SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No. 2 to FORM 10-K
 
(Mark One)
x   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended March 31, 2010
 
o    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________ to ___________
 
Commission File No. 000-51882
 
VOICESERVE, INC.
(Name of small business issuer in its charter)
 
DELAWARE
   
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer Identification No.)
     
Grosvenor House 1 High Street
Middlesex, England
 
 
HA8, 7TA
(Address of principal executive offices)
 
(Zip Code)
 
(44) 208-136-6000
(Registrant’s telephone number, including area code)
 
Securities registered under Section 12(b) of the Exchange Act:
   
Title of each class registered:
Name of each exchange on which registered:
None
None
 
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001
(Title of class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.      Yes   o     No  x
 
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 if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  o     No   x
 
 
 

 
 
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   o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K.   x
 
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
o
 
Accelerated filer                     
  o
 
           
Non-accelerated filer (Do not check if a smaller reporting company)
o
 
Smaller reporting company    
  x
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o      No   x
 
Number of shares of the registrant’s common stock outstanding as of June 29, 2010 was 35,204,429.
 
 
 

 
 
TABLE OF CONTENTS
 
PART I
   
     
ITEM 1.
DESCRIPTION OF BUSINESS
  1
ITEM 2.
PROPERTIES
  6
ITEM 3.
LEGAL PROCEEDINGS
  7
ITEM 4.
(REMOVED AND RESERVED)
  7
     
PART II
   
     
ITEM 5.
MARKET FOR REGISTRANT ’ S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  7
ITEM 6.
SELECTED FINANCIAL DATA
  8
ITEM 7.
MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  8
    ITEM 7A.
QUANTITATIVE AND QUALITATIVE D ISCLOSURES ABOUT MARKET RISK
  13
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  F-
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  14
ITEM 9A.
CONTROLS AND PROCEDURES
  14
     
PART III
   
     
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  15
ITEM 11.
EXECUTIVE COMPENSATION
  18
ITEM 12.
SECURITY O WNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  19
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  20
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
  20
     
PART IV
   
     
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
  21
 
 
 

 
 
EXPLANATORY NOTE
 
This Form 10-K/A (“Amendment No. 2”) amends Amendment No. 1 to the Registrant’s Annual Report on Form 10-K for the year ended March 31, 2010, filed with the Securities and Exchange Commission on November 10, 2010 (“Amendment No. 1”). The purpose of this Amendment No. 2 is to amend the following items in Amendment No. 1:
 
 
1.
Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” is amended in the section titled “Liquidity and Capital Resources” to disclose that the Company is not in violation with the Registration Rights Agreement it entered into November 6, 2007.
     
 
2.
Item 9A(T).  “Controls and Procedures,” is amended to disclose our officers’ conclusion that our disclosure controls are ineffective.
     
 
3.
Item 10. “Directors, Executive Officers,” Promoters and Corporate Governance,” is amended to disclose and provide a brief description of the background and business experience for the past five years of our executive officers and directors as of March 1, 2011.
     
 
4.
Item 11. “Summary Compensation Table,” is amended to disclose that our executive officers are independent contractors and as such, the duties and obligations to the Company they are subject to.
     
 
5.
Item 15. “Exhibits, Financial Statement Schedules,” is amended to include exhibit 3.1, the Articles of Incorporation, exhibit 3.2, the Bylaws of the Company, and exhibit 10.1, the Stock Purchase Agreement and Share Exchange by and among 4306, Inc. and Voiceserve, Ltd.
 
This Amendment No. 2 has no effect on the Registrant’s consolidated financial statements. Except as described above, this amendment does not amend, update or change any other items or disclosures contained in the Original Report or otherwise reflect events that occurred subsequent to the filing of the Original Report.
 
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the certifications required pursuant to the rules promulgated under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which were included as exhibits to the Original Report, have been amended, restated and re-executed as of the date of this Amendment No. 2 and are included as Exhibits 31.1, 31.2, 32.1 and 32.2 hereto.  
 
 
 

 
 
PART I
 
ITEM 1. DESCRIPTION OF BUSINESS
 
Note About Forward-Looking Statements
 
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results.  These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” in our fiscal year 2010 Form 10-K. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
 
