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EX-31.1 - CERTIFICATION - Aly Energy Services, Inc.preferred_ex311.htm


United States
Securities and Exchange Commission
Washington, D. C.  20549

Form 10-Q
 
x  Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Period Ended September 30, 2012.
 
or
 
o  Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of  1934 for the Transition Period From _____________to _____________

Commission File Number  33-92894

PREFERRED VOICE, INC.
 
Delaware   75-2440201
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
 
6500 Greenville Avenue
Suite 330
Dallas,  TX
  75206
(Address of Principal Executive Offices)   (Zip Code)
 
(214) 850-6830
 (Registrant’s Telephone Number, including area code.)
 
Not Applicable
(Former name, Former Address and Former Fiscal year, if changed since last report.)

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 the filing requirements for at least the past 90 days. Yes x    No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No o
 
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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer 
o Smaller reporting company  x
(Do not check if a smaller reporting company)      
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x
 
Applicable Only to Corporate Issuers

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Common Stock, $ 0.001 Par Value – 6,130,184 shares as of October 31, 2012.
 


 
 

 
INDEX
 
Preferred Voice, Inc.

Part I. Financial Information      
         
Item 1.
Financial Statements
       
           
  Balance Sheets-September 30, 2012 and March 31, 2012.     3  
  Statements of Operations- Three Months Ended September 30, 2012 and 2011 and Six Months Ended September 30, 2012 and 2011.     4  
 
Statements of Cash Flows-Six Months Ended September 30, 2012 and 2011.
    5  
  Notes to Financial Statements – September 30, 2012.     6  
         
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    11  
           
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
    13  
           
Item 4T.
Controls and Procedures
    13  
           
Part II. Other Information        
           
Item 1.
Legal Proceedings
    14  
           
Item 1A.
Risk Factors
    14  
           
Item 2.
Unregistered Sales of Securities and Use of Proceeds
    14  
           
Item 3.
Defaults upon Senior Securities
    14  
           
Item 4.
Mine Safety Disclosures
    14  
           
Item 5.
Other Information
    14  
           
Item 6.
Exhibits and Reports on Form 8-K
    14  
           
Signatures
    15  
 
 
2

 

PREFERRED VOICE, INC.

CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2012 AND MARCH 31, 2012
 
   
September 30,
   
March 31,
 
   
2012
   
2012
 
   
(unaudited)
   
(audited)
 
 
Assets
             
Current assets:
           
Cash and cash equivalents
  $ 341,364     $ 391,174  
Accounts receivable, net of allowance for doubtful accounts
    5,840       5,828  
                 
Total current assets
  $ 347,204     $ 397,002  
                 
Property and equipment:
               
Computer equipment
  $ 11,349     $ 16,745  
Furniture and fixtures
    22,317       22,317  
Office equipment
    8,567       8,567  
                 
    $ 42,233     $ 47,629  
Less accumulated depreciation
    41,874       41,657  
                 
Net property and equipment
  $ 359     $ 5,972  
                 
Other assets:
               
Deposits
  $ 4,485     $ 4,485  
                 
Total other assets
  $ 4,485     $ 4,485  
                 
Total assets
  $ 352,048     $ 407,459  
             
Liabilities and stockholders' equity (deficit)
             
Current liabilities:
           
Accounts payable
  $ 4,402     $ 4,896  
Payroll taxes payable
    1,133       1,796  
                 
Total current liabilities
  $ 5,535     $ 6,692  
Commitments and contingencies (Note E)
               
                 
Stockholders' equity (deficit):                
                 
Common stock, $.001 par value; 100,000,000 shares authorized; 6,130,184 and 6,130,184 shares issued, respectively
  $ 6,130     $ 6,130  
Additional paid-in capital
    20,481,148       20,481,148  
Accumulated deficit
    (20,139,259 )     (20,085,005 )
Treasury stock - 4,500 shares at cost
    (1,506 )     (1,506 )
                 
Total stockholders' equity (deficit)
  $ 346,513     $ 400,767  
                 
Total liabilities and stockholders' equity (deficit)
  $ 352,048     $ 407,459  

The accompanying notes are an integral part of these financial statements.
 
