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

FORM 10-Q/A
(Amendment No. 1)

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

For the quarterly period ended September 30, 2011

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

Commission File Number:000-54535

LOGO

VOICE ASSIST, INC.
(Exact name of registrant as specified in its charter)

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

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

(949) 655-1677
(Registrant’s telephone number, including area code)
Copies of Communications to:
Stoecklein Law Group, LLP
401 WestA Street, Suite 1150
San Diego, CA92101
(619) 704-1310
Fax (619) 704-0556

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x    No ¨

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

Large accelerated filer  ¨
Accelerated filer  ¨
   
Non-accelerated filer  ¨ (Do not check if a smaller reporting company)
Smaller reporting company  x
   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨   No x

The number of shares of Common Stock, $0.001 par value, outstanding on November 21, 2011, was 30,499,223 shares.


 
1

 

*EXPLANATORY NOTE – RESTATEMENT OF FINANCIAL INFORMATION- The Registrant is filing this Form 10-Q/A  amending the Form 10-Q for the period ended September 30, 2011 originally filed on November 21, 2011 to amend and restate financial statements and other financial information.

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

This Form 10Q/A should be read in conjunction with the Company’s filings made with the SEC subsequent to the filing of Form 10-Q for the period ended September 30, 2011 originally filed on November 21, 2011.

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

·  
Part I- Item 1- Financial Statements
·  
Item 1- Notes to Financial Statements
·  
Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations.


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


 
2

 


PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.



VOICE ASSIST, INC.  CONDENSED BALANCE SHEETS
(2011 Unaudited, 2010 Audited)

   
Restated 01/01/2011 to 09/30/2011
   
01/01/2010 to 12/31/2010
 
             
ASSETS
           
             
CURRENT ASSETS
           
Cash
  $ 15,731     $ 615,722  
Accounts Receivable
    110,178       44,739  
Deferred Customer Activation Costs
    16,656       21,061  
Prepaid Expenses
    290,267       16,256  
                 
Total Current Assets
    432,832       697,778  
                 
Property & Equipment, Net
    202,186       158,610  
Software Development, Net
    597,852       496,229  
                 
OTHER ASSETS
               
Other Assets
    40,135       28,643  
                 
Total Other Assets
    40,135       28,643  
                 
Total Assets
  $ 1,273,005     $ 1,381,260  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
       
                 
CURRENT LIABILITIES
               
Accounts Payable
    375,031       254,637  
Accounts Payable - Related Party
    2,000,000       -  
Accrued Expenses
    78,026       10,000  
Deferred Revenue
    66,616       84,238  
Current Portion - L/T Loans Payable
    3,000       13,984  
Loans Payable - Related Parties
    -       708,603  
                 
Total Current Liabilities
    2,522,673       1,071,462  
                 
NON CURRENT LIABILITIES
               
L/T Portion Loans Payable
    -       -  
                 
Total Liabilities
    2,522,673       1,071,462  
                 
STOCKHOLDERS' EQUITY (DEFICIT)
               
Preferred stock
    2,000       2,000  
Common stock
    30,499       26,600  
Additional Paid in Capital
    20,675,640       12,007,389  
Shares to be Issued
    -       970,000  
Retained Earnings
    (21,957,807 )     (12,696,191 )
                 
                 
Total Stockholders' Equity (Deficit)
    (1,249,668 )     309,798  
                 
TOTAL LIABILITIES AND STOCK HOLDERS' EQUITY (DEFICIT)
  $ 1,273,005     $ 1,381,260  

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

 
3

 

VOICE ASSIST, INC. CONDENSED STATEMENTS OF OPERATIONS
(2011 Unaudited, 2010 Audited)

   
07/01/2011 to 09/30/2011
   
07/01/2010 to 09/30/2010
   
Restated 01/01/2011 to 09/30/2011
   
01/01/2010 to 09/30/2010
 
                         
OPERATING REVENUES
                       
Revenues
  $ 191,357     $ 312,233     $ 725,495     $ 986,083  
                                 
OPERATING EXPENSES
                               
Direct Cost of Services
    79,033       73,844       327,981       178,965  
Other Costs
    1,608       5,387       5,809       13,679  
Total Direct Cost of Services
    80,641       79,231       333,790       192,644  
                                 
Legal and Professional
    225,836       0       735,764       0  
Selling, General and Administrative
    1,169,477       245,871       8,800,488       587,313  
Selling, General and Administrative - Related Parties
    -       106,149       -       259,715  
Depreciation and Amortization
    38,862       83,536       114,684       104,997  
                                 
