UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





FORM 10-Q/A


(Amendment No. 1)





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





For the quarterly period ended June 30, 2011





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





Commission File Number:000-54535








VOICE ASSIST, INC.


(Exact name of registrant as specified in its charter)





Nevada
26-1929199(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)





2 South Pointe Dr., Suite 100, Lake Forest, CA
92630(Address of principal executive offices)
(Zip Code)





(949) 655-1677


(Registrant’s telephone number, including area code)





Copies of Communications to:


Stoecklein Law Group


401 West A Street, Suite 1150


San Diego, CA 92101


(619) 704-1310


Fax (619) 704-0556





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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes x    No  ̈





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





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


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes  ̈   No x





The number of shares of Common Stock, $0.001 par value, outstanding on August 15, 2011, was 29,724,223 shares.





1


*EXPLANATORY NOTE – RESTATEMENT OF FINANCIAL INFORMATION- The Registrant is filing this Form 10-Q/A  amending the Form 10-Q for the period ended June 30, 2011 originally filed on August 15, 2011 to amend and restate financial statements and other financial information.





The restated unaudited quarterly financial statements in this Form 10-Q/A account for the non recording of the valuation of personal shares transferred from the Chief Executive Officer of the Company to a former executive officer for services rendered to the Company. The adjustment results in an increase in the total net loss for the period and has no effect on the Company’s historical or future revenues, cash or total assets.





This Form 10Q/A should be read in conjunction with the Company’s filings made with the SEC subsequent to the filing of Form 10-Q for the period ended June 30, 2011 originally filed on August 15, 2011.





The following items have been amended as a result of the restatement described above:





·
Part I- Item 1- Financial Statements


·
Item 1- Notes to Financial Statements


·
Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations.








No changes were made to the other disclosures in this Form 10-Q/A for the period ended June 30, 2011


2





PART I -- FINANCIAL INFORMATION





Item 1. Financial Statements.





VOICE ASSIST, INC. CONDENSED BALANCE SHEETS(2011 Unaudited, 2010 Audited)Restated 01/01/2011 to 06/30/2011


01/01/2010 to 12/31/2010ASSETSCURRENT ASSETSCash

$
292,774


$
615,722Accounts Receivable


112,231



44,739Deferred Customer Activation Costs


15,890



21,061Prepaid Expenses


14,648



16,256Total Current Assets


435,543



697,778Property & Equipment, Net


216,746



158,610Software Development, Net


565,682



496,229OTHER ASSETSOther Assets


40,135



28,643Total Other Assets


40,135



28,643Total Assets

$
1,258,106


$
1,381,260LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIESAccounts Payable


299,796



254,637Accounts Payable - Related Parties


2,000,000



-Accrued Expenses


107,496



10,000Deferred Revenue


63,553



84,238Current Portion - L/T Loans Payable


6,000



13,984Loans Payable - Related Parties


-



708,603Total Current Liabilities


2,476,845



1,071,462NON CURRENT LIABILITIESL/T Portion Loans Payable


-



-Total Liabilities


2,476,845



1,071,462STOCKHOLDERS' EQUITY (DEFICIT)Preferred stock


2,000



2,000Common stock


28,061



26,600Additional Paid in Capital


18,689,121



12,007,389Shares to be Issued


695,500



970,000Retained Earnings


(20,633,421
)


(12,696,191
)Total Stockholders' Equity (Deficit)


(1,218,739
)


309,798TOTAL LIABILITIES AND STOCK HOLDERS' EQUITY (DEFICIT)

$
1,258,106


$
1,381,260(1) $.001 par value, 10,000,000 shares authorized, 2,000,000 issued and outstanding(2) $.001 par value, 10,000,000 shares authorized, 2,000,000 issued and outstanding(3) $.001 par value, 100,000,000 shares authorized, 28,061,223 issued and outstanding(4) $.001 par value, 100,000,000 shares authorized, 26,600,000 issued and outstanding








The accompanying notes are an integral part of these condensed financial statements.


3








VOICE ASSIST, INC. CONDENSED STATEMENTS OF OPERATIONS


(2011 Unaudited, 2010 Audited)





Restated 04/01/2011 to 06/30/2011


04/01/2010 to 06/30/2010


Restated 01/01/2011 to 06/30/2011


01/01/2010 to 06/30/2010OPERATING REVENUESRevenues

$
299,089


$
298,644


$
534,138


$
673,851OPERATING EXPENSESDirect Cost of Services


137,876



82,598



248,948



165,196Other Costs


1,733



2,465



4,201



8,291Total Direct Cost of Services


139,609



85,063



253,149



173,487Legal and Professional


255,390



1,750



509,928



2,500Selling, General and Administrative


4,671,222



154,347



7,631,011



338,942Selling, General and Administrative - Related Parties


-



75,228



-



153,566Depreciation and Amortization


38,752



11,915



75,822



21,461Total Operating Expenses


5,104,973



328,303



8,469,910



689,956Net (Loss) from Operations


(4,805,884
)


(29,659
)


(7,935,772
)


(16,105
)OTHER INCOME AND (EXPENSE)Interest Expense


(575
)


(18,215
)


(1,126
)


(126,100
)Other Income (Expense)


0



(200
)


0



9,367Total Other Income (Expense)


(575
)


(18,415
)


(1,126
)


(116,733
)Net (Loss) before Income Taxes


(4,806,459
)


(48,074
)


(7,936,898
)


(132,838
)Income Tax Expense


-



800



(332
)


-NET (LOSS)

$
(4,806,459
)

$
(47,274
)

$
(7,937,230
)

$
(132,838
)Weighted Average Shares


27,642,934



20,460,080



27,642,934



20,460,080Earnings Per Share

$
(0.17
)

$
(0.00
)

$
(0.29
)

$
(0.01
)








The accompanying notes are an integral part of these condensed financial statements.


4


VOICE ASSIST, INC. COMBINED STATEMENTS OF CASH FLOWS


(2011 Unaudited, 2010 Audited)





Restated 01/01/2011 to 06/30/2011


01/01/2010 to 06/30/2010Operating ActivitiesNet (Loss)

$
(7,937,230
)

$
(132,838
)Adjustments to reconcile from Net Loss to net cash

provided by (used in) operating activities:Depreciation and amortization


75,822



21,461Shares Issued for Services


232,917



-Stock Option Amortization


3,700,135



-Changes in operating assets and liabilitiesAccounts Receivable


(67,492
)


(600
)Deferred Customer Activation Costs


5,171



(15,608
)Prepaid Expense


1,608



(7,750
)Other Assets


(11,492
)


-Accounts Payable


45,160



31,559Accounts Payable, Related Party


2,000,000



56,417Accrued Expenses


97,496



94,322Deferred Customer Activation Fees


(20,685
)


61,559Net cash provided by (used in) operating activities


(1,878,590
)


108,522Cash flows from investing activitiesAcquisition and development of software assets


(118,057
)


(92,490
)Purchase  of Equipment


(85,355
)


(18,299
)Net cash provided by (used in) investing activities


(203,412
)


(110,789
)Cash flows from financing activitiesProceeds from Loans Payable, Related Party


5,612



104,012Proceeds from Loans Payable


12,000



-Repayment of Loans Payable


(26,359
)


(24,789
)Repayment of Loans Payable, Related Party


(58,256
)


(86,956
)Proceeds from issuance of common stock


1,826,057



10,000Net cash provided by (used in) financing activities


1,759,054



2,267Net Increase/(Decrease) in Cash


(322,948
)


-Cash, Beginning of Year


615,722



-Cash, End of Year

$
292,774


$
-Supplemental Information:Cash paid for:Taxes

$
-


$
-Interest Expense

$
-


$
-Non Cash Financing Activities:Equipment Purchased under Capital Leases

$
-


$
-





The accompanying notes are an integral part of these condensed financial statements.


