Thursday, October 11, 2007 8:11:42 PM
I found a little bit about the activities from the past on Marketwire. For those who have not enough information.
DIVIDENDS / SPIN-OFFS:
In the last 36 months, we have successfully spun-off four subsidiaries through special dividends to our shareholders. Also, during the six months ended June 30, 2007, we have started the process to spin-off Thomas Pharmaceuticals, Ltd.
Trey Resources, Inc.: In February 2004, iVoice shareholders received one share of Trey Resources for every 1,793 shares held by iVoice. 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 three companies, hired the management of a fourth company, and grown from zero sales to revenues at a current operating rate of nearly $6.6 million per annum.
iVoice Technology, Inc.: On August 5, 2005, iVoice shareholders received one share of iVoice Technology for every 988 shares held by iVoice. iVoice Technology will initially focus on building a business around the IVR technology. On June 6, 2007 iVoice Technology announced that it signed a non-binding Letter of Intent to acquire Prosperity Ventures, Inc, d/b/a Tropical Screen, Stronghold Manufacturing, Inc, Aero Consulting, LLC and Screen Enclosure Technologies, LLC, Florida limited liability corporations. The transaction, which is subject to due diligence, the usual and customary conditions, and entering into a definitive agreement, is expected to close in August 2007.
Deep Field Technologies, Inc.: On August 5, 2005, iVoice shareholders received one share of Deep Field Technologies for every 988 shares held by iVoice. On February 13, 2007, Deep Field completed its acquisition of Beijing Sino-US Beijing Jinche Yingang Auto Technological Services, Ltd. ("AutoMart"), a cooperative joint venture organized under the laws of The People's Republic of China. As part of the transaction, the Company received 4,000,000 shares of Class A common stock of Deep Field for consulting services to be provided over 6 months following the closing.
SpeechSwitch, Inc.: On August 5, 2005, iVoice shareholders received one share of SpeechSwitch for every 988 shares held by iVoice. SpeechSwitch continues to sell the speech recognition software and manage the business. The assets that were transferred to SpeechSwitch include the Speech SDK, Speech Enabled Auto Attendant, Name Dialer, plus two issued patents and two patents pending.
Thomas Pharmaceuticals, Inc.: On March 30, 2007, the Company announced that it intends to distribute to the Company's shareholders shares of common stock of its subsidiary Thomas Pharmaceuticals, Ltd. The proposed distribution is subject to final review by the U.S. Securities and Exchange Commission. The holders of iVoice common stock will receive shares of Thomas Pharmaceuticals, Ltd. common stock. The record date and distribution date will be as soon as practicable after the U.S. Securities and Exchange Commission declares the Thomas Pharmaceuticals Ltd. Form SB-2 registration statement effective. The initial Form SB-2 registration statement was filed with the SEC on April 13, 2007 and amendments were filed on June 18, 2007 and July 27, 2007.
PATENTS AND TRADEMARKS:
TO DATE WE HAVE FILED TWELVE PATENT APPLICATIONS WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE FOR SPEECH ENABLED APPLICATIONS THAT WE HAVE DEVELOPED INTERNALLY.
Of these applications, three (3) patents have been awarded. Our first patent, for our Speech-Enabled Automatic Telephone Dialer, was issued in May 2003. Our second patent for our Speech-Enabled Automatic Telephone Dialer without the need for a Private Branch Exchange (PBX) was issued in December 2003. This patent is similar to our first patent however; the PBX requirement is circumvented through the use of software. Our third patent for Speech Enabled Voice Activated/Voice Responsive Item Locator was issued in October 2004.
The remaining patent applications are pending. These applications include various versions of the "Wirelessly Loaded Speaking Medicine Container", "iVoice Speech Enabled Name Dialer", the "Voice Activated Voice Operated Copier", the "Voice Activated Voice Operational Universal Remote Control", the "Product Location Method Utilizing Product Bar and Product-Situated, Aisle-Identifying Bar Code", "Product Location Method Utilizing Bar Code and Aisle-Situated, Aisle-Identifying Bar Code", "Product Location Method Utilizing Bar Code and Product-Situated, Aisle-Identifying Bar Code", "Wireless Methodology for Talking Consumer Products", "Product Identifier and Receive Spoken Instructions" and "Traffic Signal System with Countdown Signaling and with Advertising and/or News Message."
Following the formation of SpeechSwitch, Inc. in November 2004, we transferred our legal rights to four of the Speech-Enabled Automatic Telephone Dialer patents to SpeechSwitch, Inc. Upon the conclusion of the spin-off of SpeechSwitch, Inc on August 5, 2005, we no longer maintained any rights to or control over these four patents.