 
3

 
 
PREFERRED VOICE, INC.

CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX-MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
 
   
Three months
   
Six months
   
Three months
   
Six months
 
   
ended
   
ended
   
ended
   
ended
 
   
September 30,
   
September 30,
   
September 30,
   
September 30,
 
   
2012
   
2012
   
2011
   
2011
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
                         
Net sales
  $ -     $ -     $ -     $ -  
                                 
Cost of sales
    -       -       -       -  
                                 
Gross profit
  $ -     $ -     $ -     $ -  
                                 
General and administrative expenses
  $ 29,984     $ 48,858     $ 36,913     $ 56,195  
                                 
Loss from operations
  $ (29,984 )   $ (48,858 )   $ (36,913 )   $ (56,195 )
                                 
Other income (expense):
                               
Impairment expense
  $ -     $ (5,396 )   $ -     $ -  
                                 
Total other expense
  $ -     $ (5,396 )   $ -     $ -  
                                 
Loss from continuing operations  before income taxes
  $ (29,984 )   $ (54,254 )   $ (36,913 )   $ (56,195 )
                                 
Provision for income taxes
    -       -       -       -  
                                 
Loss from continuing operations
  $ (29,984 )   $ (54,254 )   $ (36,913 )   $ (56,195 )
                                 
Income from discontinued operations
  $ -     $ -     $ 2,977     $ 5,834  
                                 
Net income (loss)
  $ (29,984 )   $ (54,254 )   $ (33,936 )   $ (50,361 )
                                 
Per share amounts:
                               
Net loss from continuing operations  per common share
  $ (0.005 )   $ (0.009 )   $ (0.006 )   $ (0.009 )
                                 
Net income from discontinued operations per common share
  $ -     $ -     $ 0.000     $ 0.001  
                                 
Net income (loss) per common share
  $ (0.005 )   $ (0.009 )   $ (0.006 )   $ (0.008 )

The accompanying notes are an integral part of these financial statements.
 
 
4

 

PREFERRED VOICE, INC.

CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

 
   
2012
   
2011
 
   
(unaudited)
   
(unaudited)
 
             
Cash flows from operating activities:
           
     Net income
  $ (54,254 )   $ (50,361 )
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
               
Income from discontinued operations, net of income taxes
  $ -     $ (5,834 )
Depreciation and amortization
    217       216  
Impairment of fixed assets
    5,396       -  
Changes in operating assets and liabilities:
               
(Increase) decrease in accounts receivable
    (12 )     (224 )
Increase (decrease) in accounts payable and accrued expenses
    (1,157 )     13,121  
       Total adjustments
  $ 4,444     $ 7,279  
                 
Net cash used by continuing operating activities
  $ (49,810 )   $ (43,082 )
Net cash provided by discontinued operating activities
    -       5,834  
Net cash provided by operating activities
  $ (49,810 )   $ (37,248 )
                 
Cash flows from investing activities:
               
Net cash provided by continuing investing activities
  $ -     $ -  
Net cash provided by discontinued investing activities
               
Net cash provided by investing activities
  $ -     $ -  
                 
Cash flows from financing activities:
               
Net cash used by continuing financing activities
  $ -     $ -  
Net cash used by discontinued financing activities
               
Net cash used by financing activities
  $ -     $ -  
                 
Net increase (decrease) in cash and cash equivalents
  $ (49,810 )   $ (37,248 )
                 
Cash and cash equivalents:
               
Beginning of period
    391,174       489,031  
                 
End of period
  $ 341,364     $ 451,783  
 
The accompanying notes are an integral part of these financial statements.
 
 
5

 

PREFERRED VOICE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

Note A - General organization and management’s plans:

Preferred Voice, Inc. (the "Company") is a Delaware corporation incorporated in 1992, commenced business on May 13, 1994, and was in the development stage until August 1, 1995. On February 25, 1997, the Company’s stockholders approved changing the name of the Company to better reflect the nature of the Company’s business. The Company currently has no operations but continues to maintain its principal offices in Dallas, Texas.