Total Operating Expenses
    1,514,816       514,787       9,984,726       1,144,669  
                                 
Net (Loss) from Operations
    (1,323,459 )     (202,554 )     (9,259,231 )     (158,586 )
                                 
OTHER INCOME AND (EXPENSE)
                               
Interest Expense
    (579 )     (62,081 )     (1,705 )     (188,180 )
Other Income (Expense)
    (348 )     0       (348 )     9,367  
                                 
Total Other Income (Expense)
    (927 )     (62,081 )     (2,053 )     (178,813 )
                                 
Net (Loss) before Income Taxes
    (1,324,386 )     (264,635 )     (9,261,284 )     (337,399 )
                                 
Income Tax Expense
    -       1,600       (332 )     1,600  
                                 
                                 
                                 
NET (LOSS)
  $ (1,324,386 )   $ (263,035 )   $ (9,261,616 )   $ (335,799 )
                                 
Weighted Average Shares
    29,284,864       20,566,304       27,903,387       20,521,293  
                                 
Earnings Per Share
  $ (0.05 )   $ (0.01 )   $ (0.33 )   $ (0.02 )

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

 
4

 

VOICE ASSIST, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)


   
Restated
       
   
For the Nine
   
For the Nine
 
   
Months Ended
   
Months Ended
 
   
9/30/2011
   
9/30/2010
 
             
Operating Activities
           
             
Net (Loss)
  $ (9,261,616 )   $ (335,799 )
Adjustments to reconcile from Net Loss to net cash provided by (used in) operating activities:
 
Depreciation and amortization
    114,686       104,997  
Shares issued for services
    345,667       -  
Stock option amortization
    4,299,592       -  
Changes in operating assets and liabilities
               
Accounts receivable
    (65,439 )     (600 )
Deferred customer activation costs
    4,405       (16,559 )
Prepaid expense
    (17,761 )     (3,500 )
Other assets
    (11,492 )     -  
Accounts payable
    120,394       (53,848 )
Accounts payable - related party
    2,000,000       101,584  
Bank overdraft
    -       19,174  
Accrued expenses
    68,026       -  
Accrued expenses - related party
    -       (65,820 )
Accrued income taxes
    -       (4,900 )
Accrued interest payable
    -       145,782  
Accrued interest payable - related party
    -       2,306  
Deferred customer activation fees
    (17,622 )     64,867  
                 
Net cash provided by (used in) operating activities
    (2,421,160 )     (42,316 )
                 
Cash flows from investing activities
               
    Acquisition and development of software assets
    (174,529 )     (100,527 )
Purchase  of equipment
    (85,356 )     (31,300 )
                 
Net cash provided by (used in) investing activities
    (259,885 )     (131,827 )
                 
Cash flows from financing activities
               
    Cash acquired upon reverse merger
    -       513  
Proceeds from loans payable
    5,612       311,500  
Proceeds from loans payable - related party
    12,000       89,160  
Repayment of equipment loans
    -       (23,126 )
Repayment of loans payable
    (29,359 )     (14,000 )
Repayment of loans payable - related party
    (58,256 )     (178,944 )
Proceeds from issuance of common stock
    2,151,057       10,000  
                 
Net cash provided by (used in) financing activities
    2,081,054       195,103  
                 
Net Increase/(Decrease) in Cash
    (599,991 )     20,960  
                 
Cash, Beginning of Year
    615,722       -  
                 
Cash, End of Year
  $ 15,731     $ 20,960  
                 
Supplemental Information:
               
Cash paid for:
               
Taxes
  $ -     $ -  
Interest Expense
  $ -     $ -  
                 
Non Cash Financing Activities:
               
Stock options granted for accrued liabilities
  $ 56,250     $ -  
Common stock issued for prepaid services
  $ 369,000     $ -  
Debt converted into preferred stock
  $ -     $ 1,700,000  
Debt extinguished for common stock
  $ 653,057     $ 2,650,301  




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

 
5

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



NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Organization
 
 
Musician’s Exchange was incorporated under the laws of the State of Nevada on February 4, 2008 and developed an internet destination and marketplace for musicians.  On September 28, 2010, Musician’s Exchange amended its articles of incorporation to change its name from Musician’s Exchange to Voice Assist, Inc. (“the Company”).
 