Licensing of Patents:
GlynnTech Inc. has been involved in the licensing of a variety of technologies for more than thirty years. Besides representing such diverse successful products as the SuperSoaker(R) water gun and the RotoWrench(R), Glynn has successfully licensed or sold more than thirty four patents in the field of containers and packaging. Glynn stated that the speaking product packaging technology could eventually become a widespread method of using many consumer products.
iVoice's commitment to innovative technology continues to help customers meet their client requirements. We believe GlynnTech can help us unlock the potential of the pending applications.
iVoice has filed a number of patent applications that relate to wirelessly loaded product containers, including prescription medicine containers and OTC medicine containers. This product packaging contains wirelessly downloaded instructions and warnings for subsequent audio playback by users. It is anticipated that these inventions would enable sight-impaired users to avoid the need to read instructions and product warnings. In the long term, it is believed that broad acceptance of this technology would enable anyone to simply press a button on a package and hear instructions.
Sales & Licensing of Patents:
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. A portion of the proceeds were disbursed to GlynnTech, Inc. for patents that are co-owned by the President of GlynnTech, Inc., Kenneth Glynn. On July 28, 2006, we concluded the sale of the patents to Lamson Holdings LLC for the net proceeds of $136,000. The net proceeds were used to pay down a portion of the Cornell Debentures.
ACQUISITIONS & MERGERS:
We also 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.
Merger with Thomas Pharmaceuticals Ltd.:
On January 6, 2006, we 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"), our wholly owned subsidiary, 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 our wholly owned subsidiary, 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. The Series A Preferred Stock shareholders can elect to have us spin-off Thomas NJ. On August 9, 2006, we entered into a Stock Purchase Agreement with Thomas Pharmaceutical Acquisition Corp ("TPA"), a Delaware corporation and Thomas Pharmaceuticals, Ltd ("TPL"), a New Jersey corporation, our wholly owned subsidiary, whereby TPA agreed to purchase all the TPL securities held by us. These securities include the Class A common stock, Series B Convertible Preferred Stock, Secured Convertible Debentures and Administrative Service Convertible Debenture for $1,235,100, plus a 25% premium ($308,775) on the initial value of the TPL securities, plus interest and dividends accrued under the terms of such securities through the closing date. The closing will occur when TPA secures financing to consummate the transaction. However, we may terminate this Stock Purchase Agreement should this transaction not be completed by October 31, 2006.
On January 26, 2007, we entered into an Extension Agreement (the "Extension Agreement") with Thomas Pharmaceuticals and Thomas Acquisition. The Extension Agreement amended the Stock Purchase Agreement whereby the expiration date provided for in the Stock Purchase Agreement was extended to and through the date on which the Securities and Exchange Commission declares effective a registration statement for the distribution of Class A Common Stock of Thomas Pharmaceuticals to the shareholders of the iVoice. It was also agreed by the parties that Thomas Acquisition would provide $160,000 to Thomas Pharmaceuticals as bridge financing.
On March 30, 2007, the Company announced that it intends to distribute to the Company's shareholders shares of common stock of its subsidiary Thomas Pharmaceuticals, Ltd. The proposed distribution is subject to final review by the U.S. Securities and Exchange Commission. The holders of iVoice common stock will receive shares of Thomas Pharmaceuticals, Ltd. common stock. The record date and distribution date will be as soon as practicable after the U.S. Securities and Exchange Commission declares the Thomas Pharmaceuticals Ltd. Form SB-2 registration statement effective. The Form SB-2 registration statement was filed with the SEC on April 13, 2007 and amendments were filed on June 18, 2007 and July 27, 2007.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO SIX MONTHS ENDED JUNE 30, 2006
In January 2006, the Company acquired Thomas Pharmaceuticals, which was a start-up company with limited operations prior to the merger.
Total sales for the six months ended June 30, 2007 and 2006 were $917,484 and $51,917, respectively. Sales in 2007 include $840,000 of consulting revenues earned on the Deep Field agreement. Sales in 2007 also include revenues from the administrative services agreements of $50,777 and from product sales of the Company's Acid-All product of $26,707, which was introduced in March 2006. The product sales of Acid-All in 2007 were reduced by a charge of $48,850 for a provision for product returns. The sales in 2006 represent initial product sales of the Acid-All product, net of a provision for product returns of $17.
Cost of sales for the six months ended June 30, 2007 and 2006 were $90,976 and $27,331, respectively. The costs in 2007 represent the costs of raw materials, packaging and shipping for the Acid-All product shipments and a $56,116 charge for a reserve for excess and obsolete inventory. The costs in 2006 represent the costs of raw materials, packaging and shipping for the Acid-All product shipments.