On September 9, 2010, the Company entered into an Asset Purchase Agreement between the Company, as seller, and ClearSky Mobile Media, Inc., a Delaware corporation (“CMM”) and ClearSky RBT, LLC, a Florida limited liability company (“CRBT”), a wholly-owned subsidiary of CMM, as purchasers. Pursuant to the Purchase Agreement, the Company sold all of the rights and assets utilized by the Company in its ringback tone and content delivery products business (including the product line/application known as “Rockin’ Ringback) to CMM and CRBT for $225,000 in cash.

The Company continued its digital signage operations through January 31, 2012 at which time it discontinued operations due to a decline in business.

The operations of the Company’s digital sign products are reflected in the financial statements as discontinued operations.  The 2011 financial statements have been retrospectively adjusted to reflect the operations of the digital sign products as discontinued operations.

The Company intends to explore strategic alternatives including merger with another entity. Currently, the Company does not have any agreement or understanding with any entity, and there is no assurance that such a transaction will ever be consummated. The Company believes that it will be able to meet its cash requirements throughout fiscal 2013.

Note B - Summary of significant accounting policies:
 
Basis of presentation

The accounting policies followed by Preferred Voice, Inc. are set forth in the Company’s financial statements that are a part of its March 31, 2012, Form 10K and should be read in conjunction with the financial statements for the three and six months ended September 30, 2012, contained herein.

The financial information included herein as of September 30, 2012, and for the three and six-month periods ended September 30, 2012 and 2011, has been presented without an audit, pursuant to accounting principles for the interim financial information generally accepted in the United States of America and the rules of the Securities and Exchange Commission.  The Company believes that the disclosures are adequate to make the information presented not misleading.  The information presented reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the period.
 
Cash and cash equivalents

For purposes of reporting cash flows, cash and cash equivalents include all amounts due from banks with original maturities of three months or less.
 
Concentration of business, market and credit risks

In the normal course of business, the Company extends unsecured credit to its customers with payment terms generally 30 days.  Because of the credit risk involved, management provides an allowance for doubtful accounts which reflects its opinion of amounts which will eventually become uncollectible. In the event of complete nonperformance by the Company’s customers, the maximum exposure to the Company is the outstanding accounts receivable balance at the date of nonperformance.
 
 
6

 
PREFERRED VOICE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

Note B - Summary of significant accounting policies (continued):
 
Receivables and credit policies

Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date.   Unpaid accounts receivable with invoice dates over 30 days old bear no interest.

Accounts receivable are stated at the amount billed to the customer. Customer account balances with invoices dated over 90 days are considered delinquent.

Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoice.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected.  Management individually reviews all accounts receivable balances that exceed 90 days from the invoice date and, based on an assessment of current creditworthiness, estimates that portion, if any, of the balance that will not be collected.   Accounts receivable past 90 days due are $-0- and $-0- as of September 30, 2012 and March 31, 2012, respectively.
 
Property and equipment

The cost of property and equipment is depreciated over the estimated useful lives of the related assets.  Depreciation is computed on the straight-line method for financial reporting purposes and the double declining method for income tax purposes.

Maintenance and repairs are charged to operations when incurred.  Betterments and renewals are capitalized.

The useful lives of property and equipment for purposes of computing depreciation are as follows:
 
Computer equipment  
5 years
Furniture and fixtures
5 years
Office equipment 
5 years
 
The Company made a decision that the spare parts were deemed to be impaired and written down to their fair value of $-0-.   An impairment expense of $5,396 has been charged to operations for the six-month period ended September 30, 2012.

Fair value of financial instruments

The Company defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.  Financial instruments included in the Company’s financial statements include cash and cash equivalents, trade accounts receivable, other receivables, other assets, notes payable and long-term debt.  Unless otherwise disclosed in the notes to the financial statements, the carrying value of financial instruments is considered to approximate fair value due to the short maturity and characteristics of those instruments.  The carrying value of long-term debt approximates fair value as terms approximate those currently available for similar debt instruments.
 
