Item
1. Financial Statements.
VOICE
ASSIST, INC.
CONDENSED
BALANCE SHEETS
(Unaudited)
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|
6/30/2013
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12/31/2012
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ASSETS
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|
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|
|
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|
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CURRENT ASSETS
|
|
|
|
|
|
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|
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Cash
|
|
$
|
2,545
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|
|
$
|
51,478
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|
|
Accounts Receivable
|
|
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44,200
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|
|
|
80,325
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|
|
Deferred Customer Activation Costs
|
|
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-
|
|
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|
1,500
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|
|
Prepaid Expenses
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|
33,997
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|
|
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65,688
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|
|
Total Current Assets
|
|
|
80,742
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|
|
|
198,991
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|
|
|
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|
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|
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|
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Property & Equipment, Net
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|
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108,737
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133,398
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Software Development, Net
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117,853
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|
|
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235,706
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Other Assets
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|
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32,027
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|
|
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32,027
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|
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Total Assets
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|
$
|
339,359
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|
|
$
|
600,122
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|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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CURRENT LIABILITIES
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Accounts Payable
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$
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432,985
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$
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406,922
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Accrued Expenses
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427,454
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|
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307,560
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Deferred Revenue
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|
|
-
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6,000
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|
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Deposits
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10,045
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20,000
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Loans Payable
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|
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351,845
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|
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36,000
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Loans Payable - Related Parties
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192,000
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|
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192,000
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Total Current Liabilities
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1,414,329
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968,482
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Total Liabilities
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1,414,329
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968,482
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|
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STOCKHOLDERS’ DEFICIT
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Preferred stock, $0.001 par value, 10,000,000 shares authorized,
2,000,000 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively
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2,000
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2,000
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Common stock, $0.001 par value, 100,000,000 shares authorized,
44,848,277 and 41,839,500 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively
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44,848
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41,839
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Additional Paid in Capital
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26,037,462
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25,484,005
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Shares to be Issued
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-
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100,000
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Accumulated Deficit
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(27,159,280
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)
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(25,996,204
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)
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Total Stockholders’ Deficit
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(1,074,970
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)
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(368,360
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)
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
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|
$
|
339,359
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$
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600,122
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|
The
accompanying notes are an integral part of these condensed financial Statements.
VOICE
ASSIST, INC.
CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June
30,
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2013
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2012
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2013
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2012
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OPERATING REVENUES
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Total Revenues
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$
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74,006
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$
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128,981
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$
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141,354
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$
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262,624
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OPERATING EXPENSES
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Direct Cost of Services
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97,020
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74,145
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203,529
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149,397
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Other Costs
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-
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2,050
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|
473
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|
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|
2,400
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Total Direct Cost of Services
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97,020
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|
76,195
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204,002
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151,797
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Legal and Professional
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130,833
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237,665
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221,256
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514,234
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Selling, General and Administrative
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340,629
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486,168
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704,717
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970,961
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Selling, General and Administrative - Related Parties
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-
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15,676
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-
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29,838
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Advertising and Marketing
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9,413
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-
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14,600
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-
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Depreciation and Amortization
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70,664
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42,163
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142,514
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83,970
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Total Operating Expenses
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648,559
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857,867
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1,287,089
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1,750,800
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Net Loss from Operations
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(574,553
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)
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(728,886
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)
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(1,145,735
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)
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(1,488,176
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)
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OTHER INCOME AND (EXPENSE)
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Interest Expense
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(17,564
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)
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|
(19
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)
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(17,634
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)
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|
(682
|
)
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Other Income (Expense)
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(91
|
)
|
|
|
(98
|
)
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|
|
293
|
|
|
|
1,702
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|
Total Other Income (Expense)
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(17,655
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)
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|
|
(117
|
)
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|
(17,341
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)
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|
1,020
|
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|
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|
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Net Loss before Income Taxes
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(592,208
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)
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(729,003
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)
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(1,163,076
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)
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|
|
(1,487,156
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)
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Income Tax Provision
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-
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-
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-
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(800
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)
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NET LOSS
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$
|
(592,208
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)
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|
$
|
(729,003
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)
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|
$
|
(1,163,076
|
)
|
|
$
|
(1,487,956
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)
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|
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Weighted Average Shares Outstanding - Basic and Diluted
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44,111,354
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35,786,050
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41,887,780
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33,388,303
|
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|
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Net Loss Per Common Share – Basic and
Diluted
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|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.04
|
)
|
The
accompanying notes are an integral part of these condensed financial Statements.