 
On July 22, 2010, the Company entered into the following:
 
 
(1) An Agreement of Purchase and Sales of Assets with SpeechPhone, LLC, a Delaware Limited Liability Company (“Speechphone”) to purchase substantially all of the assets of Speechphone in exchange for 10,250,000 shares of common stock and also agreed to issue 2,000,000 shares of convertible preferred stock in exchange for extinguishment of $1,700,000 in debt;
 
 
(2) An Agreement of Purchase and Sales of Assets with MDM Intellectual Property, LLC, a California Limited Liability Company (“MDM”) to purchase substantially all of the assets of MDM in exchange for 6,150,000 shares of common stock;
 
 
(3) An Agreement of Purchase and Sales of Assets with SpeechCard, LLC, a Delaware Limited Liability Company (“SpeechCard”) to purchase substantially all of the assets of SpeechCard in exchange for 1,025,000 shares of common stock;
 
 
(4) An Agreement of Purchase and Sales of Assets with Voiceassist, a Delaware Limited Liability Company (“Voiceassist”) to purchase substantially all of the assets of Voiceassist in exchange for 2,050,000 shares of common stock; and
 
 
(5) An agreement to issue 1,025,000 shares to purchase Mr. Michael Metcalf’s concept, Music By Voice and shareholders agreed to cancel a total of 8,400,000 shares upon the close of the transaction.
 
On September 30, 2010, the transaction was closed and substantially all of the assets and certain liabilities of Speechphone and related entities listed above were acquired by the Company.  For accounting purposes, the acquisition of substantially all of the assets and certain liabilities of Speechphone by the Company has been recorded as a reverse acquisition of a public company and recapitalization of Speechphone based on the factors demonstrating that Speechphone represents the accounting acquirer.  The historic financial statements of Speechphone and related entities, while historically presented as an LLC equity structure, have been retroactively presented as a corporation for comparability purposes.  The Company changed its business direction and is now a voice recognition technology company focused on enabling access to any information through any device using speech technology.

 
6

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


 
Basis of presentation
 
The condensed interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
 
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed interim financial statements be read in conjunction with the financial statements of the Company for the years ended December 31, 2010 and 2009 and notes thereto included in the Company’s 10-K filed on April 1, 2011. The Company follows the same accounting policies in the preparation of interim reports.
 
Results of operations for the interim period are not indicative of annual results.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Generally, matters subject to estimation and judgment include amounts related to asset impairments, useful lives of fixed assets and capitalization of costs for software developed for internal use.  Actual results could differ from those estimates.

Cash and Cash Equivalents

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

 
7

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


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, and when services have been rendered. The Company recognized revenue from sales of $725,495 and $986,083 during the nine months ended September 30, 2011 and 2010, 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 $66,616 and $84,238 at September 30, 2011 and December 31, 2010, respectively.  The costs associated with these activation fees are recorded as deferred costs and are similarly amortized over the estimated average customer relationship period.  The net unamortized costs are $16,656 and $21,061 at September 30, 2011 and December 31, 2010, respectively.  For both the activation fees and costs associated therewith, the estimated average customer relationship period was 24 months for the nine months ended September 30, 2011.

Software Development Costs

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

As of September 30, 2011, software development costs not yet amortized are $597,852.  During the nine months ended September 30, 2011 and 2010, amortization was $77,905 and $0, respectively.  

 
8

 
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.  An evaluation of our intangible assets was conducted utilizing the two step impairment analysis. No impairments were indicated or recorded during three months ended September 30, 2011 and 2010.
 
Stock-based Payments
 
The Company records the stock-based compensation awards issued to non-employees and other external entities for goods and services at either the fair market value of the goods received or services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30.
 
Recent Pronouncements
 
From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.  If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

NOTE 2 – GOING CONCERN

The financial statements have been presented on a going concern basis, which contemplates, but does not include adjustments for the realization of assets and satisfaction of liabilities in the normal course of business. The Company has a limited operating history and limited funds. As shown in the financial statements, the Company incurred a net loss of $9,261,616 and cash used by operations of $2,421,160 for the nine months ended September 30, 2011, and had a working capital deficit of $2,089,841 as of September 30, 2011.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company believes that it is appropriate for the financial statements to be prepared on a going concern basis. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty.

 
9

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


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 – ACCOUNTS PAYABLE – RELATED PARTIES RESTATED

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


NOTE 4 – LOANS PAYABLE – RELATED PARTIES

The Company received advances totaling $5,612 during the six months ended June 30, 2011. These advances are due upon demand, unsecured, and carry 0% interest.  There were no further advances during the three months ended September 30, 2011.  During the six months ended June 30, 2011, the Company paid $58,256 to a related entity controlled by the shareholder and issued stock options in lieu of cash payment for the remaining balance of the loans payable to shareholder.  There were no further payments made to this related party entity during the three months ended September 30, 2011.  In addition, the Company converted $653,057 of convertible debt with a related party to 261,233 common shares during the nine months ended September 30, 2011.  There was no other debt converted into shares during the three months ended September 30, 2011.