 
7

 

PREFERRED VOICE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

Note B - Summary of significant accounting policies (continued):

Revenue recognition

For recognizing revenue, the Company applies the rules defined by the Revenue Recognition Topic of the FASB Accounting Standards Codification. In most cases, the services being performed do not require significant production, modification or customization of the Company’s software or services; therefore, revenues are recognized when evidence of a completed transaction exists, generally when services have been rendered.  In situations where the Company receives an initial payment for future services, the Company defers recognition of revenue, and recognizes the revenue over the life of the respective contract.

There were no revenues in the three and six-month periods ended September 30, 2012.  During the three and six-month periods ended September 30, 2011, the Company’s revenue consisted of services that have been discontinued.

Income or loss per share

The Company adopted the provisions of the Earnings Per Share Topic of the FASB Accounting Standards Codification.  This standard replaces primary and fully-diluted earnings per share (EPS) with basic and diluted EPS.  Basic EPS is calculated by dividing net income or loss (available to common stockholders) by the weighted average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  For 2012 and 2011, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Income per share for the three and six-months ended September 30, 2012 and 2011, respectively, is based on the weighted average number of shares outstanding of 6,130,184 for both periods.

Income taxes

For income taxes, the Company applies the rules defined by the Income Taxes Topic of the FASB Accounting Standards Codification.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.  Deferred tax assets and liabilities are measured using enacted tax rates that will apply in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company has available at March 31, 2012, a net operating loss carry-forward of approximately $15,750,000, which can be used to offset future taxable income through the year 2031.  Utilization of net operating loss carry-forwards in the future may be limited if changes in the Company’s stock ownership create a change of control as provided in Section 382 of the Internal Revenue Code.

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 amounts reported in the financial statements and accompanying notes.  Actual results could differ from these estimates.
 
 
8

 
 
PREFERRED VOICE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

Note B - Summary of significant accounting policies (continued):
 
Stock-based compensation
 
For stock-based compensation, the Company applies the rules defined by the Compensation - Stock Compensation Topic of the FASB Accounting Standards Codification.  This statement requires the Company to recognize compensation costs related to stock-based payment transactions (i.e. granting of stock options and warrants to employees) in the financial statements.  With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued.  In addition, liability awards will be re-measured each reporting period.  Compensation cost will be recognized over the period that an employee provides services in exchange for the award.   Compensation expense recognized during the three and six-months ended September 30, 2012 and 2011 was $-0- for both periods.

Note C - Discontinued operations:

In accordance with FASB Accounting Standards Codification, Presentation of Financial Statements – Discontinued Operations – Other Presentation Matters Topic, the Company has presented the results of the Company’s digital sign  product business as discontinued operations in the accompanying statement of operations and statement of cash flows.

Income from discontinued operations in the periods presented were as follows:

   
Three months
   
Six months
   
Three months
   
Six months
 
   
ended
   
ended
   
ended
   
ended
 
   
September 30,
   
September 30,
   
September 30,
   
September 30,
 
   
2012
   
2012
   
2011
   
2011
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
                         
Net sales
  $ -     $ -     $ 3,110     $ 6,966  
                                 
Cost of sales
    -       -       111       884  
                                 
Gross profit
  $ -     $ -     $ 2,999     $ 6,082  
                                 
General and administrative expenses
  $ -     $ -     $ 22     $ 248  
                                 
Income from discontinued operations
  $ -     $ -     $ 2,977     $ 5,834  
 
Note D - Common stock:
 
At September 30, 2012, the Company had no outstanding options or warrants.
 
 
9

 

PREFERRED VOICE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

Note E - Commitments:
 
The Company leases its office facilities and office equipment under operating leases originally expiring on December 31, 2012.  The Company and the lessor amended the lease to terminate effective October 31, 2012.  Following is a schedule of future minimum lease payments required under the above operating leases as of September 30, 2012:
 
Year ending March 31,
 
Amount
 
       
2013
  $ 2,240  
 
The Company subleases 92% of its office space to a third party under a month-to-month sublease that will expire with the termination of the Company’s lease October 31, 2012.  Payments received from sub-lessor reduce rent expense.  Total rent expense charged to operations was $1,075 and $1,014 for the six months ended September 30, 2012 and 2011, respectively, and $538 and $507 for the three months ended September 30, 2012 and 2011, respectively.
 