VOICE
ASSIST, INC.
CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
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|
Six Months Ended June
30,
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|
2013
|
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|
2012
|
|
|
Cash Flows From Operating Activities
|
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|
|
|
|
|
|
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Net Loss
|
|
$
|
(1,163,076
|
)
|
|
$
|
(1,487,956
|
)
|
|
Adjustments to reconcile from Net Loss to net cash
provided by (used in) operating activities:
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|
|
|
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|
|
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Depreciation and Amortization
|
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|
142,514
|
|
|
|
83,970
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|
|
Shares Issued for Services
|
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|
54,334
|
|
|
|
83,750
|
|
|
Stock-Based Compensation Expense
|
|
|
302,133
|
|
|
|
616,727
|
|
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Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
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Accounts Receivable
|
|
|
36,125
|
|
|
|
(2,060
|
)
|
|
Deferred Customer Activation Costs
|
|
|
1,500
|
|
|
|
4,420
|
|
|
Prepaid Expense
|
|
|
31,691
|
|
|
|
73,121
|
|
|
Accounts Payable
|
|
|
26,063
|
|
|
|
1,416
|
|
|
Customer Deposits
|
|
|
(9,955
|
)
|
|
|
-
|
|
|
Accrued Expenses
|
|
|
119,894
|
|
|
|
49,222
|
|
|
Deferred Customer Activation Fees
|
|
|
(6,000
|
)
|
|
|
(17,682
|
)
|
|
Net cash used in operating activities
|
|
|
(464,777
|
)
|
|
|
(595,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Acquisition and Development of Software Assets
|
|
|
-
|
|
|
|
(23,673
|
)
|
|
Purchase of Equipment
|
|
|
-
|
|
|
|
(9,337
|
)
|
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(33,010
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from Loans Payable
|
|
|
315,844
|
|
|
|
-
|
|
|
Proceeds from Loans Payable - Related Party
|
|
|
-
|
|
|
|
102,000
|
|
|
Repayment of Loans Payable
|
|
|
-
|
|
|
|
(7,200
|
)
|
|
Proceeds from Issuance of Common Stock
|
|
|
100,000
|
|
|
|
880,800
|
|
|
Net cash provided by financing activities
|
|
|
415,844
|
|
|
|
975,600
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Cash
|
|
|
(48,933
|
)
|
|
|
347,518
|
|
|
Cash, Beginning of Period
|
|
|
51,478
|
|
|
|
5,853
|
|
|
Cash, End of Period
|
|
$
|
2,545
|
|
|
$
|
353,371
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Information:
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Interest Expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash Financing Activities:
|
|
|
|
|
|
|
|
|
|
Payment of accounts payable through issuance
of common stock
|
|
$
|
54,334
|
|
|
$
|
2,169,312
|
|
The
accompanying notes are an integral part of these condensed financial Statements.
VOICE
ASSIST, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Voice
Assist, Inc. (the “Company”) was formed as a Nevada corporation on February 4, 2008 as Musician’s Exchange.
On September 29, 2010, the Company changed its name from Musician’s Exchange to Voice Assist, Inc. Effective September 30,
2010, the Company completed the acquisition of substantially all of the assets of SpeechPhone LLC, MDM Intellectual Property LLC,
SpeechCard LLC, SpeechCall, LLC, SpeechPhone Direct, LLC and Voice Assist LLC, (the “Acquisitions”).
For
accounting purposes, the acquisition of substantially all of the assets and certain liabilities of Speechphone by the Company
has been recorded as a reverse acquisition of a public company and recapitalization of Speechphone based on the factors demonstrating
that Speechphone represents the accounting acquirer. The historic financial statements of Speechphone and related entities, while
historically presented as an LLC equity structure, have been retroactively presented as a corporation for comparability purposes.
The Company changed its business direction and is now a voice recognition technology company focused on enabling access to any
information through any device using speech technology.