Total operating expenses for the six months ended June 30, 2007 and 2006, were $934,385 and $1,311,523, respectively, for an overall decrease of $377,139. The costs in 2007 include $123,991 for selling and marketing expenses compared to $101,924 for 2006. The increase of $22,067 over 2006 represents expenses incurred on a sampling event in San Francisco on valentine's day. General and administrative expenses in 2007 decreased by $477,047 when compared to 2006. Of these decreases, advertising expenses decreased by approximately $211,842 when compared to 2006 when Thomas paid $224,737 for advertising campaigns initiated to introduce the Acid-All products. Other decreases include reductions in printing and reproduction fees of $72,873 when compared to 2006 for costs of printing and distribution of the 2006 proxy statements, reductions in legal expenses of $96,399 when compared to 2006 costs related to the merger with Thomas Pharmaceuticals and the overall reduction of Thomas's general and administrative overhead expenses as we curtail the operations to conserve operating cash until the alternate funding can be arranged. The operating expenses in 2007 also include a $109,137 charge for impairment of intangible assets of Thomas Pharmaceuticals and a $33,333 reduction in the amortization of financing costs when compared to 2006.
Total other income (expense) for the six months ended June 30, 2007 was an expense of $784,198. This total was primarily comprised of $1,992,410 amortization of the discount on debt, $265,744 of accrued interest expense on the Cornell notes and other debt, and $85,234 loss on sales of marketable securities which is offset by $1,275,129 gain on revaluation of the derivatives and $278,823 of interest income. Total other income (expense) for the six months ended June 30, 2006 was an expense of $624. This total was primarily comprised of $304,079 amortization of the discount on debt and $306,197 of accrued interest expense on the Cornell notes and other debt, offset by $233,312 of interest income on the cash accounts, $75,000 placement fees related to the financing of Corporate Strategies in 2005 and $64,165 of administrative service fees.
Net loss for the six months ending June 30, 2007 and 2006, were $892,075 and $1,287,561, respectively. The decrease in net loss of $395,486 was the result of the factors discussed above.
THREE MONTHS ENDED JUNE 30, 2007 COMPARED TO THREE MONTHS ENDED JUNE 30, 2006
In January 2006, the Company acquired Thomas Pharmaceuticals, which was a start-up company with limited operations prior to the merger.
Total sales for the three months ended June 30, 2007 and 2006 were $593,831 and $50,924, respectively. Sales in 2007 include $560,000 of consulting revenues earned on the Deep Field agreement. Sales in 2007 also include revenues from the administrative services agreements of $25,326 and from product sales of the Company's Acid-All product of $50,924 which was introduced in March 2006. Sales in 2007 were reduced by a charge of $14,685 for a provision for product returns. The sales in 2006 represent initial product sales of the Acid-All product, net of a provision for product returns of $17.
Cost of sales for the three months ended June 30, 2007 and 2006 were $35,036 and $26,235, respectively. The costs in 2007 represent the costs of raw materials, packaging and shipping for the Acid-All product shipments and a $26,616 charge for a reserve for excess inventory. The costs in 2006 represent the costs of raw materials, packaging and shipping for the Acid-All product shipments.
Total operating expenses for the three months ended June 30, 2007 and 2006, were $398,375 and $646,543, respectively, for an overall decrease of $248,168. The costs in 2007 include $30,676 for selling and marketing expenses compared to $66,063 for 2006. The decrease of $35,387 when compared to 2006 represents reduction in salaries and curtailment of sampling expenses upon the resignation of the Thomas's president in March '07. General and administrative expenses in 2007 decreased by $222,268 when compared to 2006. Of these decreases, advertising expenses decreased by approximately $78,000 when compared to 2006 when Thomas paid $89,045 for advertising campaigns initiated to introduce the Acid-All products. Other decreases include reductions in printing and reproduction fees when compared to 2006 costs for printing and distribution of the 2006 proxy statements, reductions in legal expenses when compared to 2006 costs related to the filing of a subsequently withdrawn SB2 registration statement, and the overall reduction of Thomas's general and administrative overhead expenses as we curtail the operations to conserve operating cash until the alternate funding can be arranged. The operating expenses in 2007 also include a $20,604 charge for impairment of intangible assets of Thomas Pharmaceuticals and a $13,332 reduction in the amortization of financing costs when compared to 2006.
Total other income (expense) for the three months ended June 30, 2007 was an expense of $1,127,258. This total was primarily comprised of $1,080,174 amortization of the discount on debt, $133,192 of accrued interest expense on the Cornell notes and other debt, and $70,058 loss on revaluation of the derivatives which is offset by $140,506 of interest income and $10,569 gain on sales of marketable securities. Total other income (expense) for the three months ended June 30, 2006 was an income of $17,090. This total was primarily comprised of $251,847 gain on revaluation of the derivatives, $122,422 of interest income on the cash accounts, $32,083 of administrative service fees and $75,000 placement fees related to the financing of Corporate Strategies in 2005 offset $304,079 amortization of the discount on debt, $145,352 of accrued interest expense on the Cornell notes and other debt and $15,000 write-off of financing costs on the Cornell debenture.
