UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549


Form
10-K
 
 x
                      ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended December
      31, 2008r
                      TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 COMMISSION
FILE NUMBER 000-29341
 
 iVoice,
      Inc.
                (Name
      of small business issuer in its charter)New
      Jersey
                (State
      or other jurisdiction of incorporation or organization)
              51-0471976
                (I.R.S.
      Employer Identification No.)750
      Highway 34, Matawan, NJ
                (Address
      of principal executive offices)
              07747
                (Zip
      Code)Issuer's
      telephone number (732)
      441-7700Securities
      registered under Section 12(b) of the Exchange Act:
  None.Securities
      registered under Section 12(g) of the Exchange Act: Class A Common, No Par
      Value
  Indicate
by check mark if the registrant is a well-known seasoned issuer (as defined in
Rule 405 of the Securities Act). Yes r No x
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. Yes r No x
  Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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. x Yes r No
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§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 r No x
  Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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
amendment to this Form 10-K. x
  Large
Accelerated filer r                            Accelerated
filer  r Non-accelerated
filer r                
(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 r No x
  Issuer's
revenues for its most recent fiscal year. $173,424
  As of
April 13, 2009, the Registrant had 2,602,170,527 shares of Class A, no par value
common stock outstanding. The aggregate market value of the voting stock held by
non-affiliates as of June 30, 2008 based upon the average bid and ask prices on
that date was $515,350.
 
 As of
April 13, 2009, the Registrant had no shares of Class B, no par value per share,
common stock outstanding.
  Transitional
Small Business Disclosure Format (Check one): Yes r  No x
   Table of Contents
 
 Tableof Contents
 
 PagePART
      IItem
      1. Description of business
                      3Item
      2. Description of property
                      11Item
      3. Legal proceedings
                      11PART
      IIItem
      5. Market for Registrant's Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities.
                      12Item
      7. Management's Discussion and Analysis of Financial
      Condition and Results of Operations.
                      15Item
      8. Financial Statements and Supplementary
      Data
                      17Item
      9A(T). Controls & Procedures
                      17PART
      IIIItem
      10. Directors, Executive Officers and Corporate
      Governance.
                      19Item
      11. Executive Compensation.
                      20Item
      12. Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder Matters.
                      21Item
      13. Certain Relationships and Related Transactions and
      Director Independence.
                      22Item
      14. Principal Accountant Fees and
    Services.
                      22PART
      IVItem
      15. Exhibits and Financial Statement
      Schedules.
                      23
 
  
  Table of Contents
  PART
I
   Item1. Description of Business.
  Background
  Our
corporate configuration is the result of a number of separate transactions over
the past several years. On May 21, 1999, International Voice Technologies,
Corp., a Delaware corporation, merged with and into Visual Telephone
International, Inc. Visual Telephone changed its name to iVoice.com, Inc. and we
changed our NASD OTC Bulletin Board trading symbol to “IVOC.”
  On April
25, 2003, we formed a wholly owned subsidiary in the State of New Jersey and on
May 5, 2003, we changed our state of incorporation from Delaware to New Jersey
by merging into the newly formed New Jersey subsidiary.
  On
February 2, 2004 and August 5, 2005, we spun out four of our operating companies
by distributing special dividends to our shareholders of shares of Class A
Common Stock of our three wholly owned subsidiaries, Trey Resources Inc, iVoice
Technology Inc, Deep Field Technologies Inc and SpeechSwitch Inc.
  In May
2005, we formed a new wholly owned subsidiary, iVoice Acquisition Corporation in
the State of New Jersey to facilitate future acquisitions made by
us.
  On
January 6, 2006, iVoice Acquisition Corporation entered into an Agreement and
Plan of Merger with Thomas Pharmaceuticals Ltd., a New York corporation (“Thomas
NY”), Farris M. Thomas, Jr., an individual (“Thomas”), John E. Lucas, an
individual (“Lucas”) Richard C. Brogle, (“Brogle”), Nina Schwalbe, an
individual, (“Schwalbe”), John H. Kirkwood, an individual (“Kirkwood”), and
Maureen Gillespie, an individual (“Gillespie”) (Brogle, Schwalbe, Kirkwood,
Gillespie, Thomas and Lucas are collectively as the “Thomas Shareholders”).
Under the terms of the Agreement, Thomas NY merged into a wholly owned
subsidiary of us, Thomas NJ. The Thomas Shareholders of Thomas NY exchanged all
of their common stock shares of Thomas NY for 500,000 Thomas NJ Series A
Convertible Preferred Stock (“Series A Preferred Stock”) shares. In 2007, the
Series A Preferred Stock shareholders elected to have the Company spin-off
Thomas NJ from iVoice.
  On March
6, 2006, we formed a new wholly owned subsidiary, iVoice Innovations, Inc. in
the State of New Jersey.  This subsidiary will be used to either
acquire other operating companies or for a potential spin-off of an existing
asset of ours..
  On April
10, 2006, pursuant to approval by a majority of voting shares at the Annual
Meeting of Shareholders held on March 31, 2006, an Amendment to the Certificate
of Incorporation dated April 7, 2006 was accepted by the State of New Jersey
(the “Amendment”) to effect a one for two hundred reverse stock split (the
“Reverse Split”). The Reverse Split took effect on April 27, 2006 and the
trading symbol of our Class A Common Stock was changed to “IVOI”.
  On
November 14, 2007, we spun off our Thomas Pharmaceuticals subsidiary by
distributing a special dividend to our shareholders of shares of Class A Common
Stock of Thomas Pharmaceuticals Ltd.
  Significant Events During
Fiscal 2008
  On March
12, 2008, the Company acquired 1,444.44 shares of iVoice Technology, Inc.’s
Series A 10% Convertible Preferred Stock for $1,444,444.  The holder
of each share of Series A Preferred Stock shall have the right to one vote for
each share of Common Stock into which such Series A Preferred Stock could then
be converted, and with respect to such vote, such holder shall have full voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled to notice of any shareholders' meeting in
accordance with the bylaws of the Corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote. In addition, the holders of the
Series A Preferred Stock shall not have in the aggregate more than seventy
percent (70%) of the total votes of all classes of voting stock of the
Corporation that would vote at a meeting of shareholders. Based on this voting
formula, it was determined that iVoice, Inc. has voting rights equal to 70% of
the voting stock of iVoice Technology and as such, according to APB Opinion No.
18 “The Equity Method of
Accounting for Investments in Common Stock”, iVoice, Inc. is required to
consolidate the results of operations of iVoice Technology with those of iVoice
and its other subsidiary.
 
 Our
principal offices and facilities are located at 750 Highway 34, Matawan, NJ
07747 and our telephone number is (732) 441-7700.  Our common stock is
quoted on the NASD OTC Bulletin Board under the trading symbol
“IVOI.”
  Our
Business
  We have
determined that the best way to create shareholder value, separate and apart
from our operating performance, is by spinning off and distributing shares of
our wholly owned subsidiaries if the form of a special dividend to our
shareholders.
  The
common stock distributions are part of a broader strategy relating to our
transition into a company focused on the development and licensing of
proprietary technologies. To date we have filed fifteen patent applications with
the United States Patent and Trademark Office for speech enabled applications
that we have developed internally.  Of the patent applications we have
filed, four (4) patents have been awarded.  In March 2004 we announced
that it has entered into a technology licensing agreement with GlynnTech Inc.,
to serve as its licensing agent for speaking product packaging
technology.
  3
 Table of Contents
  We will
also continue to search for potential merger candidates with or without
compatible technology and products, in a further attempt to increase shareholder
value.  As an example, in January 2006, we acquired the New York City
based Thomas Pharmaceuticals Ltd (“Thomas”), which develops and markets over the
counter non-prescription healthcare products. Thomas’ 1st product focuses on the
high-end, branded consumables market, with a calcium-enriched, sugar free,
anti-gas antacid tablet.
  In March
2008, we invested $1.4 million in iVoice Technology (OTC Bulletin Board: IVOT)
which is dedicated to becoming a “green” technology company, focused on
acquiring and identifying promising technologies that address environmental
issues.
  We
announced additional plans to enter the alternative energy
sector.  Our previous negotiations to acquire the rights to build and
operate biodiesel production facilities in Richmond, Virginia and in central
Long Island, New York have not been successful. We have curtailed our efforts to
identify additional opportunities at this time.
  Dividends
/ Spin-Offs:
  In
the last sixty months, we have successfully spun-off five subsidiaries through
special dividends to our shareholders.
  Trey
Resources, Inc.: In February 2004, our shareholders received one share of Trey
Resources for every 1,793 of our shares held by such shareholder and was
spun-off from us.  Following the spin-off, Trey Resources became a
publicly held company and we no longer held any stock of Trey. Trey Resources
closed on its first acquisition in June 2004 by acquiring an operating company
with sales of over $2 million. Since that time, Trey has acquired two companies,
hired the management of a third company, and grown from no sales to revenues at
a current operating rate of nearly $8 million per annum.
  iVoice
Technology, Inc.: On August 5, 2005, we spun-off iVoice Technology, Inc. to our
shareholders, to unlock the value in our interactive voice recognition (IVR)
software technology. iVoice Technology later became involved in becoming a
“green” technology company.
  Deep
Field Technologies, Inc.: On August 5, 2005, we spun-off Deep Field Technologies
Inc. to our shareholders, to unlock the value in its Unified Messaging software
technology.  Deep Field later merged with AutoMart, a China based
joint venture recently formed between Beijing Silver Harbor Car Service Center
and Mayflower Auto Group, LLC. AutoMart business focuses on automobile
after-sales services, including maintenance and repairs, insurance, parts sales,
interior furnishings, care products, tires, and windshields in the People's
Republic of China.
 
 SpeechSwitch,
Inc.: On August 5, 2005, we spun-off SpeechSwitch, Inc. to our shareholders, to
pursue a strategy designed to unlock the value in our speech recognition
software.  The assets that became part of SpeechSwitch included the
Speech SDK, Speech Enabled Auto Attendant, Name Dialer, plus two issued patents
and two patents pending.
  Thomas
Pharmaceuticals, Ltd.: On November 14, 2007, we spun-off Thomas Pharmaceuticals
to our shareholders pursuant to the wishes of the Thomas Pharmaceuticals Series
A Convertible Preferred shareholders.
  Our
strategy for our spin-off business is to create value for our shareholders from
the shares of the business distributed to our shareholders.  The
strategy of acquiring and developing new businesses and subsequently
distributing the shares of these businesses to our shareholders has various
uncertainties.  We must first identify a business and/or a company
that we can develop.  We then fund the business and after the business
can be operated independently, we seek to distribute the shares of the business
to our shareholders.  This incubation process has many uncertainties,
which include identifying target businesses and negotiating the acquisition;
successfully integrating the new businesses and profitably managing the
operations; responding to competition for acquisition candidates; and the degree
of success of the acquired business, any of which could have a material adverse
effect on our condition and results of operations.  In addition, this
business strategy also creates risks, which include diversion of management
attention, inability to retain key personnel, risks associated with
unanticipated events and the financial statement effect of potential impairment
of acquired intangible assets, any of which could have a material adverse effect
on our condition and results of operations.
  We incur
substantial start-up costs and expenses when we acquire and develop a new
business.  If the business generates revenues before it is spun-off,
we are able to recoup all or a portion of the start-up costs and
expenses.  In certain instances, we do not recoup our start-up costs
by the time we spin-off the business.  However, if the price of the
shares distributed to our shareholders increase, then our shareholders will
receive the increased value of those shares.
  We have
spun-off five subsidiaries through special dividends to our
shareholders.  The spin-offs have created value for our shareholders
by diversifying their investment in us. Some of the original shareholders of our
shares also now own shares of Trey Resources, Inc., iVoice Technology, Inc.,
Deep Field Technologies, Inc., SpeechSwitch, Inc. and Thomas Pharmaceuticals,
Ltd.  Our ability to acquire businesses that operate profitably and
can create interest in the marketplace will have a significant impact on our
prospects for the future.
  Administrative
Service Agreements
  In
conjunction with the various spin-offs, iVoice Technology, Deep Field
Technology, SpeechSwitch and Thomas Pharmaceuticals have individually entered
into temporary administrative services agreement with us. Under the terms of
these agreements, , iVoice provides the companies with physical premises,
contract review, sales issuance, invoicing and collection services, financial
accounting and reporting, claims administration and reporting, and other areas
where the companies need transitional assistance and support. These agreements
will continue on a month-to-month basis until these companies have found
replacement services for those services being provided by us or can provide
these services for itself.
  4
 Table of Contents
  Patents
and Trademarks
  To date
we have filed fifteen patent applications with the United States Patent and
Trademark Office for speech enabled applications that we have developed
internally.  Of the patent applications we have filed, four (4)
patents have been awarded.
  In March
2004 we announced that we had entered into a technology licensing agreement with
GlynnTech Inc., to serve as our licensing agent for speaking product packaging
technology. GlynnTech Inc. has been involved in licensing of a variety of
technologies for more than thirty years. Besides representing such diverse
successful products as the SuperSoaker® Watergun and the RotoWrench®, Glynn has
successfully licensed or sold more than thirty-four patents in the field of
containers and packaging. We believe GlynnTech can help us unlock the potential
of the pending applications.
  Following
the formation and spin out of SpeechSwitch, Inc. in August 2005, we transferred
our legal rights to four of the Speech-Enabled Automatic Telephone Dialer
patents to SpeechSwitch, Inc.
  On March
21, 2006, we entered into a Patent Purchase Agreement with Lamson Holdings LLC,
a Nevada limited liability company, for the sale of certain United States
Letters Patents and/or applications for United States Letters Patents and/or
foreign patents and applications.  The patents or patent applications
being transferred in this purchase agreement are related to: a) patent 6813341,
Voice Activated/Voice Responsive item locator; b) patent 10/696,660, Voice
activated, voice responsive product locator system, including product location
method utilizing product bar code and aisle-situated, aisle-identifying bar
code; c) patent 10/696,090, Voice activated, voice responsive product locator
system, including product location method utilizing product bar code and
product-situated, location-identifying bar code; and d) patent 10/696,701,
Product location method utilizing product bar code and aisle-situated,
aisle-identifying bar code.
  We have
eight remaining patent applications in our portfolio.  These
applications include the “Voice Activated Voice Operated Copier”, the “Voice
Activated Voice Operational Universal Remote Control”, the “Wirelessly Loaded
Speaking Medicine Container”, the “Wirelessly Loaded OTC Speaking Medicine
Container”, the “Methodology for Talking Consumer Products with Voice
Instructions via Wireless Technology”, the “Product Identifier and Receive
Spoken Instructions”, the “Pedestrian Air Bag Device” and the “Traffic Signal
System with Countdown Signaling and with Advertising and/or News
Message”.
  We have
been developing proprietary technology for eight years.  Developing
and licensing proprietary technology has various uncertainties, which include,
our ability to protect the intellectual property for our technology; obtaining
patents that are broad enough to prevent competitors from introducing similar
products on the market; unintentionally infringing on the proprietary rights of
others; and receiving approval from the United States Patent and Trademark
Office, or the USPTO, for the twelve patent applications that we have
outstanding.
  We were
awarded three patents by the USPTO in 2003 and 2004.  Two of these
patents were transferred to SpeechSwitch, Inc. as part of the spin off in 2005.
The third patent for the Voice Activated/Voice Response Item Locator was sold to
Lamson Holdings LLC in July 2006 along with the three other patent applications
related to voice activated applications for product locating systems. The
development and licensing of such patents has created shareholder value as
demonstrated by the spinoff of SpeechSwitch, Inc. and from the sales of patents
to Lamson Holding LLC.  Our ability to continue to develop and license
unique technologies and to license and sell these technologies will have a
significant impact on our prospects for the future.
  In Fiscal
Year 2006, the USPTO reported that it “received in excess of 440,000 patent
applications in 2006, a record number.”  The USPTO also reports that
their “examiners completed 332,000 patent application in 2006” and approved 54%
of these.  Patent activity is robust as companies and individuals look
to protect their inventions and unique technologies by filing patent
applications at a record pace.
  Mergers
and Acquisitions
  We
continue to search for potential merger candidates with or without compatible
technology and products, which management feels may make financing more
appealing to potential investors.
  We do not
have any other plans, proposals or arrangements with respect to future
acquisitions.
  Marketing
and Distribution
  We have
experience with marketing, promoting and selling our speech-enabled products
through telephone reseller channels, telephone equipment manufacturer
distributor networks as well as directly to end users. We believe we can
leverage this experience into gaining access to these markets for our patenting
and licensing of new products being developed by us.
  New
Products
  We are
working with GlynnTech, Inc. to identify viable products and/or services that
may be derived from our work on the various patents, such as the “Speech Enabled
Voice Activated/Voice Responsive Item Locator”, “Methodology for Talking
Consumer Products with Voice Instructions via Wireless Technology” and the
“Wirelessly Loaded Speaking Medicine Container”.
  5
 Table of Contents
  Competition
  We will
be operating in an industry segment having inherent risks generally associated
with small technology companies.  Such risks include, but are not
limited to, the ability to:  a) generate sales of our product at
levels sufficient to cover our costs and provide a return for investors, b)
attract additional capital in order to finance growth, c) further develop and
successfully market and distribute commercial products and d) successfully
compete with other technology companies having significantly greater financial,
production and marketing resources.
  The
technology industry is highly competitive, and we believe that this competition
will intensify.  Many of our competitors may have longer operating
histories, significantly greater financial, technical, product development, and
marketing resources, greater name recognition or larger client bases than we
do.
  Suppliers
  As our
future products are yet unknown, our suppliers have not been identified. But our
past experience indicates that Dialogic Corporation (an Intel company), iTox,
Inc., Dell and Amer.com, Inc. could be ideal candidates to supply our computer
hardware components.  We have not experienced any supply shortages
with respect to the components used in systems or developed applications in our
past.
  Customers
  Direct
customers could be comprised of businesses, organization and corporate
departments that use voice activated processes for efficiency in their
operations.  Our patents seek to fulfill these customer
needs.
  Government
Regulation
  We may be
subject to licensing and regulation by a number of authorities in their
respective state or municipality. These may include health, safety, and fire
regulations. Our operations are also subject to federal and state minimum wage
laws governing such matters as working conditions and overtime.
  We are
not subject to any necessary government approval or license requirement in order
to market, distribute or sell our principal or related products other than
ordinary federal, state, and local laws which govern the conduct of business in
general.  We are unaware of any pending or probable government
regulations that would have any material impact on the conduct of
business.
  Employees
  As of the
date of this filing, we have 2 full-time employees and 1 part-time consultant
for a total of 3 individuals.  None of our employees are represented
by a labor organization and we are not a party to any collective bargaining
agreements. We consider our relationship with our employees generally to be
good.
  In
addition to other information in this Annual Report on Form 10-K, the following
important factors should be carefully considered in evaluating the Company and
its business because such factors currently have a significant impact on the
Company's business, prospects, financial condition and results of
operations.
  Forward
Looking Statements - Cautionary Factors
  This
annual report on Form 10-K contains forward-looking statements within the
meaning of that term in Section 27A of the Securities Act of 1933, as
amended, and in Section 21F of the Securities Exchange Act of 1934 as amended.
The statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
“may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,”
“estimate,” “predict,” “potential” or “continue,” the negative of these terms or
other similar terminology. These forward-looking statements involve risks and
uncertainties and other factors that may cause the actual results, performance
or achievements to differ from any future results, performance or achievements
expressed or implied by such forward-looking statements. Except for the
historical information and statements contained in this Report, the matters and
items set forth in this Report are forward looking statements that involve
uncertainties and risks some of which are discussed at appropriate points in the
Report and are also summarized as follows:
  As
of December 31, 2008, there was substantial doubt about our ability to continue
as a going concern. The Company may not be able to continue its operations
and the financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
  As of
December 31, 2008, the Company’s independent public accounting firm issued a
“going concern opinion” wherein they stated that the accompanying financial
statements were prepared assuming the Company will continue as a going concern.
The Company has incurred substantial accumulated deficits, has an obligation to
deliver an indeterminable amount of common stock due on derivative liabilities
and has completed the process of spinning out the five operating subsidiaries.
These issues raise substantial doubt about the Company’s ability to continue as
a going concern. Therefore, recoverability of a major portion of the recorded
asset amounts shown in the accompanying balance sheets is dependent upon
continued operations of the Company, which in turn, is dependent upon the
Company’s ability to raise capital and/or generate positive cash flow from
operations.
  6
 Table of Contents
  The
Company will face many of the difficulties that companies in the early stage may
face.
  Since the
spin-off of our operating subsidiaries in 2004, 2005 and 2007, we have a limited
operating history. As such, it may be difficult for you to assess our ability to
identify merger or acquisition candidates and our growth and earnings
potential.  Therefore, we may face many of the difficulties that
companies in the early stages of their development in new and evolving markets
often face as they are described below.  We may continue to face these
difficulties in the future, some of which may be beyond our
control.  If we are unable to successfully address these problems, our
future growth and earnings will be negatively affected.
  Our
historical information has limited relevance to our future results of
operations.
  The
historical financial information we have included in this report does not
reflect what our results of operations, financial position and cash flows will
be in the future.  This is because we operated in the past with
different goals and objectives from our new objectives.
  We
cannot accurately forecast our future revenues and operating results, which may
fluctuate.
  Our short
operating history and the rapidly changing nature of the markets in which we
compete make it difficult to accurately forecast our revenues and operating
results.  Furthermore, we expect our revenues and operating results to
fluctuate in the future due to a number of factors, including the
following:
  ·
              the
      success of identifying and completing mergers and acquisitions,
      particularly in light of our limited
history;
  ·
              the
      introduction of competitive products by different or new
      competitors;
  ·
              reduced
      demand for any given product;
  ·
              difficulty in keeping current
      with changing technologies;
  ·
              unexpected
      delays in introducing new products, new product features and
      services;
  ·
              increased
      or uneven expenses, whether related to sales and marketing, product
      development or administration;
  ·
              deferral
      of recognition of our revenue in accordance with applicable accounting
      principles due to the time required to complete
  projects;
  ·
              seasonality
      in the end-of-period buying patterns of foreign and domestic software
      markets;
  ·
              the
      market's transition between operating systems;
  and
  ·
              costs
      related to possible acquisitions of technology or
    businesses.
 
  Due to
these factors, forecasts may not be achieved, either because expected revenues
do not occur or because they occur at lower prices or on terms that are less
favorable to us.  In addition, these factors increase the chances that
our results could diverge from the expectations of investors and
analysts.  If so, the market price of our stock would likely
decline.
  We
may fail to develop new products, or may incur unexpected expenses or
delays.
  Due to
the risks inherent in developing new products and technologies—limited
financing, competition, obsolescence, loss of key personnel, and other
factors—we may fail to develop these technologies and products, or may
experience lengthy and costly delays in doing so.  Although we are
able to license some of our technologies in their current stage of development,
we cannot assure that we will be able to develop new products or enhancements to
our existing products in order to remain competitive.
  7
 Table of Contents
  If
we cannot raise additional capital to finance future operations, we may need to
curtail our operations in the future.
  We have
relied on significant external financing to fund our operations.  Such
financing has historically come from a combination of borrowings and sales of
securities from third parties and funds provided by certain officers and
directors.  We cannot assure you that financing whether from external
sources or related parties will be available if needed or on favorable
terms.  Our inability to obtain adequate financing will result in the
need to curtail business operations.  Any of these events would be
materially harmful to our business and may result in a lower stock
price.  While we have recently raised sufficient working capital to
fund our operations for at least the next 24 months, we will need to raise
additional capital to fund our future operations.
  The
Company may in the future sell additional unregistered convertible securities,
possibly without limitations on the number of shares of common stock the
securities are convertible into, which could dilute the value of the holdings of
current stockholders and have other detrimental effects on your
holdings.
 