Voice
Assist operates a cloud-based speech recognition platform that supports speech recognition based enterprise services such as Customer
Relationship Management (CRM), field force automation, as well as direct-to-enterprise services such as virtual assistants that
unify communications and direct-to-consumer “safe driving” services that allow SMS, email, and social media messaging
through a single personal phone number. The technology empowers mobile staff members and especially drivers to use speech commands
to access data and send email or text messages by voice instead of typing.
Basis
of presentation
The
condensed interim financial statements included herein, presented in accordance with United States generally accepted accounting
principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These
statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary
for fair presentation of the information contained therein. It is suggested that these condensed interim financial statements
be read in conjunction with the financial statements of the Company for the year ended December 31, 2012 and notes thereto included
in the Company’s 10-K filed on April 16, 2013. The Company follows the same accounting policies in the preparation of interim
reports.
Results
of operations for the interim periods are not indicative of annual results.
VOICE
ASSIST, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during the reporting periods. Generally, matters subject
to estimation and judgment include amounts related to asset impairments, useful lives of fixed assets and capitalization of costs
for software developed for internal use. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers highly liquid investments with insignificant interest rate risk and original maturities of three months or less
to be cash equivalents. Cash equivalents consist primarily of interest-bearing bank accounts and money market funds. The Company’s
cash positions represent cash on deposit in checking accounts. These assets are generally available on a daily basis and are highly
liquid in nature.
Revenue
Recognition
For
recognizing revenue, the Company applies the provisions of the Revenue Recognition Topic of Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”). Revenues are generated from telephony services including
activation fees, hardware fees and monthly usage fees. In most cases, the services performed do not require significant production,
modification or customization of the Company’s software or services; therefore, revenues for the hardware fees and monthly
usage fees are recognized when evidence of a completed transaction exists, when services have been rendered. The Company recognized
revenue from sales of $141,354 and $262,624 during the six months ended June 30, 2013 and 2012, respectively.
The
activation fees generated from new accounts are recorded as deferred revenue and are amortized over the estimated average customer
relationship period. The net unamortized activation fees were $0 and $6,000 at June 30, 2013 and December 31, 2012, respectively.
The costs associated with these activation fees are recorded as deferred costs and are similarly amortized over the estimated
average customer relationship period. The net unamortized costs are $0 and $1,500 at June 30, 2013 and December 31, 2012, respectively.
For both the activation fees and costs associated therewith, the estimated average customer relationship period was 24 months
for the three months ended June 30, 2013.
Software
Development Costs
The
Company has adopted the provisions of FASB ASC 350-40 in order to account for its software developed for internal use since the
Company is dependent on the internal use automated speech recognition software to provide the enhanced services. Software development
costs are capitalized for certain costs incurred during the application development stage and for upgrades and enhancements. Amortization
is computed on an individual project basis using the straight-line method over the estimated economic life of the projected product,
generally three to five years.
As
of June 30, 2013, software development costs not yet amortized are $117,853. During the three months ended June 30, 2013 and 2012,
amortization was $58,927 and $27,380, respectively. During the six months ended June 30, 2013, management determined that it was
appropriate to reduce the estimated useful lives of the software development costs and thereby the remaining amortization period
to one year.
VOICE
ASSIST, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Impairment
FASB
ASC 360-10-35-21 requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. We regularly evaluate whether events
or circumstances have occurred that indicate the carrying value of our long-lived assets may not be recoverable. If factors
indicate the asset may not be recoverable, we compare the related undiscounted future net cash flows to the carrying value of
the asset to determine if impairment exists. If the expected future net cash flows are less than the carrying value, an impairment
charge is recognized based on the fair value of the asset. No impairments were indicated or recorded during the three and six months ended June 30, 2013
and 2012.
Income
Taxes
The
Company accounts for income taxes under FASB ASC 740-10-30. Deferred income tax assets and liabilities are determined based upon
differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of
a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits
of deferred tax assets will not be realized.
Stock-based
Payments
The
Company records the stock-based compensation awards issued to non-employees and other external entities for goods and services
at either the fair market value of the goods received or services rendered or the instruments issued in exchange for such services,
whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30.