NOTE 5 – STOCKHOLDERS’ EQUITY

Preferred Stock

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

 
10

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



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 September 30, 2011, there have been no other issuances of preferred stock.
 
Common Stock

The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock.
 
On September 30, 2010, the Company completed its Agreement of Purchase and Sale of Assets with Speechphone, LLC, MDM LLC, Speechcard, LLC and Voiceassist and issued a total of 20,500,000 restricted shares of common stock of the Company.  In connection with the Agreement of Purchase and Sales of Assets, principal shareholders cancelled a total of 8,400,000 shares upon the close of the transaction.
 
During the nine months ended September 30, 2011, the Company issued the following shares of $0.001 par value common stock:

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

 
11

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



·  
35,000 shares in exchange for services received valued at $70,000 committed to in December, 2010
·  
550,000 shares for cash totaling $1,100,000 received during the nine months ended September 30, 2011. These shares were sold as Units at $2.00 per Unit which consisted of 1 restricted common share at $2.00 and one 2 year warrant exercisable at $4.00 callable at $5.00
·  
948,000 shares for cash totaling $948,000 received during the nine months ended September 30, 2011.  These shares were sold as Units at $1.00 per Unit which consisted of 1 restricted common share at $1.00 and one callable common stock purchase warrant priced at $1.50 for up to five years.  Of these shares issued, 325,000 were for cash received in the three months ended September 30, 2011.
·  
85,000 in exchange for services with two investor relations firms valued at $152,500
·  
20,000 shares in exchange for severance with an executive of the Company valued at $30,000
·  
100,000 shares in exchange for commission contract termination valued at $150,000
·  
261,223 shares for conversion of debt totaling $653,057 with a related party
·  
250,000 shares in exchange for services with a related party valued at $205,000
·  
200,000 shares in exchange for services with a research firm valued at $164,000

Rescission Offer

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

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

 
12

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



NOTE 6 – WARRANTS AND OPTIONS

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

The first employee received 1,000,000 options of which 500,000 vested immediately and the remaining 500,000 vest at a rate of 50,000 per quarter over the next two and a half years.  The options have an exercise price of $1.95 and can be exercised for a period of five years.  As of September 30, 2011, 600,000 options were fully vested and the Company recorded compensation expense totaling $1,004,298.

The second employee received 1,000,000 options of which 500,000 vested immediately and the remaining 500,000 vest at a rate of 50,000 per quarter over the next two and a half years.  The options have an exercise price of $1.95 and can be exercised for a period of ten years.  As of September 30, 2011, 550,000 options were fully vested and the Company recorded compensation expense totaling $1,138,643.

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

Options Granted

On April 13, 2011, pursuant to the employment agreement effective January 1, 2011, the Company granted Michael Silva, CFO, two million (2,000,000) options to buy shares of common stock under the Company’s 2010 Stock Option Plan.  Seven hundred fifty thousand (750,000) options are to vest monthly over 36 months and one million two hundred fifty thousand (1,250,000) are to vest upon reaching mutually agreed upon milestones.  As of the period end September 30, 2011, 125,000 options were vested and the Company recorded compensation expense of $305,810.

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

 
13

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



On April 13, 2011, pursuant to the employment agreements effective January 1, 2011, the Company granted to the following executives, Andrew Fox, Vic Boyd, Tracy Roberts, and Lisa Porter five hundred thousand (500,000) options each to buy shares of common stock under the Company’s 2010 Stock Option Plan.  These options are to vest monthly over 36 months.  Subject to Board Approval, management has recommended that each executive receive monthly stock grants to compensate for employment contract modification and for reduced salary.  Such grants will be considered based upon amount of salary reduction and as salary adjusts upward based upon Company revenues, the grants will be reduced accordingly.  At the period ending September 30, 2011, 333,333 options were vested and the Company recorded compensation expense of $702,662.

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

On April 13, 2011, the Company granted to Scott Fox pursuant to the Independent Director Stock Option Agreement two hundred twenty five thousand (225,000) options to buy shares of common stock under the Company’s 2010 Stock Option Plan.  The options are to vest monthly over 36 months. At the period ending September 30, 2011, 37,500 options were vested and the Company recorded director’s expense of $79,049.