 We have
relied on the private placement of secured promissory notes to obtain working
capital and may continue to do so in the future.  As of this date,
however, we have outstanding convertible obligations.  In order to
obtain working capital in the future, we intend to issue additional equity
securities and convertible obligations.
  In the
event that the price of our Class A Common Stock decreases, and our convertible
obligations (or any other convertible obligations we may issue) are converted
into shares of our Class A Common Stock,
  ·
              the
      percentage of shares outstanding that will be held by these holders upon
      conversion will increase
accordingly,
  ·
              such
      increased share issuance, in addition to a stock overhang of an
      indeterminable amount, may depress the price of our Class A Common Stock,
      and
  ·
              the
      sale of a substantial amount of convertible debentures to relatively few
      holders could effectuate a possible change in control of the
      Company.
  Our
existing convertible obligations are convertible based upon a formula that
varies with the market price of our common stock.  As a result, if the
market price of our Class A Common Stock increases after the issuance of our
convertible obligations, it is possible, that, upon conversion of our
convertible obligations, we will issue shares of Class A Common Stock at a price
that is far less than the then-current market price of our Class A Common
Stock.
  Protecting
our intellectual property in our technology through patents may be costly and
ineffective and if we are not able to protect our intellectual property, we may
not be able to compete effectively and we may not be profitable.
  Our
future success depends in part on our ability to protect the intellectual
property for our technology by obtaining patents.  We will only be
able to protect our products and methods from unauthorized use by third parties
to the extent that our products and methods are covered by valid and enforceable
patents or are effectively maintained as trade secrets.  To date, we
have filed fifteen patent applications for internally developed applications
with the U.S Patent and Trademark Office.  Of the patent applications
we have filed, we have been awarded four patents.  In August 2005, we
transferred four of our Speech-Enabled Automatic Telephone Dialer patents to
SpeechSwitch, Inc. and in March 2006 we sold four of our voice activated product
and item locator patents to Lamson Holdings LLC. We have eight remaining patent
applications related to wirelessly loaded speaking medicine containers and
consumer products, voice activated copiers and universal remote controls,
pedestrian airbag, product identifier receiving wireless directions and our
“Traffic Signal System with Countdown Signaling with Advertising and/or News
Message”. No
assurances can be given that these remaining patent applications will be
approved.
  The
protection provided by our patent applications if issued, may not be broad
enough to prevent competitors from introducing similar products into the
market.  Our patent applications, if challenged or if we attempt to
enforce them, may not be upheld by the courts of any
jurisdiction.  Numerous publications may have been disclosed by, and
numerous patents may have been issued to, our competitors and others relating to
methods of dialysis of which we are not aware and additional patents relating to
methods of dialysis may be issued to our competitors and others in the
future.  If any of those publications or patents conflict with our
patent rights, or cover our products, then any or all of our patent applications
could be rejected and any or all of our granted patents could be invalidated,
either of which could materially adversely affect our competitive
position.
  Litigation
and other proceedings relating to patent matters, whether initiated by us or a
third party, can be expensive and time consuming, regardless of whether the
outcome is favorable to us, and may require the diversion of substantial
financial, managerial and other resources.  An adverse outcome could
subject us to significant liabilities to third parties or require us to cease
any related development product sales or commercialization
activities.  In addition, if patents that contain dominating or
conflicting claims have been or are subsequently issued to others and the claims
of these patents are ultimately determined to be valid, we may be required to
obtain licenses under patents of others in order to develop, manufacture use,
import and/or sell our products.  We may not be able to obtain
licenses under any of these patents on terms acceptable to us, if at
all.  If we do not obtain these licenses, we could encounter delays
in, or be prevented entirely from using, importing, developing, manufacturing,
offering or selling any products or practicing any methods, or delivering any
services requiring such licenses.
  If
we are not able to protect our trade secrets through enforcement of our
confidentiality and non-competition agreements, then we may not be able to
compete effectively and we may not be profitable.
  We
attempt to protect our trade secrets, including the processes, concepts, ideas
and documentation associated with our technologies, through the use of
confidentiality agreements and non-competition agreements with our current
employees and with other parties to whom we have divulged such trade
secrets.  If the employees or other parties breach our confidentiality
agreements and non-competition agreements or if these agreements are not
sufficient to protect our technology or are found to be unenforceable, our
competitors could acquire and use information that we consider to be our trade
secrets and we may not be able to compete effectively.  Most of our
competitors have substantially greater financial, marketing, technical and
manufacturing resources than we have and we may not be profitable if our
competitors are also able to take advantage of our trade secrets.
  8
 Table of Contents
  We
may unintentionally infringe on the proprietary rights of others.
  Many
lawsuits currently are being brought in the software industry alleging violation
of intellectual property rights.  In addition, a large number of
patents have been awarded in the voice-recognition and call processing
area.  Although we do not believe that we are infringing on any patent
rights, patent holders may claim that we are doing so.  Any such claim
would likely be time-consuming and expensive to defend, particularly if we are
unsuccessful, and could prevent us from selling our products or services. In
addition, we may also be forced to enter into costly and burdensome royalty and
licensing agreements.
  Our
future business acquisitions may be unpredictable and may cause our business to
suffer.
  We will
seek to expand our operations through the acquisition of additional
businesses.  We may not be able to identify, successfully integrate or
profitably manage any such businesses or operations.  The proposed
expansion may involve a number of special risks, including possible adverse
effects on our operating results, diversion of management attention, inability
to retain key personnel, risks associated with unanticipated events and the
financial statement effect of potential impairment of acquired intangible
assets, any of which could have a materially adverse effect on the our condition
and results of operations.  In addition, if competition for
acquisition candidates or assumed operations were to increase, the cost of
acquiring businesses or assuming customers’ operations could increase
materially.  Our inability to implement and manage our expansion
strategy successfully may have a material adverse effect on our business and
future prospects.  Furthermore, through the acquisition of additional
businesses, we may effect a business acquisition with a target business which
may be financially unstable, under-managed, or in its early stages of
development or growth.  While we may, under certain circumstances,
seek to effect business acquisitions with more than one target business, as a
result of our limited resources, we, in all likelihood, will have the ability to
effect only a single business acquisition at one time.  Currently, we
has no plans, proposals or arrangements, either orally or in writing, regarding
any proposed acquisitions.
  The
Company's stockholders may experience significant dilution if future equity
offerings are used to fund operations or acquire businesses.
  If
working capital or future acquisitions are financed through the issuance of
equity securities, our shareholders would experience significant
dilution.  In addition, the conversion of outstanding debt obligations
into equity securities would have a dilutive effect on our
shareholders.  Further, securities issued in connection with future
financing activities or potential acquisitions may have rights and preferences
senior to the rights and preferences of our Class A Common Stock.
  We
believe that our going-forward expenses over the next 12 months will be
approximately $700,000.  We have no current plan to hire additional
employees, perform additional research and development or purchase additional
equipment or services.  We believe that the deficiency between our
expenses and net revenues will be more than covered by the cash
available.  If there are additional deficiencies that are in excess of
the proceeds of the Securities Purchase Agreement, management believes that we
can limit our operations, defer payments to management and maintain our business
at nominal levels until we can identify alternative sources of
capital.
  Our
sole officer controls a significant percentage of our capital stock and has
sufficient voting power to control the vote on substantially all corporate
matters.
  As of
March 20, 2009, Jerome R. Mahoney, our president, chief executive officer, chief
financial officer and director, beneficially owned approximately 53%of our outstanding
shares of our Class A common stock (assuming the conversion of outstanding debt
into shares of Class A common stock).  Mr. Mahoney is able to
influence all matters requiring shareholder approval, including the election of
directors and approval of significant corporate transactions.  This
concentration of ownership, which is not subject to any voting restrictions,
could limit the price that investors might be willing to pay for our Class A
common stock.  In addition, Mr. Mahoney is in a position to impede
transactions that may be desirable for other shareholders.  He could,
for example, make it more difficult for anyone to take control of
us.
  Our industry is characterized by
rapid technological change and failure to adapt our product development to these
changes may cause our products to become obsolete.
  We
participate in a highly dynamic industry characterized by rapid change and
uncertainty relating to new and emerging technologies and
markets.  Future technology or market changes may cause some of our
products to become obsolete more quickly than expected.
  If
we lose the services of any of our key personnel, including our president and
chief executive officer, our business may suffer.
  We are
dependent on our key officer, Jerome R. Mahoney, our president and chief
executive officer.  The loss of our key officer could materially harm
our business because of the cost and time necessary to retain and train a
replacement.  Such a loss would also divert management attention away
from operational issues.  In an attempt to minimize the effects of
such loss, we presently maintain a $5,000,000 key-man term life insurance policy
on Mr. Mahoney.
  9
 Table of Contents
  The
Company has limited segregation of duties amongst its employees with respect to
the Company’s preparation and review of the Company’s financial statements due
to the Company’s limited number of employees, which is a  material
weakness in internal controls , and if the Company fails to maintain an
effective system of internal controls, it may not be able to accurately report
its financial results or prevent fraud. As a result, current and potential
stockholders could lose confidence in the Company’s financial reporting which
could harm the trading price of the Company’s stock.
 
 Effective
internal controls are necessary for the Company to provide reliable financial
reports and prevent fraud.  Inferior internal controls could cause
investors to lose confidence in the Company’s reported financial information,
which could have a negative effect on the trading price of the Company’s
stock.  Management has found it necessary to limit the Company’s
administrative staffing in order to conserve cash, until the Company’s level of
business activity increases. As a result, there is very limited segregation of
duties amongst the administrative employees, and the Company and its independent
public accounting firm have identified this as a material weakness in the
Company’s internal controls.  The Company intends to remedy this
material weakness by hiring additional employees and reallocating duties,
including responsibilities for financial reporting, among the Company’s
employees as soon as there are sufficient resources
available.  However, until such time, this material weakness will
continue to exist.  Despite the limited number of administrative
employees and limited segregation of duties, management believes that the
Company’s administrative employees are capable of following its disclosure
controls and procedures effectively.
 
 We
have made a distribution of shares of Class A Common Stock of Trey Resources,
Inc. to our shareholders, which may result in our President, Chief Executive
Officer and Director having conflicts of interest, and we do not have any formal
procedure for resolving any such conflicts in the future.
  Following
the distribution to our shareholders of shares of Class A Common Stock of Trey
Resources, our President, Chief Executive Officer and Director, Jerome R.
Mahoney, is now serving as Non-executive Chairman of the Board of Trey Resources
and has the right to convert approximately $1,000,000 of indebtedness into
approximately 1,000,000 shares of Class B common stock of Trey Resources, which
are convertible into an indeterminable number of shares of Class A common stock
of Trey Resources.  This could create, or appear to create, potential
conflicts of interest when our President, Chief Executive Officer and Director
is faced with decisions that could have different implications for Trey
Resources.  Examples of these types of decisions might include any of
the potential business acquisitions made by us or the resolution of disputes
arising out of the agreements governing the relationship between Trey Resources
and us.  Also, the appearance of conflicts, even if such conflicts do
not materialize, might adversely effect the public’s perception of us following
the distribution.  Furthermore, we do not have any formal procedure
for resolving any such conflicts of interest if they do arise.
  We
have made a distribution of shares of Class A Common Stock of iVoice Technology,
Inc. to our shareholders, which may result in our President, Chief Executive
Officer and Director having conflicts of interest, and we do not have any formal
procedure for resolving any such conflicts in the future.
  Following
the distribution to our shareholders of shares of Class A common stock of iVoice
Technology, our President, Chief Executive Officer and Director, Jerome R.
Mahoney, is now also serving as President, Chief Executive Officer and Director
of iVoice Technology and has the right to convert $396,678 of indebtedness into
396,678 shares of Class B common stock of iVoice Technology, which are
convertible into an indeterminable number of shares of Class A common stock of
iVoice Technology.  This could create, or appear to create, potential
conflicts of interest when our President, Chief Executive Officer and Director
is faced with decisions that could have different implications for iVoice
Technology.  Examples of these types of decisions might include any of
the potential business acquisitions made by us or the resolution of disputes
arising out of the agreements governing the relationship between iVoice
Technology and us.  Also, the appearance of conflicts, even if such
conflicts do not materialize, might adversely effect the public’s perception of
us following the distribution.  Furthermore, we do not have any formal
procedure for resolving any such conflicts of interest if they do
arise.
  We
have made a distribution of shares of Class A Common Stock of SpeechSwitch, Inc.
to our shareholders, which may result in our President, Chief Executive Officer
and Director having conflicts of interest, and we do not have any formal
procedure for resolving any such conflicts in the future.
  Following
the distribution to our shareholders of shares of Class A common stock of
SpeechSwitch, our President, Chief Executive Officer and Director, Jerome R.
Mahoney, will have the right to convert approximately $400,000 of indebtedness
into approximately 400,000 shares of Class B common stock of SpeechSwitch, which
are convertible into an indeterminable number of shares of Class A common stock
of SpeechSwitch.  This could create, or appear to create, potential
conflicts of interest when our President, Chief Executive Officer and Director
is faced with decisions that could have different implications for
SpeechSwitch.  Examples of these types of decisions might include any
of the potential business acquisitions made by us or the resolution of disputes
arising out of the agreements governing the relationship between SpeechSwitch
and us.  Also, the appearance of conflicts, even if such conflicts do
not materialize, might adversely effect the public’s perception of us following
the distribution.  Furthermore, we do not have any formal procedure
for resolving any such conflicts of interest if they do arise.
  Our
Securities
  We
do not expect to pay dividends in the foreseeable future.
  At the
annual meeting on March 31, 2006, the Board of Directors received approval from
the shareholders to grant discretionary authority for the Board of Directors to
declare a cash dividend to Class A Common Stock shareholders of $1.5 million. As
of the date of this filing, the Board of Directors has not proceeded with the
declaration of the dividend and we do not expect to pay dividends in the
foreseeable future.
  The
price of our stock may be affected by a limited trading volume and may fluctuate
significantly
  There has
been a limited public market for our Class A common stock and there can be no
assurance that an active trading market for our stock will
continue.  An absence of an active trading market could adversely
affect our shareholders’ ability to sell our Class A common stock in short time
periods, or possibly at all.  Our Class A common stock has
experienced, and is likely to experience in the future, significant price and
volume fluctuations which could adversely affect the market price of our stock
without regard to our operating performance.  In addition, we believe
that factors such as quarterly fluctuations in our financial results and changes
in the overall economy or the condition of the financial markets could cause the
price of our Class A common stock to fluctuate substantially.
  10
 Table of Contents
 
 Our
class A common stock is deemed to be "penny stock," which may make it more
difficult for investors to sell their shares due to suitability
requirements
  Our Class
A common stock is deemed to be "penny stock" as that term is defined in Rule
3a51-1 promulgated under the Securities Exchange Act of 1934. These requirements
may reduce the potential market for our Class A common stock by reducing the
number of potential investors.  This may make it more difficult for
investors in our Class A common stock to sell shares to third parties or to
otherwise dispose of them.  This could cause our stock price to
decline.  Penny stocks are stock:
  ·
              With
      a price of less than $5.00 per
share
  ·
              That
      are not traded on a "recognized" national
  exchange;
  ·
              Whose
      prices are not quoted on the NASDAQ automated quotation
      system  (NASDAQ listed stock must still have a price of not less
      than $5.00 per share); or
  ·
              In
      issuers with net tangible assets less than $2.0 million (if the issuer has
      been in continuous operation for at least three years) or $5.0 million (if
      in continuous operation for less than three years), or with average
      revenues of less than $6.0 million for the last three
    years.
  Broker/dealers
dealing in penny stocks are required to provide potential investors with a
document disclosing the risks of penny stocks.  Moreover,
broker/dealers are required to determine whether an investment in a penny stock
is a suitable investment for a prospective investor.
  Future
sales of our Class A common stock could cause our stock price to
decline.
  The sale
of a large number of our shares, or the perception that such a sale may occur,
could lower our stock price.  Such sales could make it more difficult
for us to sell equity securities in the future at a time and price that we
consider appropriate.
  Issuance
of our reserved shares of Class A common stock may significantly dilute the
equity interest of existing stockholders.
  We have
reserved for issuance, shares of our Class A common stock upon exercise or
conversion of stock options, warrants, or other convertible securities that are
presently outstanding.  Issuance of these shares will have the effect
of diluting the equity interest of our existing shareholders and could have an
adverse effect on the market price for our Class A common stock.  As
of December 31, 2008, 30,000,000 shares have been reserved for conversion of
warrants pursuant to the Investor Registration Rights Agreement entered into
with YA Global Investments and there are 250,000 shares remaining available for
issuance under the 2005 Stock Incentive Plan.  Otherwise,
7,367,579,473 shares of Class A common stock, reserved for possible future
issuance.
  Reports
to Security Holders
  We are a "reporting company" under the
Securities Exchange Act of 1934, as amended and we file reports with the
Securities and Exchange Commission. In this regard, the Company files quarterly
reports on Form 10-Q, annual reports on Form 10-K and as required, files reports
on Form 8-K.
  The
public may read and copy any materials the Company files with the Securities and
Exchange Commission at the Commission's Public Reference Room at 100 F Street,
N. E., Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the Commission. The Internet address of the
Commission's site is (http://www.sec.gov).
 
 Item2. Description of Property.
  We do not
own any real property for use in our operations or otherwise.
  Our
primary facility is located at 750 Highway 34, Matawan, New Jersey and consist
of approximately 3,500 square feet of space.  Our space is leased on a
month-to month basis at a monthly rent of $4,000.   We use our
facilities to house our corporate headquarters and believe our facilities are
suitable for such purpose.  We also believe that our insurance
coverage adequately covers our interest in our leased space.  We have
a good relationship with our landlord and believe that our current facilities
will be adequate for the foreseeable future.
  Item3. Legal Proceedings.
  We are subject to litigation from time
to time arising from our normal course of operations.  Currently,
there are no open litigation matters relating to our products, product
installations or technical services provided.
  11
 Table of Contents
  PART
II
  
 Item5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
 
 Market
Information
 
 Our Class
A common stock, no par value, was quoted on the NASD OTC Bulletin Board under
the symbol “IVOI.”  The following table shows the high and low closing
prices for the periods indicated.
  High
                            
                            
                            Low2007First
      Quarter
                            
                            $
                            0.0190
                            
                            
                            $
                            0.0095Second
      Quarter
                            
                            $
                            0.0160
                            
                            
                            $
                            0.0053Third
      Quarter
                            
                            $
                            0.0069
                            
                            
                            $
                            0.0012Fourth
      Quarter
                            
                            $
                            0.0096
                            
                            
                            $
                            0.00112008First
      Quarter
                            
                            $
                            0.0015
                            
                            
                            $
                            0.0005Second
      Quarter
                            
                            $
                            0.0005
                            
                            
                            $
                            0.0001Third
      Quarter
                            
                            $
                            0.0003
                            
                            
                            $
                            0.0001Fourth
      Quarter
                            
                            $
                            0.0003
                            
                            
                            $
                            0.0001
 
 Holders
of Common Equity.
  As of
April 13, 2009, the number of record holders of our common shares was
approximately 766.
  Dividend
Information.
  To date,
we have never paid a cash dividend and we do not expect to pay dividends in the
foreseeable future.
  Sales
of Unregistered Securities.
  In the
year ending December 31, 2008, the Company issued the following unregistered
securities pursuant to various exemptions from registration under the Securities
Act of 1933, as amended:
  ·
              The
      Company issued 1,805,499,209 shares of Class A common stock to YA Global
      Investments as repayment of principal and accrued interest on an
      outstanding convertible debenture, valued at
  $778,751.
  ·
              The
      Company issued 316,000,000 shares of Class A common stock upon conversion
      of 40,380 shares of Class B common stock, pursuant to the provisions of
      Class B common stock.
  ·
              The
      Company issued 60,000,000 shares of Class A common stock to Kenneth Glynn
      for legal services, valued at $6,000, related to continuation of work on
      patent prosecution
  Description
of Securities
  Pursuant
to our certificate of incorporation, as amended, we are authorized to issue up
to: 10,000,000,000 shares of Class A common stock, no par value per share,
50,000,000 shares of Class B common stock, par value $.01 per share and
1,000,000 shares of preferred stock, par value of $1.00 per
share.  Below is a description of our outstanding securities,
including Class A common stock, Class B common stock, options, warrants and
debt.
  12
 Table of Contents
 
 Preferred
Stock
  The Board
of Directors expressly is authorized, subject to limitations prescribed by the
New Jersey Business Corporations Act and the provisions of this Certificate of
Incorporation, to provide, by resolution and by filing an amendment to the
Certificate of Incorporation pursuant to the New Jersey Business Corporations
Act, for the issuance from time to time of the shares of Preferred Stock in one
or more series, to establish from time to time the number of shares to be
included in each series, and to fix the designation, powers, preferences and
other rights of the shares of each such series and to fix the qualifications,
limitations and restrictions thereon, including, but without limiting the
generality of the foregoing, the following:
  a)
              the
      number of shares constituting that series and the distinctive designation
      of that series;
  b)
              the
      dividend rate on the shares of that series, whether dividends shall be
      cumulative, and, if so, from which date or dates, and the relative rights
      of priority, if any, of payment of dividends on shares of that
      series;
  c)
              whether
      that series shall have voting rights, in addition to voting rights
      provided by law, and, if so, the terms of such voting
    rights;
  d)
              whether
      that series shall have conversion privileges, and, if so, the terms and
      conditions of such conversion, including provisions for adjustment of the
      conversion rate in such events as the Board of Directors shall
      determine;
  e)
              whether
      or not the shares of that series shall be redeemable, and, if so, the
      terms and conditions of such redemption, including the dates upon or after
      which they shall be redeemable, and the amount per share payable in case
      of redemption, which amount may vary under different conditions and at
      different redemption dates;
  f)
              whether
      that series shall have a sinking fund for the redemption or purchase of
      shares of that series, and, if so, the terms and amount of such sinking
      fund;
  g)
              the
      rights of the shares of that series in the event of voluntary or
      involuntary liquidation, dissolution or winding up of the Corporation, and
      the relative rights of priority, if any, of payment of shares of that
      series; and
  h)
              any
      other relative powers, preferences and rights of that series, and
      qualifications, limitations or restrictions on that
  series.
  In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Preferred Stock of each series shall be entitled to receive only
such amount or amounts as shall have been fixed by the certificate of
designations or by the resolution or resolutions of the Board of Directors
providing for the issuance of such series.
  Class
A Common Stock
  Each
holder of our Class A common stock is entitled to one vote for each share held
of record.  Holders of our Class A common stock have no preemptive,
subscription, conversion, or redemption rights.  Upon liquidation,
dissolution or winding-up, the holders of Class A common stock are entitled to
receive our net assets pro rata.  Each holder of Class A common stock
is entitled to receive ratably any dividends declared by our board of directors
out of funds legally available for the payment of dividends.  We have
not paid any dividends on our common stock and do not contemplate doing so in
the foreseeable future.  We anticipate that any earnings generated
from operations will be used to finance our growth.
  As of
December 31, 2008, we had 2,602,173,527  shares of Class A common
stock issued and 2,602,170,527 shares outstanding.
  Class
B Common Stock
  Each
holder of Class B Common Stock shall have the right to convert each share of
Class B Common Stock into the number of Class A Common Stock Shares calculated
by dividing the number of shares of Class B Common Stock being converted by 50%
of the lowest price that we had previously issued our Class A Common Stock since
the Class B Common Stock were issued.  Every holder of the outstanding
shares of the Class B Common Stock shall be entitled on each matter to cast the
number of votes equal to the number of Class A Common Stock that would be issued
upon the conversion of the Class B Common Stock held by that holder, had all of
the outstanding Class B Common Stock held by that holder been converted on the
record date used for purposes of determining which shareholders would vote in
such an election.  With respect to all matters upon which shareholders
are entitled to vote or to which shareholders are entitled to give consent, the
holders of the outstanding shares of Class B Common Stock shall vote together
with Class A Common Stock without regard to class, except as to those matters on
which separate class voting is required by applicable law.  There
shall be no cumulative voting by shareholders.  Each share of Class B
Common Stock shall receive dividends or other distributions, as declared, equal
to the number of Class A Common Stock that would be issued upon the conversion
of the Class B Common Stock, had all of the outstanding Class B Common Stock
been converted on the record date established for the purposes distributing any
dividend or other shareholder distribution. Jerome R. Mahoney is the sole owner
of the Class B common stock of which there are 50,000,000 shares authorized,
2,204,875 shares issued, 1,512,104 shares outstanding and 692,771 shares retired
as of December 31, 2008.  As of December 31, 2008, these shares of
Class B Common Stock were convertible into 33,602,311,111 shares of Class A
common stock. Following the redemption of the Class B common stock on March 11,
2009, there are no shares of Class B Common Stock outstanding.
  13
 Table of Contents
  Options
and Warrants
  On May
25, 2006, we issued warrants to YA Global Investments (f/k/a/ Cornell Capital
Partners) to purchase 30,000,000 shares of our Class A common stock. These
warrants have exercise prices ranging from $0.30 per share to $0.50 per share,
with a weighted average exercise price of $0.40 per share.  These
warrants expire on May 25, 2011.
  Stock
Incentive Plans
  2005 Stock Incentive
Plan
  On
December 20, 2005, the Company adopted the 2005 Stock Incentive Plan (the “2005
Plan”). The purpose of the 2005 Plan is to (i) provide long-term incentives and
rewards to employees, directors, independent contractors or agents of iVoice,
Inc. and its subsidiaries; (ii) assist the Company in attracting and retaining
employees, directors, independent contractors or agents with experience and/or
ability on a basis competitive with industry practices; and (iii) associate the
interests of such employees, directors, independent contractors or agents with
those of the Company's stockholders.
  Under the
Plan, the Board of Directors shall have all the powers vested in it by the terms
of the Plan to select the Eligible Participants to be granted awards under the
Plan, to determine the type, size and terms of awards to be made to each
Eligible Participant selected, to determine the time when awards will be
granted, when they will vest, when they may be exercised and when they will be
paid, to amend awards previously granted and to establish objectives and
conditions, if any, for earning awards and whether awards will be paid after the
end of the award period. The Board shall have full power and authority to
administer and interpret the Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of the Plan and
for the conduct of its business as the Board deems necessary or advisable and to
interpret same. The Board's interpretation of the Plan, and all actions taken
and determinations made by the Board pursuant to the powers vested in it
hereunder shall be conclusive and binding on all parties concerned, including
the Company stockholders, any participants in the Plan and any other Eligible
Participant of the Company.
  All
employees of the Company and all employees of subsidiaries shall be eligible to
participate in the Plan. The Board, in its sole discretion, shall from time to
time designate from among the eligible employees and among directors,
independent contractors or agents those individuals who are to receive awards
under and thereby become participants in the Plan.
  For the
years ended December 31, 2008 and 2007, no shares were granted under the 2005
Plan.
  Debt
  On May
11, 2006 the Company issued to YA Global a $5,544,110 secured convertible
debenture due on May 11, 2008 bearing interest of 7.5%. This debenture replaced
a promissory note with a principal balance of $5,000,000 and $544,110 of accrued
interest due to YA Global from June 15, 2005. During the period of January 1,
2008 until May 12, 2008, we issued 882,165,877 shares of Class A common stock,
with a value of $529,640, as repayment of $401,700 of principal. The difference
of $127,940 is charged to the Statement of Operations as beneficial interest. On
May 12, 2008, the remaining principal balance of $4,796,510 was repaid in cash
from the proceeds of the Smith Barney short term loans and sales of the ARPSs.
As of December 31, 2008, the unpaid balance of accrued interest was
$799,139.
 