Net loss for the three months ending June 30, 2007 and 2006, were $966,838 and $604,764, respectively. The increase in net loss of $362,074 was the result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
We are currently seeking additional operating income opportunities through potential acquisitions or investments. Such acquisitions or investments may consume cash reserves or require additional cash or equity. Our working capital and additional funding requirements will depend upon numerous factors, including: (i) strategic acquisitions or investments; (ii) an increase to current Company personnel; (iii) the level of resources that we devote to sales and marketing capabilities; (iv) technological advances; and (v) the activities of competitors.
During the year ended December 31, 2006 we had incurred net losses from continuing operations of $3,146,906 and had cash flow deficiencies from continuing operations of $1,214,206. 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 $184,500 per month. These monthly expenses are anticipated to consist of the following: payroll and benefits of $90,000, occupancy costs of $15,000, professional fees of $40,000, advertising $30,000, and miscellaneous administrative expenses
of $9,500. We expect to fund these monthly 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 six months ended June 30, 2007, iVoice had a net increase in cash of $50,654. iVoice's principal sources and uses of funds in the six months ended June 30, 2007 were as follows:
CASH FLOWS FROM OPERATING ACTIVITIES. The Company used $227,677 in cash for operations in the six months ended June 30, 2007, a decrease of $705,389 compared to $933,066 in cash used for operations in the six months ending June 30, 2006. The prior period results included the start-up costs for Thomas Pharmaceuticals which was not repeated in the current period.
CASH FLOWS FROM INVESTING ACTIVITIES. The Company provided $124,331 cash from investing activities for the six months ended June 30, 2007. This was primarily due to the net proceeds from the sales of marketable securities of $136,787. These proceeds were offset by cash used to upgrade the home office copiers and by the increases in patent and trademark costs. The Company used cash of $16,372 for investing activities in the six months ended June 30, 2007. The Company upgraded the computers and network for the Thomas operations in 2006. The Company also continues to invest money in the prosecution of the Companies patent portfolios.
CASH FLOWS FROM FINANCING ACTIVITIES. The Company provided $154,000 cash from financing in the six months ended June 30, 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. During 2007, $6,000 was repaid to Thomas Pharmaceuticals Acquisition. For the six month ended June 30, 2006, the Company provided $1,141,250 cash from financing which represented the net proceeds from the sale of a $1,250,000 Secured Convertible Debenture to Cornell Capital.
Below is a description of iVoice's principal sources of funding:
On May 11, 2006 we issued to Cornell a $503,776 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 $333,760 and $170,016 of accrued interest due to Cornell from May 25, 2004.
On May 11, 2006 we issued to Cornell 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 Cornell from June 15, 2005.
On May 25, 2006, we issued to Cornell 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 Cornell.
On May 25, 2006, we entered into a Securities Purchase Agreement with Cornell whereby we issued to Cornell an aggregate $8,547,886 of Cornell Debentures which are convertible into shares of our Class A Common Stock. The aggregate principal amount of $8,547,886 of Cornell Debentures consists of the three secured convertible debentures mentioned above and a fourth secured convertible debenture in the principal amount of $1,250,000 that will be issued to Cornell two (2) business days prior to the date the upcoming Registration Statement is declared effective by the SEC.
We can redeem a portion or all amounts outstanding under the Cornell Debentures at any time upon three business days advanced written notice. A 20% redemption premium on the principal amount being redeemed is required. Cornell 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 Cornell 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.
In addition, on any conversion date, Cornell 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 Cornell, when aggregated with all other shares of our Class A Common Stock beneficially owned by Cornell at such time, would result in Cornell beneficially owning greater than 4.9% of our outstanding shares of Class A Common Stock. For example, assuming Cornell did not beneficially own any shares of our Class A Common Stock at the time of conversion, if Cornell were to request a conversion of $100,000 at a conversion price of $.02, then we would have to issue 5,555,555 shares ($100,000 / ($.02 multiplied by 90%) to Cornell. Since this number of shares exceeds 4.9% of our issued and outstanding shares of Class A Common Stock (3,384,464 shares), then Cornell could request that we make a cash payment of $43,422 (2,171,091 multiplied by $.02). 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 Cornell Debentures, in part, because the conversion price of the Cornell Debentures will fluctuate based on prevailing market prices. If we are unable to issue enough shares to meet our obligations, then Cornell could request cash payments, which could have a material impact on our long-term growth strategy.
On May 3, 2007, the Company received notice from Cornell Capital Partners that Cornell would waive certain terms of the Registration Right Agreement of May 25, 2006, related to the effectiveness of the registration statement and event of default. In addition, Cornell will also waive all rights to liquidated damages related to the event of default.
On May 7, 2007, the Company filed a formal request with the Securities and Exchange Commission for withdrawal of the Company's Registration Statement previously filed on Form SB-2 for the registration of 1,122,178,413 shares of common stock issuable upon the conversion Convertible Debentures previously sold to Cornell Capital Partners, LP.