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

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

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

 
14

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



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

On July 25, 2011 the Board of Directors granted an investor relations company an option to purchase 40,000 shares of Common Stock of the Company under the 2011 Stock Incentive Plan, with an exercise price of one cent ($0.01). The Option will be exercisable for five years.

On September 30, 2011, the Board of Directors granted an executive, seven employees and three independent sub-contractors options to purchase 80,350 shares of Common Stock of the Company under the 2011 Stock Incentive Plan.  The options vested immediately and are exercisable over a period of five years with an exercise price of $0.01.  The fair value of the stock options are $32,711 and the Company recorded compensation expense.
 
NOTE 7 – SUBSEQUENT EVENTS
 
On October 14, 2011, Randy Granovetter, President and Director, resigned her position effective immediately.

On October 17, 2011, Michael P. Silva, Chief Financial and Operating Officer, resigned his positions effective immediately.
On October 20, 2011, the Board of Directors appointed Donna S. Moore as Chief Financial Officer and Donald P. Sutherland as a member of the Board of Directors.

There have been no new shares issued subsequent to September 30, 2011.

NOTE 8 – RESTATEMENT FOOTNOTE

On or about March 22, 2012, the Board of Directors of the Company concluded that the Company’s financial statements for the nine months ended September 30, 2011 should no longer be relied upon because of an error in such financial statements.  These financial statements did not disclose the issuance of personal shares from the CEO of the Company to a former executive officer for services rendered to the Company.
 
Due to an administrative oversight, the value of the shares was not reflected in the Company’s unaudited financial statements for the nine months ended September 30, 2011.  The exclusion of this transaction resulted in an understatement of General and Administrative expenses of $2,000,000 for the nine months ended September 30, 2011 and an understatement of Accounts Payable-Related Parties of $2,000,000 for the period ended September 30, 2011.
 

 
15

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


 

   
September 30, 2011
 
   
As Previously
             
   
Reported
   
Adjustments
   
As Restated
 
                   
Balance Sheet Line Items Affected
                 
Accounts Payable - Related Parties
  $ -     $ 2,000,000     $ 2,000,000  
Total Current Liabilities
    522,673       2,000,000       2,522,673  
Total Liabilities
    522,673       2,000,000       2,522,673  
Retained Deficit
    (19,957,807)       (2,000,000 )     (21,957,807 )
Total Stockholders Equity (Deficit)
  $ 750,332     $ (2,000,000 )   $ (1,249,668)  
                         
   
Nine Months Ended September 30, 2011
 
   
Previously
                 
   
Reported
   
Adjustment
   
Restated
 
Statement of Operations Line Items Affected
                       
General and Administrative Expense
  $ 6,800,488     $ 2,000,000     $ 8,800,488  
Total Operating Expenses
    7,984,726       2,000,000       9,984,726  
Net Income (Loss) from Operations
    (7,259,231 )     (2,000,000 )     (9,259,231 )
Net Income (Loss) before Income Tax
    (7,261,284 )     (2,000,000 )     (9,261,284 )
Net (Loss)
  $ (7,261,616 )   $ (2,000,000 )   $ (9,261,616 )
 
 

 
16

 


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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this 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.  Voice Assist provides hands-free safe driving applications such as voice dialing, email by voice, text by voice and posting to social networks by voice.  Voice Assist also works with 3rd party developers to voice enable any mobile application.  Voice Assist sells direct to the public via our website at www.voiceassist.com and also licenses technology and provides hosted services to enterprises, 3rd party developers, wireless and wireline service providers and value added resellers.

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

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

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

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

 
17

 

How We Generate Revenue

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

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

Trends in Our Business

On June 30, 2011, we retained the services, through a consulting agreement, of a corporate consultant in connection with corporate finance relations, corporate financial services and mergers and acquisitions. The consultant will be compensated with restricted shares of common stock.

On July 25, 2011 we revised and amended our December 2, 2010 contract with an investor relations consulting firm wherein they will be compensated with non-qualified stock options to purchase one share of common stock.

On August 11, 2011, we retained the services of Crystal Research Associates, Inc. of New York, NY in connection with the composition and printing of two years of Executive Informational Overviews for Voice Assist, Inc., with the first year consisting of one initial, extended report and four quarterly update reports. Pursuant to the Letter of Agreement, they will be compensated annually at $52,500.00 (USD) plus 200,000 shares of restricted common stock in the Corporation, and the second year of four quarterly reports compensated annually at $30,000.00 (USD).