 On May
25, 2006, the Company issued to YA Global a $1,250,000 (“Debenture Number
CCP-1”) secured convertible debenture due on May 25, 2008 bearing interest of
7.5% per annum pursuant to a Securities Purchase Agreement entered into between
us and YA Global. During the year ended December 31, 2008, we issued 923,333,332
shares of Class A common stock, with a value of $249,111, as repayment of
$83,100 of principal. The difference of $166,011 is charged to the Statement of
Operations as beneficial interest. As of December 31 2008, the unpaid principal
balance on the secured convertible debenture is $1,166,900 plus accrued interest
of $319,916.
  On May
25, 2006, we entered into a Securities Purchase Agreement with YA Global whereby
we issued to YA Global an aggregate $8,547,886 of YA Global Debentures
convertible into shares of our Class A Common Stock.  The aggregate
principal amount of $8,547,886 of YA Global Debentures consists of the three
secured convertible debentures mentioned above and a fourth secured convertible
debenture in the principal amount of $1,250,000 to be issued to YA Global two
(2) business days prior to the date the Registration Statement is declared
effective by the SEC. On May 7, 2007, we suspended activities related to the
filing of the Registration Statement and have not received the proceeds from the
fourth secured convertible debenture.
  We can
redeem a portion or all amounts outstanding under the YA Global Debentures at
any time upon three business days advanced written notice.  We shall
pay 20% redemption premium on the principal amount being redeemed. YA Global
may, at its discretion, convert the outstanding principal and accrued interest,
in whole or in part, into a number of shares of our Class A Common Stock equal
to the quotient obtained by dividing (x) the outstanding amount of the YA Global
Debentures to be converted by (y) 90% of the lowest closing bid price of our
shares of Class A Common Stock during the 30 trading days immediately preceding
the conversion date.
  On
October 31, 2007, the Company executed a waiver agreement with YA Global that
provides that if the Company reduces the debt to $141,523 that YA Global will
waive its rights to any future payments and will consider the account paid in
full. This waiver agreement was executed to compensate the Company for losses
incurred on the sales of the Corporate Strategies investments.
 
 On
February 21, 2008, the Company entered in an Amendment Agreement with YA Global
to: a) extend the maturity date of Debenture Number CCP-1 until May 25, 2011, b)
to raise the interest rate on Debenture Number CCP-1 to 15% per annum and c) to
change the conversion price to 70% of the lowest closing bid price of the Common
Stock during the 30 trading days immediately preceding the conversion
date.
 
 On
December 1, 2008, the Company notified YA Global that there was a dispute
regarding the final balance of principal and accrued interest for Convertible
Debentures with YA Global. This dispute dates back to written commitments and
verbal reconfirmations made to the Company by YA Global in respect to the
Company’s unreimbursed losses on the investment in Corporate Strategies. The
Company proposed a settlement of $300,000 to settle the disputed balance, but
the settlement is still pending at the time of this filing.
  14
 Table of Contents
  Item7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
  This
discussion and analysis of our financial condition and results of operations
includes “forward-looking” statements that reflect our current views with
respect to future events and financial performance.  We use words such
as we “expect,” “anticipate,” “believe,” and “intend” and similar expressions to
identify forward-looking statements.  You should be aware that actual
results may differ materially from our expressed expectations because of risks
and uncertainties inherent in future events and you should not rely unduly on
these forward looking statements.  We will not necessarily update the
information in this discussion if any forward-looking statement later turns out
to be inaccurate.
  This
discussion and analysis of financial condition and results of operations should
be read in conjunction with our Financial Statements included in this
filing.
  Overview
  Since
2005, the Company has transitioned itself into a company focused on the
development and licensing of proprietary technologies. As an example, in March
2006 we sold four of our voice activated product and item locator patents to
Lamson Holdings LLC for net proceeds of $136,000 and on December 6, 2007 we were
issued Patent 7,305,344 for a patent for Methodology for Talking Consumer
Products with Voice Instructions via Wireless Technology. On January 8, 2008,
the Company entered into a Technology Transfer Agreement with GlynnTech to
market its recently issued patent. GlynnTech will provide assistance in
developing a DVD of the patents capabilities. GlynnTech will also be obligated
to solicit licensing opportunities and/or acquisition of the
patent.
  The
Company also continues to search for potential merger candidates with or without
compatible technology and products, which management feels may make financing
more appealing to potential investors.
  On March 12, 2008, the Company
acquired 1,444.44 shares of iVoice Technology, Inc.’s Series A 10% Convertible
Preferred Stock for $1,444,444.  iVoice Technology, Inc. used the
proceeds from the sale of the stock to fund the repayment of convertible debt to
YA Global Investments and to fund their acquisition programs. The holder of each
share of iVoice Technology’s Series A Preferred Stock shall have the right to
one vote for each share of Common Stock into which such Series A Preferred Stock
could then be converted, and with respect to such vote, such holder shall have
full voting rights and powers equal to the voting rights and powers of the
holders of Common Stock, and shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of the Corporation, and shall be entitled
to vote, together with holders of Common Stock, with respect to any question
upon which holders of Common Stock have the right to vote. In addition, the
holders of the Series A Preferred Stock shall not have in the aggregate more
than seventy percent (70%) of the total votes of all classes of voting stock of
the Corporation that would vote at a meeting of shareholders. Based on this
voting formula, it was determined that iVoice, Inc. has voting rights equal to
70% of the voting stock of iVoice Technology and as such, according to APB
Opinion No. 18 “The Equity
Method of Accounting for Investments in Common Stock”, iVoice, Inc. is
required to consolidate the results of operations of iVoice Technology with
those of iVoice and its other subsidiary.
 
 Results
of Operations
  Year ended December 31, 2008
compared to year ended December 31, 2007
 
 Total
sales for the years ended December 31, 2008 and 2007 were $173,424 and
$1,276,761, respectively. Sales in 2008 include $46,773 of recurring maintenance
contracts and new anti-vibration product revenues of iVoice Technology and
$126,651 of administrative services agreements. Sales in 2007 include $1,120,000
of consulting revenues earned on the Deep Field agreement and revenues from the
administrative services agreements of $156,761. The consulting revenues from the
Deep Field agreement are not expected to be repeated in future
periods.
  Cost of
sales for the year ended December 31, 2008 were $746. The costs represent the
direct material and labor costs for the anti-vibration products produced by
iVoice Technology’s out-sourced manufacturer.
  Total
operating expenses for the years ended December 31, 2008 and 2007, were
$1,410,840 and $957,962, respectively, for an increase of
$452,878.  Of these increases, $461,620 is attributable to the
expenses of iVoice Technology, professional fees increased $109,474 and overhead
and office expenses of the parent increased by $13,325. These increases are
offset by decreases in amortization of finance costs and depreciation expense of
$103,616 and decreases in rent of $27,925 on the consolidation into smaller
space in the home office.
  Total
other income (expense) for the year ended December 31, 2008 was an expense of
$1,326,839. This total was primarily comprised of $1,959,745 amortization of the
discount on debt conversion, $2,982,833 fair value adjustment on the impairment
of several investments and $880,618 of accrued interest expense on the YA Global
notes and other debt. These amounts are offset by $3,854,935 gain on revaluation
of the derivatives, $543,244 of interest income and $98,178 of other income
primarily from the iVoice Technology settlement with YA Global. Total other
income (expense) for the year ended December 31, 2007 was an expense of
$2,702,067. This total was primarily comprised of $3,725,279 amortization of the
discount on debt, $481,156 of accrued interest expense on the YA Global notes
and other debt and $314,273 loss on sales of securities available for sale.
These are offset by $1,131,305 gain on revaluation of the derivatives and
$686,760 of interest income on the cash accounts and promissory notes
receivable.
  Net loss
from continuing operations for the year ending December 31, 2008 was $2,565,001.
The net loss from continuing operations for the year ending December 31, 2007
was $2,383,268. The increase in net loss of $181,733 was primarily due to the
loss on the fair value adjustment on investments, lower sales, increased
operating expenses and increased interest expenses, offset by increased gain on
revaluation of derivatives on the repayment of the underlying debt and the
reduced amortization of the discount on debt as the result of the factors
discussed above.
 
 Net loss
from discontinued operations for the year ended December 31, 2007 was $765,833.
This operation had been experiencing reduced product sales and had curtailed
spending to better manage their available resources.
 
 As
required by APB Opinion No. 18, the Company is required to record minority
shareholders’ interest in net income (loss) of iVoice Technology.  For
the year ended December 31, 2008, iVoice Technology reported a net loss of
$115,012 and as such, the Company recorded no minority shareholders’ interest
for the period.
  The total
net loss for the year ended December 31, 2008 was $2,565,001 as compared to the
net loss of $3,149,101 for the year ended December 31, 2007.  The
decrease in net loss of $584,100 was the result of the factors discussed
above.
  15
 Table of Contents
  Liquidity
and Capital Resources
 
 We are
currently seeking additional operating income opportunities through potential
acquisitions or investments. Such acquisitions or investments may consume cash
reserves or require additional cash or equity. Our working capital and
additional funding requirements will depend upon numerous factors, including:
(i) strategic acquisitions or investments; (ii) an increase to current
personnel; (iii) the level of resources that we devote to sales and marketing
capabilities; (iv) technological advances; and (v) the activities of
competitors.
 
 During
the years ended December 31, 2008 and 2007, we had incurred net losses from
continuing operations of $2,565,001 and $2,383,268, respectively, and had cash
flow deficiencies from continuing operations of $203,554 and $174,729,
respectively.  These matters raise substantial doubt about our ability
to generate cash flows internally through our current operating activities
sufficient enough that its existence can be sustained without the need for
external financing. Our primary need for cash is to fund our ongoing operations
until such time that we can identify sales opportunities for new products or
identify strategic acquisitions that generates enough revenue to fund
operations.  There can be no assurance as to the receipt or timing of
revenues from operations.  We anticipate that our operations will
require at least $700,000 for the next 12 months.  These expenses are
anticipated to consist of the following: payroll and benefits of $400,000,
occupancy costs of $60,000, professional fees of $100,000, business insurance of
$70,000 and miscellaneous administrative expenses of $70,000.  We
expect to fund these obligations from cash on hand or otherwise from the sale of
equity or debt securities.  We believe that we have sufficient funds
on-hand to fund our operations for at least 24 months.
 
 During
the year ended December 31, 2008, we had a net increase in unrestricted cash and
cash equivalents of $3,362,671. During the year ended December 31, 2007, we had
a net increase in cash and cash equivalents of $48,684. The Company’s principal
sources and uses of funds in the years ended December 31, 2008 and 2007 were as
follows:
  Cash flows from operating
activities.  We used $203,554 in cash for continuing operations
in the year ended December 31, 2008 and we used $174,729 in cash for continuing
operations in the year ended December 31, 2007. The increase in cash used in
operations of $28,825 was primarily the result of higher net cash loss (net loss
after adding back non-cash items but before considering changes in certain
assets and liabilities) of $134,645 and an increase in notes receivables of
$89,325. These increases were offset by favorable changes in prepaid expenses of
$97,320, deferred revenues of $50,000, accounts payable and accrued liabilities
of $7,402 and increases in related party accounts of $40,423.
  The net
effect on cash flows from operating activities by the discontinued operations
for the year ended December 31, 2007 was a decrease in cash of $447,977.
  Cash flows from investing
activities.  We provided cash of $9,874,839 from investing
activities in the year ended December 31, 2008. We provided cash of $223,413
from investing activities in the year ended December 31, 2007. The increase in
cash was primarily due to the liquidation of our Auction Rate Securities of
$10,814,954. These proceeds are offset by the net effect of the consolidation of
iVoice Technology of $879,840. The Company had invested $1.4 million in iVoice
Technology’s Series A Convertible Preferred Stock and iVoice Technology has used
a portion of these proceeds to pay down a portion of the YA Global Convertible
Debentures and to their investment in B Green Innovations, a wholly owned
subsidiary of iVoice Technology.
  The net
effect on cash flows from investing activities from the discontinued operations
for the years ending December 31, 2007 was an increase of cash of
$119,248.
  Cash flows from financing
activities. For the year ended December 31, 2008, we used $6,308,614 cash
for financing activities. During the year, funds provided by the Smith Barney
Credit Line of $5,660,000 were used to pay down the YA Global convertible
debentures of $4,796,510. Proceeds from the liquidation of our Auction Rate
Securities were then used to repay the Smith Barney Credit Line account and the
Company used $1,512,104 of the funds to redeem Class B Common Shares. For the
year ended December 31, 2007, we were unable to raise any addition capital from
the YA Global Securities Purchase Agreement because of the failed registration
statement in May 2007.
  The net
effect on cash flows from financing activities from the discontinued operations
was an increase in cash of $154,000 for the year ending December 31, 2007. This
represented the proceeds from the sale of a $160,000 Promissory note to Thomas
Pharmaceuticals Acquisition, Inc. pursuant to the terms of the Extension
Agreement with Thomas Pharmaceuticals and Thomas Pharmaceuticals
Acquisition.
  Below
is a description of iVoice’s principal sources of funding:
  
 On May
11, 2006 we issued to YA Global a $5,544,110 secured convertible debenture due
on May 11, 2008 with an interest of 7.5%. This debenture replaced a promissory
note with a principal balance of $5,000,000 and $544,110 of accrued interest due
to YA Global from June 15, 2005. On May 12, 2008, the remaining principal
balance of $4,796,510 was repaid in cash from the proceeds of the Smith Barney
short term loans.
  On May
25, 2006, we issued to YA Global a $1,250,000 secured convertible debenture due
on May 25, 2008 with an interest of 7.5% per annum pursuant to a Securities
Purchase Agreement entered into between us and YA Global. On February 21, 2008,
this debenture was amended to extend the maturity date until May 25, 2011 and to
raise the interest rate to 15% per annum.
  On March
7, 2008 and May 8, 2008, the Company received proceeds from an Express
Creditline Loan from Smith Barney that is collateralized by the proceeds
available from the sales of the auction rate preferred shares (“ARPS”). The
interest rate charged on the loan is tied to the dividend rates earned on the
ARPSs. When the ARPS were sold, a portion of the proceeds were applied to pay
down the short term loans and the balance was deposited into interest bearing
savings account at our primary banking center.
  16
 Table of Contents
  We can
redeem a portion or all amounts outstanding under the YA Global Debentures at
any time upon three business days advanced written notice.  A 20%
redemption premium on the principal amount being redeemed is required. YA Global
may, at its discretion, convert the outstanding principal and accrued interest,
in whole or in part, into a number of shares of our Class A Common Stock equal
to the quotient obtained by dividing (x) the outstanding amount of the YA Global
Debentures to be converted by (y) 70% of the lowest closing bid price of our
shares of Class A Common Stock during the 30 trading days immediately preceding
the conversion date.
  In
addition, on any conversion date, YA Global may require us to make a cash
payment in lieu of delivering shares of our Class A Common Stock if the
conversion shares to be issued to YA Global, when aggregated with all other
shares of our Class A Common Stock beneficially owned by YA Global at such time,
would result in YA Global beneficially owning greater than 4.9% of our
outstanding shares of Class A Common Stock.  For example, assuming YA
Global did not beneficially own any shares of our Class A Common Stock at the
time of conversion, if YA Global were to request a conversion of $30,000 at a
conversion price of $.0001, then we would have to issue 333,333,333 shares
($30,000 / ($.0001 multiplied by 90%) to YA Global.  Since this number
of shares exceeds 4.9% of our issued and outstanding shares of Class A Common
Stock (134,076,084 shares), then YA Global could request that we make a cash
payment of $19,926 (199,257,249 multiplied by $.0001).  We believe we
have sufficient cash on-hand to satisfy such obligations if and when they shall
arise.
  We cannot
predict the actual number of shares of Class A Common Stock that will be issued
pursuant to the YA Global Debentures, in part, because the conversion price of
the YA Global Debentures will fluctuate based on prevailing market
prices.  If we are unable to issue enough shares to meet our
obligations, then YA Global could request cash payments, which could have a
material impact on our long-term growth strategy.
  There is
no assurance that the future funding, if any, offered by YA Global Investments,
LP. in the form of secured convertible debentures will enable us to raise the
requisite capital needed to implement our long-term growth strategy or that
alternative forms of financing will be available.  Current economic
and market conditions have made it very difficult to raise required capital for
us to implement our business plan.
 
 Off
Balance Sheet Arrangements
 
 During
the year ended December 31, 2008, we did not engage in any material off-balance
sheet activities or have any relationships or arrangements with unconsolidated
entities established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. Further, we have
not guaranteed any obligations of unconsolidated entities nor do we have any
commitment or intent to provide additional funding to any such
entities.
  Item8. Financial Statements and Supplementary Data.
  The financial statements and notes of
this Form 10-K appear after the signature page to this Form 10-K.
  Item9A(T). Controls and Procedures.
 
 Evaluation
of disclosure controls and procedures.
 
 An
evaluation was performed under the supervision and with the participation of
management, including the Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures as defined in Rules 13a-15(e) or 15d-15(e) of
the Securities Exchange Act of 1934, as amended, as of December 31,
2008.  Based on that evaluation, management, including the Chief
Executive Officer and Chief Financial Officer had concluded that the Company's
disclosure controls and procedures were not effective.
 
 The
Company maintains a set of disclosure controls and procedures designed to ensure
that information required to be disclosed by us in our reports filed under the
securities Exchange Act, is recorded, processed, summarized, and reported within
the time periods specified by the SEC's rules and forms. Disclosure controls are
also designed with the objective of ensuring that this 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.
 
 17
 Table of Contents
  Management’s
Report on Internal Control Over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act
Rule 13a-15(f). Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
we conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2008 based on the criteria set forth
in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on our evaluation
under the criteria set forth in Internal Control — Integrated Framework,
our management concluded that our internal control over financial reporting was
not effective for the following reasons:
 
 a)
              The
      deficiency was identified as the Company's limited segregation of duties
      amongst the Company's employees with respect to the Company's control
      activities. This deficiency is the result of the Company's limited number
      of employees. This deficiency may affect management's ability to determine
      if errors or inappropriate actions have taken place. Management is
      required to apply its judgment in evaluating the cost-benefit relationship
      of possible changes in our disclosure controls and
    procedures.
 
 b)
              The
      deficiency was identified in respect to the Company's Board of Directors.
      This deficiency is the result of the Company's limited number of external
      board members. This deficiency may give the impression to the investors
      that the board is not independent from management. Management and the
      Board of Directors are required to apply their judgment in evaluating the
      cost-benefit relationship of possible changes in the organization of the
      Board of Directors.
 
 This
Annual Report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. We were not required to have, nor have we engaged our independent
registered public accounting firm to perform, an audit on our internal control
over financial reporting pursuant to the rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this Annual
Report. Our registered public accounting firm will be required to attest to our
management's assessment of internal control over financial reporting tentatively
beginning with our annual report for the year ended December 31,
2009.
 
 Changes
in internal controls.
 
 Management
of the Company has also evaluated, with the participation of the Chief Executive
Officer of the Company, any change in the Company's internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) that occurred during the fiscal year covered by this Annual Report
on Form 10-K.  There was no change in the Company's internal control
over financial reporting identified in that evaluation that occurred during the
fiscal year covered by this Annual Report on Form 10-K that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
 
 Risk
factors related to controls and procedures
 
 The
Company has limited segregation of duties amongst its employees with respect to
the Company's preparation and review of the Company's financial statements due
to the limited number of employees, which is a deficiency in internal controls,
and if the Company fails to maintain an effective system of internal controls,
it may not be able to accurately report its financial results or prevent fraud.
As a result, current and potential stockholders could lose confidence in the
Company's financial reporting which could harm the trading price of the
Company's stock.
 
 Management
has found it necessary to limit the Company's administrative staffing in order
to conserve cash, until the Company's level of business activity increases. As a
result, there is very limited segregation of duties amongst the administrative
employees, and the Company and its independent public accounting firm have
identified this as a deficiency in the Company's internal controls. The Company
intends to remedy this deficiency by hiring additional employees and
reallocating duties, including responsibilities for financial reporting, among
the employees as soon as there are sufficient resources available. However,
until such time, this deficiency will continue to exist. Despite the limited
number of administrative employees and limited segregation of duties, management
believes that the Company's administrative employees are capable of following
its disclosure controls and procedures effectively.
  18
 Table of Contents
  Part
III
 
 Item10. Directors,
Executive Officers, and Corporate Governance.
 
  The Company has two directors and one
principal officer. Listed below is certain information concerning individuals
who currently serve as directors and executive officers of the
Company.
  Name
                                  
                                  Age
                                  
                                  Position
                                  
                                  Period Served asOfficer\DirectorJerome
      R. Mahoney
                                  
                                  49
                                  
                                  President,
      CEO, Director
                                  
                                  5-21-99
      to presentFrank
      V. Esser
                                  
                                  69
                                  
                                  Director
                                  
                                  2-24-04
      to
present
  Jerome R.
Mahoney.  Mr. Mahoney has been our Chief Executive Officer and
our sole director since May 21, 1999.  Mr. Mahoney started at
Executone Information Systems, a telephone systems manufacturer, and was
Director of National Accounts from 1988 to 1989.  In 1989, Mr. Mahoney
founded Voice Express, Inc., a New York company that sold voicemail systems and
telephone system service contracts and installed these systems.  Mr.
Mahoney sold Voice Express Systems in 1993.  From 1993 to 1997,
Mr. Mahoney was President of IVS Corp., and on December 17, 1997, he
established International Voice Technologies, which we merged with on May 21,
1999.  Mr. Mahoney is also the Non-Executive Chairman of the Board of
Trey Resources, Inc., Livingston, New Jersey and a member of its Board of
Directors since January 1, 2003. He had served as Non-Executive Chairman of the
Board of SpeechSwitch, Inc., Matawan, New Jersey, from November 10, 2004 until
February 2008.  He has served as Non-Executive Chairman of the Board
of Thomas Pharmaceuticals, Ltd., Matawan, New Jersey from May 19, 2005 until
April 16, 2008. He has also served as Non-Executive Chairman of the Board of MM2
Group, Inc., Matawan, New Jersey since October 19, 2005.  He is the
President, Chief Executive Officer, Chief Financial Officer and Secretary of
iVoice Technology, Inc, Matawan, NJ, and has held this position since August 30,
2006. He was also the Non-Executive Chairman of the Board of Deep Field
Technologies, Inc., Matawan, New Jersey, until January 27, 2007. Mr. Mahoney
received a B.A. in finance and marketing from Fairleigh Dickinson University,
Rutherford, N.J. in 1983.
  Frank V. Esser. Board Member
since February 24, 2004 and the Head of The Audit Committee. Mr. Esser, who is a
Certified Public Accountant, from 1959 to 1968, he functioned as Transfer Agent
and Head Bookkeeper in the Treasury Department of Texaco Inc. As a certified
public accountant with Ernst & Young from 1968 to 1981, he participated in
the audits of major publicly traded companies such as J.P. Stevens & Co.,
Dynamics Corporation of America, and Phillips – Van Heusen Corporation, along
with law firms, banks, manufacturing companies and other organizations. He also
participated in the public offerings of equity and debt and the preparation of
SEC filings. In 1981, Mr. Esser accepted the position of Corporate Controller
with a client, Grow Group, Inc., a Fortune 500 manufacturer of paints, solvents,
and household products. Ascending to the position of Chief Financial Officer in
1987. In 1998, Mr. Esser accepted the position of Senior Associate at Beacon
Consulting Associates, adding the title of Vice President in 1999. Mr. Esser is
also a Board member of iVoice Technology, Inc., Matawan, New Jersey, since June
2005.  Mr. Esser is also a Board member of Thomas Pharmaceuticals,
Ltd, Matawan, New Jersey, since January 2006.  Mr. Esser holds a BBA
degree from Baruch College of the City University of New York and is a Certified
Public Accountant in New York State.
  There are
no agreements or understandings for the officer or directors to resign at the
request of another person and the above-named officers and director is not
acting on behalf of nor will act at the direction of any other person. The
Company has an audit committee in place and has one independent member of the
Board of Directors.
 
 For the year ended December 31, 2008,
the Board held no meeting and acted forty-four times through written unanimous
consent in lieu of a meeting.
 
 AUDIT
COMMITTEE
 
 During
2008, Messrs. Mahoney and Esser served on the Audit Committee with Mr. Esser
serving as the Chairman of the committee. The Audit Committee has one
independent member who may also be deemed to be a financial expert as defined in
§228.401(e) of the regulations promulgated by the SEC pursuant to the Securities
Exchange Act of 1934, as amended.  Management is responsible for the
Company’s internal controls and the financial reporting process. The independent
auditors are responsible for performing an independent audit of the Company’s
consolidated financial statements in accordance with generally accepted
accounting principles and to issue a report thereon and as to management’s
assessment of the effectiveness of internal controls over financial reporting.
The Audit Committee’s responsibility is to monitor and oversee these processes,
although the members of the Audit Committee are not engaged in the practice of
auditing.  The Audit Committee met once in 2008. The Board of
Directors approved an Audit Committee Charter on March 23, 2006. As of this
date, the Audit Committee operates pursuant to this Audit Committee
Charter.
 
 AUDIT
COMMITTEE REPORT
 
 The
following is the Audit Committee’s report submitted to the Board of Directors
for the fiscal year ended December 31, 2008.  The Audit Committee
has:
 
 ·
              reviewed
      and discussed the Company’s audited financial statements with management
      and Bagell, Josephs, Levine & Company, L.L.C., the Company’s
      independent registered public accounting
firm;
 ·
              discussed
      with Bagell, Josephs, Levine & Company, L.L.C. the matters required to
      be discussed by Statement on Auditing Standards No.114, as
      may be modified or supplemented;
and
 ·
              received
      from Bagell, Josephs, Levine & Company, L.L.C. the written disclosures
      and the letter regarding their independence as required by Independence
      Standards Board Standard No. 1, as may be modified or supplemented, and
      discussed the auditors’ independence with
them.
  