5
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization





Musician’s Exchange was incorporated under the laws of the State of Nevada on February 4, 2008 and developed an internet destination and marketplace for musicians.  On September 28, 2010, Musician’s Exchange amended its articles of incorporation to change its name from Musician’s Exchange to Voice Assist, Inc. (“the Company”).





On July 22, 2010, the Company entered into the following:





(1) An Agreement of Purchase and Sales of Assets with SpeechPhone, LLC, a Delaware Limited Liability Company (“Speechphone”) to purchase substantially all of the assets of Speechphone in exchange for 10,250,000 shares of common stock and also agreed to issue 2,000,000 shares of convertible preferred stock in exchange for extinguishment of $1,700,000 in debt;





(2) An Agreement of Purchase and Sales of Assets with MDM Intellectual Property, LLC, a California Limited Liability Company (“MDM”) to purchase substantially all of the assets of MDM in exchange for 6,150,000 shares of common stock;





(3) An Agreement of Purchase and Sales of Assets with SpeechCard, LLC, a Delaware Limited Liability Company (“SpeechCard”) to purchase substantially all of the assets of SpeechCard in exchange for 1,025,000 shares of common stock;





(4) An Agreement of Purchase and Sales of Assets with Voiceassist, a Delaware Limited Liability Company (“Voiceassist”) to purchase substantially all of the assets of Voiceassist in exchange for 2,050,000 shares of common stock; and





(5) An agreement to issue 1,025,000 shares to purchase Mr. Michael Metcalf’s concept, Music By Voice and shareholders agreed to cancel a total of 8,400,000 shares upon the close of the transaction.





On September 30, 2010, the transaction was closed and substantially all of the assets and certain liabilities of Speechphone and related entities listed above were acquired by the Company.  For accounting purposes, the acquisition of substantially all of the assets and certain liabilities of Speechphone by the Company has been recorded as a reverse acquisition of a public company and recapitalization of Speechphone based on the factors demonstrating that Speechphone represents the accounting acquirer.  The historic financial statements of Speechphone and related entities, while historically presented as an LLC equity structure, have been retroactively presented as a corporation for comparability purposes.  The Company changed its business direction and is now a voice recognition technology company focused on enabling access to any information through any device using speech technology.


6
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





Basis of presentation





The condensed interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.





These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed interim financial statements be read in conjunction with the financial statements of the Company for the years ended December 31, 2010 and 2009 and notes thereto included in the Company’s 10-K filed on April 1, 2011. The Company follows the same accounting policies in the preparation of interim reports.





Results of operations for the interim period are not indicative of annual results.





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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Generally, matters subject to estimation and judgment include amounts related to asset impairments, useful lives of fixed assets and capitalization of costs for software developed for internal use.  Actual results could differ from those estimates.





Cash and Cash Equivalents





The Company considers highly liquid investments with insignificant interest rate risk and original maturities of three months or less to be cash equivalents.  Cash equivalents consist primarily of interest-bearing bank accounts and money market funds.  The Company’s cash positions represent cash on deposit in checking accounts.  These assets are generally available on a daily basis and are highly liquid in nature.





Revenue Recognition





For recognizing revenue, the Company applies the provisions of the Revenue Recognition Topic of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”).  Revenues are generated from telephony services including activation fees, hardware fees and monthly usage fees. In most cases, the services performed do not require significant production, modification or customization of the Company’s software or services; therefore, revenues for the hardware fees and monthly usage fees are recognized when evidence of a completed transaction exists, when services have been rendered. The Company recognized revenue from sales of $534,138 and $673,851 during the six months ended June 30, 2011 and 2010, respectively.


7
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





The activation fees generated from new accounts are recorded as deferred revenue and are amortized over the estimated average customer relationship period.  The net unamortized activation fees were $63,553 and $84,238 at June 30, 2011 and December 31, 2010, respectively.  The costs associated with these activation fees are recorded as deferred costs and are similarly amortized over the estimated average customer relationship period.  The net unamortized costs are $15,890and $21,061 at June 30, 2011 and December 31, 2010, respectively.  For both the activation fees and costs associated therewith, the estimated average customer relationship period was 24 months for the six months ended June 30, 2011.





Software Development Costs





The Company has adopted the provisions of the Software Topic of the FASB ASC 350 to account for its internally and externally developed software costs since the Company is dependent on the internal use automated speech recognition software to provide the enhanced services.  The capitalization of software development costs begins when a product’s technological feasibility has been established and ends when the product is available for use. Software development costs include direct costs incurred subsequent to establishment of technological feasibility for significant product enhancements.  Amortization is computed on an individual project basis using the straight-line method over the estimated economic life of the projected product, generally three to five years.





As of June 30, 2011, software development costs not yet amortized are $565,682.  During the six months ended June 30, 2011 and 2010, amortization was $48,604 and $0, respectively.





Impairment





FASB ASC 360-10-35-21 requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  We regularly evaluate whether events or circumstances have occurred that indicate the carrying value of our long-lived assets may not be recoverable.  If factors indicate the asset may not be recoverable, we compare the related undiscounted future net cash flows to the carrying value of the asset to determine if impairment exists.  If the expected future net cash flows are less than the carrying value, an impairment charge is recognized based on the fair value of the asset.  An evaluation of our intangible assets was conducted utilizing the two step impairment analysis. No impairments were indicated or recorded during three months ended June 30, 2011 and 2010.








Stock-based Payments





The Company records the stock-based compensation awards issued to non-employees and other external entities for goods and services at either the fair market value of the goods received or services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30


8
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





Recent Pronouncements





From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.  If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.





NOTE 2 – GOING CONCERN





The financial statements have been presented on a going concern basis, which contemplates, but does not include adjustments for the realization of assets and satisfaction of liabilities in the normal course of business. The Company has a limited operating history and limited funds. As shown in the financial statements, the Company incurred a net loss of $7,937,230 and cash used by operations of $1,878,590 for the six months ended June 30, 2011, and had a working capital deficit of $2,041,302 as of June 30, 2011.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company believes that it is appropriate for the financial statements to be prepared on a going concern basis. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty.