Subsequent to the period ended September 30, 2011 and as reported in the Form 8-K filed October 20, 2011, Ms. Randy Granovetter resigned her positions as President and Director of the Company; Mr. Michael P. Silva resigned his position as Chief Financial Officer of the Company; and Ms. Donna Moore has been appointed as Chief Financial Officer of the Company and Mr Donald Sutherland was appointed as a member of the Board of Directors.


 
18

 

Results of Operations

Comparison of Quarter Ended and Nine Months Ended September 30, 2011 and September 30, 2010

The following table sets forth key components of our results of operations during the three months and nine months endedSeptember30, 2011 and September30, 2010. The financial data should be read in conjunction with the financial statements, related notes and other financial information included in this Quarterly Report.

   
Restated 07/01/2011 to 09/30/2011
   
07/01/2010 to 09/30/2010
   
Restated 01/01/2011 to 09/30/2011
   
01/01/2010 to 09/30/2010
 
                         
OPERATING REVENUES
                       
Revenues
  $ 191,357     $ 312,233     $ 725,495     $ 986,083  
                                 
OPERATING EXPENSES
                               
Direct Cost of Services
    79,033       73,844       327,981       178,965  
Other Costs
    1,608       5,387       5,809       13,679  
Total Direct Cost of Services
    80,641       79,231       333,790       192,644  
                                 
Legal and Professional
    225,836       0       735,764       0  
Selling, General and Administrative
    1,169,477       245,871       8,800,488       587,313  
Selling, General and Administrative - Related Parties
    -       106,149       -       259,715  
Depreciation and Amortization
    38,862       83,536       114,684       104,997  
                                 
Total Operating Expenses
    1,514,816       514,787       9,984,726       1,144,669  
                                 
Net (Loss) from Operations
    (1,323,459 )     (202,554 )     (9,259,231 )     (158,586 )
                                 
OTHER INCOME AND (EXPENSE)
                               
Interest Expense
    (579 )     (62,081 )     (1,705 )     (188,180 )
Other Income (Expense)
    (348 )     0       (348 )     9,367  
                                 
Total Other Income (Expense)
    (927 )     (62,081 )     (2,053 )     (178,813 )
                                 
Net (Loss) before Income Taxes
    (1,324,386 )     (264,634 )     (9,261,284 )     (337,399 )
                                 
Income Tax Expense
    -       1,600       (332 )     1,600  
                                 
                                 
                                 
NET (LOSS)
  $ (1,324,386 )   $ (263,034 )   $ (9,261,616 )   $ (335,799 )


Revenues. Our revenues decreased to $725,495 in the nine months ended September 30, 2011 from $986,083 last year, representing a 26% decrease year-over-year.  The decrease in revenues is as a result of lower non-reimbursable engineering (NRE) revenue and retail subscribers disconnections due to a service outage by a service provider and the impact of the prevailing economic downturn.  While we had redundancy and mitigation infrastructure in place, the lack of a timely response by our service provider led to a loss of subscribers.  We have made additional investment and taken additional measures to ensure any such outage in the future will not have as material an impact on our revenues.

 
19

 


Total Cost of Services. Our total cost of services increased $141,146, or 73%, to $333,790 in the nine months ended September 30, 2011 from $192,644 for the same period in 2010.  The increase in our total cost of services is a result of the loss of retail subscribers due to a service outage by a service provider and fixed minimum commitments to that provider.  We are disputing the fees based upon our loss of subscribers and anticipate a reversal of fees and subsequent lowering of cost of services in the future.

Legal and Professional. Our legal and professional expenses increased $735,764, for the nine months ended September 30, 2011 from $0 for the same period in 2010.  The increase in legal and professional fees was the result of non-cash consulting expenses and legal fees incurred in connection with preparation and filing requirements as a public company, the preparation and filing of additional patent applications, investor relations fees, and outside auditor accounting fees.

Selling, General and Administrative. Our selling, general and administrative expenses increased $8,213,175 or 1,398%, to $8,800,488 for the nine months ended September 30, 2011 from $587,313 for the same period in 2010. The increase was largely due to $4.5MM in non-cash stock option compensation expense, the recording of the value of the transfer of personal shares of the CEO to a former executive officer and other non-cash expenses as well as increased payroll and travel related expenses as the Company expanded its executive staff and customer focus.

Selling, General and Administrative – Related Parties. Our selling, general and administrative – related parties’ expenses decreased $259,715, or 100%, to $0 for the nine months ended September 30, 2011 from $259,715 in the same period in 2010. The decrease was the result of engaging non-related party professional staffing.