 19
 Table of Contents
  Based on
the review and discussions referred to above, the Audit Committee 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.
 
 AUDIT
      COMMITTEEFrank
      V. Esser,ChairmanJerome
      Mahoney, Member
  The
Audit Committee report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Annual Report on Form 10-K
into any filing under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under
these acts.
 
 NOMINATING
COMMITTEE
 
 The
Company does not have a standing nominating committee or a committee performing
similar functions, as the Board of Directors consists of only two
members.  Due to the Company’s size, it finds it difficult to attract
individuals who would be willing to accept membership on the Company’s Board of
Directors.  Therefore, with only two members of the Board of
Directors, the full Board of Directors would participate in nominating
candidates to the Board of Directors.  The Company did not have an
annual meeting of shareholders in the past fiscal year.
  Section
16(a) Beneficial Ownership Reporting Compliance.
 
 No person who was a director, officer,
beneficial owner of more than ten percent of any class of equity securities of
the registrant registered pursuant to section 12 (“Reporting Person”) failed to
file on a timely basis the necessary reports, on Forms 3, 4, or 5, as required
by section 16(a) of the Exchange Act during the most recent fiscal
year.
  Code
of Ethics.
 
 The
Company has adopted a Code of Ethics for adherence by its Chief Executive
Officer, Chief Financial Officer, Chief Accounting Officer and Controller to
ensure honest and ethical conduct; full, fair and proper disclosure of financial
information in the Company's periodic reports filed pursuant to the Securities
Exchange Act of 1934; and compliance with applicable laws, rules, and
regulations. Any person may obtain a copy of our Code of Ethics by mailing a
request to the Company at the address appearing on the front page of this Annual
Report on Form 10-K.
  Item11. Executive Compensation.
  The
following table sets forth compensation information for services rendered by
certain of our executive officers in all capacities during the last two
completed fiscal years.  The following information includes the dollar
value of base salaries, bonus awards, the number of stock options granted, and
certain other compensation, if any, whether paid or deferred.
  Summary
Compensation Table
  Name and
      Position(s)
                          
                          Year
                          
                          Salary($)
                          
                          
                          All Other Compensation
                          
                          
                          Total CompensationJerome
      R. MahoneyChief
      Executive Officer
                          
                          2008
                          
                          $
                          383,328
                          
                          
                          $
                          866
                          (1)
                          
                          $
                          384,194and
      President
                          
                          2007
                          
                          $
                          360,480
                          
                          
                          $
                          866
                          (1)
                          
                          $
                          361,346
 (1)
              Represents
      $866 in life insurance premiums paid on behalf of Mr. Mahoney for the year
      ending December 31, 2008 and 2007.
   20
 Table of Contents
  Compensation
of Directors
  The
following table sets forth compensation information for services rendered by our
directors during the last completed fiscal year.  The following
information includes the dollar value of fees earned or paid in cash and certain
other compensation, if any, whether paid or deferred.  Our directors
did not receive any bonus, stock awards, option awards, non-equity incentive
plan compensation, or nonqualified deferred compensation earnings during the
last completed fiscal year.
  Director
Compensation
  Name
                    
                    Fees Earned or Paid in
      Cash
                      ($)
                    
                    
                    All Other Compensation
                      ($)
                    
                    
                    Total Compensation
                      ($)Frank
      V. Esser(1)
                    
                    $
                    12,000
                    (2)
                    
                    $
                    0
                    
                    
                    $
                    12,000
 
 (1)
              Mr.
      Esser has been serving as our outside director since June 2005 at a fee of
      $12,000 per year.
  (2)
              Includes
      $9,000 of Director’s fees that have been accrued and
    unpaid.
  Employment
Contracts
  On May 1,
1999, the Company entered into a five-year employment agreement with its
majority stockholder (the "Executive"). He will serve as the Company's Chairman
of the Board and Chief Executive Officer for a term of five years. As
consideration, the Company agrees to pay the Executive a sum of $180,000 the
first year with a 10% increase every year thereafter.  The employment
agreement with Mr. Mahoney provides for a severance payment to him of three
hundred percent (300%), less $100, of his average annual amount actually paid by
the Company or any parent or subsidiary of the Company to the Executive and
included in the Executive's gross income for services rendered in each of the
five prior calendar years (or shorter period during which the Executive shall
have been employed by the Company) should his employment be terminated following
a Change in Control, as defined in the agreement.
  On
November 15, 2004, the Company amended the employment agreement with Jerome
Mahoney and extended the term for an additional five-year period commencing on
May 1, 2004. He will serve as the Company's Chairman of the Board, President and
Chief Executive Officer for a term of five years. As consideration, the Company
agrees to pay Mr. Mahoney a sum of $270,000 the first year with a 10% increase
every year thereafter.
 
 Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
  The
following tables set forth certain information regarding the beneficial
ownership of our voting securities as of April 13, 2009 of (i) each person
known to us to beneficially own more than 5% of the applicable class of voting
securities, (ii) our directors, (iii) and each named executive officer
and (iv) all directors and executive officers as a group.  As of
April 13, 2008 a total of 2,602,170,527 shares of Class A Common Stock
outstanding and a no shares of our Class B Common Stock were
outstanding.  Each share of Class A common stock is entitled to one
vote on matters on which holders of common stock are eligible to
vote.  Every holder of the outstanding shares of the Class B Common
Stock Shares shall be entitled on each matter to cast the number of votes equal
to the number of Class A Common Stock Shares that would be issued upon the
conversion of the Class B Common Stock Shares held by that holder, had all of
the outstanding Class B Common Stock Shares held by that holder been converted
on the record date used for purposes of determining which shareholders would
vote in such an election.  The column entitled “Percentage of Total
Voting Stock” shows the percentage of total voting stock beneficially owned by
each listed party.
 
 The number of shares beneficially owned
is determined under rules promulgated by the Securities and Exchange Commission,
and the information is not necessarily indicative of beneficial ownership for
any other purpose.  Under those rules, beneficial ownership includes
any shares as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within 60 days of April 13, 2009, through the exercise or conversion of
any stock option, convertible security, warrant or other
right.  Unless otherwise indicated, each person or entity named in the
table has sole voting power and investment power (or shares that power with that
person’s spouse) with respect to all shares of capital stock listed as owned by
that person or entity.
   21
 Table of Contents
  Ownership
of Common Stock
  Common
      Stock
                    Beneficially
      OwnedName/Address
                
                Title
      of Class
                
                Number
                
                
                PercentJerome
      R. Mahoney
                
                Class
      A Common Stock
                
                
                2,940,930,258
                (1)
                
                
                53.3
                %c/o
      iVoice, Inc.
                
                Class
      B Common Stock
                
                
                131,201
                (2)
                
                
                100.0
                %750
      Highway 34Matawan,
      New Jersey  07747Frank
      V. Esser (Director)
                
                Class
      A Common Stock
                
                
                70,892
                
                
                
                0.0
                %27
      Arden RoadOld
      Bridge, New Jersey  08857YA
      Global Investments LP
                
                Class
      A Common Stock
                
                
                16,700,000,000
                (3)
                
                
                86.5
                %101
      Hudson Street, Suite 3700Jersey
      City, New Jersey  07302Director
      and executive officer as a group
                
                Class
      A Common Stock
                
                
                2,941,001,150
                
                
                
                53.3
                %Class
      B Common Stock
                
                
                131,201
                
                
                
                100.0
                %
 (1)
              Includes
      (i) 25,352,480 shares of our Class A common stock held by Mr. Mahoney and
      his minor aged children and (ii) 2,915,577,778 shares of our Class A
      common stock issuable upon repayment of accrued interest and deferred
      compensation.  Mr. Mahoney may, at any time, convert amounts
      owed to him into (i) one share of our Class B common stock for each dollar
      owed, (ii) the number of shares of our Class A common stock calculated by
      dividing (x) the sum of the amount being prepaid by (y) 50% of the lowest
      issue price of shares of our Class A common stock since the first advance
      of funds under such note, or (iii) payment of the principal of the note,
      before any repayment of interest.  At April 13, 2009, the total
      balance owed to Mr. Mahoney was $131,201, convertible into 131,201 shares
      of our Class B common stock, or 2,915,577,778 shares of our Class A common
      stock.
 
 (2)
              Includes
      $131,201 of amounts due to Mr. Mahoney, which is convertible into 131,201
      shares of Class B common stock.
 
 (3)
              Includes
      (i) 16,670,000,000 shares of our Class A common stock issuable upon
      conversion of $1,166,900 principal balance on the YA Global Convertible
      Debentures, and (ii) 30,000,000 shares of our Class A common stock
      issuable upon conversion of YA Global Warrants.  Pursuant to the
      terms of the YA Global Convertible Debentures, YA Global may, at any time,
      convert outstanding principal and accrued interest, in whole or in part,
      into a number of shares of our Class A Common Stock equal to the quotient
      obtained by dividing (x) the outstanding amount of the YA Global
      Debentures to be converted by (y) 70% of the lowest closing bid price of
      our shares of Class A Common Stock during the 30 trading days immediately
      preceding the conversion date.
 
 Item13. Certain Relationships and Related Transactions and Director
Independence.
  At
December 31, 2008, the total balance owed to Mr. Mahoney, by the parent of
iVoice Inc., was $296,506, which is convertible into 296,506 shares of our Class
B common stock, or 6,589,022,222 shares of our Class A common
stock.
  At
December 31, 2008, the total balance owed to Mr. Mahoney, by iVoice Technology
Inc., was $420,488, which is convertible into 420,488 shares of iVoice
Technology’s Class B common stock, or 1,051,218,750 shares of iVoice
Technology’s Class A common stock.
  At
December 31, 2008, the total balance owed to Mr. Mahoney, by B Green Technology,
Inc., a wholly owned subsidiary of iVoice Technology Inc., was $16,000, for
deferred compensation.
  Item14. Principal Accountant Fees and Services
  The
following table sets forth fees billed to the Company by the Company’s
independent auditors for the year ended December 31, 2008 and December 31, 2007
for (i) services rendered for the audit of the Company’s annual financial
statements and the review of the Company’s quarterly financial statements, (ii)
services rendered that are reasonably related to the performance of the audit or
review of the Company’s financial statements that are not reported as Audit
Fees, and (iii) services rendered in connection with tax preparation,
compliance, advice and assistance.
  Services
                  
                  2007
                  
                  
                  2007Audit
      Fees
                  
                  $
                  25,000
                  
                  
                  $
                  27,000Audit
      - Related Fees
                  
                  
                  (1
                  )
                  
                  
                  (1
                  )Tax
      fees
                  
                  
                  (1
                  )
                  
                  
                  (1
                  )All
      Other Fees (review of other filings)
                  
                  $
                  160
                  
                  
                  $
                  1,200Total
                  
                  $
                  25,160
                  
                  
                  $
                  28,200(1)
      Included in base audit fee, not itemized
 
 Prior to engaging our accountants to
perform a particular service, our Audit Committee obtains an estimate for the
service to be performed. All of the services described above were approved by
the Audit Committee in accordance with its procedures.
  22
 Table of Contents
  PART
IV
  Item15. Exhibits and Financial Statement Schedules.
  (a)           Exhibits
  No.
                  Description3.1
                  Certificate
      of incorporation of  iVoice, Inc., a New Jersey corporation,
      incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form
      10-QSB for the period ended March 31, 2003.3.2
                  Amendment
      to the Certificate of incorporation of  iVoice, Inc., filed with
      the Treasurer of the State of New Jersey on June 9, 2005, incorporated
      herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated June
      9, 2005.3.3
                  Amendment
      to the Certificate of incorporation of  iVoice, Inc., filed with
      the Treasurer of the State of New Jersey on June 17, 2005, incorporated
      herein by reference to Exhibit 3.2 of the Registrant’s Form 8-K dated June
      9, 2005.3.4
                  By-laws
      of iVoice, Inc., a New Jersey corporation, incorporated herein by
      reference to Exhibit 3.2 of the Registrant’s Form 10-QSB for the period
      ended March 31, 2003.3.5
                  Amendment
      to the Certificate of Incorporation of iVoice, Inc., filed with the
      Treasurer of the State of New Jersey on April 10, 2006, incorporated
      herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated
      March 30, 2006.3.6
                  Amendment
      to the Certificate of Incorporation of iVoice, Inc., filed with the
      Treasurer of the State of New Jersey on March 6, 2009, incorporated herein
      by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated March 13,
      2009.4.1
                  Secured
      Convertible Debenture dated May 11, 2006, between YA Global Investments LP
      (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal
      value of $5,544,110. (incorporated herein by reference to Exhibit 4.1 of
      the Registration Statement on Form SB-2 (File No. 333-134555) filed on May
      30, 2006).4.2
                  Secured
      Convertible Debenture dated May 11, 2006, between YA Global Investments LP
      (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal
      value of $503,776. (incorporated herein by reference to Exhibit 4.2 of the
      Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30,
      2006).4.3
                  Secured
      Convertible Debenture dated May 25, 2006, between YA Global Investments LP
      (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal
      value of $1,250,000.  (incorporated herein by reference to
      Exhibit 4.3 of the Registration Statement on Form SB-2 (File No.
      333-134555) filed on May 30, 2006).4.4
                  Warrant
      to Purchase 10,000,000 shares of common stock issued to YA Global
      Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an
      exercise price per share of $.30. (incorporated herein by reference to
      Exhibit 4.4 of the Registration Statement on Form SB-2 (File No.
      333-134555) filed on May 30, 2006).4.5
                  Warrant
      to Purchase 10,000,000 shares of common stock issued to YA Global
      Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an
      exercise price per share of $.40. (incorporated herein by reference to
      Exhibit 4.6 of the Registration Statement on Form SB-2 (File No.
      333-134555) filed on May 30, 2006).4.6
                  Warrant
      to Purchase 10,000,000 shares of common stock issued to YA Global
      Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an
      exercise price per share of $.50. (incorporated herein by reference to
      Exhibit 4.6 of the Registration Statement on Form SB-2 (File No.
      333-134555) filed on May 30, 2006).10.1
                  iVoice,
      Inc. 2005 Stock Incentive Plan incorporated herein by reference to
      Appendix A to the Schedule 14A filed on February 27,
  2006.10.2
                  Amended
      and Restated Security Agreement, dated May 25, 2006 between YA Global
      Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc.
      (incorporated herein by reference to Exhibit 10.15 of the Registration
      Statement on Form SB-2 (File No. 333-134555) filed on May 30,
      2006).10.3
                  Agreement
      and Plan of Merger dated January 6, 2006 by and among iVoice, Inc., Thomas
      Pharmaceuticals, Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey
      corporation, Thomas Pharmaceuticals Ltd., a New York corporation, Farris
      M. Thomas, Jr., an individual, John E. Lucas, an individual, Richard C.
      Brogle, Nina Schwalbe, an individual, John H. Kirkwood, an individual, and
      Maureen Gillespie, an individual (incorporated herein by reference to
      Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly period
      ended March 31, 2006, filed with the SEC on May 15,
  2006).10.4
                  Secured
      Convertible Debenture dated January 6, 2006 issued by Thomas
      Pharmaceuticals, Ltd. a New Jersey corporation. for the sum of $360,000
      (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report
      on Form 10-Q for the quarterly period ended March 31, 2006, filed with the
      SEC on May 15, 2006).10.5
                  Administrative
      Services Agreement dated January 6, 2006 between Thomas Pharmaceuticals,
      Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey corporation and
      iVoice, Inc. (incorporated herein by reference to Exhibit 10.3 of the
      Quarterly Report on Form 10-Q for the quarterly period ended March 31,
      2006, filed with the SEC on May 15, 2006).10.6
                  Security
      Agreement dated January 6, 2006 by and between iVoice, Inc. and Thomas
      Pharmaceuticals, Ltd., a New Jersey corporation (incorporated herein by
      reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q for the
      quarterly period ended March 31, 2006, filed with the SEC on May 15,
      2006).10.7
                  Administrative
      Services Convertible Debenture dated January 6, 2006 issued by Thomas
      Pharmaceuticals, Ltd. a New Jersey corporation. for the sum of $100,000
      (incorporated herein by reference to Exhibit 10.8 of the Quarterly Report
      on Form 10-Q for the quarterly period ended March 31, 2006, filed with the
      SEC on May 15, 2006).10.8
                  Stock
      Purchase Agreement dated August 7, 2006 by and among Thomas
      Pharmaceuticals Ltd., Thomas Pharmaceutical Acquisition Corp. and iVoice,
      Inc. (incorporated herein by reference to Exhibit 10.28 of Amendment
      No. 2 to Form SB-2 filed on October 23, 2006).10.9
                  Extension
      Agreement dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd.,
      Thomas Pharmaceutical Acquisition Corp. and iVoice, Inc. (incorporated
      herein by reference to Exhibit 10.1 of Form 8-K filed on January 26,
      2007).10.10
                  Secured
      Convertible Debenture dated January 26, 2007 by and among Thomas
      Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated herein by
      reference to Exhibit 10.2 of Form 8-K filed on January 26,
      2007).10.11
                  Convertible
      Debenture dated January 26, 2007 by and among Thomas Pharmaceutical
      Acquisition Corp. and Biobridge LLC (incorporated herein by reference to
      Exhibit 10.3 of Form 8-K filed on January 26,
  2007).10.12
                  Promissory
      Note dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd., and
      Thomas Pharmaceutical Acquisition Corp. (incorporated herein by reference
      to Exhibit 10.4 of Form 8-K filed on January 26,
    2007).10.13
                  Security
      Agreement dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd.,
      Thomas Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated
      herein by reference to Exhibit 10.5 of Form 8-K filed on January 26,
      2007).   23
 Table of Contents
  No.
                      Description10.14
                      Consulting
      Services Agreement dated February 13, 2007 between iVoice, Inc and Deep
      Field Technologies, Inc. (incorporated herein by reference to Exhibit
      10.34 of Form 10-KSB for the fiscal year ended December 31,
      2007).
 10.15
                  Amendment
      Agreement dated February 21, 2008 by and between iVoice, Inc. and YA
      Global Investments LP. (incorporated herein by reference to
      Exhibit 10.1 of Form 8-K dated February 22, 2008).10.16
                  Administrative Services Agreement, Amendment No. 1,
      dated March 5, 2008 between SpeechSwitch, Inc., a New Jersey corporation,
      and iVoice, Inc. *10.17
                  Secured Convertible Promissory Note dated March 5, 2008
      issued by SpeechSwitch, Inc., a New Jersey corporation, to iVoice, Inc.
      *10.18
                  Security Agreement dated March 5, 2008 issued by
      SpeechSwitch, Inc., a New Jersey corporation, to iVoice, Inc.
      *10.19
                  Administrative
      Services Agreement, Amendment No. 1, dated March 5, 2008 between iVoice
      Technology, Inc., a New Jersey corporation, and iVoice, Inc. (incorporated
      herein by reference to Exhibit 10.1 of Form 8-K dated March 5,
      2008).10.20
                  Secured
      Convertible Promissory Note dated March 5, 2008 issued by iVoice
      Technology, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated
      herein by reference to Exhibit 10.2 of Form 8-K dated March 5,
      2008).10.21
                  Security
      Agreement dated March 5, 2008 issued by iVoice Technology, Inc., a New
      Jersey corporation, to iVoice, Inc. (incorporated herein by reference to
      Exhibit 10.3 of Form 8-K dated March 5, 2008).10.22
                  Stock Purchase Agreement, dated March 11, 2008 issued
      by iVoice Technology, Inc., a New Jersey corporation, and iVoice, Inc.
      *10.23
                  Security Agreement dated March 11, 2008 issued by
      iVoice Technology, Inc., a New Jersey corporation, to iVoice, Inc.
      *10.24
                  Warrant to purchase $144,444 worth of common stock of
      iVoice Technology, Inc., a New Jersey corporation, dated March 11, 2008.
      *10.25
                  Administrative
      Services Agreement dated June 10, 2008 between Small Cap Advisors, Inc., a
      New Jersey corporation, and iVoice, Inc. (incorporated herein by reference
      to Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly
      period ended June 30, 2008, filed with the SEC on August 13,
      2008).10.26
                  Secured
      Convertible Promissory Note dated June 10, 2008 issued by Small Cap
      Advisors, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated
      herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q
      for the quarterly period ended June 30, 2008, filed with the SEC on August
      13, 2008).10.27
                  Security
      Agreement dated June 10, 2008 issued by Small Cap Advisors, Inc., a New
      Jersey corporation, to iVoice, Inc. (incorporated herein by reference to
      Exhibit 10.3 of the Quarterly Report on Form 10-Q for the quarterly period
      ended June 30, 2008, filed with the SEC on August 13,
    2008).10.28
                  Administrative
      Services Agreement, Amendment No. 1, dated June 12, 2008 between Thomas
      Pharmaceuticals, Ltd., a New Jersey corporation, and iVoice, Inc.
      (incorporated herein by reference to Exhibit 10.4 of the Quarterly Report
      on Form 10-Q for the quarterly period ended June 30, 2008, filed with the
      SEC on August 13, 2008).10.
      29
                  Secured
      Convertible Promissory Note dated June 10, 2008 issued by Thomas
      Pharmaceuticals, Ltd., a New Jersey corporation, to iVoice, Inc.
      (incorporated herein by reference to Exhibit 10.5 of the Quarterly Report
      on Form 10-Q for the quarterly period ended June 30, 2008, filed with the
      SEC on August 13, 2008).10.30
                  Security
      Agreement dated June 12, 2008 issued by Thomas Pharmaceuticals, Ltd., a
      New Jersey corporation, to iVoice, Inc. (incorporated herein by reference
      to Exhibit 10.6 of the Quarterly Report on Form 10-Q for the quarterly
      period ended June 30, 2008, filed with the SEC on August 13,
      2008).10.31
                  Amendment
      No. 3 to Employment Agreement dated March 13, 2009 by and between iVoice,
      Inc., a New Jersey corporation, and Jerome Mahoney (incorporated herein by
      reference to Exhibit 10.1 of the Registrant’s Form 8-K dated March 13,
      2009.14.1
                  Code
      of Ethics (incorporated by reference to Exhibit 14.1 filed with the
      Registrant’s Form 10-KSB for the fiscal year ended December 31,
      2003).21
                  List of Subsidiaries (incorporated by reference to Exhibit
      21 filed with the Registrant’s Form 10-KSB for the fiscal year ended
      December 31, 2007).31.1
                  Rule 13a-14(a)/15d-14(a)
      Certifications.*32.1
                  Certification Pursuant To 18 U.S.C. Section 1350, As
      Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of
      2002.*
 
  *  Filed
herein
  
 24
 Table of Contents
  Signatures
  In
accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Registrant
has duly caused this report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
 iVoice,
Inc.
  By: /s/ JEROME R
MAHONEY April 15,
2009
 Jerome R.
Mahoney
 President,
Chief Executive Officer,
 Chief
Financial Officer and Director
  
 In
accordance with the Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
 
 By:              /s/ Jerome R.
Mahoney                                            
April 15, 2009
 Jerome R. Mahoney
 President, Chief Executive
Officer,
 Chief Financial Officer
and Director
 
 
 By:              /s/ Frank V.
Esser                                                      
 April 15, 2009
 Frank V. Esser
 Director
  25
 Table of Contents
 
