
Articles of Merger for the merger of Conversational Systems, Inc. into Dead On,
Inc. filed with the Nevada Secretary of State on July 14, 1999 with supporting
documents (incorporated by reference to Exhibit 2 to our Form 10-SB, filed
October 7, 1999). This document changed the name of the surviving entity, Dead
On, Inc., to ConversIt.com, Inc.





3.4
Certificate of Amendment of Articles of Incorporation of ConversIt.com, Inc.
changing its name to One Voice Technologies, Inc. (incorporated by reference to
Exhibit 2 to our Form 10-SB filed October 7, 1999).





3.5
Bylaws of Belridge Holdings Corp. (incorporated by reference to Exhibit 3(ii) of
our Form 10-SB, filed October 7, 1999).





3.6
Amendment to Bylaws dated July 11, 2000 (excerpted) (incorporated by reference
to Exhibit 4.3 of our Form S-8, filed October 3, 2000).





3.7
Certificate of Amendment of Articles of Incorporation increasing One Voice's
common stock to 250,000,000.





INSTRUMENTS DEFINING RIGHTS
OF SECURITY HOLDERS





4.1
Common Stock Purchase Warrant with Veritas SG Investments from the January 2000
offering (incorporated by reference to Exhibit 4.1 of our Form SB-2, filed
November 11, 2000).





4.2 Form
of Common Stock Purchase Warrant from the March 2000 offering (incorporated by
reference to Exhibit 4.1 of our Form SB-2, filed November 11,
2000).





4.3
Securities Purchase Agreement ("SPA") with Nevelle Investors LLC dated October
3, 2000, and Form of Debenture (Exhibit A to the SPA), Form of Warrant (Exhibit
B to the SPA), Conditional Warrant dated October 3, 2000 (Exhibit C to the SPA)
and Registration Rights Agreement dated October 3, 2000 (Exhibit E to the SPA),
each with Nevelle Investors LLC (incorporated by reference to Exhibit 4 to our
Form 10-QSB, filed November 14, 2000).





25


MATERIAL
CONTRACTS





10.1
Employment Agreement with Dean Weber dated July 14, 1999 (incorporated by
reference to Exhibit 10 to our Form 10-SB, filed October 7, 1999). This
agreement was amended on April 10, 2000, to increase Mr. Weber's annual salary
to $252,000.





10.2
Consulting Agreement with KJN Management Ltd. For the services of James Hadzicki
dated July 14, 1999 (incorporated by reference to Exhibit 10 to our Form 10-SB,
filed October 7, 1999). This agreement was amended on April 10, 2000, to
increase the annual consulting fee to $180,000. On November 8,  2007
the agreement was mutually terminated.





10.3
Software Agreement with IBM/OEM dated September 21, 1999 (incorporated by
reference to Exhibit 4.4 to our Form SB-2 filed November 20, 2000).





10.4
Software License Agreement with Philips Speech Processing dated March 3, 2000
(incorporated by reference to Exhibit 4.4 to our Form SB-2 filed November 20,
2000).





10.5
Amended and Restated 1999 Stock Option Plan (incorporated by reference to
Exhibit 4.4 to our Form S-8, Amendment No. 1, filed October 4,
2000).





10.6
Subscription Agreement dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002).





10.7
Alpha Capital Note dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.8
Alpha Capital Warrant dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.9
Stonestreet Note dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.10
Stonestreet Warrant dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.11
Subscription Agreement dated November 14, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.12
Alpha Capital Note dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.13
Alpha Capital Warrant dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.14
Ellis Note dated August 8, 2002 (incorporated by reference to our registration
statement on Form SB-2 filed September 12, 2002)





10.15
Ellis Warrant dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.16
Bristol Note dated August 8, 2002 (incorporated by reference to our registration
statement on Form SB-2 filed September 12, 2002)





10.17
Bristol Warrant dated August 8, 2002 (incorporated by reference to our
registration statement on Form SB-2 filed September 12, 2002)





10.18
Subscription Agreement dated April 10, 2003 (incorporated by reference to our
registration statement on Form SB-2 filed April 30, 2003)





10.19
Form of Warrant dated June 30, 2003 (incorporated by reference to our
registration statement on Form SB-2 filed April 30, 2003)





10.20
Subscription Agreement dated September 17, 2003 (incorporated by reference to
our registration statement on Form SB-2 filed October 20, 2003)





26





MATERIAL CONTRACTS
(CONTINUED)





10.21
Form of convertible note dated September 17, 2003 (incorporated by reference to
our registration statement on Form SB-2 filed October 20,2003)