. . .
Aug 14, 2007
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DIVIDENDS / SPIN-OFFS:
In the last 36 months, we have successfully spun-off four subsidiaries through special dividends to our shareholders. Also, during the six months ended June 30, 2007, we have started the process to spin-off Thomas Pharmaceuticals, Ltd.
Trey Resources, Inc.: In February 2004, iVoice shareholders received one share of Trey Resources for every 1,793 shares held by iVoice. 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 three companies, hired the management of a fourth company, and grown from zero sales to revenues at a current operating rate of nearly $6.6 million per annum.
iVoice Technology, Inc.: On August 5, 2005, iVoice shareholders received one share of iVoice Technology for every 988 shares held by iVoice. iVoice Technology will initially focus on building a business around the IVR technology. On June 6, 2007 iVoice Technology announced that it signed a non-binding Letter of Intent to acquire Prosperity Ventures, Inc, d/b/a Tropical Screen, Stronghold Manufacturing, Inc, Aero Consulting, LLC and Screen Enclosure Technologies, LLC, Florida limited liability corporations. The transaction, which is subject to due diligence, the usual and customary conditions, and entering into a definitive agreement, is expected to close in August 2007.
Deep Field Technologies, Inc.: On August 5, 2005, iVoice shareholders received one share of Deep Field Technologies for every 988 shares held by iVoice. On February 13, 2007, Deep Field completed its acquisition of Beijing Sino-US Beijing Jinche Yingang Auto Technological Services, Ltd. ("AutoMart"), a cooperative joint venture organized under the laws of The People's Republic of China. As part of the transaction, the Company received 4,000,000 shares of Class A common stock of Deep Field for consulting services to be provided over 6 months following the closing.
SpeechSwitch, Inc.: On August 5, 2005, iVoice shareholders received one share of SpeechSwitch for every 988 shares held by iVoice. SpeechSwitch continues to sell the speech recognition software and manage the business. The assets that were transferred to SpeechSwitch include the Speech SDK, Speech Enabled Auto Attendant, Name Dialer, plus two issued patents and two patents pending.
Thomas Pharmaceuticals, Inc.: On March 30, 2007, the Company announced that it intends to distribute to the Company's shareholders shares of common stock of its subsidiary Thomas Pharmaceuticals, Ltd. The proposed distribution is subject to final review by the U.S. Securities and Exchange Commission. The holders of iVoice common stock will receive shares of Thomas Pharmaceuticals, Ltd. common stock. The record date and distribution date will be as soon as practicable after the U.S. Securities and Exchange Commission declares the Thomas Pharmaceuticals Ltd. Form SB-2 registration statement effective. The initial Form SB-2 registration statement was filed with the SEC on April 13, 2007 and amendments were filed on June 18, 2007 and July 27, 2007.
PATENTS AND TRADEMARKS:
TO DATE WE HAVE FILED TWELVE PATENT APPLICATIONS WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE FOR SPEECH ENABLED APPLICATIONS THAT WE HAVE DEVELOPED INTERNALLY.
Of these applications, three (3) patents have been awarded. Our first patent, for our Speech-Enabled Automatic Telephone Dialer, was issued in May 2003. Our second patent for our Speech-Enabled Automatic Telephone Dialer without the need for a Private Branch Exchange (PBX) was issued in December 2003. This patent is similar to our first patent however; the PBX requirement is circumvented through the use of software. Our third patent for Speech Enabled Voice Activated/Voice Responsive Item Locator was issued in October 2004.
The remaining patent applications are pending. These applications include various versions of the "Wirelessly Loaded Speaking Medicine Container", "iVoice Speech Enabled Name Dialer", the "Voice Activated Voice Operated Copier", the "Voice Activated Voice Operational Universal Remote Control", the "Product Location Method Utilizing Product Bar and Product-Situated, Aisle-Identifying Bar Code", "Product Location Method Utilizing Bar Code and Aisle-Situated, Aisle-Identifying Bar Code", "Product Location Method Utilizing Bar Code and Product-Situated, Aisle-Identifying Bar Code", "Wireless Methodology for Talking Consumer Products", "Product Identifier and Receive Spoken Instructions" and "Traffic Signal System with Countdown Signaling and with Advertising and/or News Message."
Following the formation of SpeechSwitch, Inc. in November 2004, we transferred our legal rights to four of the Speech-Enabled Automatic Telephone Dialer patents to SpeechSwitch, Inc. Upon the conclusion of the spin-off of SpeechSwitch, Inc on August 5, 2005, we no longer maintained any rights to or control over these four patents.