Recent
Pronouncements
From
time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.
If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have
a material impact on the Company’s financial statements upon adoption.
VOICE
ASSIST, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE
2 – GOING CONCERN
The
financial statements have been presented on a going concern basis, which contemplates, but does not include adjustments for the
realization of assets and satisfaction of liabilities in the normal course of business. The Company has a limited operating history
and limited funds. As shown in the financial statements, the Company incurred a net loss of $1,163,076 and cash used by operations
of $464,777 for the six months ended June 30, 2013, and had a working capital deficit of $1,333,587 as of June 30, 2013. These
factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this uncertainty. The Company believes that it is appropriate
for the financial statements to be prepared on a going concern basis. The accompanying financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities
that might result from the outcome of this uncertainty.
The
Company is dependent upon debt and equity financing to continue operations. It is management’s plans to raise necessary
funds via private placements of its common stock to satisfy the capital requirements of the Company’s business plan. There
is no assurance that the Company will be able to obtain the necessary funds through continuing debt and equity financing to have
sufficient operating capital to support a level of operations to obtain a level of cash flow to sustain continuing operations.
If the Company is successful in raising the necessary funds, there is no assurance that the Company will successfully implement
its business plan. The Company’s continuation as a going concern is dependent on the Company’s ability to raise additional
funds through a private placement of its common stock or debt sufficient to meet its obligations on a timely basis and ultimately
to attain profitable operations.
NOTE
3 – LOANS PAYABLE AND LOANS PAYABLE – RELATED PARTIES
The
Company received advances totaling $284,000 during the three months ended June 30, 2013. These advances are recorded in various
notes, which are due upon demand after 90 days, carry 10% interest, and are convertible to common stock at $0.09 per share. Subsequent
to June 30, 2013, $101,000 of this loan was consolidated into a promissory note discussed in Note 7.
The Company
has also received related party loans payable advances totaling $192,000. These advances are due upon demand, unsecured, and carry
0% interest.
VOICE ASSIST, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4 – LEASE COMMITMENT AND CONTINGENCIES
Lease Commitment
The Company leases commercial
office space. The office space comprises approximately 4,200 square feet located at 2 South Pointe Drive, Suite 100, Lake Forest,
CA 92630. The lease was signed on June 17, 2011 and is for twenty-four (24) months with a monthly cost of $9,017. The rental expense
was $27,052 and $27,052 for the three months ended June 30, 2013 and 2012 and $54,103 and $52,464 for the six months ended June
30, 2013 and 2012, respectively. The lease expired at the end of June 2013 and the company is currently on a month-to-month agreement
until a new contract is executed. Until such time, the future monthly rental expense for the commercial office space lease is
$10,192.
Contingent Liability
The Company has disputed
invoices with a vendor over charges on invoices received in the fourth quarter of 2012 and the first and second quarters of 2013.
The amount of the dispute is $438,360. The Company believes the liability is limited to the $20,000 credit limit with the vendor.
The Company, through its counsel, issued a ‘notice of invoice dispute’ concerning the amounts in question together
with payment of $15,000 for undisputed charges.
As of the date of this
filing, the vendor has not responded to the Company’s notices of invoice dispute. The Company does not consider an unfavorable
outcome probable. The liability, however, would be limited to $438,360, the disputed amount.
NOTE 5 – STOCK-BASED COMPENSATION
The Company has reserved
for issuance an aggregate of 10,000,000 shares of common stock under our 2011 Stock Incentive Plan (“the Plan”) that
was adopted in June 2011. As of June 30, 2013, 8,307,625 options have been granted under the Plan, 6,361,325 options have been
cancelled, 292,475 have been exercised, and 1,653,825 options were outstanding. There were no options granted during the six months
ended June 30, 2013.
The purposes of the Plan
are (a) to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors,
contractors and other service providers upon whose judgment, initiative and efforts the successful conduct and development of
the Company’s business largely depends, and (b) to provide additional incentives to such persons or entities to devote their
utmost effort and skill to the advancement and betterment of the Company by providing them an opportunity to participate in the
ownership of the Company and thereby have an interest in the success and increased value of the Company.