 
10

 

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

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results, including those set forth herein under “Management’s Discussion and Analysis of Financial Condition and Results of Operations" and those set forth in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Form 10-K for the fiscal year ended March 31, 2012.  Notwithstanding the foregoing, the Company is not entitled to rely on the safe harbor for forward looking statements under 27A of the Securities Act or 21E of the Exchange Act as long as the Company’s stock is classified as a penny stock within the meaning of Rule 3a51-1 of the Exchange Act.  A penny stock is generally defined to be any equity security that has a market price (as defined in Rule 3a51-1) of less than $5.00 per share, subject to certain exceptions.

Overview

We began operations in May 1994 as a traditional 1+ long-distance reseller.  Recognizing the declines in telecommunications service prices and the decreasing margins being experienced in long distance sales, we decided to sell our long distance customer base and assets in early 1997.  From 1997 until early 2005, we focused on the development of voice activated telecommunications services that would allow any consumer the ability to “dial” their calls using their voice.  In the last five years we have focused our efforts on service applications that relate to the delivery of content to end users.

Our initial introduction to mobile entertainment led us to research the viability of personalized entertainment services that could be delivered through our network. On October 22, 2004 we announced the first commercial launch of a ringback service in the United States with the launch of our Rockin’ Ringback service.  Our personalized ringback service provided a network-based personalized service that enabled users to choose an audio file that callers will listen to while the phone is ringing.  We believed that since we already had a relationship with the carrier and were integrated with these carriers customer service departments and billing departments that we had an opportunity to introduce new products with minimal integration effort.  As of August 30, 2010 we had eight carrier customers providing My Phone Services Suite service in their marketplace.

Approximately 65% of the Company’s revenue came from one customer.  In early May 2010, this customer gave notice that it would be canceling its contract and did effective August 31, 2010.   The Company’s revenues from its remaining customers were insufficient to continue operational requirements.

On September 9, 2010, the Company entered into an Asset Purchase Agreement between the Company, as seller, and ClearSky Mobile Media, Inc., (“CMM”) and ClearSky RBT, LLC, (“CRBT”). Pursuant to the Purchase Agreement, the Company sold all of the rights and assets utilized by the Company in its ringback tone and content delivery business to CMM and CRBT. CRBT is a wholly owned subsidiary of CMM. The Purchase Agreement was effective for accounting purposes as of September 1, 2010.

Under the Purchase Agreement, the Company transferred (i) to CMM, all of the Company’s business contracts executed in connection with the ringback tone and content delivery business, intellectual property rights (including patents and trademarks) relating to the ringback tone and content delivery business, key employee services, equipment, website content and telephone numbers, and (ii) to CRBT, all software, hardware and software development rights used in connection with the ringback tone and content delivery business at a purchase price of $225,000 in cash at the closing.

The Company retained its digital signage support business until January of 2012 when it determined that it was no longer a viable business at which time it discontinued the service.
 
 
11

 

Results of Operations

The operations of the Company’s digital sign business have been classified as discontinued in the Statements of Operations contained in the Company’s Financial Statements. The results of continuing operations include only the Company’s general overhead allocated to the continuing business enterprise.

We recorded a net loss from continuing operations of $54,254 or $.009 per share, for the six-month period ended September 30, 2012, compared to a net loss from continuing operations of 56,195 or $.009 per share, for the six-month period ended September 30, 2011.  For the three-month period ended September 30, 2012, we recorded a net loss of $29,984 or $.005 per share compared to a net loss from continuing operations of $36,913 or $.006 per share, for the three-month period ended September 30, 2011.
 
Selling, General and Administrative
 
Selling, general and administrative expenses for the six-month period ended September 30, 2012 were $48,858 compared to $56,195 for the six-month period ended September 30, 2011.  Selling, general and administrative expenses for the three-month period ended September 30, 2012 were $29,984 compared to $36,913 for the three-month period ended September 30, 2011.  General and administrative expenses will continue to drop as the overall overhead of the Company is reduced.