Licensing of Patents:
GlynnTech Inc. has been involved in the licensing of a variety of technologies for more than thirty years. Besides representing such diverse successful products as the SuperSoaker(R) water gun and the RotoWrench(R), Glynn has successfully licensed or sold more than thirty four patents in the field of containers and packaging. Glynn stated that the speaking product packaging technology could eventually become a widespread method of using many consumer products.
iVoice's commitment to innovative technology continues to help customers meet their client requirements. We believe GlynnTech can help us unlock the potential of the pending applications.
iVoice has filed a number of patent applications that relate to wirelessly loaded product containers, including prescription medicine containers and OTC medicine containers. This product packaging contains wirelessly downloaded instructions and warnings for subsequent audio playback by users. It is anticipated that these inventions would enable sight-impaired users to avoid the need to read instructions and product warnings. In the long term, it is believed that broad acceptance of this technology would enable anyone to simply press a button on a package and hear instructions.
Sales & Licensing of Patents:
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. A portion of the proceeds were disbursed to GlynnTech, Inc. for patents that are co-owned by the President of GlynnTech, Inc., Kenneth Glynn. On July 28, 2006, we concluded the sale of the patents to Lamson Holdings LLC for the net proceeds of $136,000. The net proceeds were used to pay down a portion of the Cornell Debentures.
ACQUISITIONS & MERGERS:
We also 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.
Merger with Thomas Pharmaceuticals Ltd.:
On January 6, 2006, we 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"), our wholly owned subsidiary, 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 our wholly owned subsidiary, 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. The Series A Preferred Stock shareholders can elect to have us spin-off Thomas NJ. On August 9, 2006, we entered into a Stock Purchase Agreement with Thomas Pharmaceutical Acquisition Corp ("TPA"), a Delaware corporation and Thomas Pharmaceuticals, Ltd ("TPL"), a New Jersey corporation, our wholly owned subsidiary, whereby TPA agreed to purchase all the TPL securities held by us. These securities include the Class A common stock, Series B Convertible Preferred Stock, Secured Convertible Debentures and Administrative Service Convertible Debenture for $1,235,100, plus a 25% premium ($308,775) on the initial value of the TPL securities, plus interest and dividends accrued under the terms of such securities through the closing date. The closing will occur when TPA secures financing to consummate the transaction. However, we may terminate this Stock Purchase Agreement should this transaction not be completed by October 31, 2006.
On January 26, 2007, we entered into an Extension Agreement (the "Extension Agreement") with Thomas Pharmaceuticals and Thomas Acquisition. The Extension Agreement amended the Stock Purchase Agreement whereby the expiration date provided for in the Stock Purchase Agreement was extended to and through the date on which the Securities and Exchange Commission declares effective a registration statement for the distribution of Class A Common Stock of Thomas Pharmaceuticals to the shareholders of the iVoice. It was also agreed by the parties that Thomas Acquisition would provide $160,000 to Thomas Pharmaceuticals as bridge financing.
On March 30, 2007, the Company announced that it intends to distribute to the Company's shareholders shares of common stock of its subsidiary Thomas Pharmaceuticals, Ltd. The proposed distribution is subject to final review by the U.S. Securities and Exchange Commission. The holders of iVoice common stock will receive shares of Thomas Pharmaceuticals, Ltd. common stock. The record date and distribution date will be as soon as practicable after the U.S. Securities and Exchange Commission declares the Thomas Pharmaceuticals Ltd. Form SB-2 registration statement effective. The Form SB-2 registration statement was filed with the SEC on April 13, 2007 and amendments were filed on June 18, 2007 and July 27, 2007.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO SIX MONTHS ENDED JUNE 30, 2006
In January 2006, the Company acquired Thomas Pharmaceuticals, which was a start-up company with limited operations prior to the merger.
Total sales for the six months ended June 30, 2007 and 2006 were $917,484 and $51,917, respectively. Sales in 2007 include $840,000 of consulting revenues earned on the Deep Field agreement. Sales in 2007 also include revenues from the administrative services agreements of $50,777 and from product sales of the Company's Acid-All product of $26,707, which was introduced in March 2006. The product sales of Acid-All in 2007 were reduced by a charge of $48,850 for a provision for product returns. The sales in 2006 represent initial product sales of the Acid-All product, net of a provision for product returns of $17.
Cost of sales for the six months ended June 30, 2007 and 2006 were $90,976 and $27,331, respectively. The costs in 2007 represent the costs of raw materials, packaging and shipping for the Acid-All product shipments and a $56,116 charge for a reserve for excess and obsolete inventory. The costs in 2006 represent the costs of raw materials, packaging and shipping for the Acid-All product shipments.