VOICE ASSIST, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 6 – PREFERRED AND COMMON STOCK
Preferred Stock
The Company is authorized
to issue 10,000,000 shares of its $0.001 par value preferred stock.
On October 4, 2010, the
Company’s board of directors authorized Series A Convertible Preferred Stock. The Series A Convertible Preferred stock has
a liquidation preference of $1.25 per share and is not entitled to dividends. The Series A Convertible Preferred stock may be
converted on a 1:1 basis into shares of common stock at any time at the option of the holder, subject to adjustments for stock
dividends, combinations or splits. The Series A Convertible Preferred stock has protective provisions. As long as any Series A
Convertible Preferred are outstanding, this Corporation shall not without first obtaining approval of the holders of at least
two-thirds of the outstanding Series A Convertible Preferred which is entitled, other than solely by law, to vote with respect
to the matter, and which Series Preferred represents at least two-thirds of the voting power of the then outstanding Series A
Convertible Preferred: (a) sell, convey or otherwise dispose of or encumber all or substantially all of its property or business
or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any transaction
or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is disposed of;
(b) alter or change the rights, preferences or privileges of the Series A Convertible Preferred so as to affect adversely the
Series A Convertible Preferred; (c) increase or decrease (other than by redemption or conversion) the total number of authorized
shares of preferred stock; (d) authorize or issue, or obligate itself to issue, any other equity security, including any other
security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the
Series A Convertible Preferred with respect to dividends or upon liquidation, or (ii) having rights similar to any of the rights
of the Preferred Stock; or amend the Corporation’s Articles of Incorporation or bylaws.
On September 30, 2010,
the Company issued 2,000,000 shares of Series A Convertible Preferred stock in exchange for extinguishment of $1,700,000 in debt.
As of June 30, 2013, there
have been no other issuances of preferred stock.
Common Stock
The Company is authorized
to issue 100,000,000 shares of its $0.001 par value common stock.
On March 15, 2012, the
Company filed an S-8 statement for 3,000,000 shares (“S-8 Shares”) of already authorized common stock to be registered
for sale to attorneys, consultants and employees pursuant to the 2012 Non-Qualified Consultant Stock Compensation Plan.
During the six months
ended June 30, 2013, the Company issued the following shares of $0.001 par value common stock:
|
|
●
|
508,777
S-8
Shares
of
common
stock
for
services
in
the
amount
of
$54,334
|
|
|
●
|
2,500,000
shares
of
common
stock
in
a
private
sale
for
cash
received
of
$200,000.
The
company
received
$100,000
in
December
2012
with
the
other
$100,000
received
in
January
2013.
|
VOICE ASSIST, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 7 – SUBSEQUENT EVENTS
Subsequent to June 30,
2013 and prior to this filing, the Company issued 66,000 shares of common stock for accounts payable in the amount of $6,600 and
90,000 shares to the three recently elected board members per their agreements.
On July 8, 2013 and July 18, 2013, the Company
issued secured convertible promissory notes (the “Notes”) in the principal sum of $121,000 and $63,000
,
respectively, upon which interest shall accrue at a rate of ten percent (10%) per ninety (90) day period, and which shall
be due and payable upon demand at any time on or after October 1, 2013 and October 19, 2013, respectively. The notes are
secured by 150% of the value in common stock at eight cents ($0.08) per share for the July 8, 2013 note and nine cents
($0.09) per share for the July 18, 2013. $101,000 of the $121,000 note was received in June 2013 as noted in Note 3. The
entire principal amount of, and accrued but unpaid interest on, the Notes may, at the holder’s sole discretion, be
converted into restricted Common Stock at eight cents ($0.08)
per
share for the July 8, 2013 note and nine cents ($0.09) per share for the July 18, 2013 note.
On July 15,
2013, Michael Metcalf, the Company’s CEO, loaned the company $13,000 under the same terms as other investors which was at
a rate of ten percent (10%) per ninety (90) day period, and which shall be due and payable upon demand at any time on or after
ninety days. Mr. Metcalf may, at his discretion, convert the entire principal amount of, and accrued but unpaid interest on, the
loan into restricted common stock at eight cents ($0.08) per share. The loan is secured by 150% of the value in common stock at
eight cents ($0.08) per share.