 INDEX
OF EXHIBITS
 
 No.
                    Description3.1
                    Certificate
      of incorporation of  iVoice, Inc., a New Jersey corporation,
      incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form
      10-QSB for the period ended March 31, 2003.3.2
                    Amendment
      to the Certificate of incorporation of  iVoice, Inc., filed with
      the Treasurer of the State of New Jersey on June 9, 2005, incorporated
      herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated June
      9, 2005.3.3
                    Amendment
      to the Certificate of incorporation of  iVoice, Inc., filed with
      the Treasurer of the State of New Jersey on June 17, 2005, incorporated
      herein by reference to Exhibit 3.2 of the Registrant’s Form 8-K dated June
      9, 2005.3.4
                    By-laws
      of iVoice, Inc., a New Jersey corporation, incorporated herein by
      reference to Exhibit 3.2 of the Registrant’s Form 10-QSB for the period
      ended March 31, 2003.3.5
                    Amendment
      to the Certificate of Incorporation of iVoice, Inc., filed with the
      Treasurer of the State of New Jersey on April 10, 2006, incorporated
      herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated
      March 30, 2006.3.6
                    Amendment
      to the Certificate of Incorporation of iVoice, Inc., filed with the
      Treasurer of the State of New Jersey on March 6, 2009, incorporated herein
      by reference to Exhibit 3.1 of the Registrant’s Form 8-K dated March 13,
      2009.4.1
                    Secured
      Convertible Debenture dated May 11, 2006, between YA Global Investments LP
      (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal
      value of $5,544,110. (incorporated herein by reference to Exhibit 4.1 of
      the Registration Statement on Form SB-2 (File No. 333-134555) filed on May
      30, 2006).4.2
                    Secured
      Convertible Debenture dated May 11, 2006, between YA Global Investments LP
      (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal
      value of $503,776. (incorporated herein by reference to Exhibit 4.2 of the
      Registration Statement on Form SB-2 (File No. 333-134555) filed on May 30,
      2006).4.3
                    Secured
      Convertible Debenture dated May 25, 2006, between YA Global Investments LP
      (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc. for the principal
      value of $1,250,000.  (incorporated herein by reference to
      Exhibit 4.3 of the Registration Statement on Form SB-2 (File No.
      333-134555) filed on May 30, 2006).4.4
                    Warrant
      to Purchase 10,000,000 shares of common stock issued to YA Global
      Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an
      exercise price per share of $.30. (incorporated herein by reference to
      Exhibit 4.4 of the Registration Statement on Form SB-2 (File No.
      333-134555) filed on May 30, 2006).4.5
                    Warrant
      to Purchase 10,000,000 shares of common stock issued to YA Global
      Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an
      exercise price per share of $.40. (incorporated herein by reference to
      Exhibit 4.6 of the Registration Statement on Form SB-2 (File No.
      333-134555) filed on May 30, 2006).4.6
                    Warrant
      to Purchase 10,000,000 shares of common stock issued to YA Global
      Investments LP (f/k/a/ Cornell Capital Partners, LP) on May 25, 2006 at an
      exercise price per share of $.50. (incorporated herein by reference to
      Exhibit 4.6 of the Registration Statement on Form SB-2 (File No.
      333-134555) filed on May 30, 2006).10.1
                    iVoice,
      Inc. 2005 Stock Incentive Plan incorporated herein by reference to
      Appendix A to the Schedule 14A filed on February 27,
  2006.10.2
                    Amended
      and Restated Security Agreement, dated May 25, 2006 between YA Global
      Investments LP (f/k/a/ Cornell Capital Partners, LP) and iVoice, Inc.
      (incorporated herein by reference to Exhibit 10.15 of the Registration
      Statement on Form SB-2 (File No. 333-134555) filed on May 30,
      2006).10.3
                    Agreement
      and Plan of Merger dated January 6, 2006 by and among iVoice, Inc., Thomas
      Pharmaceuticals, Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey
      corporation, Thomas Pharmaceuticals Ltd., a New York corporation, Farris
      M. Thomas, Jr., an individual, John E. Lucas, an individual, Richard C.
      Brogle, Nina Schwalbe, an individual, John H. Kirkwood, an individual, and
      Maureen Gillespie, an individual (incorporated herein by reference to
      Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly period
      ended March 31, 2006, filed with the SEC on May 15,
  2006).10.4
                    Secured
      Convertible Debenture dated January 6, 2006 issued by Thomas
      Pharmaceuticals, Ltd. a New Jersey corporation. for the sum of $360,000
      (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report
      on Form 10-Q for the quarterly period ended March 31, 2006, filed with the
      SEC on May 15, 2006).10.5
                    Administrative
      Services Agreement dated January 6, 2006 between Thomas Pharmaceuticals,
      Ltd. (f/k/a iVoice Acquisition Corp.), a New Jersey corporation and
      iVoice, Inc. (incorporated herein by reference to Exhibit 10.3 of the
      Quarterly Report on Form 10-Q for the quarterly period ended March 31,
      2006, filed with the SEC on May 15, 2006).10.6
                    Security
      Agreement dated January 6, 2006 by and between iVoice, Inc. and Thomas
      Pharmaceuticals, Ltd., a New Jersey corporation (incorporated herein by
      reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q for the
      quarterly period ended March 31, 2006, filed with the SEC on May 15,
      2006).10.7
                    Administrative
      Services Convertible Debenture dated January 6, 2006 issued by Thomas
      Pharmaceuticals, Ltd. a New Jersey corporation. for the sum of $100,000
      (incorporated herein by reference to Exhibit 10.8 of the Quarterly Report
      on Form 10-Q for the quarterly period ended March 31, 2006, filed with the
      SEC on May 15, 2006).10.8
                    Stock
      Purchase Agreement dated August 7, 2006 by and among Thomas
      Pharmaceuticals Ltd., Thomas Pharmaceutical Acquisition Corp. and iVoice,
      Inc. (incorporated herein by reference to Exhibit 10.28 of Amendment
      No. 2 to Form SB-2 filed on October 23, 2006).10.9
                    Extension
      Agreement dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd.,
      Thomas Pharmaceutical Acquisition Corp. and iVoice, Inc. (incorporated
      herein by reference to Exhibit 10.1 of Form 8-K filed on January 26,
      2007).10.10
                    Secured
      Convertible Debenture dated January 26, 2007 by and among Thomas
      Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated herein by
      reference to Exhibit 10.2 of Form 8-K filed on January 26,
      2007).10.11
                    Convertible
      Debenture dated January 26, 2007 by and among Thomas Pharmaceutical
      Acquisition Corp. and Biobridge LLC (incorporated herein by reference to
      Exhibit 10.3 of Form 8-K filed on January 26,
  2007).10.12
                    Promissory
      Note dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd., and
      Thomas Pharmaceutical Acquisition Corp. (incorporated herein by reference
      to Exhibit 10.4 of Form 8-K filed on January 26,
    2007).10.13
                    Security
      Agreement dated January 26, 2007 by and among Thomas Pharmaceuticals Ltd.,
      Thomas Pharmaceutical Acquisition Corp. and Biobridge LLC (incorporated
      herein by reference to Exhibit 10.5 of Form 8-K filed on January 26,
      2007).
  
  *  Filed
herein
  
 26
 Table of Contents
  No.
                  Description10.14
                  Consulting
      Services Agreement dated February 13, 2007 between iVoice, Inc and Deep
      Field Technologies, Inc. (incorporated herein by reference to Exhibit
      10.34 of Form 10-KSB for the fiscal year ended December 31,
      2007).
 10.15
              Amendment
      Agreement dated February 21, 2008 by and between iVoice, Inc. and YA
      Global Investments LP. (incorporated herein by reference to
      Exhibit 10.1 of Form 8-K dated February 22, 2008).10.16
              Administrative Services Agreement, Amendment No. 1,
      dated March 5, 2008 between SpeechSwitch, Inc., a New Jersey corporation,
      and iVoice, Inc. *10.17
              Secured Convertible Promissory Note dated March 5, 2008
      issued by SpeechSwitch, Inc., a New Jersey corporation, to iVoice, Inc.
      *10.18
              Security Agreement dated March 5, 2008 issued by
      SpeechSwitch, Inc., a New Jersey corporation, to iVoice, Inc.
      *10.19
              Administrative
      Services Agreement, Amendment No. 1, dated March 5, 2008 between iVoice
      Technology, Inc., a New Jersey corporation, and iVoice, Inc. (incorporated
      herein by reference to Exhibit 10.1 of Form 8-K dated March 5,
      2008).10.20
              Secured
      Convertible Promissory Note dated March 5, 2008 issued by iVoice
      Technology, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated
      herein by reference to Exhibit 10.2 of Form 8-K dated March 5,
      2008).10.21
              Security
      Agreement dated March 5, 2008 issued by iVoice Technology, Inc., a New
      Jersey corporation, to iVoice, Inc. (incorporated herein by reference to
      Exhibit 10.3 of Form 8-K dated March 5, 2008).10.22
              Stock Purchase Agreement, dated March 11, 2008 issued
      by iVoice Technology, Inc., a New Jersey corporation, and iVoice, Inc.
      *10.23
              Security Agreement dated March 11, 2008 issued by
      iVoice Technology, Inc., a New Jersey corporation, to iVoice, Inc.
      *10.24
              Warrant to purchase $144,444 worth of common stock of
      iVoice Technology, Inc., a New Jersey corporation, dated March 11, 2008.
      *10.25
              Administrative
      Services Agreement dated June 10, 2008 between Small Cap Advisors, Inc., a
      New Jersey corporation, and iVoice, Inc. (incorporated herein by reference
      to Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly
      period ended June 30, 2008, filed with the SEC on August 13,
      2008).10.26
              Secured
      Convertible Promissory Note dated June 10, 2008 issued by Small Cap
      Advisors, Inc., a New Jersey corporation, to iVoice, Inc. (incorporated
      herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q
      for the quarterly period ended June 30, 2008, filed with the SEC on August
      13, 2008).10.27
              Security
      Agreement dated June 10, 2008 issued by Small Cap Advisors, Inc., a New
      Jersey corporation, to iVoice, Inc. (incorporated herein by reference to
      Exhibit 10.3 of the Quarterly Report on Form 10-Q for the quarterly period
      ended June 30, 2008, filed with the SEC on August 13,
    2008).10.28
              Administrative
      Services Agreement, Amendment No. 1, dated June 12, 2008 between Thomas
      Pharmaceuticals, Ltd., a New Jersey corporation, and iVoice, Inc.
      (incorporated herein by reference to Exhibit 10.4 of the Quarterly Report
      on Form 10-Q for the quarterly period ended June 30, 2008, filed with the
      SEC on August 13, 2008).10.
      29
              Secured
      Convertible Promissory Note dated June 10, 2008 issued by Thomas
      Pharmaceuticals, Ltd., a New Jersey corporation, to iVoice, Inc.
      (incorporated herein by reference to Exhibit 10.5 of the Quarterly Report
      on Form 10-Q for the quarterly period ended June 30, 2008, filed with the
      SEC on August 13, 2008).10.30
              Security
      Agreement dated June 12, 2008 issued by Thomas Pharmaceuticals, Ltd., a
      New Jersey corporation, to iVoice, Inc. (incorporated herein by reference
      to Exhibit 10.6 of the Quarterly Report on Form 10-Q for the quarterly
      period ended June 30, 2008, filed with the SEC on August 13,
      2008).10.31
              Amendment
      No. 3 to Employment Agreement dated March 13, 2009 by and between iVoice,
      Inc., a New Jersey corporation, and Jerome Mahoney (incorporated herein by
      reference to Exhibit 10.1 of the Registrant’s Form 8-K dated March 13,
      2009.14.1
              Code
      of Ethics (incorporated by reference to Exhibit 14.1 filed with the
      Registrant’s Form 10-KSB for the fiscal year ended December 31,
      2003).21
              List of Subsidiaries (incorporated by reference to Exhibit
      21 filed with the Registrant’s Form 10-KSB for the fiscal year ended
      December 31, 2007).31.1
              Rule 13a-14(a)/15d-14(a)
      Certifications.*32.1
              Certification Pursuant To 18 U.S.C. Section 1350, As
      Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of
      2002.* 
  *  Filed
herein


27
 Table of Contents




iVOICE,
INC.  AND SUBSIDIARIES




CONSOLIDATED
FINANCIAL STATEMENTS




DECEMBER
31, 2008 and 2007






Table of Contents




iVOICE, INC. AND SUBSIDIARIES




CONSOLIDATED
FINANCIAL STATEMENTS




CONTENTS






PageREPORT OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                F-2CONSOLIDATED FINANCIAL STATEMENTSBalance Sheets
                F-3Statements of Operations
                F-5Statements of Changes in Stockholders' Equity
      (Deficit)
                F-6Statement of Accumulated Other Comprehensive Income
      (Loss)
                F-8Statements of Cash Flows
                F-9Notes to Consolidated Financial
    Statements
                F-12








Table of Contents




BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.


Certified
Public Accountants


406
Lippincott Drive – Suite J


Marlton,
New Jersey 08053


(856)
355-5900  Fax (856) 396-0022








REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM








TO THE
BOARD OF DIRECTORS AND STOCKHOLDERS’ OF iVOICE, INC.


Matawan,
New Jersey





We have
audited the accompanying consolidated balance sheets of iVoice, Inc. and
Subsidiaries as of December 31, 2008 and 2007, and the related consolidated
statements of operations, changes in stockholders' equity (deficit), accumulated
other comprehensive income (loss) and cash flows for each of the years in the
two-year period ended December 31, 2008.  These consolidated 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 audits 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 audits 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of iVoice, Inc. and
Subsidiaries as of December 31, 2008 and 2007, and the results of their
operations and their cash flows for each of the years in the two-year period
ended December 31, 2008 in conformity with accounting principles generally
accepted in the United States of America.





The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 19 to the
consolidated financial statements, the Company has incurred substantial
accumulated deficits, has an obligation to deliver an indeterminable amount of
common stock due on derivative liabilities and has completed the process of
spinning out their subsidiary. These issues raise substantial doubt about the
Company’s ability to continue as a going concern. Management’s plans in regards
to these matters are also discussed in Note 19. The consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.

















Bagell,
Josephs, Levine & Company, LLC


Marlton,
New Jersey


April 9,
2009




F-2
 Table of Contents






iVOICE, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


December
31,





ASSETS








2008
                      
                      
                      2007CURRENT
      ASSETSCash
      and cash equivalents
                      
                      $
                      3,442,590
                      
                      
                      $
                      79,919Marketable
      securities
                      
                      
                      --
                      
                      
                      
                      10,814,954Securities
      available for sale
                      
                      
                      13,016
                      
                      
                      
                      676,272Inventory
                      
                      
                      6,246
                      
                      
                      
                      --Prepaid
      expenses and other current assets
                      
                      
                      21,811
                      
                      
                      
                      194,678Total
      current assets
                      
                      
                      3,483,663
                      
                      
                      
                      11,765,823PROPERTY AND EQUIPMENT,net of accumulated depreciationof
      $221,162 and $214,721, respectively
                      
                      
                      23,556
                      
                      
                      
                      11,285OTHER
      ASSETSConvertible
      debentures receivable
                      
                      
                      --
                      
                      
                      
                      852,447Intangible
      assets, net of accumulated amortization of $1,608 and $871
                      
                      
                      233,939
                      
                      
                      
                      170,975Deposits
      and other assets
                      
                      
                      6,666
                      
                      
                      
                      6,666Total
      other assets
                      
                      
                      240,605
                      
                      
                      
                      1,030,088TOTAL
      ASSETS
                      
                      $
                      3,747,824
                      
                      
                      $
                      12,807,196





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





F-3
 Table of Contents





iVOICE,
INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS – (Continued)


December
31,





LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)







2008
                        
                        
                        2007CURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                        
                        $
                        2,171,229
                        
                        
                        $
                        1,127,695Due
      to related parties
                        
                        
                        648,058
                        
                        
                        
                        176,293Convertible
      debenture payables, net of discount of $170,808 and
    $1,444,056
                        
                        
                        996,092
                        
                        
                        
                        5,004,154Derivative
      liability on convertible debentures
                        
                        
                        1,659,991
                        
                        
                        
                        4,249,113Redemption
      of Class B common stock liability, net of restricted cash of
      $1,512,104
                        
                        
                        --
                        
                        
                        
                        --Deferred
      revenue
                        
                        
                        9,407
                        
                        
                        
                        --Total
      current liabilities
                        
                        
                        5,484,777
                        
                        
                        
                        10,557,255COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      stock, $1 par value; Authorized shares - 1,000,000;Issued
      and outstanding shares – none
                        
                        
                        -
                        
                        
                        
                        -Common
      stock, Class A:2008
      – no par value; Authorized 10,000,000,000,2,602,173,527
      shares issued, 2,602,170,527 shares outstanding2007
      – no par value; Authorized 10,000,000,000,420,674,318
      shares issued, 420,671,318 shares outstanding
                        
                        
                        24,613,184
                        
                        
                        
                        25,325,012Common
      stock, Class B:2008 - $.01 par value; Authorized 50,000,0002,204,875
      shares issued, 1,512,104 shares outstanding,2007 - $.01 par value; Authorized 50,000,0002,204,875
      shares issued, 1,552,484 shares outstanding
                        
                        
                        --
                        
                        
                        
                        15,525Additional
      paid-in capital
                        
                        
                        719,702
                        
                        
                        
                        719,702Discount
      on investment in subsidiary
                        
                        
                        (1,792,325
                        )
                        
                        
                        -Accumulated
      other comprehensive income (loss)
                        
                        
                        1,785
                        
                        
                        
                        (1,096,000
                        )Accumulated
      deficit
                        
                        
                        (25,250,499
                        )
                        
                        
                        (22,685,498
                        )Treasury
      stock, 3,000 Class A shares, at cost
                        
                        
                        (28,800
                        )
                        
                        
                        (28,800
                        )Total
      stockholders' equity (deficit)
                        
                        
                        (1,736,953
                        )
                        
                        
                        2,249,941TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                        
                        $
                        3,747,824
                        
                        
                        $
                        12,807,196




The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
 Table of Contents







iVOICE, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


For
the years ended December 31,





2008
                        
                        
                        2007SALES,
      net
                        
                        $
                        173,424
                        
                        
                        $
                        1,276,761COST
      OF SALES
                        
                        
                        746
                        
                        
                        
                        --GROSS
      PROFIT
                        
                        
                        172,678
                        
                        
                        
                        1,276,761SELLING,
      GENERAL ANDADMINISTRATIVE
      EXPENSESGeneral
      and administrative expenses
                        
                        
                        1,331,812
                        
                        
                        
                        775,318Amortization
      of financing costs
                        
                        
                        72,396
                        
                        
                        
                        173,750Depreciation
      and amortization
                        
                        
                        6,632
                        
                        
                        
                        8,894Total
      selling, general and administrative expenses
                        
                        
                        1,410,840
                        
                        
                        
                        957,962INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                        
                        
                        (1,238,162
                        )
                        
                        
                        318,799OTHER
      INCOME (EXPENSE)Other
      income
                        
                        
                        641,422
                        
                        
                        
                        373,063Gain
      on revaluation of derivatives
                        
                        
                        3,854,935
                        
                        
                        
                        1,131,305Amortization
      of discount on debt
                        
                        
                        (1,959,745
                        )
                        
                        
                        (3,725,279
                        )Fair
      value adjustment on investments
                        
                        
                        (2,982,833
                        )
                        
                        
                        --Interest
      expense
                        
                        
                        (880,618
                        )
                        
                        
                        (481,156
                        )Total
      other income (expense)
                        
                        
                        (1,326,839
                        )
                        
                        
                        (2,702,067
                        )LOSS
      FROM CONTINUING OPERATIONS BEFOREPROVISION
      FOR INCOME TAXES
                        
                        
                        (2,565,001
                        )
                        
                        
                        (2,383,268
                        )PROVISION
      FOR INCOME TAXES
                        
                        
                        --
                        
                        
                        
                        --LOSS
      FROM CONTINUING OPERATIONS
                        
                        
                        (2,565,001
                        )
                        
                        
                        (2,383,268
                        )LOSS
      FROM DISCONTINUED OPERATIONSLoss
      from discontinued operations
                        
                        
                        --
                        
                        
                        
                        (765,833
                        )NET
      LOSS APPLICABLE TO COMMON SHARES
                        
                        $
                        (2,565,001
                        )
                        
                        $
                        (3,149,101
                        )NET
      LOSS PER BASIC AND DILUTED COMMON SHAREContinuing
      Operations: basic and diluted
                        
                        $
                        (0.00
                        )
                        
                        $
                        (0.02
                        )Discontinued Operations:
      basic and diluted
                        
                        $
                        (0.00
                        )
                        
                        $
                        (0.02
                        )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDINGBasic
      and diluted
                        
                        
                        1,798,730,508
                        
                        
                        
                        141,801,089




The
accompanying notes are an integral part of these consolidated financial
statements.
   F-5
 Table of Contents




iVOICE, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(DEFICIT)


FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007








Common
      Stock Class A
                    
                    
                    Common
      Stock Class B
                    
                    
                    TreasuryStockShares
                    
                    
                    Amount
                    
                    
                    Shares
                    
                    
                    Amount
                    
                    
                    AmountBalance
      at January 1, 2007
                    
                    
                    69,070,695
                    
                    
                    $
                    24,831,084
                    
                    
                    
                    1,605,347
                    
                    
                    $
                    16,053
                    
                    
                    $
                    (28,800
                    )Issuance
      of stock on conversion of Class B shares
                    
                    
                    86,012,651
                    
                    
                    
                    528
                    
                    
                    
                    (52,863
                    )
                    
                    
                    (528
                    )
                    
                    
                    -Issuance
      of stock as repayment of principal on an outstanding convertible
      debentures
                    
                    
                    265,587,972
                    
                    
                    
                    493,400
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Unrealized
      loss on securities available for sale
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Gain
      on spin off of subsidiary to shareholders
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
      loss for the year ended December 31, 2007 from continuing
      operations
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
      loss for the year ended December 31, 2007 from discontinued
      operations
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Balance
      at December 31, 2007
                    
                    
                    420,671,318
                    
                    
                    $
                    25,325,012
                    
                    
                    
                    1,552,484
                    
                    
                    $
                    15,525
                    
                    
                    $
                    (28,800
                    )Issuance
      of stock as repayment of principal on an outstanding convertible
      debentures
                    
                    
                    1,805,499,209
                    
                    
                    
                    778,751
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Issuance
      of stock on conversion of Class B shares
                    
                    
                    316,000,000
                    
                    
                    
                    404
                    
                    
                    
                    (40,380
                    )
                    
                    
                    (404
                    )
                    
                    
                    -Issuance
      of stock for legal services
                    
                    
                    60,000,000
                    
                    
                    
                    6,000
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Reclass
      of redemption of Class B common stock to liabilities
                    
                    
                    -
                    
                    
                    
                    (1,496,983
                    )
                    
                    
                    -
                    
                    
                    
                    (15,121
                    )
                    
                    
                    -Discount
      on investment in subsidiary
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Unrealized
      loss on securities available for sale
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Reclassification
      adjustment for losses included in net loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
      loss for the year ended December 31, 2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Balance
      at December 31, 2008
                    
                    
                    2,602,170,527
                    
                    
                    $
                    24,613,184
                    
                    
                    
                    1,514,104
                    
                    
                    $
                    -
                    
                    
                    $
                    (28,800
                    )





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


F-6
 Table of Contents














iVOICE,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Continued)


FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007





Discount
      on Investment
              
              
              Additional
              
              
              Accumulated
      Other
              
              
              
              
              
              Total
      Stockholders’In
              
              
              Paid-In
              
              
              Comprehensive
              
              
              Accumulated
              
              
              EquitySubsidiary
              
              
              Capital
              
              
              (Losses)
              
              
              (Deficit)
              
              
              (Deficit)Balance
      at January 1, 2007
              
              $
              -
              
              
              $
              719,702
              
              
              $
              (376,559
              )
              
              $
              (21,501,690
              )
              
              $
              3,659,790Issuance
      of stock on conversion of Class B shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Issuance
      of stock as repayment of principal on an outstanding convertible
      debentures
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              493,400Unrealized
      loss on securities available for sale
              
              
              -
              
              
              
              -
              
              
              
              (719,441
              )
              
              
              -
              
              
              
              (719,441
              )Gain
      on spin off of subsidiary to shareholders
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,965,293
              
              
              
              1,965,293Net
      loss for the year ended December 31, 2007 from continuing
      operations
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,383,268
              )
              
              
              (2,383,268
              )Net
      loss for the year ended December 31, 2007 from discontinued
      operations
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (765,833
              )
              
              
              (765,833
              )Balance
      at December 31, 2007
              
              $
              -
              
              
              $
              719,702
              
              
              $
              (1,096,000
              )
              
              $
              (22,685,498
              )
              
              $
              2,249,941Issuance
      of stock as repayment of principal on an outstanding convertible
      debentures
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              778,751Issuance
      of stock on conversion of Class B shares
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Issuance
      of stock for legal services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              6,000Reclass
      of redemption of Class B common stock to liabilities
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,512,104
              )Discount
      on investment in subsidiary
              
              
              (1,792,325
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,792,325
              )Unrealized
      loss on securities available for sale
              
              
              -
              
              
              
              -
              
              
              
              (11,952
              )
              
              
              -
              
              
              
              (11,952
              )Reclassification
      adjustment for losses included in net loss
              
              
              -
              
              
              
              -
              
              
              
              1,109,737
              
              
              
              -
              
              
              
              1,109,737Net
      loss for the year ended December 31, 2008
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,565,001
              )
              
              
              (2,565,001
              )Balance
      at December 31, 2008
              
              $
              (1,792,325
              )
              
              $
              719,702
              
              
              $
              1,785
              
              
              $
              (25,250,499
              )
              
              $
              (1,736,953
              )





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


F-7
 Table of Contents




iVOICE, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)


FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007







Accumulated
      OtherComprehensiveIncome (Loss)Balance
      at January 1, 2007
                                                      
                                                      $
                                                      
                                                      
                                                      $
                                                      (376,559
                                                      )Unrealized loss on securities available for sale:Unrealized
      losses arising during the period
                                                      
                                                      
                                                      (1,033,714
                                                      )Less:
      reclassification adjustment for losses included in net
loss
                                                      
                                                      
                                                      314,273Net
      change for the year
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (719,441
                                                      )Balance
      at December 31, 2007
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (1,096,000
                                                      )Unrealized loss on securities available for sale:Unrealized
      losses arising during the period
                                                      
                                                      
                                                      (11,952
                                                      )Less:
      reclassification adjustment for losses included in net
loss
                                                      
                                                      
                                                      (1,109,737
                                                      )Net
      change for the year
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      1,097,785Balance
      at December 31, 2008
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      1,785





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





F-8
 Table of Contents





iVOICE, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED DECEMBER 31,








2008
                          
                          
                          2007CASH
      FLOW FROM OPERATING ACTIVITIESNet
      loss
                          
                          $
                          (2,565,001
                          )
                          
                          $
                          (2,383,268
                          )Adjustments
      to reconcile net loss to netcash
      (used in) operating activities:Depreciation
      and amortization
                          
                          
                          5,779
                          
                          
                          
                          8,894Amortization
      of prepaid financing costs
                          
                          
                          72,396
                          
                          
                          
                          173,750Amortization
      of discount on debt conversion
                          
                          
                          1,273,248
                          
                          
                          
                          3,725,279Fair
      value adjustment on investments
                          
                          
                          2,982,833
                          
                          
                          
                          --Beneficial
      interest on issuance of stock
                          
                          
                          293,951
                          
                          
                          
                          --(Gain)
      loss on sales or exchange of marketable securities
                          
                          
                          (12,111
                          )
                          
                          
                          314,273Issuance
      of common stock services
                          
                          
                          6,000
                          
                          
                          
                          --Gain
      on revaluation of derivatives
                          
                          
                          (2,589,122
                          )
                          
                          
                          (1,131,305
                          )Non-cash
      consulting revenues
                          
                          
                          --
                          
                          
                          
                          (1,120,000
                          )Interest
      and dividends earned on investments
                          
                          
                          (149,883
                          )
                          
                          
                          (134,888
                          )Changes
      in certain assets and liabilities:(Increase)
      in notes receivable
                          
                          
                          (89,325
                          )
                          
                          
                          --(Increase)
      in prepaid and other current assets
                          
                          
                          (2,036
                          )
                          
                          
                          (99,356
                          )Increase
      in accounts payable and accrued expenses
                          
                          
                          449,504
                          
                          
                          
                          442,102(Decrease) in deferred
      revenue
                          
                          
                          --
                          
                          
                          
                          (50,000
                          )Increase in related party
      accounts
                          
                          
                          120,213
                          
                          
                          
                          79,790Total
      cash (used in) operating activities of continuing
    operations
                          
                          
                          (203,554
                          )
                          
                          
                          (174,729
                          )Net
      loss from discontinued operations
                          
                          
                          --
                          
                          
                          
                          (765,833
                          )Net
      effect on cash flow from spin-off of subsidiaries
                          
                          
                          --
                          
                          
                          
                          492,585Total cash (used in)
      operating activities of discontinued operations
                          
                          
                          --
                          
                          
                          
                          (273,248
                          )Total
      cash (used in) operating activities
                          
                          
                          (203,554
                          )
                          
                          
                          (447,977
                          )





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





F-9
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)


FOR
THE YEARS ENDED DECEMBER 31,








2008
                        
                        
                        2007CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of property and equipment
                        
                        
                        --
                        
                        
                        
                        (4,708
                        )Net
      redemption of principal and interest on marketable
    securities
                        
                        
                        10,814,954
                        
                        
                        
                        7,399Net
      proceeds from sales of securities available for sale
                        
                        
                        26,136
                        
                        
                        
                        264,872Investment
      in securities and loans of unaffiliated companies
                        
                        
                        (77,250
                        )
                        
                        
                        (25,000
                        )Net
      effect on cash flow from consolidation of majority owned
      investment
                        
                        
                        (879,840
                        )
                        
                        
                        --Purchase
      of intangibles assets
                        
                        
                        (9,161
                        )
                        
                        
                        (19,150
                        )Total
      cash provided by investing activities from continuing
      operations
                        
                        
                        9,874,839
                        
                        
                        
                        223,413Adjustments
      to reconcile total cash provided by investing activities
    fromdiscontinued
      operations
                        
                        
                        --
                        
                        
                        
                        119,248Total cash provided by
      investing activities
                        
                        
                        9,874,839
                        
                        
                        
                        342,661CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from short term borrowings
                        
                        
                        5,660,000
                        
                        
                        
                        --Repayment
      of short term borrowings
                        
                        
                        (5,660,000
                        )
                        
                        
                        --Repayment
      of convertible debentures
                        
                        
                        (4,796,510
                        )
                        
                        
                        --Redemption
      of Class B common stock
                        
                        
                        (1,512,104
                        )
                        
                        
                        --Total
      cash (used in) financing activities from continuing
    operations
                        
                        
                        (6,308,614
                        )
                        
                        
                        --Adjustments
      to reconcile total cash provided by (used in) financing
      activitiesfrom
      discontinued operations
                        
                        
                        --
                        
                        
                        
                        154,000Total cash provided by
      (used in) financing activities
                        
                        
                        (6,308,614
                        )
                        
                        
                        154,000NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                        
                        
                        3,362,671
                        
                        
                        
                        48,684CASH
      AND EQUIVALENTS – BEGINNING OF YEAR
                        
                        
                        79,919
                        
                        
                        
                        31,235CASH
      AND EQUIVALENTS – END OF YEAR
                        
                        $
                        3,442,590
                        
                        
                        $
                        79,919SUPLLEMENTAL
      DISCLOUSRE OF NON CASH ACTIVITIES:CASH
      PAID DURING THE YEAR FOR:Interest
      expense
                        
                        $
                        45,041
                        
                        
                        $
                        --Income
      taxes
                        
                        $
                        --
                        
                        
                        $
                        --
  The
accompanying notes are an integral part of these consolidated financial
statements.