The Company is dependent upon debt and equity financing to continue operations. It is management’s plans to raise necessary funds via private placements of its common stock to satisfy the capital requirements of the Company’s business plan.  There is no assurance that the Company will be able to obtain the necessary funds through continuing debt and equity financing to have sufficient operating capital to support a level of operations to obtain a level of cash flow to sustain continuing operations. If the Company is successful in raising the necessary funds, there is no assurance that the Company will successfully implement its business plan. The Company’s continuation as a going concern is dependent on the Company’s ability to raise additional funds through a private placement of its common stock or debt sufficient to meet its obligations on a timely basis and ultimately to attain profitable operations.





NOTE 3 – CHANGES IN EXECUTIVE COMPENSATION





During the quarter ended March 31, 2011 and the reporting period ended December 31, 2010, the Company entered into employment agreements with a professional executive team.  Due to a loss in revenue as a result of a disruption of service by a third party provider during the reporting period ended March 31, 2011, the executive team agreed to modification of their employment agreements to reduce cash requirements but earn stock-based compensation.  During the quarter ended June 30, 3011, the Company renegotiated the reduction of compensation for the executive team subject to being increased upon the Company achieving revenue milestones.  In addition, each executive has agreed to receive his/her quarterly performance bonus in options to purchase common stock until such time as the Company has achieved $8MM in revenue in a twelve-month period.  The salary reductions are as follows:


9
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





·
Michael Metcalf  - salary reduced from $240,000 per year to $141,000 per year
 ·
Randy Granovetter – salary reduced from $350,000 per year to $141,000 per year
 ·
Michael Silva – salary reduced from $250,000 per year to $141,000 per year
 ·
Vic Boyd – salary reduced from $180,000 per year to $144,000 per year
 ·
Tracy Roberts – salary reduced from $180,000 per year to $102,000 per year
 ·
Andrew Fox – salary reduced from $180,000 per year to $102,000 per year
 ·
Lisa Porter – salary reduced from $180,000 per year to $102,000 per year


NOTE 4 – ACCOUNTS PAYABLE – RELATED PARTIES RESTATED





During the yearend audit for December 31, 2011, the Company determined that a liability needed to be recorded for the transfer of 1,000,000 personal shares valued at $2,000,000 from the CEO to a former executive officer of the Company for services that had been rendered.  The Company recorded the liability because it was considering whether or not to reimburse these shares to the CEO.  The shares were transferred at the beginning of 2011 and vested over a three year period with one month immediately.  During the quarter ended June 30, 2011, as a condition for obtaining the modified employment agreements, the Company determined to vest all of the shares then unvested.  This required that the remaining vested value of $1,777,778 be recorded as an accounts payable-related party and as an expense.  The financial statements have been restated to reflect the total value of $2,000,000 shares being recorded during the six months ended June 30, 2011.





NOTE 5 – LOANS PAYABLE – RELATED PARTIES





The Company received advances totaling $5,612 during the six months ended June 30, 2011. These advances are due upon demand, unsecured, and carry 0% interest.  During the six months ended June 30, 2011, the Company paid $58,256 to a related entity controlled by the shareholder and issued stock options in lieu of cash payment for the remaining balance of the loans payable to shareholder.  In addition, the Company converted $653,057 of convertible debt with a related party to 261,233 common shares during the six months ended June 30, 2011.





NOTE 6 – STOCKHOLDERS’ EQUITY





Preferred Stock





The Company is authorized to issue 10,000,000 shares of its $0.001 par value preferred stock.







10








On October 4, 2010, the Company’s board of directors authorized Series A Convertible Preferred Stock.  The Series A Convertible Preferred stock has a liquidation preference of $1.25 per share and is not entitled to dividends.  The Series A Convertible Preferred stock may be converted on a 1:1 basis into shares of common stock at any time at the option of the holder, subject to adjustments for stock dividends, combinations or splits.  The Series A Convertible Preferred stock has protective provisions.  As long as any Series A Convertible Preferred are outstanding, this Corporation shall not without first obtaining approval of the holders of at least two-thirds of the outstanding Series A Convertible Preferred which is entitled, other than solely by law, to vote with respect to the matter, and which Series  Preferred represents at least two-thirds of the voting power of the then outstanding Series A Convertible Preferred: (a) sell, convey or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is disposed of; (b) alter or change the rights, preferences or privileges of the Series A Convertible Preferred so as to affect adversely the Series A Convertible Preferred; (c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of preferred stock; (d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Series A Convertible Preferred with respect to dividends or upon liquidation, or (ii) having rights similar to any of the rights of the Preferred Stock; or amend the Corporation’s Articles of Incorporation or bylaws.





On September 30, 2010, the Company issued 2,000,000 shares of Series A Convertible Preferred stock in exchange for extinguishment of $1,700,000 in debt.





As of June 30, 2011, there have been no other issuances of preferred stock.





Common Stock





The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock.





On September 30, 2010, the Company completed its Agreement of Purchase and Sale of Assets with Speechphone, LLC, MDM LLC, Speechcard, LLC and Voiceassist and issued a total of 20,500,000 restricted shares of common stock of the Company.  In connection with the Agreement of Purchase and Sales of Assets, principal shareholders cancelled a total of 8,400,000 shares upon the close of the transaction.





During the six months ended June 30, 2011, the Company issued the following shares of $0.001 par value common stock:





·
450,000 shares for cash totaling $900,000 received in December, 2010. These shares were sold as Units which consisted of 1 restricted common share at $2.00 and one 2 year warrant at $4.00 callable at $5.00


·
35,000 shares in exchange for services received valued at $70,000 committed to in December, 2010


·
550,000 shares for cash totaling $1,100,000 received during the six months ended June 30, 2011. These shares were sold as Units which consisted of 1 restricted common share at $2.00 and one 2 year warrant at $4.00 callable at $5.00


·
45,000 shares in exchange for services received valued at $90,000


11
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





·
20,000 shares in exchange for severance with an executive of the Company valued at $30,000


·
100,000 shares in exchange for commission contract termination valued at $150,000


·
261,223 shares for debt conversion of debt totaling $653,057with related party





During the six months ended June 30, 2011, the Company committed to issue shares


of $0.001 par value common stock as follows:





·
In exchange for services - 85,000 shares of common stock valued at $152,500.  The Company issued 45,000 shares of this commitment during the period ended June 30, 2011. During July, 2011, the Company issued the remaining 40,000 shares valued at $72,500.


·
In exchange for cash - 623,000 shares of common stock valued at $623,000.  As of June 30, 2011, the shares were not issued.  During July, 2011, the Company issued 623,000 shares valued at $623,000. These shares were sold as Units which consisted of 1 restricted common share at $1.00 and one 5 year warrant at $1.50 callable at $3.00





The remaining value of the shares for the commitments for services received and cash received represent the amount in the “Shares to Be Issued” on the Balance Sheet.