Total operating expenses for the six months ended June 30, 2007 and 2006, were $934,385 and $1,311,523, respectively, for an overall decrease of $377,139. The costs in 2007 include $123,991 for selling and marketing expenses compared to $101,924 for 2006. The increase of $22,067 over 2006 represents expenses incurred on a sampling event in San Francisco on valentine's day. General and administrative expenses in 2007 decreased by $477,047 when compared to 2006. Of these decreases, advertising expenses decreased by approximately $211,842 when compared to 2006 when Thomas paid $224,737 for advertising campaigns initiated to introduce the Acid-All products. Other decreases include reductions in printing and reproduction fees of $72,873 when compared to 2006 for costs of printing and distribution of the 2006 proxy statements, reductions in legal expenses of $96,399 when compared to 2006 costs related to the merger with Thomas Pharmaceuticals and the overall reduction of Thomas's general and administrative overhead expenses as we curtail the operations to conserve operating cash until the alternate funding can be arranged. The operating expenses in 2007 also include a $109,137 charge for impairment of intangible assets of Thomas Pharmaceuticals and a $33,333 reduction in the amortization of financing costs when compared to 2006.
Total other income (expense) for the six months ended June 30, 2007 was an expense of $784,198. This total was primarily comprised of $1,992,410 amortization of the discount on debt, $265,744 of accrued interest expense on the Cornell notes and other debt, and $85,234 loss on sales of marketable securities which is offset by $1,275,129 gain on revaluation of the derivatives and $278,823 of interest income. Total other income (expense) for the six months ended June 30, 2006 was an expense of $624. This total was primarily comprised of $304,079 amortization of the discount on debt and $306,197 of accrued interest expense on the Cornell notes and other debt, offset by $233,312 of interest income on the cash accounts, $75,000 placement fees related to the financing of Corporate Strategies in 2005 and $64,165 of administrative service fees.
Net loss for the six months ending June 30, 2007 and 2006, were $892,075 and $1,287,561, respectively. The decrease in net loss of $395,486 was the result of the factors discussed above.
THREE MONTHS ENDED JUNE 30, 2007 COMPARED TO THREE MONTHS ENDED JUNE 30, 2006
In January 2006, the Company acquired Thomas Pharmaceuticals, which was a start-up company with limited operations prior to the merger.
Total sales for the three months ended June 30, 2007 and 2006 were $593,831 and $50,924, respectively. Sales in 2007 include $560,000 of consulting revenues earned on the Deep Field agreement. Sales in 2007 also include revenues from the administrative services agreements of $25,326 and from product sales of the Company's Acid-All product of $50,924 which was introduced in March 2006. Sales in 2007 were reduced by a charge of $14,685 for a provision for product returns. The sales in 2006 represent initial product sales of the Acid-All product, net of a provision for product returns of $17.
Cost of sales for the three months ended June 30, 2007 and 2006 were $35,036 and $26,235, respectively. The costs in 2007 represent the costs of raw materials, packaging and shipping for the Acid-All product shipments and a $26,616 charge for a reserve for excess inventory. The costs in 2006 represent the costs of raw materials, packaging and shipping for the Acid-All product shipments.
Total operating expenses for the three months ended June 30, 2007 and 2006, were $398,375 and $646,543, respectively, for an overall decrease of $248,168. The costs in 2007 include $30,676 for selling and marketing expenses compared to $66,063 for 2006. The decrease of $35,387 when compared to 2006 represents reduction in salaries and curtailment of sampling expenses upon the resignation of the Thomas's president in March '07. General and administrative expenses in 2007 decreased by $222,268 when compared to 2006. Of these decreases, advertising expenses decreased by approximately $78,000 when compared to 2006 when Thomas paid $89,045 for advertising campaigns initiated to introduce the Acid-All products. Other decreases include reductions in printing and reproduction fees when compared to 2006 costs for printing and distribution of the 2006 proxy statements, reductions in legal expenses when compared to 2006 costs related to the filing of a subsequently withdrawn SB2 registration statement, and the overall reduction of Thomas's general and administrative overhead expenses as we curtail the operations to conserve operating cash until the alternate funding can be arranged. The operating expenses in 2007 also include a $20,604 charge for impairment of intangible assets of Thomas Pharmaceuticals and a $13,332 reduction in the amortization of financing costs when compared to 2006.
Total other income (expense) for the three months ended June 30, 2007 was an expense of $1,127,258. This total was primarily comprised of $1,080,174 amortization of the discount on debt, $133,192 of accrued interest expense on the Cornell notes and other debt, and $70,058 loss on revaluation of the derivatives which is offset by $140,506 of interest income and $10,569 gain on sales of marketable securities. Total other income (expense) for the three months ended June 30, 2006 was an income of $17,090. This total was primarily comprised of $251,847 gain on revaluation of the derivatives, $122,422 of interest income on the cash accounts, $32,083 of administrative service fees and $75,000 placement fees related to the financing of Corporate Strategies in 2005 offset $304,079 amortization of the discount on debt, $145,352 of accrued interest expense on the Cornell notes and other debt and $15,000 write-off of financing costs on the Cornell debenture.