Depreciation and Amortization. Our depreciation and amortization expenses increased $9,687, or 9%, to $114,684 for the nine months ended September 30, 2011 from $104,997 for the same period in 2010. The increase was the result of software development costs being amortized because one of the capitalized projects was launched at the beginning of 2011.

Net (Loss) from Operations. We had $9,259,231 in net loss from operations for the nine months ended September 30, 2011, as compared to net loss from operations of $158,586 during the same period in 2010.  The increased loss was the result of non-cash stock option compensation expense, increased expenses related to public reporting and compliance, the increase in professional staffing, and the recording of the value of the transfer of personal shares of the CEO to a former executive officer .

Interest Expense. Our interest expense decreased $186,475, or 99%, to $1,705 for the nine months ended September 30, 2011 from $188,180 in the same period in 2010. The decrease was the result of the elimination of loans from related parties on which interest was calculated and applied.

 
20

 

Other Income. Our other income decreased $9,715 for the nine months ended September 30, 2011 from $9,367 in the same period in 2010. The decrease was the result of discontinuing a sublease of office space.

Net Loss. For the nine months ended September 30, 2011, we generated a net loss of $9,261,616, an increase of $8,925,817, or 2,658%, from a net loss of $335,799 for the same period in 2010. This increase was primarily attributable to non-cash stock option compensation expense, increased expenses related to public reporting and compliance, and the increase in professional staffing, and the recording of the value of the transfer of personal shares of the CEO to a former executive officer .

Liquidity and Capital Resources

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

 
Restated
September 30,
 2011
December 31, 2010
Increase / (Decrease)
$
%
         
Current Assets
$432,832
$697,778
$(264,946)
(38%)
         
Current Liabilities
2,522,673
1,071,462
1,451,211
135%
         
Working Capital (deficit)
$(2,089,841)
$(373,684)
$1,716,157
459%

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

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

During the nine months ended September 30, 2011, the current assets decreased by $264,946 when compared to December 31, 2010 due to the cash requirements during the period.  The Company received a total of $2,151,057 cash from investors during the reporting period.
 
During the nine months ended September 30, 2011, the current liabilities increased by $1,451,211 when compared to December 31, 2010 current liabilities of $1,071,462.  The increase can be attributed to the recording of the value of transfer of personal shares of the CEO to a former executive for a total of $2,000,000, increases in accrued salaries and payables with an offsetting decrease for the conversion of debt to common stock for a total of $653,057.

 
21

 


We anticipate that we may incur operating losses during the next twelve months. The Company’s 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, provide national and regional industry participants with an effective, efficient and accessible website on which to promote their products and services through the Internet, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

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

Significant changes in the number of employees.

We currently have 13 full time employees and no part time employees.

Subsequent to period ended September 30, 2011 and as reported in the Form 8-K filed October 20, 2011, Ms. Randy Granovetter resigned her positions as President and Director of the Company; Mr. Michael P. Silva resigned his position as Chief Financial Officer of the Company; and Ms. Donna Moore has been appointed as Chief Financial Officer of the Company. 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.

 
22

 

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 $66,616 at the nine months ended September 30, 2011.  The costs associated with these activation fees are recorded as deferred costs and are similarly amortized over the estimated average customer relationship period.  The net unamortized costs are $16,656 at the nine months ended September 30, 2011.  For both the activation fees and costs associated therewith, the estimated average customer relationship period was 24 months for the nine months ended September 30, 2011.

Stock-Based Compensation

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

 
23

 

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report.  Based on that evaluation, it was concluded that our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

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

Limitations on Effectiveness of Controls and Procedures

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

 
24

 


PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are not a party to any material legal proceedings.

Item 1A. Risk Factors.

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

Our auditors have substantial doubt about our ability to continue as a going concern. Additionally, our auditor’s report reflects the fact that the ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately the achievement of significant operating revenues.

Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our auditor’s report reflects that the ability of Voice Assist to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. If we are unable to continue as a going concern, you will lose your investment.  We will be required to seek additional capital to fund future growth and expansion. No assurance can be given that such financing will be available or, if available, that it will be on commercially favorable terms. Moreover, favorable financing may be dilutive to investors.

The loss of key personnel or the inability to retain and, where necessary, attract additional personnel could impair our ability to expand our operations.

We are highly dependent upon the principal members of our management and sales staff, the loss of whose services might adversely impact the achievement of our objectives and the continuation of existing business plans. Our recent change in the position of President and Chief Financial Officer could have an adverse impact on our ability to retain and recruit qualified personnel. Further, all of our employees are employed “at will” and, therefore, may leave our employment at any time.
 
Future sales of our common stock may depress our stock price.