F-10
 Table of Contents







iVOICE, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)


FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007





SUPPLEMENTAL
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES





During
the year ended December 31, 2008:





a) The
Company issued 1,805,499,209 shares of Class A common stock to YA Global
Investments, LP as repayment of $484,800 of principal on outstanding convertible
debentures. The stock was valued at $778,751 and $293,951 was charged to
beneficial interest expense.





b) The
Company issued 316,000,000 shares of Class A Common upon the conversion of
40,380 shares of Class B Common Stock.





c) The
Company received 142,600,000 shares of Thomas Pharmaceuticals, Ltd. Class A
common stock on conversion of $12,368 of convertible debentures
receivable.





d) The
Company exchanged $92,861 of amounts due from SpeechSwitch, Inc. into a
Convertible Promissory Note of the same amount.





e) The
Company received 151,000,000 shares of SpeechSwitch, Inc. Class A common stock
on conversion of $12,080 of convertible notes receivable.





f) The
Company received 42,000,000 shares of iVoice Technology, Inc. Class A common
stock on conversion of $13,440 of convertible notes receivable.  This
transaction was eliminated in consolidation.





g) The
Company exchanged $71,302 of amounts due from Thomas Pharmaceuticals, Ltd. into
a Convertible Promissory Note of the same amount.





h) The
Company issued 60,000,000 shares of Class A common stock to Kenneth Glynn for
legal services, valued at $6,000, related to continuation of work on patent
prosecution.





i) Reclassification
of Class B common stock from equity to liability for
$1,512,104.





During
the year ended December 31, 2007:





a) The
Company issued 265,587,972 shares of Class A common stock to YA Global Capital
Partners (f/k/a/ Cornell Capital
Partners)as repayment of principal on an outstanding convertible
debenture, valued at $493,400.





b) The
Company converted 52,863 shares of Class B Common into 86,012,651 shares of
Class A Common, pursuant to the provisions of Class B common
stock.




c) On
November 21, 2007, the Company completed the distribution of shares of Thomas
Pharmaceuticals to the iVoice shareholders and effectuated the spin-off of
Thomas. Refer to Footnote 2 for a discussion of the effects on the Company’s
financial statements.




d) The
Company received 4,000,000 shares of Class A common stock of Deep Field
Technologies as compensation for consulting services to be provided pursuant to
the terms of the Consulting Agreement entered into on February 13, 2007. The
fair value of the agreement was determined to be $1,120,000 and was amortized
over six months ending August 13, 2007.
  F-11
 Table of Contents
 iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
ENDED DECEMBER 31, 2008 and 2007


NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES





a) Basis of
Presentation


iVoice,
Inc. formerly known as Visual Telephone International, Inc. (“Visual”) was
incorporated under the laws of Utah on December 2, 1995, and subsequently
changed to Delaware.





On May
21, 1999, the Company executed a Reorganization Agreement (the “Agreement”) that
provided that the Company and International Voice Technologies, Corp. (“IVT”)
would be merged and the Company would be the surviving entity. On May 25, 1999,
a certificate of merger was filed with the State of Delaware and the name of the
Company was changed to iVoice.com, Inc.





On April
24, 2000, the Company entered into an agreement and plan of reorganization with
all the stockholders of ThirdCAI, another shell company that was a reporting
company under the Securities Exchange Act of 1934.  In this
transaction, which took place by means of a short-form merger, with ThirdCAI’s
name being changed to iVoice.com, Inc. The purpose of this transaction was to
enable the Company’s business to be conducted by a reporting company, as
pursuant to the “eligibility rule” adopted by the National Association of
Securities Dealers, Inc., or “NASD,” only reporting companies may continue to
have stock quoted on the OTC Bulletin Board.





On August
24, 2001, the Company amended its certificate of incorporation to change its
name from iVoice.com, Inc. to iVoice, Inc.





On April
25, 2003, the Company formed a wholly owned subsidiary in the State of New
Jersey and on May 5, 2003, changed its state of incorporation from Delaware to
New Jersey by merging into the newly formed New Jersey subsidiary.





In
September 2003, the Company announced its intention to distribute to its
stockholders shares of Class A common stock of Trey Resources, Inc., one of the
Company’s subsidiaries, and its Automated Reminder business, upon the
effectiveness of required Securities and Exchange Commission filings and final
approval by the iVoice Board of Directors of the terms and conditions of the
proposed distribution, as described in the registration statement on Form SB-2
of Trey Resources, initially filed with the Securities and Exchange Commission
on October 3, 2003.  Effective with the spin-off of Trey Resources on
February 11, 2004, Trey Resources now owns and operates the Automatic Reminder
software business as an independent publicly traded entity following this
distribution.





In
September 2004 and November 2004, the Company announced its intention to
distribute to its stockholders, in the form of a special dividend, shares of
Class A Common Stock of its three wholly owned subsidiaries, iVoice Technology,
Deep Field and SpeechSwitch (the “Spin-off”). The Company announced on July 21,
2005, that the Board of Directors set a record date for the previously announced
spin-off of its three wholly owned subsidiaries. Shareholders of record on July
29, 2005 were entitled to receive the special dividend.  The special
dividend was distributed on August 5, 2005.  Holders of iVoice Class A
Common Stock, other than affiliates of iVoice, received one share of Class A
Common Stock of each of iVoice Technology, Inc., Deep Field Technologies, Inc.
and SpeechSwitch, Inc. for every 988 shares of iVoice common stock that they
held.  Holders of less than 988 shares of iVoice common stock received
one share of iVoice Technology, Inc., Deep Field Technologies, Inc. and
SpeechSwitch, Inc. Class A common stock.  All of the outstanding
shares of Class B Common Stock (including convertible debt into such shares) of
iVoice Technology, Inc., Deep Field Technologies, Inc. and SpeechSwitch, Inc.
will be beneficially owned by affiliates of iVoice, Inc. or iVoice Technology,
Inc., Deep Field Technologies, Inc. and SpeechSwitch, Inc.





In May
2005, we formed a new wholly owned subsidiary, iVoice Acquisition Corporation in
the State of New Jersey.  This subsidiary would be used in the future
for an acquisition made by us.





On
January 6, 2006, iVoice, Inc. entered into an Agreement and Plan of Merger (the
“Agreement”) with Thomas Pharmaceuticals, Ltd. (f/k/a iVoice Acquisition Corp.),
a New Jersey corporation (“Thomas NJ”), a wholly
owned subsidiary of the Company, Thomas Pharmaceuticals Ltd., a New York
corporation (“Thomas
NY”), Farris M. Thomas, Jr., an individual (“Thomas”), John E. Lucas, an
individual (“Lucas”) Richard C. Brogle, (“Brogle”), Nina Schwalbe, an
individual, “Schwalbe”), John H. Kirkwood, an individual (“Kirkwood”), and
Maureen Gillespie, an individual (“Gillespie”) (Brogle, Schwalbe, Kirkwood,
Gillespie, Thomas and Lucas are collectively as the “Shareholders”).  Under
the terms of the Agreement, Thomas NY merged into a wholly owned subsidiary of
the Company, Thomas NJ.  The Shareholders of Thomas NY exchanged all
of their common stock shares of Thomas NY for 500,000 Thomas NJ Series A
Convertible Preferred Stock (“Series A Preferred Stock”) shares.  In
2007, the Series A Preferred Stock shareholders elected to have the Company
spin-off Thomas NJ from iVoice.





On March
6, 2006, we announced that we had formed a new wholly owned subsidiary, iVoice
Innovations, Inc. in the State of New Jersey.  This subsidiary will be
used to either acquire other operating companies or for a potential spin-off of
an existing asset of ours similar to the recent spin-offs of Trey Resources,
iVoice Technology, Deep Field and SpeechSwitch.





On April
10, 2006, pursuant to approval by a majority of voting shares at the Annual
Meeting of Shareholders held on March 31, 2006, an Amendment to the Certificate
of Incorporation dated April 7, 2006 was accepted by the State of New
Jersey (the “Amendment”) to effect a one for two hundred reverse stock split
(the “Reverse Split”). The Reverse Split took effect on April 27, 2006 and the
trading symbol of our Class A Common Stock was changed to “IVOI”. All
shareholders' holdings were divided by two hundred and the number of issued and
outstanding Class A Common Stock shares were reduced from 9,994,728,373 to
49,973,642, plus any additional shares issued as a result of the rounding up of
fractional shares created by the Reverse Split.  The Amendment
provided for the issuance of no fractional shares, but instead, all fractional
shares created by the Reverse Split were rounded up to one whole
share.  Additionally, the shareholders approved a re-authorization of
the number of authorized Class A Common Stock shares to 10 billion
shares.





On
October 9, 2007, the Company announced that the Board of Directors set a record
date of October 15, 2007 for the spin-off of Thomas Pharmaceuticals. This date
was subsequently amended to be November 14, 2007 to satisfy requirements of the
Securities and Exchange Commission (“SEC”). Shareholders of record on November
14, 2007 were entitled to receive the special dividend.  On November
21, 2007, the holders of iVoice Class A Common Stock, other than affiliates of
iVoice, received one share of Class A Common Stock of Thomas Pharmaceuticals,
Ltd. for each share of iVoice common stock that they held.  In
addition, on December 14, 2007, 500,000 shares of Series A Preferred Stock of
Thomas Pharmaceuticals were exchanged for 5,091,237 shares of Class A Common
Stock of Thomas Pharmaceuticals to complete the terms of the spin-off
agreement





As part
of the Spin-off, the Company transferred certain of its assets and related
liabilities to Thomas Pharmaceuticals immediately prior to the
distribution.  The consolidated financial statements for the years
ended December 31, 2008 and 2007 include reclassifications of the operations of
the Thomas to reflect the disposal of the businesses in accordance with the
provisions of Statements of Financial Accounting Standards (FAS) 144,
“Accounting for the Impairment or Disposal of Long Lived Assets”.





F-12
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007


On March
12, 2008, the Company acquired 1,444.44 shares of iVoice Technology, Inc.’s
Series A 10% Convertible Preferred Stock for $1,444,444.  The holder
of each share of Series A Preferred Stock shall have the right to one vote for
each share of Common Stock into which such Series A Preferred Stock could then
be converted, and with respect to such vote, such holder shall have full voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled to notice of any shareholders' meeting in
accordance with the bylaws of the Corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote. In addition, the holders of the
Series A Preferred Stock shall not have in the aggregate more than seventy
percent (70%) of the total votes of all classes of voting stock of the
Corporation that would vote at a meeting of shareholders. Based on this voting
formula, it was determined that iVoice, Inc. has voting rights equal to 70% of
the voting stock of iVoice Technology and as such, according to APB Opinion No.
18 “The Equity Method of
Accounting for Investments in Common Stock”, iVoice, Inc. is required to
consolidate the results of operations of iVoice Technology with those of iVoice
and its other subsidiary.





The
Company is publicly traded and is currently traded on the Over The Counter
Bulletin Board (“OTCBB”) under the symbol “IVOI”.





b) Principles of
Consolidation


The
accompanying consolidated financial statements include the accounts of the
Company, its subsidiary, iVoice Innovations Inc. and its majority owned public
company, iVoice Technology, Inc.    On November 21, 2007,
Thomas Pharmaceuticals Ltd was distributed to iVoice shareholders through a
Spin-off transaction. All significant inter-company transactions and balances
have been eliminated in consolidation.





c) Line of
Business


We have
determined that the best way to create shareholder value, separate and apart
from our operating performance, is by spinning off and distributing shares of
our wholly owned subsidiaries in the form of a special dividend to our
shareholders.  The only industry in which we currently have operations
are patent licensing.


We will
also continue to search for potential merger candidates with or without
compatible technology and products, in a further attempt to increase shareholder
value.





d) Start-up
Costs


In
accordance with the American Institute of Certified Public Accountants Statement
of Position 98-5, “Reporting on the Costs of Start-up Activities,” the Company
expenses all costs incurred in connection with the start-up and organization of
the Company.





e) Use of
Estimates


The
preparation of financial statements are in conformity with accounting principles
generally accepted in the United States of America which requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period.  Actual results could differ from those
estimates.





f) Revenue and Cost
Recognition


The
Company obtains its income primarily from the sales or licensing of its patents
and patent applications. Revenues for the sales of our patents are recorded upon
transfer of title. The patent revenues are reported net of any broker fees or
commissions.





The
Company also is reporting revenues for iVoice Technology which derives its
revenues from the customer support (maintenance) service of its software product
and environmentally conscious green anti-vibration products. iVoice Technology
offers customers annual software maintenance and support agreements for one-year
periods. Sales of three green products are cash in advance and carry a 30 day
money back guarantee.





Costs for
patents include expensing the deferred costs of the licensing activities. There
are no direct costs associated with the customer support service contracts of
iVoice Technology. Costs for the anti-vibration products represent the direct
material and labor costs of production of the products by iVoice Technology’s
out-sourced manufacturer.





g) Cash and Cash
Equivalents


The
Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company had cash
and cash equivalents at December 31, 2008 and 2007 of $4,954,694 and $79,919,
respectively.





h) Marketable
Securities


Marketable
securities consist of auction rate securities with auction reset periods less
than 12 months and are stated at fair value. The cost of securities sold is
based on specific identification. The Company had marketable securities at
December 31, 2008 and 2007 of $0 and $10,814,954,
respectively.





i) Securities
Available-for-sale


The
Company has evaluated its investment policies consistent with FAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, and determined
that all of its investment securities are to be classified as
available-for-sale. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses reported in Stockholders' Equity (Deficit)
under the caption Accumulated Other Comprehensive (Loss). The Company had
securities available for sale at December 31, 2008 and 2007 of $13,016 and
$676,272, respectively.





j) Concentration of Credit
Risk


The
Company maintains cash balances at a financial institution that are insured by
the Federal Deposit Insurance Corporation up to $250,000 and $100,000 at
December 31, 2008 and 2007, respectively. The cash equivalents are not insured.
The Company has uninsured cash balances at December 31, 2008 and 2007 of
$4,604,226 and $29,148, respectively.





k) Property and
Equipment


Property
and equipment is stated at cost.  Depreciation is computed using the
straight-line method based upon the estimated useful lives of the assets,
generally five to seven years.  Maintenance and repairs are charged to
expense as incurred.





F-13
 Table of Contents


iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007
 l) Intangible
Assets
 Intangible
assets represent costs incurred for trademarks, patents and patent applications.
Identified intangible assets are regularly reviewed to determine whether facts
and circumstances exist which indicate that the useful life is shorter than
originally estimated or the carrying amount of assets may not be recoverable.
The Company assesses the recoverability of its identifiable intangible assets by
comparing the projected discounted net cash flows associated with the related
asset or group of assets over their remaining lives against their respective
carrying amounts. Impairment, if any, is based on the excess of the carrying
amount over the fair value of those assets.





m) Income
Taxes


The
Company accounts for income taxes in accordance with FAS No. 109, “Accounting
for Income Taxes,” which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income taxes and liabilities
are computed annually for differences between the financial statement and the
tax basis of assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.





n) Financing
Costs


Financing
costs consist primarily of professional fees and various paid commissions
relating to the issuance of the Company’s convertible
debentures.  These costs are deferred and amortized over the term of
the underlying security.





o) Debt Issue
Costs


Debt
issue costs represent the estimated cost of the conversion discount feature
relating to the issuance of the Company’s convertible debentures.  In
previous years, these costs were amortized and charged to interest expense over
the life of the debt.  During the year ended December 31, 2001, the
Company changed its method of accounting for these costs and charged to expense
the fair value of the beneficial conversion features of the convertible debt as
measured at the date of issuance in accordance with Emerging Issues Task Force
(EITF) Issue 98-5.  The switch to this method of accounting did not
have a material affect on the Company’s financial statements.





p) Fair Value of Financial
Instruments


The
Company estimates that the fair value of all financial instruments at December
31, 2008 and 2007, as defined in FAS 107, does not differ materially, except for
the items discussed below, from the aggregate carrying values of its financial
instruments recorded in the accompanying consolidated balance sheets. The
estimated fair value amounts have been determined by the Company using available
market information and appropriate valuation methodologies. Considerable
judgment is required in interpreting market data to develop the estimates of
fair value, and accordingly, the estimates are not necessarily indicative of the
amounts that the Company could realize in a current market
exchange.





During
the 4th Quarter
2008, management of the Company determined that the carrying value of the of
Thomas Pharmaceuticals, Ltd. Series B Convertible Preferred Stock, the
Convertible Promissory notes of Thomas Pharmaceuticals, Ltd. and SpeechSwith,
Inc. and the Class A Common Stock of Deep Field Technologies, Inc. were severely
impaired due to poor liquidity of their Common Stock in the
marketplace.  Management has taken a fair value adjustment of
$2,982,833 to write down these investments.





In
addition, the amounts due on the Atire Technologies, Inc. Promissory Note was
reserved as bad debt on the books of iVoice Technology for $28,850, due to
non-payment of Atire’s current obligations.





q) Long-Lived
Assets


FAS No.
121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of,” requires that long-lived assets and certain
identifiable intangibles to be held and used or disposed of by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.  The
Company has adopted this statement and determined that an impairment loss should
not be recognized for applicable assets of continuing
operations.





r) Loss Per Common
Share


FAS No.
128, “Earnings Per Share” requires presentation of basic earnings per share
(“basic EPS”) and diluted earnings per share (“diluted EPS”).


The
computation of basic EPS is computed by dividing income available to common
stockholders by the weighted average number of outstanding Common shares during
the period.  Diluted earnings per share gives effect to all dilutive
potential Common shares outstanding during the period. The computation of
diluted EPS does not assume conversion, exercise or contingent exercise of
securities that would have an anti-dilutive effect on earnings.  The
shares used in the computations are as follows:
  December
      31,2008
                            
                            
                            2007Net
      loss from continuing operations
                            
                            $
                            (2,565,001
                            )
                            
                            $
                            (2,383,268
                            )Net
      loss from discontinued operations
                            
                            
                            N/A
                            
                            
                            $
                            (765,833
                            )Weighted-average
      common shares outstanding
                            
                            
                            1,798,730,508
                            
                            
                            
                            141,801,089Net
      loss per common share from continuing operations
                            
                            $
                            (0.00
                            )
                            
                            $
                            (0.02
                            )Net
      loss per common share from discontinued operations
                            
                            
                            N/A
                            
                            
                            $
                            (0.01
                            )




The
Company has shares issuable upon conversion of the Class B Common Stock, YA
Global Convertible Debentures and YA Global Warrants. The Company had common
stock equivalents of 50,302,311,111 and 7,911,419,852 at December 31, 2008 and
2007, respectively. Subsequent to December 31, 2008, the holder of the Class B
common stock elected for the Company to redeem the Class B common stock for cash
and eliminated approximately 33.6 billion of the common stock
equivalents.


s) Comprehensive
Income
 FAS No.
130, “Reporting Comprehensive Income”, establishes standards for the reporting
and display of comprehensive income and its components in the financial
statements. The items of other comprehensive income that are typically required
to be displayed are foreign currency items, minimum pension liability
adjustments, and unrealized gains and losses on certain investments in debt and
equity securities. As of December 31, 2008 and 2007, the Company has several
items that represent comprehensive losses, and thus, have included a statement
of comprehensive income (loss).




F-14
 Table of Contents


iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007
 t) Reclassification of accounts
in the prior period financial statements
 The
Company has reclassified certain accounts in the balance sheets, statements of
operations and statements of cash flows for the years ended December 31, 2007 to
reflect the Spin-off of Thomas Pharmaceuticals, Ltd.  The statements
reflect the reclassification of these operations to below the line as
discontinued operations in accordance with the provisions of FAS No. 144,
“Accounting for the Impairment or Disposal of Long Lived
Assets”.  There has been no effect on net (loss) for the year ended
December 31, 2007.





u) Reclassification of accounts
to reflect subsequent events
 Subsequent
to the year ended December 31, 2008, the Company amended the Certificate of
Incorporation to enable the holders of the Class B Common Stock to elect, at the
holder’s discretion, the redemption for cash by the Corporation at the rate of
$1.00 for each Class B Common Share presented to the Corporation for redemption.
Consequently, the Company reclassified the redemption amount of the Class B
Common Stock from Shareholders’ deficit to current
liabilities.




v) Derivative
Liabilities
 During
April 2003, the Financial Accounting Standards Board issued SFAS 149, "Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities."  SFAS 149 amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities." The statement requires that contracts with
comparable characteristics be accounted for similarly and clarifies when a
derivative contains a financing component that warrants special reporting in the
statement of cash flows.  SFAS 149 is effective for contracts entered
into or modified after June 30, 2003, except in certain circumstances, and for
hedging relationships designated after June 30, 2003. The financial statements
for the years ended December 31, 2008 and 2007 include the recognition of the
derivative liability on the underlying securities issuable upon conversion of
the YA Global Investments (“YA Global”) Convertible
Debentures.





w) Recent Accounting
Pronouncements
 In June
2007, the FASB ratified the consensus in EITF Issue No. 07-3 "Accounting for
Nonrefundable Payments for Goods or Services to Be Used in Future Research and
Development Activities" (EITF 07-3), requiring that nonrefundable advance
payments for future research and development activities be deferred and
capitalized. Such amounts should be expensed as the related goods are delivered
or the related services are performed. The statement is effective for fiscal
years beginning after December 15, 2007. The adoption of EITF 07-3 did not have
an impact on the Company's financial position or results of
operations.





In June
2007, the FASB ratified EITF Issue No. 06-11 "Accounting for Income Tax Benefits
of Dividends on Share-Based Payment Awards" (EITF 06-11), which requires
entities to record tax benefits on dividends or dividend equivalents that are
charged to retained earnings for certain share-based awards to additional
paid-in capital. In a share-based payment arrangement, employees may receive
dividends or dividend equivalents on awards of non-vested equity shares,
non-vested equity share units during the vesting period, and share options until
the exercise date. Generally, the payment of such dividends can be treated as
deductible compensation for tax purposes. The amount of tax benefits recognized
in additional paid-in capital should be included in the pool of excess tax
benefits available to absorb tax deficiencies on share-based payment awards.
EITF 06-11 is effective for fiscal years beginning after December 15, 2007, and
interim periods within those years. The adoption of EITF 06-11 did not have an
impact on the Company's financial position or results of
operations.