GENERAL
 
Our mission is to enable VoIP business and entrepreneurs to offer a full array of VoIP services globally. Since the company was founded, we have worked to achieve this mission by creating technology that addresses the principle communication needs  through the economical use of VoIP. We develop and market software, services and solutions that we believe empowers our customers to communicate more efficiently and economically through the Internet throughout the world. VoipSwitch’s software enables communications providers, businesses, enterprises, hotels and cruise liners VOIP & TDM communication. Our customers purchase a license from us. The VoipSwitch license is a central medium in a telecommunications network that connects telephone calls from one phone line to another entirely by means of software running on a computerized system. This work was formerly carried out by hardware with physical switchboards to route the calls. VoipSwitch has created an environment whereby the VoipSwitch license purchaser can control all his clients’ activity via the Internet. Voipswitch controls connections at the junction point between circuit and packet networks. The end user can make calls from a computer, mobile phone, land line or SIP device. End users can manage their account online via their specific user names and passwords, with all the basic features available with landline communication systems plus many more convenient parameters. T hese include for example, call forwarding voice mail SMS and most basic PPX standard features. We do not have any patents. Capital devoted to research and development is used towards expanding the possibility of communication and its features.
 
We generate revenue by developing, manufacturing, licensing, and supporting a wide range of VoIP software products and services for many different types of communication devices. Our focus is to build on this foundation through ongoing innovation in our integrated software platforms, by delivering compelling value propositions to customers, by responding effectively to customer and partner needs, and by continuing to emphasize the importance of product excellence, business efficacy, and accountability.
 
 
1

 
 
Company History
 
4306, Inc. was incorporated on December 9, 2005 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. We act as a holding company for our subsidiaries; we have had no operations since inception.
 
On February 20, 2007, the Company entered into a share exchange agreement with Voiceserve Limited, a United Kingdom corporation whose principal place of business at the time of purchase was located at Cavendish House, 369 Burnt Oak Broadway, Edgware, Middlesex HA8 5AW and the shareholders of Voiceserve Limited. The Agreement provided for the acquisition of Voiceserve by the Company, whereby Voiceserve became a wholly owned subsidiary of the Company.
 
On February 20, 2007, we acquired all of the outstanding capital stock of Voiceserve in exchange for the issuance of 20,000,000 shares of 4306, Inc. common stock to the Voiceserve shareholders.  In addition, the shareholders of Voiceserve, agreed to cancel their 100,000 shares of the outstanding common stock of 4306, Inc.  Based upon same, Voiceserve became our wholly-owned subsidiary. Following the merger, we operate our business through our wholly-owned subsidiary, Voiceserve Limited, which is engaged in the global telecommunications industry.  We changed our name to Voiceserve, Inc. to reflect our new business plan.
 
On January 15, 2008, VoiceServe closed an Acquisition Agreement with VoIPSwitch Inc. (“VoIPSwitch”) whereby VoiceServe acquired all VoIPSwitch issued and outstanding ordinary shares as well as all of VoipSwitch’s assets, including customer orders and intangible assets, for total consideration of $3,000,000 ($450,000 cash, $150,000 notes payable due on demand, $600,000 notes payable in total monthly installments of $50,000 per month for 12 months, and 3,750,000 shares of VoiceServe common stock valued at $0.48 per share or $1,800,000).
 
Payment of the monthly installments of the $600,000 notes payable is contingent upon and limited each month to the future monthly net income of VoIPSwitch. Accordingly, pursuant to SFAS No. 141, this $600,000 “contingent consideration” portion of the $3,000,000 total purchase price was not included in the initial recorded cost of the acquisition or the recorded notes payable. If and when the contingency is resolved and payments of the $600,000 notes payable are made, such paid amounts will be added to goodwill.  
 
Overview
 
Voiceserve’s wholly owned subsidiary, VoIPSwitch Inc., develops and implements various types of Class 5 softswitch software that facilitate the deployment of VoIP services globally. To-date, the company has successfully implemented over approximately 16,000 VoIPSwitch systems around the world.
 
VoIPSwitch is a complete IP telephony licensed softswitch offering a variety of services including wholesale VoIP termination, device to phone technology, PC to phone/web to phone features, calling cards, SMS/ANI/PIN/DID/WEB callback, DIDs' mapping, call shops and application creating a SIP environment for most mobile phone handsets in a WiFi, 3G or Edge environment.. Unlike competitive systems composed of many different parts, the VoipSwitch platform is fully integrated in one application which makes it exceptionally easy to manage. All elements that are necessary for successful VoIP implementation are already built in.  All the features are integrated in one multiple server based application.
 
Business Model
 
Voiceserve has categorized its products into three divisions:
 
1)     VoipSwitch (www.voipswitch.com,)
 
2)     VoIP-Proxy (www.voip-proxy.com), and
 
3)     Call-to-PBX (www.calltopbx.com)
 
 
2

 
 
VoipSwitch
 
VoipSwitch is a Softswitch integrator and provider. Its multiple functions enable users to become a virtual Telecoms VoIP Operator. VoipSwitch delivers global communications through the VoIP backbone giving its users extensive voice calling features, some of which are unavailable on traditional telephones.
 