If our stockholders sell substantial amounts of our common stock (including shares issued upon the exercise of options and warrants and shares issued under our Stock Incentive Plan) in the public market, the market price of our common stock could fall. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.


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

Stock and Warrant Issuances Pursuant to Subscription Agreements

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

On August 18, 2011, the Company issued to one (1) accredited investor, a total of 25,000 Units consisting of one (1) share of restricted common stock and one (1) Callable Warrant to purchase one (1) share of restricted common stock at $1.50 per share, callable if the market price of the Company’s Common Stock closes at $3.00 per share for ten (10) consecutive days.  The Warrants are exercisable for five (5) years. The investor purchased the 25,000 Units for a total purchase price of $25,000, all of which was paid in cash.

On September 27, 2011, the Company issued to three (3) accredited investors, a total of 300,000 Units consisting of one (1) share of restricted common stock and one (1) Callable Warrant to purchase one (1) share of restricted common stock at $1.50 per share, callable if the market price of the Company’s Common Stock closes at $3.00 per share for ten (10) consecutive days.  The Warrants are exercisable for five (5) years. The investors purchased the 300,000 Units for a total purchase price of $300,000, all of which was paid in cash.

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

Rescission Offer

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

In accordance with the Rescission Agreement on August 15, 2011 the Company issued to seven accredited investors a total of two million (2,000,000) units consisting of one (1) share of restricted common stock and one (1) callable warrant to purchase one (1) share of restricted common stock at $1.50 per share, callable if the market price of the Company’s common stock closes at $3.00 per share for ten (10) consecutive days.  The warrants are exercisable for five (5) years.

Stock Issued as Payment to Third Party

On August, 18 2011, the Company issued a total of two hundred thousand (200,000) restricted Common Shares as partial payment for contractual obligations with a research company.

On August 18, 2011, the Company issued a total of two hundred fifty thousand (250,000) restricted shares of Common Stock to Summit Capital USA, Inc. pursuant to the Consulting Agreement entered into on June 30, 2011, effective July 1 through the end of the year.

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

Issuance and Grant of Stock Options

2011 Stock Incentive Plan

In September 2011, the board of directors approved Non-Qualified stock options to be accrued monthly and to be granted on a quarterly basis to service providers, under the Company’s 2011 Stock Incentive Plan. On September 30, 2011, the Company approved a total of 80,350 options to the individuals listed below for services provided to the Company and in consideration for reduced salaries:
Name
Title
Number of Options
Michael Metcalf
Officer/Director
550
Tracy Roberts
Employee
13,725
Vic Boyd
Employee
5,825
Andrew Fox
Employee
13,500
Diane Mayer
Independent Contractor
5,000
Lisa Porter
Employee
11,250
Arundhati Bopardikar
Independent Contractor
3,500
Laura Juarez
Independent Contractor
3,000
Nick Swihart
Employee
3,000
Hung Duong
Employee
10,500
Steve Do
Employee
10,500


 
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 The Company anticipates that the total amounts of the grants will not exceed 27,000 options per month and will cease when the Company’s revenues reach three million dollars ($3,000,000) in a twelve (12) month period, or until termination of employment, whichever occurs first. The options vest upon grant each month and have an exercise price of one cent ($0.01) and are exercisable until September 30, 2016.

On July 25, 2011 the Board of Directors granted an investor relations company an option to purchase 40,000 shares of Common Stock of the Company under the 2011 Stock Incentive Plan, vesting immediately with an exercise price of one cent ($0.01). The Option will be exercisable for five years.

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

Issuer Purchases of Equity Securities

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

Item 3.               Defaults Upon Senior Securities.

None.

Item 5.               Other Information.

None.

 
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Item 6. Exhibits.

Exhibit No.
 
Description
     
31.1
 
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2
 
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1
 
Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2
 
Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS*
 
XBRL Instance Document
     
101.SCH*
 
XBRL Taxonomy Extension Schema
     
101.CAL*
 
XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF*
 
XBRL Taxonomy Extension Definition Linkbase
     
101.LAB*
 
XBRL Taxonomy Extension Label Linkbase
     
101.PRE*
 
XBRL Taxonomy Extension Presentation Linkbase

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



 
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SIGNATURES

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


VOICE ASSIST, INC.


By: /S/ Donna Moore                                                                                                                                             
Donna Moore, Chief Financial Officer and Principal Financial Officer


By:/S/ Michael Metcalf                                                                                                                                            
       Michael Metcalf, Chief Executive Officer and Principal Executive Officer

Date: May 9, 2012



 
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