In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests
in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS
160”).  SFAS 160 requires that ownership interests in subsidiaries
held by parties other than the parent, and the amount of consolidated net
income, be clearly identified, labeled, and presented in the consolidated
financial statements within equity, but separate from the parent’s equity. It
also requires once a subsidiary is deconsolidated, any retained noncontrolling
equity investment in the former subsidiary be initially measured at fair value.
Sufficient disclosures are required to clearly identify and distinguish between
the interests of the parent and the interests of the noncontrolling owners. SFAS
160 will be effective beginning January 1, 2009. Management anticipates
that the adoption of SFAS 160 will not have a material impact on the Company’s
financial statements.





In
December 2007, the FASB issued SFAC No 141(R), “Business
Combinations.”  This statement provides new accounting guidance and
disclosure requirements for business combinations.  SFAS No 141(R) is
effective for business combinations which occur in the first fiscal year
beginning on or after December 15, 2008.





In
December 2007, the FASB finalized the provisions of the Emerging Issues Task
Force (EITF) Issue No. 07-1, “Accounting for Collaborative
Arrangements.”  This EITF Issue provides guidance and requires
financial statement disclosures for collaborative arrangements.  EITF
Issue No. 07-1 is effect for financial statements issued for fiscal years
beginning after December 15, 2008.  The Company is currently assessing
the effect of EITF Issue No. 07-1 on its financial statements, but it is not
expected to be material.





In
September 2006, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"), which
clarifies the definition of fair value whenever another standard requires or
permits assets or liabilities to be measured at fair value. Specifically, the
standard clarifies that fair value should be based on the assumptions market
participants would use when pricing the asset or liability, and establishes a
fair value hierarchy that prioritizes the information used to develop those
assumptions. SFAS No. 157 does not expand the use of fair value to any new
circumstances, and must be applied on a prospective basis except in certain
cases. The standard also requires expanded financial statement disclosures about
fair value measurements, including disclosure of the methods used and the effect
on earnings.




In
February 2008, FASB Staff Position ("FSP") FAS No. 157-2, "Effective
Date of FASB Statement No. 157" ("FSP No. 157-2") was issued. FSP
No. 157-2 defers the effective date of SFAS No. 157 to fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years, for all nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). Examples of items within the scope of FSP
No. 157-2 are nonfinancial assets and nonfinancial liabilities initially
measured at fair value in a business combination (but not measured at fair value
in subsequent periods), and long-lived assets, such as property, plant and
equipment and intangible assets measured at fair value for an impairment
assessment under SFAS No. 144.





The
partial adoption of SFAS No. 157 on January 1, 2008 with respect to
financial assets and financial liabilities recognized or disclosed at fair value
in the financial statements on a recurring basis had a material impact on the
Company's financial statements. See Note 4 for the fair value measurement
disclosures for these assets and liabilities. The Company is in the process of
analyzing the potential impact of SFAS No. 157 relating to its planned
January 1, 2009 adoption of the remainder of the standard.





F-15
 Table of Contents


iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007


On
January 1, 2008, the Company adopted SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities, Including an amendment of FASB
Statement No. 115" ("SFAS No. 159"). SFAS No. 159 permits
entities to choose to measure many financial instruments and certain other items
at fair value, which are not otherwise currently required to be measured at fair
value. Under SFAS No. 159, the decision to measure items at fair value is
made at specified election dates on an instrument-by-instrument basis and is
irrevocable. Entities electing the fair value option are required to recognize
changes in fair value in earnings and to expense upfront costs and fees
associated with the item for which the fair value option is elected. The new
standard did not impact the Company's consolidated financial statements, as the
Company did not elect the fair value option for any instruments existing as of
the adoption date. However, the Company will evaluate the fair value measurement
election with respect to financial instruments the Company enters into in the
future.





In March
2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No. 133”
(“SFAS 161”), which modifies and expands the disclosure requirements for
derivative instruments and hedging activities.  SFAS 161 requires that
objectives for using derivative instruments be disclosed in terms of underlying
risk and accounting designation and requires quantitative disclosures about fair
value amounts and gains and losses on derivative instruments.  It also
requires disclosures about credit-related contingent features in derivative
agreements. SFAS 161 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008, with early
application encouraged.  SFAS 161 encourages, but does not require,
comparative disclosures for earlier periods at initial adoption.  The
adoption of SFAS 161 is not expected to have a material impact on our
consolidated financial condition or results of operations.





In April
2008, the FASB issued FSP No. 142-3, Determination of the Useful Life of
Intangible Assets. FSP 142-3 amends the factors an entity should consider in
developing renewal or extension assumptions used in determining the useful life
of recognized intangible assets under SFAS 142, Goodwill and Other Intangible
Assets, and adds certain disclosures for an entity’s accounting policy of the
treatment of the costs, period of extension, and total costs
incurred.  FSP 143-3 must be applied prospectively to intangible
assets acquired after January 1, 2009.  The Company is currently
evaluating the impact that FSP 142-3 will have on its financial position or
results of operations.





In May
2008, the Financial Accounting Standards Board (the “FASB”) issued FAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles” (“FAS 162”). This
statement identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements of
nongovernmental entities that are presented in accordance with GAAP. With the
issuance of this statement, the FASB concluded that the GAAP hierarchy should be
directed toward the entity and not its auditor, and reside in the accounting
literature established by the FASB as opposed to the American Institute of
Certified Public Accountants (AICPA) Statement on Auditing Standards No. 69,
“The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.” This statement is effective 60 days following the SEC’s approval of
the Public Company Accounting Oversight Board amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.” The adoption of FAS 162 is not expected to have a material impact
on the Company’s results from operations or financial position.





In June
2008, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 08-3,
“Accounting by Lessees for Nonrefundable Maintenance Deposits” (“EITF 08-3”).
This statement provides guidance for accounting for nonrefundable maintenance
deposits. It also provides revenue recognition accounting guidance for the
lessor. This statement is effective for fiscal years beginning after December
15, 2008. The adoption of EITF 08-3 will not have a material effect on our
financial statements.





NOTE 2  -
DISCONTINUED OPERATIONS




On
November 21, 2007, iVoice completed the distribution of Thomas Pharmaceuticals
through the issuance of one share of Thomas Pharmaceuticals Class A common stock
for every share of iVoice Class A common stock held on the record date of
November 14, 2007.





The
summarized results of operations for the years ended December 31, 2007 are as
follows:




ThroughNov 20, 2007Revenues
                    
                    $
                    22,857Cost
      of revenues
                    
                    
                    91,055Gross
      profit
                    
                    
                    (68,198
                    )Operating
      expenses
                    
                    
                    618,791Operating
      loss
                    
                    
                    (686,989
                    )Other
      expense
                    
                    
                    78,844Provision
      for income taxes
                    
                    
                    -Net
      loss
                    
                    $
                    (765,833
                    )




The
summarized components of assets and liabilities associated with the discontinued
operations for the period ending November 20, 2007 are as follows:





ThroughNov 20,
    2007Cash
                      
                      $
                      10,225Prepaid
      and other current assets
                      
                      
                      19,618Property
      and equipment, net
                      
                      
                      98,681Total
      assets
                      
                      $
                      128,524Accounts
      payable and accrued expenses
                      
                      $
                      460,352Convertible
      debentures
                      
                      
                      838,553Notes
      payable
                      
                      
                      174,000Due
      to related parties
                      
                      
                      111,620Stockholder’s
      (deficit)
                      
                      
                      (1,456,001
                      )Total
      liabilities and stockholders’ equity
                      
                      $
                      128,524


F-16
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007


NOTE 3 - PROPERTY AND
EQUIPMENT





Property
and equipment is summarized as follows:




December 31,2008
                            
                            
                            2007Equipment
                            
                            $
                            110,745
                            
                            
                            $
                            91,034Leasehold
      improvements
                            
                            
                            11,454
                            
                            
                            
                            11,454Furniture
      and fixtures
                            
                            
                            123,519
                            
                            
                            
                            123,519245,718
                            
                            
                            
                            226,007Less:
      Accumulated depreciation
                            
                            
                            222,162
                            
                            
                            
                            214,722Property
      and equipment, net
                            
                            $
                            23,556
                            
                            
                            $
                            11,285




Depreciation
expense for the years ended December 31, 2008 and 2007 was $5,895 and $8,158,
respectively.





NOTE 4 – FAIR VALUE
MEASUREMENTS





On
January 1, 2008, the Company adopted SFAS No. 157 “Fair Value
Measurements” (“SFAS 157”). SFAS 157 defines fair value, provides a consistent
framework for measuring fair value under Generally Accepted Accounting
Principles and expands fair value financial statement disclosure requirements.
SFAS 157’s valuation techniques are based on observable and unobservable inputs.
Observable inputs reflect readily obtainable data from independent sources,
while unobservable inputs reflect our market assumptions. SFAS 157 classifies
these inputs into the following hierarchy:





Level
      1 Inputs– Quoted prices for identical instruments in active
      markets.


Level
      2 Inputs– Quoted prices for similar instruments in active markets; quoted
      prices for identical or similar instruments in markets that are not
      active; and model-derived valuations whose inputs are observable or whose
      significant value drivers are
observable.


Level
      3 Inputs– Instruments with primarily unobservable value
      drivers.





The
following table represents the fair value hierarchy for those financial assets
and liabilities measured at fair value on a recurring basis as of December 31,
2008.




Assets
                        
                        Level
      I
                        
                        
                        Level II
                        
                        
                        Level III
                        
                        
                        TotalSecurites
      available for sale
                        
                        $
                        13,016
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        13,016Total
      Assets
                        
                        $
                        13,016
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        13,016Convertible
      debentures
                        
                        $
                        -
                        
                        
                        $
                        996,092
                        
                        
                        $
                        -
                        
                        
                        $
                        996,092Derivative
      liabilities
                        
                        
                        -
                        
                        
                        
                        1,659,991
                        
                        
                        
                        -
                        
                        
                        
                        1,659,991Total
      Liabilities
                        
                        $
                        -
                        
                        
                        $
                        2,656,083
                        
                        
                        $
                        -
                        
                        
                        $
                        2,656,083





NOTE 5 – MARKETABLE
SECURITIES





At
various times since 2004, the Company had deposited proceeds from debt financing
into short-term securities with our Investment broker. During 2006 and 2007,
these short-term securities were exchanged for auction rate preferred shares
(“ARPS”) which provided greater returns on our investments. ARPS have long-term
maturity with the interest rate being reset through Dutch auctions that are
typically held every 7, 28 or 35 days. The securities trade at par and are
callable at par on any interest payment date at the option of the issuer.
Interest is paid at the end of each auction period.  Our auction rate
securities are all AAA rated.  During the 4th Quarter
of 2008, the Company liquidated it’s entire holdings of ARPSs and the proceeds
were used to pay down short term borrowings which were used to repay a portion
of the YA Global Convertible Debentures. The Company had marketable securities
at December 31, 2008 and 2007 of $0 and $10,814,954, respectively.






F-17
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007


NOTE 6 – SECURITIES
AVAILABLE FOR SALE





On
January 6, 2006 and April 27, 2006, iVoice, Inc. purchased an aggregate of
$550,000 of Thomas NJ Series B Convertible Preferred Stock. The initial value of
each share is $1,000 and is subject to adjustment for stock dividends,
combinations, splits, recapitalizations and the like. The holders of these
shares are entitled to receive dividends at a rate of 10% per annum based on the
initial value of the shares outstanding. Upon liquidation, the holders of these
shares will receive up to 125% of the initial value of the shares plus
accumulated and unpaid dividends, but following the distribution to any senior
debt or senior equities. The holders of these shares may convert their shares
into Class A Common Stock at the price per share equal to eighty
percent (80%) of the lowest closing bid price of the Common Stock for the
five (5) trading days immediately preceding the conversion date, but cannot be
converted into more than 9.99% of the total Class A Common Stock at that time of
conversion.   The holders of these shares shall have one vote for
each shares of Class A Common Stock into which each shares of Series B Preferred
Shares could be converted assuming a conversion price of eighty
percent (80%) of the lowest closing bid price of the Common Stock for the
five (5) trading days immediately preceding the record date, but are limited to
voting rights to no more than 9.99% of the total voting rights of the aggregate
of the Series B Preferred Stock, Class A Common Stock and Class B Common Stock
shareholders. The accounts are valued at the initial stated value plus earned
dividends. During the 4th Quarter
2008, management of the Company determined that the carrying value of the of
Thomas NJ Series B Convertible Preferred Stock were severely impaired due to
poor liquidity of their Common Stock in the marketplace.  Management
has taken a fair value adjustment of $707,415 to write down these investments.
At December 31, 2008 and 2007, the total balance is $0 and $652,264,
respectively.





On
February 13, 2007, the Company received 4,000,000 shares for Deep Field
Technologies Class A Common Stock as compensation pursuant to the Consulting
Agreement with Deep Field Technologies, valued at $1,120,000. The Company
provided “general corporate finance advisory and other similar consulting
services” for a period of six (6) months from the date of the agreement. During
the 4th Quarter
2008, management of the Company determined that the carrying value of the Deep
Field Technologies Class A Common Stock was severely impaired due to poor
liquidity of their Common Stock in the marketplace.  Management has
taken a fair value adjustment of $1,119,200 to write down these investments. At
December 31, 2008 and 2007, the total balance is $800 and $24,000,
respectively.




During
the year ended December 31, 2008, the Company received an aggregate of
142,600,000 shares of Thomas Pharmaceuticals, Ltd. Class A Common Stock upon
conversion of $12,368 of 10% Secured Convertible Debentures receivable dated
January 6, 2006. During the year ended December 31, 2008, the Company sold
101,000,000 shares for a net proceeds of $16,213. The book value of the
remaining shares is $3,328 and the market value is $4,160. The unrealized gain
of $832 is included in the Other Comprehensive Income (Loss).




During
the year ended December 31, 2008, the Company received an aggregate of
151,000,000 shares of SpeechSwitch, Inc. Class A Common Stock upon conversion of
$12,080 of Convertible Promissory Note receivable dated March 5, 2008. During
the year ended December 31, 2008, the Company sold 69,617,970 shares for a net
proceeds of $8,279. The book value of the remaining shares is $6,511 and the
market value is $8,138 at December 31, 2008. The unrealized gain of $1,627 is
included in the Other Comprehensive Income (Loss).




During
the year ended December 31, 2008, the Company received an aggregate of
42,000,000 shares of iVoice Technology, Inc. Class A Common Stock upon
conversion of $13,440 of Convertible Promissory Note receivable dated March 5,
2008. During the year ended December 31, 2008, the Company sold 8,275,350 shares
for a net proceeds of $2,229. The book value of the remaining shares is $10,792
and the market value is $10,117 at December 31, 2008. The unrealized loss of
$674 is included in the Other Comprehensive Income (Loss).




Cash
receipts from the sales of the securities are deposited in short term money
market funds at our broker. Periodically these funds are transferred to our
operating cash account. At December 31, 2008, the unremitted balance in the
money market fund at our broker was $578.




As of
December 31, 2008, the aggregate book value of these securities was $1,848,638
before elimination and adjustments, the fair value adjustment was $1,826,615,
the market value was $13,016 and the cumulative unrealized gain was $1,785. At
December 31, 2008, the balance of the iVoice Technology securities are
eliminated in consolidation.




As of
December 31, 2007, the aggregate book value of these securities was $1,772,272,
the market value was $676,272 and the cumulative unrealized loss was
$1,096,000.




NOTE 7 –PROMISSORY NOTES
RECEIVABLE





On
February 4, 2008, iVoice Technology advanced $30,000 to Atire Technologies,
Inc., an acquisition candidate, in the form of a Promissory Note, due February
4, 2010, at an interest of 8% per annum. The terms of the note provided deferred
payments of interest only starting on July 4, 2008 and principal and interest
payments starting on October 4, 2008. As of December 31, 2008, the remaining
principal balance due on the note is $25,017 plus accrued interest of $486. At
December 31, 2008, management of iVoice Technology determined that Atire was in
default of its current obligations under the agreement and wrote this account
off to bad debt.





On March
5, 2008, the Company converted its outstanding accounts due from SpeechSwitch,
Inc. for unpaid administrative services in the amount of $50,652 into a
convertible promissory note at the rate of prime plus 1 percent per annum (4.25%
at December 31, 2008). During the year ended December 31, 2008, additional
amounts were added to this note based on any unpaid administrative service fees
and will accrue interest at the above specified rate from date of advance until
paid. The principal and interest shall be due and payable as follows: (a)
interest shall accrue monthly on the unpaid balance and shall be paid annually,
and (b) principal shall be payable on demand. During the year ended December 31,
2008, the Company received an aggregate of 151,000,000 shares of SpeechSwitch,
Inc. Class A Common Stock upon conversion of $12,080 of Promissory Notes
Receivable. At December 31, 2008, the balance of the note is $83,180, which
included accrued interest of $2,725. At December 31, 2008, management of the
Company determined that the carrying value of this promissory note was severely
impaired due to poor liquidity of SpeechSwitch’s Common Stock in the
marketplace.  Management has taken a fair value adjustment of $83,180
to write down this investment.





F-18
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007




On June
12, 2008, the Company converted its outstanding accounts due from Thomas
Pharmaceuticals, Ltd. for unpaid administrative services in the amount of
$47,302 into a convertible promissory note at the rate of prime plus 1 percent
per annum (4.25% at December 31, 2008). Additional amounts may be added to this
note based on any unpaid administrative service fees and will accrue interest at
the above specified rate from date of advance until paid. The principal and
interest shall be due and payable as follows: (a) interest shall accrue monthly
on the unpaid balance and shall be paid annually, and (b) principal shall be
payable on demand. At December 31, 2008, the balance of the note is $72,832,
which included accrued interest of $1,530. At December 31, 2008, management of
the Company determined that the carrying value of this promissory note was
severely impaired due to poor liquidity of Thomas’s Common Stock in the
marketplace.  Management has taken a fair value adjustment of $72,832
to write down this investment.





On June
13, 2008, the Company invested $77,250 in Small Cap Advisors, Inc, a wholly
owned subsidiary of Thomas Pharmaceuticals, Ltd., in the form of a Promissory
Note, at an interest of prime plus 1 percent per annum (4.25% at December 31,
2008). Additional amounts may be added to this note based on any unpaid
administrative service fees and will accrue interest at the above specified rate
from date of advance until paid. The principal and interest shall be due and
payable as follows: (a) interest shall accrue monthly on the unpaid balance and
shall be paid annually, and (b) principal shall be payable on demand. On
November 20, 2008, Small Cap Advisors paid down this note for $27,000. As of
December 31, 2008, the balance due on the note is $72,073, which included
accrued interest of $2,422. At December 31, 2008, management of the Company
determined that the carrying value of this promissory note was severely impaired
due to poor liquidity of its parent’s, Thomas Pharmaceuticals, Common Stock in
the marketplace.  Management has taken a fair value adjustment of
$72,073 to write down this investment.





As of
December 31, 2008, the aggregate balance of the Promissory Notes Receivable is
$0.





NOTE 8 – CONVERTIBLE
DEBENTURES RECEIVABLE





On
January 6, 2006, iVoice, Inc. entered into an Agreement and Plan of Merger with
Thomas NJ, Thomas NY and the “Thomas Shareholders”.  During 2006 and
2007, the Company purchased an aggregate of $710,000 of Thomas NJ Secured
Convertible Debentures. The holders of these debentures are entitled to receive
interest of 10%, compounded quarterly. Thomas NJ can redeem a portion or all
amounts outstanding under the Convertible Debentures at any time upon thirty
(30) business days advanced written notice.  The redemption price
shall be equal to one hundred twenty-five percent (125%) multiplied by the
portion of the principal sum being redeemed, plus any accrued and unpaid
interest. The Company may, at its discretion, convert the outstanding principal
and accrued interest, in whole or in part, into a number of shares of Thomas
Pharmaceuticals Class A Common Stock at the price per share equal to eighty
percent (80%) of the lowest closing bid price of the Common Stock for the
five (5) trading days immediately preceding the conversion date, but they cannot
be converted into more than 9.99% of the total Class A Common Stock at that time
of conversion.  The debentures are valued at the principal value plus
accumulated interest. During the year ended December 31, 2008, the Company
converted $12,368 of principal into 142,600,000 shares of Thomas Pharmaceuticals
Class A Common Stock at a conversion price of $.00008. At December 31, 2008,
management of the Company determined that the carrying value of this promissory
note was severely impaired due to poor liquidity of Thomas’s Common Stock in the
marketplace.  Management has taken a fair value adjustment of $928,133
to write down this investment. At December 31, 2008 and 2007, the total balance
is $0 and $852,447, respectively.




NOTE 9 – CONSOLIDATION OF
MAJORITY OWNED SUBSIDIARY AND MINORITY INTEREST





On March
12, 2008, the Company acquired 1,444.44 shares of iVoice Technology’s Series A
10% Convertible Preferred Stock for $1,444,444.  The holder of each
share of Series A Preferred Stock shall have the right to one vote for each
share of Common Stock into which such Series A Preferred Stock could then be
converted, and with respect to such vote, such holder shall have full voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled to notice of any shareholders' meeting in
accordance with the bylaws of the Corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote. In addition, the holders of the
Series A Preferred Stock shall not have in the aggregate more than seventy
percent (70%) of the total votes of all classes of voting stock of the
Corporation that would vote at a meeting of shareholders. Based on this voting
formula, it was determined that iVoice, Inc. has voting rights equal to 70% of
the voting stock of iVoice Technology and as such, according to APB Opinion No.
18 “The Equity Method of
Accounting for Investments in Common Stock”, iVoice, Inc. is required to
consolidate the results of operations of iVoice Technology with those of iVoice
and its other subsidiary. iVoice Technology had a deficit net worth prior to
consolidation with iVoice and as such, iVoice was required to record a discount
on investment in subsidiary in the amount of $1,792,325 in consolidation. iVoice
is also required to recognize the minority shareholders’ interest in net income
equal to 30% of the net profit of iVoice Technology. For the year ended December
31, 2008, iVoice Technology reported an accumulated net loss of $115,012 and as
such, there is no minority shareholders’ interest in net income for the
period.





NOTE 10
–INTANGIBLES





To date
we have filed fifteen patent applications with the United States Patent and
Trademark Office for speech enabled applications that we have developed
internally.  Of the patent applications we have filed, four (4)
patents have been awarded.  In May 2003 and December 2003, the Company
was issued two patents for its Speech–Enabled Automatic Telephone
Dialer.  On October 26, 2004 we were issued Patent 6,813,341 for a
patent for Speech Enabled Voice Activated/Voice Responsive Item
Locator.  In March 2006 we sold four of our voice activated product
and item locator patents to Lamson Holdings LLC for the net proceeds of
$136,000. On December 6, 2007 we were issued Patent 7,305,344 for a patent for
Methodology for Talking Consumer Products with Voice Instructions via Wireless
Technology. The patents expire 20 years from the date of the original patent
filings. All accumulated costs incurred with respect to the Company’s patent
filings have been capitalized.




During
the year ended December 31, 2008, iVoice Technology filed several patents for
the rights related to the manufacturing of products from recycled crumb tire
rubber.




Under FAS
No. 142, “Goodwill and Other Intangible Assets”, goodwill and other intangible
assets are tested for impairment under certain circumstances, and written off
when impaired, rather than being amortized as previous standards
require.





All
capitalized intangibles have been reviewed for impairment at December 31, 2008.
In doing so, management has determined thatno further write-down for
impairment is required.




At
December 31, 2008 and 2007, intangible assets totaled $233,939 and $170,975,
respectively, net of accumulated amortization of $1,608 and $871,
respectively.




F-19
 Table of Contents


iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007




NOTE 11 - INCOME
TAXES





The
reconciliation of the effective income tax rate to the Federal statutory rate is
as follows:




December 31,2008
                        
                        
                        2007Federal Income Tax
      Rate
                        
                        
                        (34.0
                        )%
                        
                        
                        (34.0
                        )%Deferred
      Tax Charge (Credit)
                        
                        
                        -
                        
                        
                        
                        -Effect
      on Valuation Allowance
                        
                        
                        38.1
                        %
                        
                        
                        38.1
                        %State
      Income Tax, Net of Federal Benefit
                        
                        
                        (4.1
                        )%
                        
                        
                        (4.1
                        )%Effective
      Income Tax Rate
                        
                        
                        0.0
                        %
                        
                        
                        0.0
                        %




As of
December 31, 2008 and 2007, the Company had net operating loss carry forwards of
approximately $19,800,000 and $18,300,000, respectively that can be utilized to
offset future taxable income for Federal income tax purposes through 2028.
Utilization of these net loss carry forwards is subject to the limitations of
Internal Revenue Code Section 382.  Because of the current uncertainty
of realizing the benefit of the tax carry forward, a valuation allowance equal
to the tax benefit for deferred taxes has been established.  The full
realization of the tax benefit associated with the carry forward depends
predominantly upon the Company's ability to generate taxable income during the
carry forward period.





For state
income taxes, the Company’s net operating loss carry forwards have been reduced
by $8,464,741. During the years ended 2005, 2004 and 2003, the Company
participated in the Technology Tax Certificate Transfer Program sponsored by the
New Jersey Economic Development Authority and the State of New Jersey. Under the
program, eligible businesses may sell their unused net-operating-loss carry
forwards and unused research and development tax-credit carry forwards to any
corporate taxpayer in the State of New Jersey for at least 75% of the value of
the tax benefits. After related commissions and expenses related to application
submission the Company received cash proceeds of $17,069, $56,257 and $146,649
for the years ended December 31, 2005, 2004 and 2003 respectively.