VoipSwitch’s features include:
 
-  
Free pier-pier calling worldwide,
 
-  
Call Back facility,
 
-  
SMS from desktop.
 
-  
Callshop programs,
 
-  
Global User Directory,
 
-  
Conference calling,
 
-  
Monitoring of Call Data Records,
 
-  
Easily managed availability, presence, and view status of contacts
 
-  
Logs – individual call and message history
 
-  
End-to-end encryption for superior privacy
 
-  
Mobility – login into Voiceserve account anywhere in the world and access contact list
 
-  
Vippie mobile, which is a softphone application suitable for Symbian phones & windows mobile,
 
-  
Multiple accounts etc…..
 
VoipSwitch Pricing’s
 
The price of the VoipSwitch system consists of the main package price and separate prices for the additional modules. There are two price options of the basic version of the system.
 
-  
Limited license at the price of  $3,500
 
-  
Unlimited license at the price of $5,000
 
The limited license permits only a maximum of 30 simultaneous connections. This version is recommended for start-ups since it keeps the initial investment minimal. As traffic increases the software can easily be upgraded to the next level. The subsequent upgrade to the unlimited license does not require any troublesome modifications. The limited version may run only on one IP address.
 
With the unlimited version, there is no limit on the number of simultaneous calls.
 
The only limitation is related to the hardware specifications of the server on which the VoIPSwitch operates. The unlimited license supports up to three VoipSwitch’s running simultaneously on independent servers attributed to the same company. There are no restrictions regarding geographical locations.
 
Both licensed versions have the capacity to implement the following:
 
-  
PC to Phone services (g723.1 softphone included )
 
 
3

 
 
-  
Device to phone services
 
-  
DID mapping
 
-  
Wholesale termination
 
-  
Customers billing
 
-  
Web interface for end users
 
-  
Web interface for administrator
 
Beyond the main package, there are additional modules that dramatically extend VoipSwitch’s features. The costs of these extra’s are listed below:
 
- Callback module - SMS, ANI, PIN, DID, WEB
 
$
1,500
 
- IP IVR (Calling cards) module
 
$
1,500
 
- Resellers module
 
$
1,000
 
- Call Shop module
 
$
1,000
 
- Online Shop module
 
$
1,000
 
- Softphone custom made design
 
$
 500
 
- Vippie Soft Phone
 
$
1,500
 
- IP PBX
 
$
5,000
 
- VoipSwitch Mobile Softphone (Windows)   
 
$
2,500
 
- VoipSwitch Mobile Softphone (Symbian)   
 
$
2,500
 
- Mobile Softphone Custom (logo) 
 
$
 150
 
- VoipSwitch Mobile Softphone (Blackberry)   
 
$
3,500
 
- VoipSwitch Mobile Softphone (iPhone)   
 
$
2,800
 
- VoipSwitch Mobile Softphone (Android)   
 
$
2,500
 
- VoipSwitch Mobile Blackberry Call Back   
 
$
 750
 
- Vippie Softphone with IM & SMS   
 
$
1,500
 
VoIP Proxy
 
VoIP-Proxy has been established to act as a provider of quality termination international minutes, and multiple DDI’s from numerous destinations across the globe. VoIP-proxy is an electronic marketplace for communications trading.
 
VoIP-Proxy’s online trading platform enables fixed and mobile service providers to buy, sell, deliver and settle millions of minutes per year. VoIP-Proxy provides a leading marketplace for IP transit and paid peering. Multiple ISPs and content sites buy, sell, deliver and settle IP transit and peering.
 
VoIP-Proxy provides A-Z voice termination through interconnections with Tier 1 Providers. The quality of our connections is aimed to be the highest standard possible. High ASR & short PPD witness the high standard of our system. The VoIP-Proxy network is supported by a 24/7 network-operation-centre, ensuring the constant quality of our service.
 
We offer our service to carriers, small businesses, callshops, resellers and other VoIP service providers.
 
The set up procedure is fast and simple. An account is created, prepayment via one of our numerous payment methods offered. Thereafter the client configures the device and can benefit from the cheapest wholesale termination rates around.
 
 
4

 
 
Call-to-PBX
 
Call-to-PBX, offers voice, video and mobile IP communications solutions for small-to-medium size businesses and residential customers. These solutions, based on internally developed technologies, leverage existing broadband Internet connections and cellular networks to deliver a high quality phone service at a fraction of the cost of alternative solutions. The Calltopbx solution, eliminates the need for costly, on-premises phone systems by delivering all telephony services over managed or unmanaged Internet connections. This economical, easy-to-use alternative to traditional PBX systems or Centrex class services allows high-speed Internet users anywhere in the world to be part of a virtual PBX that includes automated attendants, conference bridges, extension-to-extension dialing and ring groups, in addition to a rich variety of other f eatures normally found on dedicated PBX equipment. Virtual Office extensions do not require a dedicated communications infrastructure. The service is received through an existing Internet connection, thus eliminating the need for additional phone lines or digital subscriber lines for extensions, in contrast to traditional Centrex or PBX products.
 