Other Income and Expense

We recognized an impairment expense on spare part equipment of $5,396, for the six-month period ended September 30, 2012 compared to impairment expense of $-0- for the six-month period ended September 30, 2011.

Income Taxes

As of September 30, 2012, we had cumulative federal net operating losses of approximately $16 million, which can be used to offset future income subject to federal income tax through the fiscal year 2031.  Net operating loss limitations may be imposed if changes in stock ownership of the company create a change of control as provided in Section 382 of the Internal Revenue Code of 1986.

Discontinued Operations

As discussed above, the Company’s discontinued operations included the operations of the Company’s digital sign business in all periods presented.  The income from discontinued operations in the three and six months ended September 30, 2012 and 2011 were composed of the following:

   
Three months
   
Six months
   
Three months
   
Six months
 
   
ended
   
ended
   
ended
   
ended
 
   
September 30,
   
September 30,
   
September 30,
   
September 30,
 
   
2012
   
2012
   
2011
   
2011
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
                         
Net sales
  $ -     $ -     $ 3,110     $ 6,966  
                                 
Cost of sales
    -       -       111       884  
                                 
Gross profit
  $ -     $ -     $ 2,999     $ 6,082  
                                 
General and administrative expenses
  $ -     $ -     $ 22     $ 248  
                                 
Income from discontinued operations
  $ -     $ -     $ 2,977     $ 5,834  
 
 
12

 
 
Liquidity and Capital Resources

Our cash and cash equivalents at September 30, 2012 were approximately $341,364, a decrease of $49,810 from $391,174 at March 31, 2012.

The Company will explore strategic alternatives including merger with another entity.  Currently, we do not have any agreement or understanding with any entity, and there is no assurance that such a transaction will ever be consummated.  The Company currently has sufficient capital resources to continue its diminished operations and continue to evaluate viable opportunities.
 
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 of operations, liquidity, capital expenditures or capital resources that are material to investors.
 
Future Obligations

Management projects working capital needs to be approximately $90,000 over the next twelve months for corporate overhead to continue to maintain its current level of operation and continue as a reporting company.  Management believes that current cash and cash equivalents are sufficient to meet this requirement.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
Not required by smaller reporting companies.
 
Item 4T. Controls and Procedures

Evaluation of disclosure controls and procedures.  The Chief Executive Officer, who also acts as our Chief Financial Officer, of the Company has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the quarter covered by this Quarterly Report on Form 10-Q.  Based on that evaluation, the Chief Executive Officer of the Company has concluded that the Company’s disclosure controls and procedures as of the end of the quarter covered by this Quarterly Report on Form 10-Q are effective as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act.

Due to the limited number of Company employees engaged in the authorization, recording, processing and reporting of transactions, there is inherently a lack of segregation of duties. The Company periodically assesses the cost versus benefit of adding the resources that would remedy or mitigate this situation and currently, does not consider the benefits to merit the cost of these resources.

Changes in internal controls.   There were no changes in our internal controls over financial reporting identified in connection with our evaluation that occurred during our last fiscal quarter ended September 30, 2012 that materially affected, or was reasonably likely to materially affect our internal control over financial reporting.
 
 
13

 
 
PART II.                      OTHER INFORMATION
 
Item 1.  Legal Proceedings.
 
None.

Item 1A.  Risk Factors.
 
As a smaller reporting company, we are not required to provide the information required by this Item.
 
Item 2.  Unregistered Sales of Securities and Use of Proceeds
 
None.

Item 3. Defaults upon Senior Securities.
 
None.

Item 4.  Mine Safety Disclosures.
 
Not Applicable.

Item 5.  Other Information.
 
None.

Item 6.  Exhibits
 
Exhibit Number
  Exhibit Description
     
31.1  
 
Certification of Chief Executive Officer and Chief Financial Officer
     
32.1
 
Certification 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 Document
     
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document

** 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.
 
 
14

 
 
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.

  PREFERRED VOICE, INC.  
       
November 13, 2012      
By:
/s/ Mary G. Merritt  
    Mary G. Merritt  
    Chairman and Chief Executive Officer  
    (Principal Executive Officer)  
 
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