NOTE 7 – WARRANTS AND OPTIONS





On January 25, 2011, the Company granted a total of 2,500,000 options from the 2010 Stock Incentive Plan to three employees as part of their employment agreements.  The options were valued using the Black Scholes model.  The assumptions used an expected term based on the simplified method ranging from three to six and a half years and a discount rate of 1.0% - 2.5%.  The Company did not have enough historical trading activity and used peer companies volatility of 68% - 75%.





The first employee received 1,000,000 options of which 500,000 vested immediately and the remaining 500,000 vest at a rate of 50,000 per quarter over the next two and a half years.  The options have an exercise price of $1.95 and can be exercised for a period of five years.  As of June 30, 2011, 600,000 options were fully vested and the Company recorded compensation expense totaling $911,787.





The second employee received 1,000,000 options of which 500,000 vested immediately and the remaining 500,000 vest at a rate of 50,000 per quarter over the next two and a half years.  The options have an exercise price of $1.95 and can be exercised for a period of ten years.  As of June 30, 2011, 550,000 options were fully vested and the Company recorded compensation expense totaling $1,026,914.


12
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





The third employee received 500,000 options of which vest at a rate of 45,455 per quarter over the next three years.  The options have an exercise price of $1.95 and can be exercised for a period of five years.  As of June 30, 2011, 26,663 options were vested and the Company recorded compensation expense totaling $53,548.  On April 19, 2011, this employee ceased employment with the Company and none of his vested options were exercised and all were returned to the stock incentive plan pool.





Options Granted





On April 13, 2011, pursuant to the employment agreement effective January 1, 2011, the Company granted Michael Silva, CFO, two million (2,000,000) options to buy shares of common stock under the Company’s 2010 Stock Option Plan.  Seven hundred fifty thousand (750,000) options are to vest monthly over 36 months and one million two hundred fifty thousand (1,250,000) are to vest upon reaching mutually agreed upon milestones.  As of the period end June 30, 2011, 125,000 options were vested and the Company recorded compensation expense of $203,873.





On June 30, 2011, Mr. Silva received an additional grant of 150,000 stock options as part of his employment contract modification.  The options vest immediately and are exercisable over a period of five years with an exercise price of $0.01.  The fair value of the stock options is $208,350 and the Company recorded compensation expense.





On April 13, 2011, pursuant to the employment agreements effective January 1, 2011, the Company granted to the following executives, Andrew Fox, Vic Boyd, Tracy Roberts, and Lisa Porter five hundred thousand (500,000) options each to buy shares of common stock under the Company’s 2010 Stock Option Plan.  These options are to vest monthly over 36 months.  Subject to Board Approval, management has recommended that each executive receive monthly stock grants to compensate for employment contract modification and for reduced salary.  Such grants will be considered based upon amount of salary reduction and as salary adjusts upward based upon Company revenues, the grants will be reduced accordingly.  At the period ending June 30, 2011, 333,333options were vested and the Company recorded compensation expense of $468,441.





On June 30, 2011, Mr. Fox, Mr. Boyd, Ms. Roberts, Ms. Porter each received an additional grant of 25,000 stock options as part of their employment contract modification.  The options vest immediately and are exercisable over a period of five years with an exercise price of $0.01.  The fair value of the stock options are $139,020 and the Company recorded compensation expense.





On April 13, 2011, the Company granted to Scott Fox pursuant to the Independent Director Stock Option Agreement two hundred twenty five thousand (225,000) options to buy shares of common stock under the Company’s 2010 Stock Option Plan.  The options are to vest monthly over 36 months. At the period ending June 30, 2011, 37,500 options were vested and the Company recorded directors expense of $52,700.


13
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





On June 30, 2011, Mr. Fox received an additional grant of 250,000 stock options as part of his role as a director of the Company.  The options vest immediately and are exercisable over a period of five years with an exercise price of $0.01.  The fair value of the stock options are $347,550 and the Company recorded compensation expense.





On June 30, 2011, Mr. Metcalf, Ms. Granovetter, and Mr. Boyd each received an additional grant of 60,000, 40,000 and 37,000 stock options, respectively, in exchange for accrued salaries and wages.  The options vest immediately and are exercisable over a period of five years with an exercise price of $0.01.  The fair value of the stock options are $190,457 and the Company recorded a reduction in accrued salaries and wages.





On June 30, 2011, 9 individuals consisting of executive and employees received a total of 70,000 stock options in exchange for agreeing to a reduction in salaries and wages.  The options vest immediately and are exercisable over a period of five years with an exercise price of $0.01.  The fair value of the stock options are $97,314 and the Company recorded compensation expense.





On June 29, 2011 all the options granted under the 2010 Stock Incentive Plan were cancelled. On June 30, 2011 the Company issued the holders of the cancelled options the same number of options with the same vesting and exercise schedule under the 2011 Stock Incentive Plan. See below for further description.  A total of 7 officers and executive and 1 director were affected by the cancelled options from the 2010 Stock Incentive Plan to the 2011 Stock Incentive Plan.  It was accounted for as a modification of the stock option and the exercise price of the options were reduced to $1.  The total incremental cost for the modified stock option award totaled $1,897,447 which will get amortized over the remaining vesting period of the stock options.





NOTE 8 – SUBSEQUENT EVENTS





Subsequent to period ended June 30, 2011, the Board of Directors granted an investor relations company an option to purchase 40,000 shares of Common Stock of the Company under the 2011 Stock Incentive Plan, with an exercise price of one cent ($0.01). The Option will be exercisable for five years.





Rescission Offer





An aggregate of one million shares of our common stock were issued from December 2010 to March 2011, to 7 accredited investors pursuant to subscription agreements.  The company made rescission offers to the holders of these shares during June 2011 as permitted under the applicable state securities law. On June 30, 2011, each of the investments were rescinded pursuant to Rescission Agreements between us and each accredited investor. Pursuant to the Rescission Agreement, the certificates representing all one million shares of common stock were returned to us, together with all documentation to transfer legal title in the common stock back to us. Upon receipt of the certificates representing the common stock, subsequent to period ended, we directed our transfer agent to cancel the common stock and return to treasury.


14
 Voice Assist, Inc.
 Notes To Condensed Financial Statements
 (Unaudited)





In accordance with the Rescission Agreement, subsequent to the second quarter end, on August 15, 2011 the Company issued to 7 accredited investors a total of two Million Units consisting of one (1) share of restricted common stock and one (1) Callable Warrants to purchase one (1) share of restricted common stock at $1.50 per share, callable if the market price of the Company’s Common Stock closes at $3.00 per share for ten (10) consecutive days.  The Warrants are exercisable for five (5) years. The investors purchased the two Million Units for a total purchase price of $2,000,000 all of which was paid in cash.





Shares Issued





During July, 2011, the Company issued a total of 663,000 shares of common stock.  Of the total, 623,000 shares were issued for cash received during the six months ended June 30, 2011 and 40,000 shares were issued in exchange for services performed during the six months ended June 30, 2011.





On June 30,2011 the Company agreed to issue a total of 250,000 restricted shares of Common Stock to Summit Capital USA, Inc. pursuant to the Consulting Agreement entered into on June 30, 2011, effective July 1 through the end of the year.