On August 16,
2013, the Company issued an unsecured promissory note in the principal sum of $126,300 upon which interest shall accrue at a rate
of five percent (5%) per six months, and which shall be due and payable on demand.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion
and analysis of our financial condition and results of operations should be read in conjunction with our financial statements
and related notes included elsewhere in this quarterly report. References in the following discussion and throughout this quarterly
report to “we”, “our”, “us”, “Voice Assist”, “the Company”, and similar
terms refer to Voice Assist, Inc. unless otherwise expressly stated or the context otherwise requires. This discussion contains
forward-looking statements that involve risks and uncertainties. Voice Assists’ actual results could differ materially from
those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified
below, and those discussed in the section titled “Risk Factors” included elsewhere in this filing.
OVERVIEW
Voice Assist is a hosted
speech services provider offering cloud based speech recognition technology designed to voice enable mobile applications and cloud
based services. Voice Assist provides hands-free safe driving applications such as voice dialing, email by voice, text by voice
and posting to social networks by voice. Voice Assist also works with 3rd party developers to voice enable mobile applications
and cloud based services. Voice Assist sells direct to the public via our website at
www.voiceassist.com
and also through
the app stores on Google Play and Apple iTunes for iPhone and also licenses technology or revenue shares and provides hosted services
to enterprises, 3rd party developers, wireless and wireline service providers and value added resellers.
We believe that the presence
of voice technology as an interface in mobile communications has real advantages in a mobile world. Voice interface technology
makes portable communications more effective and safer to use. Our development efforts are currently focused on the mobile workforce
and building vertical enterprise applications to, among other things, maximize employee productivity and safety while driving.
Voice Assist is also focused on building tools to empower third party developers to add voice technology into existing applications.
Our strategy is to be
a leader in cloud based speech recognition services. We want to leverage our infrastructure, technology, speech server farms,
simple APIs and setup process, and expertise to provide a super easy, fast and cost effective means for developers to integrate
to and deploy speech recognition technology without requiring a deep knowledge of speech application development or optimization.
Voice Assist and developers
will build simple to use services with wide market appeal and augment this effort with vertical applications designed for specific
purposes such as CRM, Healthcare, Insurance and other vertical markets. Voice Assist will monetize its Hosted Speech Platform
(HSP) on a usage model or through its own services offerings built upon the HSP.
We intend to aggressively
market our “safe driving” application and continue to form strategic alliances with value added resellers and carriers.
We believe the combination of these activities will result in increased revenue over time.
We currently earn our
revenues from enterprises and consumers who pay us a monthly recurring fee to use our services. We also generate revenue by hosting
speech applications and providing enhanced communication services to resellers and other service providers. When the development
portal is complete, we also expect to generate revenue on a pay per use basis and/or also based on revenue sharing with 3rd party
application developers. Completion of the development portal is subject to available capital.
We are developing
other strategies to bundle software and service with hardware including, but not limited to, Bluetooth speakerphones, Bluetooth
headsets and other Bluetooth devices that would benefit from a handsfree voice interface. We are also working with multi-level
marketing companies and other direct sales organizations that want to private label our services.
We previously
secured a celebrity endorsement from Frankie Avalon, the first American Teen Idol, and are currently negotiating with additional
celebrities to endorse and/or promote the product or service. We hope to secure additional celebrity personalities and are contemplating
that future versions may include voice prompts and/or personalities to be incorporated into the software.
The Company
continues to innovate and build new products and services which we expect to launch in the near future, subject to sufficient
capital resources. Some of these include recent additional patents applications and/or patents obtained for two-way texting for
hosted applications and voice to CRM. Two-way texting by voice for hosted applications may impact cloud based service providers
such as Skype, Twitter, Facebook, Apple, Google & Microsoft. No assurance can be given but the issued patent may create additional
value by forcing these companies to pay us a license fee if they want their cloud based services to include two-way texting by
voice. Voice to CRM may become a valuable asset over time since the mobile Salesforce is growing and salespeople who drive cannot
use their mobile phone because of handsfree driving laws.
Results of Operations
Comparison of the Three and Six Months
Ended June 30, 2013 and June 30, 2012
Revenues
.