10.22
Form of Warrant dated September 17, 2003 (incorporated by reference to our
registration statement on Form SB-2 filed October 20, 2003)





10.23
Security Agreement dated September 17, 2003 (incorporated by reference to our
registration statement on Form SB-2 filed October 20, 2003)





10.24
Modification Agreement dated September 17, 2003 (incorporated by reference to
our registration statement on Form SB-2 filed October 20, 2003)





10.25 La
Jolla Convertible Debenture (incorporated by Reference to our registration
statement on Form SB-2 filed December 22, 2003)





10.26 La
Jolla Registration Rights Agreement (incorporated by reference to our
registration statement on Form SB-2 filed December 22, 2003)





10.27 La
Jolla Letter Agreement (incorporated by reference to our registration statement
on Form SB-2 filed December 22, 2003)





10.28 La
Jolla Securities Purchase Agreement (incorporated by reference to our
registration statement on Form SB-2 filed December 22, 2003)





10.29 La
Jolla Warrant (incorporated by reference to our registration statement on Form
SB-2 filed December 22, 2003)





10.30 La
Jolla Letter Agreement (incorporated by reference to our registration statement
on Form SB-2 filed December 22, 2003)





10.31
Subscription Agreement dated August 18, 2004 (incorporated by reference to our
registration statement on Form SB-2 filed September 7, 2004)





10.32
Form of Convertible Note dated August 18, 2004 (incorporated by reference to our
registration statement on Form SB-2 filed September 7, 2004)





10.33
Form of Class A Warrant dated August 18, 2004 (incorporated by reference to our
registration statement on Form SB-2 filed September 7, 2004)





10.34
Form of Class B Warrant dated August 18, 2004 (incorporated by reference to our
registration statement on Form SB-2 filed September 7, 2004)





10.35
Subscription Agreement, dated October 28, 2004, by and among One Voice
Technologies, Inc., Alpha Capital Aktiengesellschaft, Stonestreet Limited
Partnership, Ellis International Ltd., and Momona Capital Corp. (incorporated by
reference to our current report on Form 8-K filed November 9, 2004)





10.36
Fund Escrow Agreement dated October 28, 2004, by and among One Voice
Technologies, Inc., Alpha Capital Aktiengesellschaft, Stonestreet Limited
Partnership, Ellis International Ltd., Momona Capital Corp., and Grushko &
Mittman, P.C. (incorporated by reference to our current report on Form 8-K filed
November 9, 2004)





10.37
Form of Convertible Note issued to Alpha Capital Aktiengesellschaft, Stonestreet
Limited Partnership, Ellis International Ltd., and Momona Capital Corp.
(incorporated by reference to our current report on Form 8-K filed November 9,
2004)





10.38
Form of Class A Share Purchase Warrant issued to Alpha Capital
Aktiengesellschaft, Stonestreet Limited Partnership, Ellis International Ltd.,
and Momona Capital Corp. (incorporated by reference to our current report on
Form 8-K filed November 9, 2004)





10.39
Form of Class B Share Purchase Warrant issued to Alpha Capital
Aktiengesellschaft, Stonestreet Limited Partnership, Ellis International Ltd.,
and Momona Capital Corp. (incorporated by reference to our current report on
Form 8-K filed November 9, 2004)





10.40
Subscription Agreement, dated March 18, 2005, by and among One Voice
Technologies, Inc. and the investors named on the signature pages thereto.
(incorporated by reference to our current report on Form 8-K filed March 24,
2005)





27


MATERIAL CONTRACTS
(CONTINUED)





10.41
Form of Convertible Note of One Voice Technologies, Inc. issued to the investors
named on the signature pages thereto. (incorporated by reference to our current
report on Form 8-K filed March 24, 2005)





10.42
Form of Class A Common Stock Purchase Warrant of One Voice Technologies, Inc.
issued to the investors named on the signature pages thereto. (incorporated by
reference to our current report on Form 8-K filed March 24, 2005)





10.43
Form of Class B Common Stock Purchase Warrant of One Voice Technologies, Inc.
issued to the investors named on the signature pages thereto. (incorporated by
reference to our current report on Form 8-K filed March 24, 2005)





10.44
Subscription Agreement, dated March 17, 2006, by and among One Voice
Technologies, Inc. and the investors named on the signature pages thereto.
(incorporated by reference to our current report on Form 8-K filed March
23, 2006)





10.45
Form of Convertible Note of One Voice Technologies, Inc. issued to the investors
named on the signature pages thereto. (incorporated by reference to our current
report on Form 8-K filed March 23, 2006)





10.46
Form of Class A Common Stock Purchase Warrant of One Voice Technologies, Inc.
issued to the investors named on the signature pages thereto. (incorporated by
reference to our current report on Form 8-K filed March
23, 2006).