NOTE 9 – RESTATEMENT FOOTNOTE





On or about March 22, 2012, the Board of Directors of the Company concluded that the Company’s financial statements for the three months ended June 30, 2011 and six months ended June 30, 2011 should no longer be relied upon because of an error in such financial statements. These financial statements did not disclose the issuance of personal shares from the CEO of the Company to a former executive officer.




Due to an administrative oversight, the value of the shares was not reflected in the Company’s unaudited financial statements for the three month period ended June 30, 2011 and the six months ended June 30, 2011.  The exclusion of this transaction resulted in an understatement of General and Administrative expenses of $1,777,777 for the three months ended June 30, 2011 and $2,000,000 for the six months ended June 30, 2011 and an understatement of Accounts Payable-Related Parties of $2,000,000 for the six months ended June 30, 2011.




June 30, 2011As PreviouslyReported

Adjustments

As RestatedBalance Sheet Line Items AffectedAccounts Payable - Related Parties
$                -

$   2,000,000

$   2,000,000Total Current Liabilities
476,845

2,000,000

2,476,845Total Liabilities
476,845

2,000,000

2,476,845Accumulated Deficit
(18,633,421)

(2,000,000)

(20,633,421)Total Stockholders Deficit
$      781,261

$  (2,000,000)

$  (1,218,739)Three Months Ended June 30, 2011

Six Months Ended June 30, 2011Previously





PreviouslyReported

Adjustment

Restated

Reported

Adjustment

RestatedStatement of Operations Line Items AffectedGeneral and Administrative Expense
$   2,893,444

$   1,777,778

$   4,671,222

$    5,631,011

$   2,000,000

$   7,631,011Total Operating Expenses
3,327,195

1,777,778

5,104,973

6,469,910

2,000,000

8,469,910Net Loss from Operations
(3,028,106)

(1,777,778)

(4,805,884)

(5,935,772)

(2,000,000)

(7,935,772)Net Loss before Income Tax
(3,028,681)

(1,777,778)

(4,806,459)

(5,936,898)

(2,000,000)

(7,936,898)Net Loss
$ (3,028,681)

$  (1,777,778)

$  (4,806,459)

$  (5,937,230)

$ (2,000,000)

$ (7,937,230)


15


FORWARD-LOOKING STATEMENTS





This document contains forward-looking statements.  All statements other than statements of historical fact are “forward-looking statements”, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.





Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words.  These forward-looking statements present our estimates and assumptions only as of the date of this report.  Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.





Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:





o
our current lack of working capital;


o
inability to raise additional financing;


o
the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;


o
deterioration in general or regional economic conditions;


o
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;


o
inability to efficiently manage our operations;


o
inability to achieve future sales levels or other operating results; and


o
the unavailability of funds for capital expenditures.





For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see the risk factors listed in our 2010 Form 10-K on pages 10 to 20, filed with the Securities Exchange Commission on April 1, 2011.


16





Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.





The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this annual report. References in the following discussion and throughout this annual report to “we”, “our”, “us”, “Voice Assist”, “the Company”, and similar terms refer to Voice Assist, Inc. unless otherwise expressly stated or the context otherwise requires. This discussion contains forward-looking statements that involve risks and uncertainties. Voice Assists’ actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this filing.








OVERVIEW





Voice Assist is a hosted speech services provider offering cloud based speech recognition technology designed to voice enable mobile applications.  Voice Assist provides hands-free safe driving applications such as voice dialing, email by voice, text by voice and posting to social networks by voice.  Voice Assist also works with 3rd party developers to voice enable any mobile application.  Voice Assist sells direct to the public via our website at www.voiceassist.com and also licenses technology and provides hosted services to enterprises, 3rd party developers, wireless and wireline service providers and value added resellers.





We believe that the presence of voice technology as an interface in mobile communications has real advantages in a mobile world. Voice interface technology makes portable communications more effective and safer to use. Our development efforts are currently focused on the mobile workforce and building vertical enterprise applications to, among other things, maximize employee productivity and safety while driving.  Voice Assist is also focused on building tools to empower third party developers to add voice technology into existing applications.





Our strategy is to be a leader in cloud based speech recognition services.  We want to leverage our infrastructure, technology, speech server farm, simple APIs and setup process, and expertise to provide a super easy, fast and cost effective means for developers to integrate to and deploy speech recognition technology without requiring a deep knowledge of speech application development or optimization.





Voice Assist and developers will build simple to use services with wide market appeal and augment this effort with vertical applications designed for specific purposes such as CRM, Healthcare, Insurance and other vertical markets. Voice Assist will monetize its Hosted Speech Platform (HSP) on a usage model or through its own services offerings built upon the HSP.





We intend to aggressively market our “safe driving” application and continue to form strategic alliances with value added resellers and carriers.  We believe the combination of these activities will result in increased revenue over time.


17





How We Generate Revenue





We currently earn our revenues from enterprises and consumers who pay us a monthly recurring fee to use our services.  We also generate revenue by hosting speech applications and providing enhanced communication services to resellers and other service providers.  When the development portal is complete, we also expect to generate revenue on a pay per use basis and/or also based on revenue sharing with 3rd party application developers.





We anticipate revenue will increase in the next twelve months, for which we can provide no assurance. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern.





Trends in Our Business





On June 13, 2011, the Company entered into a Placement Agent and Advisory Services Agreement with Monarch Bay Associates, LLC, wherein Monarch Bay will act as a non-exclusive Placement Agent with respect to finding investors for the Company’s current offering of the Company’s securities. Pursuant to the agreement, Voice Assist will pay Monarch Bay a Success Fee comprised of (1) a cash fee equal to 7% of gross proceeds raised by Monarch Bay in the Financing and (2) 7% of the securities issued by the Company to Monarch Bay investors. The agreement will be effective through the first annual anniversary of the closing date of the Financing.





On June 30, 2011, the Company executed a consulting agreement with Summit Capital USA, Inc, effective July 1 through the remainder of the year, wherein Summit will provide Voice Assist with the services of a corporate consultant in connection with finance relations, corporate financial services and mergers and acquisitions for the remainder of 2011. As consideration for those services, Voice Assist will issue Summit 250,000 restricted shares of Common Stock.





On June 3, 2011 the Company entered into a Placement Agent Agreement with Paulson Investment Company wherein Paulson agreed to act as a non-exclusive Placement Agent in connection with a Private Placement of a minimum of $1,000,000 and up to a maximum of $2,000,000 of an aggregate number of Units. The Units consist of one (1) share of restricted common stock and one (1) Callable Warrant to purchase one (1) share of restricted common stock at $1.50 per share, callable if the market price of the Company’s Common Stock closes at $3.00 per share for ten (10) consecutive days.  The Warrants are exercisable for five (5) years. Voice Assist agreed to pay Paulson a Placement Agent Fee equal to 10% of the aggregate funds raised in the Placement in addition to a five-year Placement Agent Warrant for 10% of the aggregate funds raised in the Placement. The agreement shall be terminated on the close of business (PST) on July 31, 2011, unless extended for up to two 30 day periods, by mutual agreement.  Subsequent to the reporting period on July 31, 2011, the parties extended the agreement.