Our
revenues decreased by $54,975 to $74,006 for the three months and $121,270 to $141,354 for the six months ended June 30, 2013
from $128,981 and $262,624 for the same periods in 2012, respectively, representing a 43% decrease quarter-over-quarter and 46%
decrease year-over-year. The decrease is mostly due to the loss of our primary reseller who no longer markets or sells telecom
products or services.
Total Cost of Services
.
Our total cost of services increased by $20,825, or 27%, to $97,020 for the three months and $52,205, or 34%, to $204,002
for the six months ended June 30, 2013 from $76,195 and $151,797 for the same periods in 2012, respectively. The increase in our
total cost of services is a result of increased rates and an increase in free trial accounts resulting from the distribution of
our free mobile applications.
Legal and Professional
.
Our legal and professional expenses decreased by $106,832, or 45%, to $130,833 for the three months and $292,978, or 57%,
to $221,256 for the six months ended June 30, 2013 from $237,665 and $514,234 for the same periods in 2012, respectively. The
decrease in legal and professional fees was mostly the result of a decrease in the use of legal and professional services from
a reduction in business.
Selling, General
and Administrative
.
Our selling, general and administrative expenses decreased by $145,539, or 30%, to $340,629 for the
three months and $266,244, or 27%, to $704,717 for the six months ended June 30, 2013 from $486,168 and $970,961 for the same
periods in 2012, respectively. The decrease was largely due to reductions in non-cash stock option compensation expense and other
non-cash expense as well as decreased payroll and travel related expenses as the Company reduced its executive staff.
Selling, General
and Administrative – Related Parties
.
Our selling, general and administrative – related parties’ expenses
decreased by $15,676, or 100%, to $0 for the three months and $29,838, or 100%, to $0 for the six months ended June 30, 2013 from
$15,676 and $29,838 for the same periods in 2012, respectively. The decrease was the result of elimination in related party professional
staffing.
Depreciation and
Amortization
.
Our depreciation and amortization expenses increased by $28,501, or 68%, to $70,664 for the three months
and $58,544, or 70%, to $142,514 for the six months ended June 30, 2013 from $42,163 and $83,970 for the same periods in 2012,
respectively. The increase was the result of an acceleration in the amortization period of software development costs.
Net Loss from Operations
.
We had $574,553 and $1,145,735 in net loss from operations for the three and six months ended June 30, 2013, respectively,
as compared to net loss from operations of $728,886 and $1,488,176 during the same periods in 2012, respectively. The decreased
loss was mostly from the result of a reduction in non-cash stock option compensation expense and a decrease in professional staffing.
Interest Expense
.
Our interest expense increased by $17,545, to $17,564 for the three months and increased by $16,952, to $17,634 for the six
months ended June 30, 2013 from $19 and $682 in the same periods in 2012, respectively. The increase was the result of two promissory
notes issued during the quarter that bear interest at 10% per ninety days.
Other Income/Expense
.
Our other expense decreased by $7 to $91 for the three months and other income decreased $1,409 to $293 for the six months
ended June 30, 2013 from $98 and $1,702 in the same periods in 2012, respectively. The decrease was the result of a reduction
of subleasing unused office space.
Net Loss
.
For
the three and six months ended June 30, 2013, we generated a net loss of $592,208, of which non-cash expenses include $70,664
for depreciation and amortization and $172,367 for stock compensation, and $1,163,076, of which non-cash expenses include $142,514
in depreciation and amortization and $356,467 for stock compensation, a decrease of $136,795, or 19%, and $324,880, or 22%, respectively,
from a net loss of $729,003 and $1,487,956 for the same periods in 2012, respectively. This decrease was primarily attributable
to a reduction in non-cash stock option compensation expense and the decrease in executive staffing.