Net loss for the three months ending June 30, 2007 and 2006, were $966,838 and $604,764, respectively. The increase in net loss of $362,074 was the result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
We are currently seeking additional operating income opportunities through potential acquisitions or investments. Such acquisitions or investments may consume cash reserves or require additional cash or equity. Our working capital and additional funding requirements will depend upon numerous factors, including: (i) strategic acquisitions or investments; (ii) an increase to current Company personnel; (iii) the level of resources that we devote to sales and marketing capabilities; (iv) technological advances; and (v) the activities of competitors.
During the year ended December 31, 2006 we had incurred net losses from continuing operations of $3,146,906 and had cash flow deficiencies from continuing operations of $1,214,206. 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 $184,500 per month. These monthly expenses are anticipated to consist of the following: payroll and benefits of $90,000, occupancy costs of $15,000, professional fees of $40,000, advertising $30,000, and miscellaneous administrative expenses
of $9,500. We expect to fund these monthly 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 six months ended June 30, 2007, iVoice had a net increase in cash of $50,654. iVoice's principal sources and uses of funds in the six months ended June 30, 2007 were as follows:
CASH FLOWS FROM OPERATING ACTIVITIES. The Company used $227,677 in cash for operations in the six months ended June 30, 2007, a decrease of $705,389 compared to $933,066 in cash used for operations in the six months ending June 30, 2006. The prior period results included the start-up costs for Thomas Pharmaceuticals which was not repeated in the current period.
CASH FLOWS FROM INVESTING ACTIVITIES. The Company provided $124,331 cash from investing activities for the six months ended June 30, 2007. This was primarily due to the net proceeds from the sales of marketable securities of $136,787. These proceeds were offset by cash used to upgrade the home office copiers and by the increases in patent and trademark costs. The Company used cash of $16,372 for investing activities in the six months ended June 30, 2007. The Company upgraded the computers and network for the Thomas operations in 2006. The Company also continues to invest money in the prosecution of the Companies patent portfolios.
CASH FLOWS FROM FINANCING ACTIVITIES. The Company provided $154,000 cash from financing in the six months ended June 30, 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. During 2007, $6,000 was repaid to Thomas Pharmaceuticals Acquisition. For the six month ended June 30, 2006, the Company provided $1,141,250 cash from financing which represented the net proceeds from the sale of a $1,250,000 Secured Convertible Debenture to Cornell Capital.
Below is a description of iVoice's principal sources of funding:
On May 11, 2006 we issued to Cornell a $503,776 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 $333,760 and $170,016 of accrued interest due to Cornell from May 25, 2004.
On May 11, 2006 we issued to Cornell 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 Cornell from June 15, 2005.
On May 25, 2006, we issued to Cornell 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 Cornell.
On May 25, 2006, we entered into a Securities Purchase Agreement with Cornell whereby we issued to Cornell an aggregate $8,547,886 of Cornell Debentures which are convertible into shares of our Class A Common Stock. The aggregate principal amount of $8,547,886 of Cornell Debentures consists of the three secured convertible debentures mentioned above and a fourth secured convertible debenture in the principal amount of $1,250,000 that will be issued to Cornell two (2) business days prior to the date the upcoming Registration Statement is declared effective by the SEC.
We can redeem a portion or all amounts outstanding under the Cornell Debentures at any time upon three business days advanced written notice. A 20% redemption premium on the principal amount being redeemed is required. Cornell 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 Cornell 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.
In addition, on any conversion date, Cornell 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 Cornell, when aggregated with all other shares of our Class A Common Stock beneficially owned by Cornell at such time, would result in Cornell beneficially owning greater than 4.9% of our outstanding shares of Class A Common Stock. For example, assuming Cornell did not beneficially own any shares of our Class A Common Stock at the time of conversion, if Cornell were to request a conversion of $100,000 at a conversion price of $.02, then we would have to issue 5,555,555 shares ($100,000 / ($.02 multiplied by 90%) to Cornell. Since this number of shares exceeds 4.9% of our issued and outstanding shares of Class A Common Stock (3,384,464 shares), then Cornell could request that we make a cash payment of $43,422 (2,171,091 multiplied by $.02). 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 Cornell Debentures, in part, because the conversion price of the Cornell Debentures will fluctuate based on prevailing market prices. If we are unable to issue enough shares to meet our obligations, then Cornell could request cash payments, which could have a material impact on our long-term growth strategy.
On May 3, 2007, the Company received notice from Cornell Capital Partners that Cornell would waive certain terms of the Registration Right Agreement of May 25, 2006, related to the effectiveness of the registration statement and event of default. In addition, Cornell will also waive all rights to liquidated damages related to the event of default.
On May 7, 2007, the Company filed a formal request with the Securities and Exchange Commission for withdrawal of the Company's Registration Statement previously filed on Form SB-2 for the registration of 1,122,178,413 shares of common stock issuable upon the conversion Convertible Debentures previously sold to Cornell Capital Partners, LP.
. . .
Aug 14, 2007
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