18





Results of Operations





Comparison of Quarter Ended and Six Months Ended June 30, 2011 and June 30, 2010





The following table sets forth key components of our results of operations during the three months and six months ended June 30, 2011 and June 30, 2010. The financial data should be read in conjunction with the financial statements, related notes and other financial information included in this Current Report.


Restated 04/01/2011 to 06/30/2011


04/01/2010 to 06/30/2010


Restated 01/01/2011 to 06/30/2011


01/01/2010 to 06/30/2010OPERATING REVENUESRevenues

$
299,089


$
298,644


$
534,138


$
673,851OPERATING EXPENSESDirect Cost of Services


137,876



82,598



248,948



165,196Other Costs


1,733



2,465



4,201



8,291Total Direct Cost of Services


139,609



85,063



253,149



173,487Legal and Professional


255,390



1,750



509,928



2,500Selling, General and Administrative


4,671,222



154,347



7,631,011



338,942Selling, General and Administrative - Related Parties


0



75,228



-



153,566Depreciation and Amortization


38,752



11,915



75,822



21,461Total Operating Expenses


5,104,973



328,303



8,469,910



689,956Net (Loss) from Operations


(4,805,884
)


(29,659
)


(7,935,772
)


(16,105
)OTHER INCOME AND (EXPENSE)Interest Expense


(575
)


(18,215
)


(1,126
)


(126,100
)Other Income (Expense)


-



(200
)


0



9,367Total Other Income (Expense)


(575
)


(18,415
)


(1,126
)


(116,733
)Net (Loss) before Income Taxes


(4,806,459
)


(48,074
)


(7,936,898
)


(132,838
)Income Tax Expense


-



800



(332
)


-NET (LOSS)

$
(4,806,459
)

$
(47,274
)

$
(7,937,230
)

$
(132,838
)








Revenues.Our revenues decreased to $534,138 in the six months ended June 30, 2011 from $673,851 last year, representing a 21% decrease year-over-year.  The decrease in revenues is as a result of lower non-reimbursable engineering (NRE) revenue and retail subscribers disconnections due to a service outage by a service provider and the impact of the prevailing economic downturn.  While we had redundancy and mitigation infrastructure in place, the lack of a timely response by our service provider led to a loss of subscribers.  We have made additional investment and taken additional measures to ensure any such outage in the future will not have as material an impact on our revenues.


19





Total Cost of Services. Our total cost of services increased $79,662, or 46%, to $253,149 in the six months ended June 30, 2011 from $173,487 for the same period in 2010.  The increase in our total cost of services is a result of the loss of retail subscribers due to a service outage by a service provider and fixed minimum commitments to that provider.  We are disputing the fees based upon our loss of subscribers and anticipate a reversal of fees and subsequent lowering of cost of services in the future.





Legal and Professional. Our legal and professional expenses increased $507,428, or 20,297%, to $509,928for the six months ended June 30, 2011 from $2,500 for the same period in 2010.  The increase in legal and professional fees was the result of non-cash consulting expenses and legal fees incurred in connection with preparation and filing requirements as a public company, the preparation and filing of additional patent applications, investor relations fees, and outside auditor accounting fees.





Selling, General and Administrative. Our selling, general and administrative expenses increased $7,292,069 or 2,151%, to $7,631,011 for the six months ended June 30, 2011 from $338,942for the same period in 2010. The increase was largely due to $3.9MM in non-cash stock option compensation expense, the recording of the value of the transfer of personal shares of the CEO to a former executive officer and other non-cash expenses as well as increased payroll and travel related expenses as the Company expanded its executive staff and customer focus.





Selling, General and Administrative – Related Parties. Our selling, general and administrative – related parties’ expenses decreased $153,566, or 100%, to $0 for the six months ended June 30, 2011 from $153,566 in the same period in 2010. The decrease was the result of engaging non-related party professional staffing.





Depreciation and Amortization. Our depreciation and amortization expenses increased $54,361, or 253%, to $75,822 for the six months ended June 30, 2011 from $21,461 for the same period in 2010. The increase was the result of software development costs being amortized because one of the capitalized projects was launched at the beginning of 2011.





Net (Loss) from Operations. We had $7,935,772 in net loss from operations for the six months ended June 30, 2011, as compared to net loss from operations of $16,105 during the same period in 2010.  The increased loss was the result of non-cash stock option compensation expense, increased expenses related to public reporting and compliance, the increase in professional staffing, and the recording of the value of the transfer of personal shares of the CEO to a former executive officer .





Interest Expense.Our interest expense decreased $124,974, or 99%, to $1,126 for the six months ended June 30, 2011 from $126,100 in the same period in 2010. The decrease was the result of the elimination of loans from related parties on which interest was calculated and applied.





Other Income. Our other income decreased $9,367 for the six months ended June 30, 2011 from $9,367 in the same period in 2010. The decrease was the result of discontinuing a sublease of office space.


20





Net Loss.For the six months ended June 30, 2011, we generated a net loss of $7,937,230, an increase of $7,804,392, or 5,875%, from a net loss of $132,838 for the same period in 2010. This increase was primarily attributable to non-cash stock option compensation expense, increased expenses related to public reporting and compliance, and the increase in professional staffing.





Liquidity and Capital Resources





The following table summarizes total current assets, total current liabilities and working capital at June 30, 2011 compared to December 31, 2010.





Restated



RestatedJune 30,

December 31,

Increase/(Decrease)2011

2010

$
%Current Assets
$      435,543

$     697,778

$  (262,235)
-38%Current Liabilities
2,476,845

1,071,462

1,405,383
131%Working Capital (deficit)
$ (2,041,302)

$  (373,684)

$ 2,414,986
646%








Liquidity is a measure of a company’s ability to meet potential cash requirements. We have historically met our capital requirements through the issuance of stock and by borrowings. In the future, we anticipate we will be able to provide the necessary liquidity needed from the revenues generated from operations.





Since inception, we have financed our cash flow requirements through issuance of common stock and related party notes payable. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending additional revenues. Additionally, we anticipate obtaining additional financing to fund operations through common stock offerings to the extent available or to obtain additional financing to the extent necessary to augment our working capital. In the future we need to generate sufficient revenues from product and software sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans.  There can be no assurance we will be successful in raising the necessary funds to execute our business plan.





During the six months ended June 30, 2011, the current assets decreased by $262,235 when compared to December 31, 2010 due to the cash requirements during the period.  The Company received a total of $1,826,057 cash from investors during the reporting period.





During the six months ended June 30, 2011, the current liabilities increased by $1,405,383 when compared to December 31, 2010 current liabilities of $1,071,462.  The increase can be attributed to the recording of the value of transfer of personal shares of the CEO to a former executive for a total of $2,000,000, increases in accrued salaries and payables with an offsetting decrease for the conversion of debt to common stock for a total of $653,057.