Liquidity and Capital Resources
The following table summarizes
total current assets, total current liabilities and working capital at June 30, 2013 compared to December 31, 2012.
|
|
|
|
|
|
|
|
|
Increase
/ (Decrease)
|
|
|
|
|
June 30, 2013
|
|
|
December 31, 2012
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
80,742
|
|
|
$
|
198,991
|
|
|
$
|
(118,249
|
)
|
|
|
59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
$
|
1,414,329
|
|
|
$
|
968,482
|
|
|
$
|
445,847
|
|
|
|
46
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Capital (deficit)
|
|
$
|
(1,333,587
|
)
|
|
$
|
(769,491
|
)
|
|
$
|
(564,096
|
)
|
|
|
73
|
%
|
Liquidity is a measure
of a company’s ability to meet potential cash requirements. We have historically met our capital requirements through the
issuance of stock and by borrowings. In the future, we anticipate we will be able to provide the necessary liquidity needed from
the revenues generated from operations but there is no assurance that this will happen.
Since inception, we have
financed our cash flow requirements through issuance of common stock and related party notes payable. As we expand our activities,
we may, and most likely will, continue to experience net negative cash flows from operations, pending additional revenues. Additionally,
we anticipate obtaining additional financing to fund operations through common stock offerings to the extent available or to obtain
additional financing to the extent necessary to augment our working capital. In the future, we need to generate sufficient revenues
from product and software sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans.
There can be no assurance we will be successful in raising the necessary funds to execute our business plan.
During the six months
ended June 30, 2013, the current assets decreased by $118,249 when compared to December 31, 2012 current assets of $198,991. The
decrease can be attributed to a reduction in cash and accounts receivable.
During the six months
ended June 30, 2013, the current liabilities increased by $445,847 when compared to December 31, 2012 current liabilities of $968,482.
The increase can be attributed to increases in accounts payable, accrued expenses and loans payable.
We anticipate that we
may incur operating losses during the next twelve months. The Company’s minimal operating history makes predictions of future
operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such
risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. These factors
raise substantial doubt about our ability to continue as a going concern. To address these risks, we must, among other things,
increase our customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade
our website and speech technology, respond to competitive developments, and attract, retain and motivate qualified personnel.
We also have to raise sufficient capital to create public awareness and demand for our cloud based services. We need sufficient
capital to market, promote and sell our services. We need to become more efficient and effective at converting free trial accounts
into paid subscriptions. We need to form additional alliances with wireless carriers, voip providers and mobile app providers.
There can be no assurance
that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business
prospects, financial condition and results of operations.
Going Concern
The financial statements
included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance
of Voice Assist as a going concern. Voice Assist may not have a sufficient amount of cash required to pay all of the costs associated
with operating and marketing of its services. Management intends to use revenues and sales of our common stock to mitigate the
effects of cash flow deficits; however no assurance can be given that debt or equity financing, if and when required, will be
available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded
assets and classification of liabilities that might be necessary should Voice Assist be unable to continue existence.
Significant changes in the number of
employees.
We currently have 15 full
time and/or part-time employees and independent contractors. We do not anticipate a significant change in the number of employees
over the next twelve months.
Off-Balance Sheet Arrangements
We do not have any off-balance
sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is
material to investors.
Critical Accounting Policies and Estimates
The preparation of our
condensed financial statements in conformity with accounting principles generally accepted in the United States requires us to
make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses and the disclosure of contingent
assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe
to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions.
Revenue Recognition
For recognizing revenue,
the Company applies the provisions of the Revenue Recognition Topic of Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”). Revenues are generated from telephony services including activation fees,
hardware fees and monthly usage fees. In most cases, the services performed do not require significant production, modification
or customization of the Company’s software or services; therefore, revenues for the hardware fees and monthly usage fees
are recognized when evidence of a completed transaction exists, generally when services have been rendered.
The activation fees generated
from new accounts are recorded as deferred revenue and are amortized over the estimated average customer relationship period.
The net unamortized activation fees were $0 at the three months ended June 30, 2013. The costs associated with these activation
fees are recorded as deferred costs and are similarly amortized over the estimated average customer relationship period. The net
unamortized costs are $0 at the six months ended June 30, 2013. For both the activation fees and costs associated therewith, the
estimated average customer relationship period was 24 months for the six months ended June 30, 2013.
Stock-Based Compensation
The Company accounts for
stock-based awards to employees in accordance with Financial Accounting Standards Board’s Accounting Standard Codification
(ASC) 718 “Stock Compensation.” Options granted to consultants, independent representatives and other non-employees
are accounted for using the fair value method as prescribed by ASC 505.