10.47
Subscription Agreement, dated May 5, 2006, by and among One Voice
Technologies, Inc. and the investors named on the signature pages thereto.
(incorporated by reference to our registration statement on Form SB-2 filed May
9, 2006)





10.48
Form of Convertible Note of One Voice Technologies, Inc. issued to the investors
named on the signature pages thereto. (incorporated by reference to our
registration statement on Form SB-2 filed May 9, 2006)





10.49
Subscription Agreement, dated July 6,  2006, by and among One Voice
Technologies, Inc. and the investors named on the signature pages thereto.
(incorporated by reference to our current report on Form 8-K filed July
11, 2006)





10.45
Form of Convertible Note of One Voice Technologies, Inc. issued to the investors
named on the signature pages thereto. (incorporated by reference to our current
report on Form 8-K filed July 11, 2006)





10.46
Form of Class A Common Stock Purchase Warrant of One Voice Technologies, Inc.
issued to the investors named on the signature pages thereto. (incorporated by
reference to our current report on Form 8-K filed July
11,  2006).





10.47
Subscription Agreement, dated August 28,  2006, by and among One Voice
Technologies, Inc. and the investors named on the signature pages thereto.
(incorporated by reference to our current report on Form 8-K filed September
1, 2006).





10.48
Form of Convertible Note of One Voice Technologies, Inc. issued to the investors
named on the signature pages thereto. (incorporated by reference to our current
report on Form 8-K filed September 1, 2006).





10.49
Form of Class A Common Stock Purchase Warrant of One Voice Technologies, Inc.
issued to the investors named on the signature pages thereto. (incorporated by
reference to our current report on Form 8-K filed September
1, 2006).





10.50
Loan Agreement Loan Agreement by and among One Voice Technologies, Inc. and the
investors named on the signature pages thereto (incorporated by reference to our
current report on Form 8-K filed January 3, 2007).





10.51
Form of Revolving Credit Note of One Voice Technologies, Inc. (incorporated by
reference to our current report on Form 8-K filed January
3, 2007).





10.52
Subscription Agreement, dated September 2007, by and among One Voice
Technologies, Inc., and the investors named on the signature pages thereto.
(incorporated by reference to our current report on Form 8-K filed September
17, 2007).





10.53
Form of Convertible Note, of One Voice Technologies, Inc. issued to the
investors named on the signature pages thereto. (incorporated by reference to
our current report on Form 8-K filed September 17, 2007).





10.54
Form of Warrant, of One Voice Technologies, Inc. issued to the investors named
on the signature pages thereto. (incorporated by reference to our current report
on Form 8-K filed September 17, 2007).




10.55
Settlement Agreement and Mutual General Release, dated August  2007,
by and among La Jolla Cove Investors, Inc. and One Voice Technologies, Inc.
(incorporated by reference to our current report on Form 8-K filed September
17, 2007).





31.1
Certification by Chief Executive Officer and Interim Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.





32.1
Certification of the Chief Executive Officer and Interim Chief Financial Officer
of One Voice Technologies, Inc. pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





28








SIGNATURES





Pursuant
to the requirements of Section 13 and 15 (d) of the Securities ExchangeAct of
1934, the Registrant has duly caused this report to be signed on itsbehalf by
the undersigned, thereunto duly authorized.








Date:  May
      18, 2009
            By:
            /s/
      Dean WeberDean
      Weber, President, Chief Executive Officer(Principal
      Executive Officer), interim Chief Financial Officer(Principal
      accounting and financial officer),Chairman
      of the Board and Secretary





In
accordance with the requirements of the Securities Act of 1933,
this


registration
statement was signed by the following persons in the capacities and


on the
dates stated.





SIGNATURE
            TITLE
            DATE/s/
      Dean Weber
            President,
      Chief Executive Officer
            May
      18 2009Dean
      Weber
            (Principal
      Executive Officer),interim
      Chief Financial Officer(Principal
      accounting and financial officer),Chairman
      of the Board and Secretary/s/
      Rahoul Sharan
            Director
            May
      18, 2009Rahoul
      Sharan/s/
      Bradley J. Ammon
            Director
            May
      18, 2009Bradley
      J. Ammon








29