21





We anticipate that we may incur operating losses during the next twelve months. The Company’s lack of operating history makes predictions of future operating results difficult to ascertain.  Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. These factors raise substantial doubt about our ability to continue as a going concern. To address these risks, we must, among other things, increase our customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our website, provide national and regional industry participants with an effective, efficient and accessible website on which to promote their products and services through the Internet, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.





Going Concern





The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of Voice Assist as a going concern. Voice Assist may not have a sufficient amount of cash required to pay all of the costs associated with operating and marketing of its services. Management intends to use revenues and security sales to mitigate the effects of cash flow deficits; however no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should Voice Assist be unable to continue existence.





Significant changes in the number of employees.


On April 19, 2011, Mr. Robb Cason, Vice President of Enterprise Sales, resigned.  The Company issued Mr. Cason 20,000 shares of common stock in association with his separation. These shares were valued at $1.50 per share which was the stock price at day of issuance resulting in a total value of $30,000.  Mr. Andrew Fox has replaced Mr. Cason as the Vice President of Sales.


Changes in executive compensation.


During the fiscal year ended December 31, 2010 and the first quarter ended March 31, 2011, the Company entered into employment agreements with a professional executive team.  Due to a loss in revenue as a result of a disruption of service by a third party provider during the previous reporting period, the executive team agreed to modification of their employment agreements to reduce cash requirements but earn stock-based compensation.
 
 On May 3, 2011, the Company renegotiated the reduction of compensation for the executive team subject to being increased upon the Company achieving revenue milestones.  In addition, each executive has agreed to receive his/her quarterly performance bonus in common stock calculated at the same rate as the employee incentive stock options in each calendar quarter until such time as the Company has achieved $8MM in revenue in a twelve-month period.  The salary reductions are as follows:


22





·
Michael Metcalf  - salary reduced from $240,000 per year to $141,000 per year
 ·
Randy Granovetter – salary reduced from $350,000 per year to $141,000 per year
 ·
Michael Silva – salary reduced from $250,000 per year to $141,000 per year
 ·
Vic Boyd – salary reduced from $180,000 per year to $144,000 per year
 ·
Tracy Roberts – salary reduced from $180,000 per year to $102,000 per year
 ·
Andrew Fox – salary reduced from $180,000 per year to $102,000 per year
 ·
Lisa Porter – salary reduced from $180,000 per year to $102,000 per year





Off-Balance Sheet Arrangements





We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.





Critical Accounting Policies and Estimates





The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions.





Revenue Recognition





For recognizing revenue, the Company applies the provisions of the Revenue Recognition Topic of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”).  Revenues are generated from telephony services including activation fees, hardware fees and monthly usage fees. In most cases, the services performed do not require significant production, modification or customization of the Company’s software or services; therefore, revenues for the hardware fees and monthly usage fees are recognized when evidence of a completed transaction exists, generally when services have been rendered.





The activation fees generated from new accounts are recorded as deferred revenue and are amortized over the estimated average customer relationship period.  The net unamortized activation fees were $63,553 at the six months ended June 30, 2011.  The costs associated with these activation fees are recorded as deferred costs and are similarly amortized over the estimated average customer relationship period.  The net unamortized costs are $15,890 at the six months ended June 30, 2011.  For both the activation fees and costs associated therewith, the estimated average customer relationship period was 24 months for the six months ended June 30, 2011.


23





Stock-Based Compensation





The Company accounts for stock-based awards to employees in accordance with Financial Accounting Standards Board’s Accounting Standard Codification (ASC) 718 “Stock Compensation.” Options granted to consultants, independent representatives and other non-employees are accounted for using the fair value method as prescribed by ASC 718.








Item 3. Quantitative and Qualitative Disclosures About Market Risk.





This item in not applicable as we are currently considered a smaller reporting company.





Item 4T. Controls and Procedures.





Evaluation of Disclosure Controls and Procedures





Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report.  Based on that evaluation, it was concluded that our disclosure controls and procedures are ineffective in timely alerting to material information relating to us required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports filed or submitted under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





Changes in Internal Control Over Financial Reporting





There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.





Limitations on Effectiveness of Controls and Procedures





In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.








PART II – OTHER INFORMATION





Item 1. Legal Proceedings.





We are not a party to any material legal proceedings.


24





Item 1A. Risk Factors.





The risk factors listed in our 2010 Form 10-K on pages 10 to 20, filed with the Securities Exchange Commission on April 1, 2011, are hereby incorporated by reference.





Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.





Stock and Warrant Issuances Pursuant to Subscription Agreements





In the second quarter ended June 30, 2011, the Company issued to accredited investors, a total of 623,000 Units consisting of one (1) share of restricted common stock and one (1) Callable Warrants to purchase one (1) share of restricted common stock at $1.50 per share, callable if the market price of the Company’s Common Stock closes at $3.00 per share for ten (10) consecutive days.  The Warrants are exercisable for five (5) years. The investors purchased the 623,000 Units for a total purchase price of $623,000, all of which was paid in cash.





Subsequent to the second quarter end, on August 15, 2011 the Company issued to 7 accredited investors a total of two Million Units consisting of one (1) share of restricted common stock and one (1) Callable Warrants to purchase one (1) share of restricted common stock at $1.50 per share, callable if the market price of the Company’s Common Stock closes at $3.00 per share for ten (10) consecutive days.  The Warrants are exercisable for five (5) years. The investors purchased the two Million Units for a total purchase price of $2,000,000all of which was paid in cash prior to June 30, 2011. The previous shares issued in relation to this cash are rescinded as discussed below.





We believe that the issuance and sale of the above shares and warrants was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The shares were sold directly by us and did not involve a public offering or general solicitation.  The recipients of the shares and warrants were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the sale of the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with the Company’s management on several occasions prior to their investment decision.  There were no commissions paid on the issuance and sale of the shares.





Rescission Offer





An aggregate of one million shares of our common stock were issued from December 2010 to March 2011, to 7 accredited investors pursuant to subscription agreements.  The company made rescission offers to the holders of these shares during June 2011 as permitted under the applicable state securities law. On June 30, 2011, each of the investments were rescinded pursuant to Rescission Agreements between us and each accredited investor. Pursuant to the Rescission Agreement, the certificates representing all one million shares of common stock were returned to us, together with all documentation to transfer legal title in the common stock back to us. Upon receipt of the certificates representing the common stock, subsequent to period ended, we directed our transfer agent to cancel the common stock and return to treasury.


25





Stock Issued as Payment to Third Party





In May 2011, the Company issued a total of 35,000 shares as partial payment for contractual obligations with an investor relations companies.





On June 30 2011 the Company agreed to issue a total of 250,000 restricted shares of Common Stock to Summit Capital USA, Inc. pursuant to the Consulting Agreement entered into on June 30, 2011, effective July 1 through the end of the year.





We believe that the issuance and sale of the above shares and warrants was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The shares were sold directly and did not involve a public offering or general solicitation.  The recipients of the shares and warrants were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the sale of the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with the Company’s management on several occasions prior to their investment decision.  There were no commissions paid on the issuance and sale of the shares.