Deferred
tax assets and liabilities reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes.  Significant
components of the Company's deferred tax assets and liabilities are summarized
as follows:
  December
    312008
                              
                              
                              2007Deferred tax
      assets
                              
                              $
                              7,130,000
                              
                              
                              $
                              6,500,000Less:
      Valuation allowance
                              
                              
                              (7,130,000
                              )
                              
                              
                              (6,500,000
                              )Net
      deferred tax assets
                              
                              $
                              -
                              
                              
                              $
                              -

















Net
operating loss carry forwards expire starting in 2018 through 2027.





NOTE 12 - CONVERTIBLE
DEBENTURES





On May
11, 2006 the Company issued to YA Global a $5,544,110 secured convertible
debenture due on May 11, 2008 bearing interest of 7.5%. This debenture replaced
a promissory note with a principal balance of $5,000,000 and $544,110 of accrued
interest due to YA Global from June 15, 2005. During the period of January 1,
2008 until May 12, 2008, we issued 882,165,877 shares of Class A common stock,
with a value of $529,640, as repayment of $401,700 of principal. The difference
of $127,940 is charged to the Statement of Operations as beneficial interest. On
May 12, 2008, the remaining principal balance of $4,796,510 was repaid in cash
from the proceeds of the Smith Barney short term loans and sales of the ARPSs.
As of December 31, 2008, the unpaid balance of accrued interest was
$799,139.





F-20
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007


On May
25, 2006, the Company issued to YA Global a $1,250,000 secured convertible
debenture due on May 25, 2008 bearing interest of 7.5% per annum pursuant to a
Securities Purchase Agreement entered into between us and YA Global. On February
21, 2008, this debenture was amended to extend the maturity date until May 25,
2011 and to raise the interest rate to 15% per annum. During the year ended
December 31, 2008, we issued 923,333,332 shares of Class A common stock, with a
value of $249,111, as repayment of $83,100 of principal. The difference of
$166,011 is charged to the Statement of Operations as beneficial interest. As of
December 31 2008, the unpaid principal balance on the secured convertible
debenture is $1,166,900 plus accrued interest of $319,916.





On
October 31, 2007, the Company executed a waiver agreement with YA Global that
provides that if the Company reduces the debt to $141,523 that YA Global will
waive its rights to any future payments and will consider the account paid in
full. This waiver agreement was executed to compensate the Company for losses
incurred on the sales of the Corporate Strategies investments.





On April
16, 2007, iVoice Technology issued a Secured Convertible Debenture dated March
30, 2007 to YA Global Investments for the sum of $700,000 in exchange for a
previously issued note payable for the same amount. The Debenture has a term of
three years, and pays interest at the rate of 5% per annum. YA Global has the
right to convert a portion or the entire outstanding principal into iVoice
Technology's Class A Common Stock at a Conversion Price equal to eighty percent
(80%) of the lowest closing Bid Price of the Common Stock during the five (5)
trading days immediately preceding the Conversion Date. YA Global may not
convert the Debenture into shares of Class A Common Stock if such conversion
would result in YA Global beneficially owning in excess of 4.9% of the then
issued and outstanding shares of Class A Common Stock. On March 14, 2008, iVoice
Technology and YA Global Investments agreed that iVoice Technology would redeem
all amounts outstanding under the Debenture, except for the $186,557 of the
outstanding interest remaining on the original notes payable that were
originally exchanged for the Debenture. The amount redeemed was $691,021,
consisting of the remaining balance of the Debenture of $572,815, accrued
interest of $32,284, and a redemption premium of $85,922. The Debenture was
amended to change amount to $186,557 with a due date of March 14, 2009. The
Debenture shall accrue interest at the rate of 15% per annum, and shall be
convertible at a conversion price equal to 70% of the lowest closing bid price
of iVoice Technology’s common stock during the 30 trading days immediately
preceding the conversion date. No conversions can be made prior to November 1,
2008.





On
November 21, 2008, iVoice Technology entered into an Amendment Agreement between
iVoice Technology and YA Global which paid off in full the Secured Convertible
dated March 30, 2007. Under the terms of this agreement, iVoice Technology paid
the sum of $135,000 in full payment of the debenture with the remaining balance
of $186,557 with accrued interest of $17,788. The difference of $69,355 is
included in other income in the accompanying consolidated financial
statements.





The
aggregate principal value of the remaining debentures at December 31, 2008 is
$1,166,900. This amount is shown on the balance sheet net of the unamortized
portion of the discount on conversion of $170,808. This discount is being
amortized over the life of the debenture and is being amortized as debt discount
on the statement of operations.





On
December 1, 2008, the Company notified YA Global that there was a dispute
regarding the final balance of principal and accrued interest for Convertible
Debentures with YA Global. This dispute dates back to written commitments and
verbal reconfirmations made to the Company by YA Global in respect to the
Company’s unreimbursed losses on the investment in Corporate Strategies. The
Company proposed a settlement of $300,000 to settle the disputed balance, but
the settlement is still pending at the time of this filing.




NOTE 13 - DERIVATIVE
LIABILITY





In
accordance with SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities" and EITF 00-19, "Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company’s Own Stock", the conversion
feature associated with the YA Global Secured Convertible Debentures represents
embedded derivatives. As such, the Company had recognized embedded derivatives
in the amount of $6,908,078 as a derivative liability in the accompanying
consolidated balance sheet, and it is now measured at its estimated fair value
of $1,659,991. The estimated fair value of the embedded derivative has been
calculated based on a Black-Scholes pricing model using the following
assumptions:





At Issue
                  
                  
                  At
    12/31/08Fair
      market value of stock
                  
                  $
                  0.096
      - $0.125
                  
                  
                  $
                  0.00010Exercise
      price
                  
                  $
                  0.086
      - $0.113
                  
                  
                  $
                  0.00007Dividend
      yield
                  
                  
                  0.00
                  %
                  
                  
                  0.00
                  %Risk
      free interest rate
                  
                  
                  5.47
                  %
                  
                  
                  3.20
                  %Expected
      volatility
                  
                  
                  195.36%
      - 196.54
                  %
                  
                  
                  322.06
                  %Expected
      life
                  
                  2.00
      years
                  
                  
                  3
      Years






F-21
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007


Changes
in the fair value of the embedded derivatives are calculated at each reporting
period and recorded in gain on revaluation of derivatives in the consolidated
statements of operations. For the year ended December 31, 2008, there was a
change in the fair value of the embedded derivatives, which resulted in a gain
of $2,589,122.





During
the year ended December 31, 2008, iVoice Technology recorded a gain on
revaluation of derivatives of $1,265,813 on the liquidation of the YA global
debentures made during the period.





In
accordance with SFAS 133, SFAS 150, “Accounting for Certain Financials
Instruments With Characteristics of Both Liabilities and Equity” and EITF 00-19,
the fair market value of the derivatives and warrants are bifurcated from the
convertible debentures as a debt discount.  The debt discount is being
amortized over the life of the convertible debentures. The consolidated
amortization expense on the derivatives for the years ended December 31, 2008
and 2007 was $1,645,738 and $2,729,117, respectively.





NOTE 14 - WARRANT
LIABILITY





On May
25, 2006, the Company issued 30,000,000 freestanding warrants exercisable over
five years as follows: 10,000,000 warrants at a fixed exercise price of $0.30
per share; 10,000,000 warrants at a fixed exercise price of $0.40 per share; and
10,000,000 warrants at a fixed exercise price of $0.50 per share.





In
accordance with SFAS 133 and EITF 00-19, the issuance of the warrants associated
with the YA Global Secured Convertible Debentures represents free-standing
warrants and is considered an equity instrument which is bifurcated from the
debentures. As such, the Company had recognized the bifurcated fair value in the
amount of $1,992,323 as additional paid-in capital in the accompanying
consolidated balance sheet. The estimated fair value of the warrant has been
calculated based on a Black-Scholes pricing model using the following
assumptions:




At IssueFair
      market value of stock
                        
                        $
                        0.096Exercise
      price
                        
                        $
                        0.30
      - $0.50Dividend
      yield
                        
                        
                        0.00
                        %Risk
      free interest rate
                        
                        
                        5.47
                        %Expected
      volatility
                        
                        
                        195.36
                        %Expected
      life
                        
                        5.00
      years
  The
contra-account of the bifurcated fair value of the warrants is recorded as debt
discount and is being amortized over the life of the YA Global debentures.
Amortization expenses for the year ended December 31, 2008 and 2007 was $314,007
and $996,162, respectively.





NOTE 15 - DUE TO RELATED
PARTIES





From time
to time, the Company has entered into various loan agreements and employment
agreements with Jerome R. Mahoney, President and Chief Executive Officer of the
Company. As of December 31, 2008, the balances due to Mr. Mahoney were: a) loan
of $2,295; b) accrued interest of $5,246; and c) deferred compensation is
$288,965. The loan accrues interest at 9.5% per year on the unpaid balance.
Balances due to Mr. Mahoney are convertible into either (i) one Class B common
stock share of iVoice, Inc., $.01 par value, for each dollar owed, or (ii) the
number of Class A common stock shares of iVoice, Inc. calculated by dividing (x)
the sum of the principal and interest that the Note holder has decided to prepay
by (y) fifty percent (50%) of the lowest issue price of Series A common stock
since the first advance of funds under this Note, whichever the Note holder
chooses, or (iii) payment of the principal of this Note, before any repayment of
interest.  The Board of Directors of the Company maintains control
over the issuance of shares and may decline the request for conversion of the
repayment into shares of the Company.




In August
2005, iVoice Technology had assumed an outstanding promissory demand note in the
amount of $190,000 payable to Jerome Mahoney, then, the Non-Executive Chairman
of the Board of iVoice Technology.  The note bears interest at the
rate of prime plus 2.0% per annum (5.25% at December 31, 2008) on the unpaid
balance until paid.  Under the terms of the Promissory Note, at the
option of the Note holder, principal and interest can be converted into either
(i) one share of Class B Common Stock of iVoice Technology, Inc., par value
$.01, for each dollar owed, (ii) the number of shares of Class A Common Stock of
iVoice Technology, Inc. calculated by dividing (x) the sum of the principal and
interest that the Note holder has requested to have prepaid by (y) eighty
percent (80%) of the lowest issue price of Class A Common Stock since the first
advance of funds under this Note, or (iii) payment of the principal of this
Note, before any repayment of interest. The Board of Directors of iVoice
Technology maintains control over the issuance of shares and may decline the
request for conversion of the repayment into shares of the iVoice Technology. As
of December 31, 2008, the outstanding balance was $141,708, plus accrued
interest of $84,936.





On August
1, 2004, iVoice Technology entered into a five-year employment agreement with
Jerome Mahoney to serve as Non-Executive Chairman of the Board of Directors of
iVoice Technology with a base salary of $85,000 for the first year with annual
increases based on the Consumer Price Index.  A portion of Mr.
Mahoney’s compensation shall be deferred until such time that the Board of
Directors of iVoice Technology determines that it has sufficient financial
resources to pay his compensation in cash. As of December 31, 2008, iVoice
Technology has recorded $193,844 of deferred compensation due to Mr. Mahoney.
The Board of iVoice Technology has the option to pay Mr. Mahoney’s compensation
in the form of Class B Common Stock. Pursuant to the terms of the Class B Common
Stock, a holder of Class B Common Stock has the right to convert each share of
Class B Common Stock into the number of shares of Class A Common Stock
determined by dividing the number of Class B Common Stock being converted by a
20% discount of the lowest price for which the Company had ever issued its Class
A Common Stock. On August 30, 2006 Mr. Mahoney was elected to the position of
President and Chief Executive Officer of iVoice Technology and no longer serves
as Non-Executive Chairman of the Board of iVoice Technology.





F-22
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007




On March
5, 2008, the Company converted its outstanding accounts due from iVoice
Technology, Inc. for unpaid administrative services in the amount of $50,652
into a convertible promissory note at the rate of prime plus 1 percent per annum
(4.25% at December 31, 2008). During the year ended December 31, 2008 an
additional $29,547 was added to this note based on any unpaid administrative
services, and will accrue interest at the above specified rate from date of
advance until paid. The principal and interest shall be due and payable as
follows: (a) interest shall accrue monthly on the unpaid balance and shall be
paid annually, and (b) principal shall be payable on demand. On March 10, 2008
and March 18, 2008, the Company received an aggregate of 42,000,000 shares of
iVoice Technology, Inc. Class A Common Stock upon conversion of $13,440 of
Promissory Notes Receivable. At December 31, 2008, the balance of the note is
$82,010 which includes accrued interest of $2,589. This transaction is
eliminated in consolidation.





On March
11, 2008, the Company entered into a Stock Purchase Agreement with iVoice
Technology, Inc. for the purchase of 1,444.44 shares of iVoice Technology’s
Series A 10% Secured Convertible Preferred Stock valued at
$1,444,444.  The holders of the stock are entitled to receive
dividends at a rate 10% per annum and will have voting rights for each share of
Common Stock that the Series A Preferred Stock would be converted into using the
applicable conversion price. The holders of the Series A Preferred Stock shall
not have in the aggregate more than 70% of the total votes of all classes of
voting stock. As of Decemberf 31, 2008, the Company has recorded $117,963 of
deferred dividends. The Company also received $144,444 in funding fees on the
transaction. These transaction is eliminated in consolidation.





On March
11, 2008, the Company received a warrant to purchase common stock of iVoice
Technology, Inc. pursuant to the terms of the Stock Purchase Agreement. The
warrant provides that the Company can purchase shares of Class A common stock at
a price calculated by dividing $144,444 by the lowest price that iVoice
Technology has ever issued its Class A common stock, provided, that in no event
shall the holder be entitled to exercise this Warrant for a number of shares
which, upon giving effect to such exercise, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to
exceed 9.99% of the outstanding shares of the Common Stock following such
exercise.





Mr.
Mahoney has a consulting agreement with B Green Innovations for annual
compensation of $24,000 and upon every annual anniversary thereafter, at the
rate based on the increase in the Consumer Price Index for All Urban Consumers
(New York-Northern N.J.-Long Island). Mr. Mahoney agreed to accept compensation
pursuant to this Consulting Agreement in the form of Class B Common Stock, par
value $.01 per share, in lieu of cash, for as long as the Board of Directors
decides in its sole discretion that the Company does not have the financial
resources to pay the Consultant in cash.  The number of Class B Common
Stock shares to be issued to the Consultant pursuant to this Paragraph 2 shall
be equal to one share of Class B common stock for every dollar of compensation
due and owing the Consultant. As of December 31, 2008, Mr. Mahoney is due
$16,000, and no shares have been issued.




NOTE 16 - COMMITMENTS AND
CONTINGENCIES





a) The
Company leases its headquarters located at 750 Highway 34, Matawan, New Jersey
on a month-to-month basis. In May 2008, the Company downsized its usage and the
monthly obligation reduced from $7,500 to $4,000 per month.  The
Company maintains a good relationship with its landlord and believes that its
current facilities will be adequate for the foreseeable
future.





Rent
expense under operating lease for the year ended December 31, 2008 and 2007 was
$62,075 and 90,000, respectively.





b) On
November 15, 2004, the Company amended the employment agreement with Jerome
Mahoney and extended the term for an additional five-year period commencing on
May 1, 2004. He will serve as the Company's Chairman of the Board, President and
Chief Executive Officer for a term of five years. As consideration, the Company
agrees to pay Mr. Mahoney a sum of $270,000 the first year with a 10% increase
every year thereafter.





c) In
conjunction with the various spin-offs, iVoice Technology, SpeechSwitch and
Thomas Pharmaceuticals have entered into administrative services agreement with
iVoice. The administrative services agreements will continue on a month-to-month
basis until these companies have found replacement services for those services
being provided by iVoice or can provide these services for
itself.





d) The
Company’s assets are subject to a Security Agreement with the majority
stockholder. See Note 9.




NOTE 17 -STOCKHOLDERS’
EQUITY





Pursuant
to the Company’s certificate of incorporation, as amended, iVoice, Inc. is
authorized to issue 1,000,000 shares of preferred stock, par value of $1.00 per
share, 10,000,000,000 shares of Class A common stock, no par value per share,
and 50,000,000 shares of Class B common stock, par value $.01 per
share.





a) Preferred
Stock





Preferred
Stock consists of 1,000,000 shares of authorized preferred stock with $1.00 par
value.  As of December 31, 2008 and 2007, no shares were issued or
outstanding.





b) Class A Common
Stock





Class A
common stock consists of 10,000,000,000 shares of authorized common stock with
no par value. Each holder of Class A common stock is entitled to one vote for
each share held of record.  Holders of our Class A common stock have
no preemptive, subscription, conversion, or redemption rights.  Upon
liquidation, dissolution or winding-up, the holders of Class A common stock are
entitled to receive our net assets pro rata.  Each holder of Class A
common stock is entitled to receive ratably any dividends declared by our board
of directors out of funds legally available for the payment of
dividends.  The Company has not paid any dividends on its common stock
and management does not contemplate doing so in the foreseeable
future.  The Company anticipates that any earnings generated from
operations will be used to finance growth.






F-23
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007


As of
December 31, 2008, there are 2,602,173,527 shares issued and 2,602,170,527
shares outstanding. For the year ended December 31, 2008, the Company had the
following transactions in its Class A Common Stock:





1) The
Company issued 1,805,499,209 shares of Class A common stock to YA Global
Investments as repayment of $484,800 of principal on an outstanding convertible
debenture. The stock was valued at $778,751 and $293,951 was charged to
beneficial interest expense.





2) The
Company issued 316,000,000 shares of Class A common stock upon conversion of
40,380 shares of Class B common stock, pursuant to the provisions of Class B
common stock.





3) The
Company issued 60,000,000 shares of Class A common stock to Kenneth Glynn,
valued at $6,000 for legal services related to the prosecution of the portfolio
of patents.





As of
December 31, 2007, there are 420,674,318 shares issued and 420,671,318 shares
outstanding. For the year ended December 31, 2007, the Company had the following
transactions in its Class A Common Stock:





4) The
Company issued 265,587,972 shares of Class A common stock to YA Global
Investments as repayment of principal and accrued interest on an outstanding
convertible debenture, valued at $493,400.





5) The
Company issued 86,012,651 shares of Class A common stock upon conversion of
52,863 shares of Class B common stock, pursuant to the provisions of Class B
common stock.





c) Class B Common
Stock





Class B
Common Stock consists of 50,000,000 shares of authorized common stock with $.01
par value. Each share of Class B common stock is convertible into Class A common
stock calculated by dividing the number of Class B shares being converted by
fifty percent (50%) of the lowest price that the Company had previously issued
its Class A common stock since the Class B shares were issued.  Each
holder of Class B common stock has voting rights equal to the number of Class A
shares that would be issued upon the conversion of the Class B shares, had all
of the outstanding Class B shares been converted on the record date used for
purposes of determining which shareholders would vote.  Holders of
Class B common stock are entitled to receive dividends in the same proportion as
the Class B common stock conversion and voting rights have to Class A common
stock.  Jerome R. Mahoney is the sole owner of the Class B common
stock.





On March
6, 2009, the Company amended the Certificate of Incorporation to enable the
holders of the Class B Common Stock to elect, at the holder’s discretion, the
redemption for cash by the Company at the rate of $1.00 for each Class B Common
Share presented to the Company for redemption. Consequently, the Company
reclassified the redemption amount of the Class B Common Stock from
Shareholders’ deficit to current liabilities.


As of
December 31, 2008, there are 2,204,875 shares issued, 1,512,104 shares
outstanding and 692,771 shares retired. As of December 31, 2007, there are
2,204,875 shares issued, 1,552,484 shares outstanding and 652,391 shares
retired.





For the
year ended December 31, 2008, the Company had the following transactions in its
Class B Common Stock:





1) A total
of 40,380 Class B shares were converted into 316,000,000 Class A
shares.





For the
year ended December 31, 2007, the Company had the following transactions in its
Class B Common Stock:





2) A total
of 52,863 Class B shares were converted into 86,012,651 Class A
shares.





d) Treasury
Stock





On
February 11, 2002, the Company repurchased 600,000 shares of Class A common
stock from a previous employee for $28,800. Following the reverse stock split on
April 27, 2006, the shares were converted in 3,000 shares.






F-24
 Table of Contents




iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007


NOTE 18 - STOCK OPTIONS,
STOCK INCENTIVES & WARRANTS





2005 Stock Incentive
Plan


On
December 20, 2005, the Company adopted the 2005 Stock Incentive Plan (the “2005
Plan”). The purpose of the 2005 Plan is to; (i) provide long-term incentives and
rewards to employees, directors, independent contractors or agents of iVoice,
Inc. and its subsidiaries; (ii) assist the Company in attracting and retaining
employees, directors, independent contractors or agents with experience and/or
ability on a basis competitive with industry practices; and (iii) associate the
interests of such employees, directors, independent contractors or agents with
those of the Company's stockholders.





Under the
Plan, the Board of Directors shall have all the powers vested in it by the terms
of the Plan to select the Eligible Participants to be granted awards under the
Plan, to determine the type, size and terms of awards to be made to each
Eligible Participant selected, to determine the time when awards will be
granted, when they will vest, when they may be exercised and when they will be
paid, to amend awards previously granted and to establish objectives and
conditions, if any, for earning awards and whether awards will be paid after the
end of the award period. The Board shall have full power and authority to
administer and interpret the Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of the Plan and
for the conduct of its business as the Board deems necessary or advisable and to
interpret same. The Board's interpretation of the Plan, and all actions taken
and determinations made by the Board pursuant to the powers vested in it
hereunder, shall be conclusive and binding on all parties concerned, including
the Company stockholders, any participants in the Plan and any other Eligible
Participant of the Company.





All
employees of the Company and all employees of Affiliates shall be eligible to
participate in the Plan. The Board, in its sole discretion, shall from time to
time designate from among the eligible employees and among directors,
independent contractors or agents those individuals who are to receive awards
under and thereby become participants in the Plan.





For the
years ended December 31, 2008 and 2007, no shares were granted under the 2005
Plan.





Options and Warrants
Outstanding


During
the year ending December 31, 2006, the following options and warrants were
issued pursuant to their respective agreements.  Unexpired options and
warrants outstanding are as follows as of December 31, 2008 and
2007:





Expiration Date
                  
                  Exercise
      Price
                  
                  
                  SharesMay
      25, 2011
                  
                  
                  .300
                  
                  
                  
                  10,000,000May
      25, 2011
                  
                  
                  .400
                  
                  
                  
                  10,000,000May
      25, 2011
                  
                  
                  .500
                  
                  
                  
                  10,000,000Balance
      at December 31, 2008 and 2007
                  
                  
                  .400
                  
                  
                  
                  30,000,000




The
following summarizes the warrant transactions:




WeightedAverageExerciseWarrants
                    
                    
                    PriceBalance,
      January 1, 2007
                    
                    
                    30,000,000
                    
                    
                    $
                    0.400Granted
                    
                    
                    -
                    
                    
                    $
                    0.000Exercised
                    
                    
                    -
                    
                    
                    $
                    0.000Expired
                    
                    
                    -
                    
                    
                    $
                    0.000Balance,
      December 31, 2007
                    
                    
                    30,000,000
                    
                    
                    $
                    0.400Granted
                    
                    
                    -
                    
                    
                    $
                    0.000Exercised
                    
                    
                    -
                    
                    
                    $
                    0.000Expired
                    
                    
                    -
                    
                    
                    $
                    0.000Balance,
      December 31, 2008
                    
                    
                    30,000,000
                    
                    
                    $
                    0.400Outstanding
      and Exercisable, December 31, 2007
                    
                    
                    30,000,000
                    
                    
                    $
                    0.400Outstanding
      and Exercisable, December 31, 2008
                    
                    
                    30,000,000
                    
                    
                    $
                    0.400






F-25
 Table of Contents


iVOICE,
INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 YEARS
ENDED DECEMBER 31, 2008 and 2007







NOTE 19 -GOING
CONCERN





The
Company has incurred substantial accumulated deficits, has an obligation to
deliver an indeterminable amount of common stock due on derivative liabilities
and has completed the process of spinning out the five operating subsidiaries.
These issues raise substantial doubt about the Company’s ability to continue as
a going concern. Therefore, recoverability of a major portion of the recorded
asset amounts shown in the accompanying balance sheets is dependent upon
continued operations of the Company, which in turn, is dependent upon the
Company’s ability to raise capital and/or generate positive cash flow from
operations.





Since the
spin off of the three operating subsidiaries in 2005, the Company has
transitioned itself into a company focused on the development and licensing of
proprietary technologies. Following the sales of patents the Lamson Holdings
LLC, the Company has 9 remaining patent applications, which have been awarded or
are pending.  These applications include various versions of the
“Wirelessly Loaded Speaking Medicine Container”, which is also filed
internationally, the “Voice Activated Voice Operated Copier”, the “Voice
Activated Voice Operational Universal Remote Control”, “Wireless Methodology for
Talking Consumer Products” which is also filed internationally, “Product
Identifier and Receive Spoken Instructions” and “Traffic Signal System with
Countdown Signaling with Advertising and/or News Message”.




The
Company also continues to search for potential merger candidates with or without
compatible technology and products, which management feels may make financing
more appealing to potential investors.





The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.





NOTE 20 -SUBSEQUENT
EVENTS





· On March
6,
2009, the Company amended the Certificate of Incorporation to enable the holders
of the Class B Common Stock to elect, at the holder’s discretion, the redemption
for cash by the Company at the rate of $1.00 for each Class B Common Share
presented to the Company for redemption. Consequently, the Company reclassified
the redemption amount of the Class B Common Stock from Shareholders’ deficit to
current liabilities.





· On March
11, 2009, the holder of the Class B Common Shares, elected for the Company to
redeem 1,512,104 shares of Class B Common Stock for cash pursuant to the
provisions of the redemption rights in the Certificate of
Incorporation.





F-26
 Table of Contents