Issuance and Grant of Stock Options





2010 Stock Incentive Plan





On April 13, 2011, pursuant to the employment agreement effective January 1, 2011, the Company granted to Michael Silva two million (2,000,000) options to buy shares of common stock at Fair Market Value under the Company’s 2010 Stock Option Plan. Seven hundred fifty thousand (750,000) options are to vest monthly over 36 months and one million two hundred fifty thousand (1,250,000) are to vest upon reaching mutually agreed upon milestones.





On April 13, 2011, pursuant to the employment agreements effective January 1, 2011 the Company granted to Mr. Andrew Fox, Mr. Vic Boyd, Ms. Tracy Roberts, and Ms. Lisa Porter five hundred thousand (500,000) options each to buy shares of common stock at Fair Market Value under the company’s 2010 Stock Option Plan, vesting monthly over 36 months.  Subject to Board Approval, management has recommended that each executive receive monthly stock grants to compensate for contract modification and reduced salary.  Such grants will be considered based upon amount of salary reduction and as salary adjusts upward based upon company revenues grants will be reduced accordingly.





On April 13, 2011, the Company granted to Scott Fox pursuant to the Independent Director Stock Option Agreement two hundred twenty five thousand (225,000) options to buy shares of common stock at Fair Market Value under the Company’s 2010 Stock Option Plan, vesting monthly over 36 months.





On June 29, 2011 all the options granted under the 2010 Stock Incentive Plan were cancelled. On June 30, 2011 the Company issued the holders of the cancelled options the same number of options with the same vesting and exercise schedule under the 2011 Stock Incentive Plan. See below for further description.


26








2011 Stock Incentive Plan





On June 27, 2011, the Company adopted a 2011 Stock Incentive Plan.  The purposes of the 2011 Plan are (a) to enhance the Company’s ability to attract and retain the services of qualified employees, officers and Directors, contractors and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.





Shares that are eligible for grant under the 2011 Plan to participants include Incentive Stock Options, Non-Qualified Stock Options and Restricted Stock.  “Incentive Options” are any options designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.  “Non-Qualified Options” are any options that are not an Incentive Option.  To the extent that any option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, including, without limitation, for failure to meet the limitations applicable to a ten percent stockholder or because it exceeds the annual limit, it shall to that extent constitute a Non-Qualified Option.  “Restricted Stock” are shares of Common Stock issued pursuant to any restrictions and conditions as established in the 2011 Plan.





The 2011 Plan provides that a maximum of Ten Million (10,000,000) shares of common stock are available for grant as awards under the 2011 Plan.





On June 30, 2011, the Company granted a total of 707,000 Non-Qualified stock options under the Company’s 2011 Stock Incentive Plan to the following employees, contractors and directors for services provided to the Company and in consideration for taking reduced salaries and/or amending their employment contracts:





Name
Title
Number of OptionsMike Silva
Employee
150,000Tracy Roberts
Employee
34,000Lisa Porter
Employee
34,000Vic Boyd
Employee
65,500Andrew Fox
Employee
34,000Scott Fox
Director
250,000Michael Metcalf
Employee and Director
60,000Randy Granovetter
Employee and Director
40,000Diane Mayer
Independent Contractor
10,000Laura Juarez
Independent Contractor
5,000Nick Swyhart
Employee
4,000Hung Duong
Employee
13,500Steve Do
Employee
7,000





The above options vested immediately upon grant and have an exercise price of one cent ($0.01) and are exercisable until June 29, 2016.


27





On June 30, 2011, the board of directors approved up to a total of 66,750, stock options to be granted on a quarterly basis, under the Company’s 2011 Stock Incentive Plan to the following individuals for services provided to the Company and in consideration for reduced fees/salaries:





Name
Title
Number of OptionsTracy Roberts
Employee
4,500Vic Boyd
Employee
1,750Andrew Fox
Employee
4,500Diane Mayer
Independent Contractor
2,500Laura Juarez
Independent Contractor
1,000Nick Swyhart
Employee
1,000Hung Duong
Employee
3,500Steve Do
Employee
3,500





The Company anticipates that the total amounts of the grants will not exceed 27,000 options per month and will cease when the Company’s revenues reach three million dollars ($3,000,000) in a twelve (12) month period, or until termination of employment, whichever occurs first. The options vest upon grant each month and have an exercise price of one cent ($0.01) and are exercisable until June 29, 2016.





On June 30, 2011,the board of directors approved a total of 6,225,000 stock options to be granted under the Company’s 2011 Stock Incentive Plan to the following individuals:





Name
Title
Number of OptionsMichael Silva
Employee
2,000,000Randy Granovetter
Employee and Director
1,000,000Michael Metcalf
Employee and Director
1,000,000Andrew Fox
Employee
500,000Vic Boyd
Employee
500,000Lisa Porter
Employee
500,000Tracy Roberts
Employee
500,000Scott Fox
Independent Director
225,000





These options are to replace the options granted under the 2010 Stock Incentive Plan that were canceled on June 29, 2011. All the options have an exercise price of $1.00, and will expire in 5 years. All of the options vest monthly for 30 months with the exception of Michael Metcalf’s which vest monthly for 21 months and Randy Granovetter’s which vests monthly for 23 months.





Subsequent to period ended June 30, 2011, the Board of Directors granted an investor relations company an option to purchase 40,000 shares of Common Stock of the Company under the 2011 Stock Incentive Plan, with an exercise price of one cent ($0.01). The Option will be exercisable for five years.


28





We believe that the grant of the above options is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipients of the options were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the grant of the options, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our management on several occasions prior to their investment decisions.





Issuer Purchases of Equity Securities





We did not repurchase any of our equity securities during the quarter covered by this report.





Item 3.               Defaults Upon Senior Securities.





None.





Item 5.               Other Information.





None.





Item 6.               Exhibits.





Incorporated by referenceExhibit

Number
Exhibit Description
Filed

Herewith
Form
Period

ending
Exhibit
Filing date31.1
Certification of CEO  pursuant to Section 302 of the Sarbanes-Oxley Act
X31.2
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act
X32.1
Certification if CEO pursuant to Section 906 of the Sarbanes-Oxley Act
X32.2
Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act
X101.INS*
XBRL Instance Document
X101.SCH*
XBRL Taxonomy Extension Schema
X101.CAL*
XBRL Taxonomy Extension Calculation Linkbase
X101.DEF*
XBRL Taxonomy Extension Definition Linkbase
X101.LAB*
XBRL Taxonomy Extension Label Linkbase
X101.PRE*
XBRL Taxonomy Extension Presentation Linkbase
X





*
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.


29


SIGNATURES





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








VOICE ASSIST, INC.








By: /S/ Donna Moore


Donna Moore, Chief Financial Officer and Principal Financial Officer








By: /S/ Michael Metcalf


Michael Metcalf, Chief Executive Officer and Principal Executive Officer





Date: May 2, 2012