In addition to the Hosted PBX service, we offer Hosted Key System service for companies whose size or structure dictates the sharing of multiple phone lines along with IP Trunking services for larger enterprises who wish to reap the cost benefits of VoIP phone service while retaining previously acquired on-premise equipment. For mobile phone users, Calltopbx offers Vippie Mobile -a softphone easily downloaded that seamlessly connects to the Call-to-PBX via WiFi or GPRS networks. This innovative service enables cell phone users to significantly reduce their international phone bills and maintain high digital voice quality, while still enjoying the convenience and flexibility of mobile calling.
 
Development
 
VoipSwitch plans to include the following new products:
 
IPTV
 
Traditional methods of content delivery, including air, satellite and cable are still available, but they are prohibitively expensive for small and medium size providers and are not globally scalable. For example, if a provider wants to offer delivery of TV channels via cable, he has to invest millions of dollars to build supporting infrastructure to the end users. Even if he succeeds, he will be limited to scaling up his business within the national boundaries.
 
Fortunately, there are emerging technologies such as Internet Protocol Television (IPTV) which enable low-cost and globally scalable delivery of multimedia content to end users. IPTV technology enables the transport of high quality multimedia content over public networks, such as the Internet. Because providers can leverage on existing global Internet infrastructure, they gain the opportunity to enter into the lucrative TV, Video-on-Demand, and Pay-per-View segments with very low cost and compete successfully with established players like cable and satellite companies.
 
VoipSwitch will be offering end-to-end IPTV Solution for distribution of IPTV, Video-on-Demand, Audio-on-Demand, Pay-per-View and other services directly to the TV sets of subscribers. The solution will feature robust user authentication, powerful billing and CRM capabilities, and intelligent content management. Utilizing advanced compression codecs, such as MPEG4 for video and MP3 for audio, the solution allows consistent delivery of high quality multimedia content to subscribers even when network bandwidth is limited.
 
IPTV will be an added feature within the VoipSwitch infrastructure.
 
Virtual PBX
 
The VoipSwitch PBX server was launched in Q4 2010  and has been designed for implementations in mixed VoIP/PSTN and pure VoIP telecom environment. The product offers both traditional and next generation services, including VoIP PBX, Auto Attendant (IVR), Voicemail, Unified Messaging, Follow-me, Conferencing and more.
 
 
5

 
 
In addition to traditional PBX services, the PBX features a number of next-generation VoIP PBX features including Voice-to-Email, Fax-to-Email, Distinctive Ring, Selective Call Forward, Selective Call Rejection, Virtual Ring, etc. All such features are available to both IP and PSTN callers. The VoIP PBX server l also supports unified messaging, enabling subscribers to access their voicemails via alternative communication methods. In particular, the VoIP PBX server can be configured to send email notifications of received voicemails or to email voicemail messages as audio attachments to subscribers.
 
Clients  have the facility to program the server with custom made announcements and/or perform custom call routing. The Follow-me feature allows subscribers to receive calls at multiple numbers that they designate. If a subscriber does not pick up at one location, the VoIP PBX server will ring onto a second or a third number. If the call is not picked up within a certain time period, the call will be transferred it to voicemail. The conferencing functionality enables providers to bridge both PSTN and VoIP callers in a voice conference. The VoIP PBX server supports public and private rooms, conference recording and real-time conference administration via phone or web.
 
Financing & Revenue Sources
 
Voiceserve is headquartered in London. To support its growth and in recognition of global opportunity, Voiceserve’s revenue stream is from the following:
 
1)   VoIPSWITCH - Revenues generated from sales of licenses and their ongoing monthly service charges to  resellers. Resellers range from small to medium VoIP business’s globally offering telephony via the Internet enabling registered users to call overseas at reduced rates, and between users for free. Purchasing the VoipSwitch license creates a virtual telecom supplier facility. www.VoIPswitch.com
 
2)  VoIP-PROXY- Being interconnected to multiple International telecom carriers, VoIP-Proxy has the capacity to offer smaller resellers & Wholesalers International, National and mobile minutes at very keen competitive tariffs. The resellers and whole-sellers interconnect to the network via VoIP, thus enabling them to pre-pay and purchase the minutes to the specified destinations.  www.VoIP-proxy.com
 
Voiceserve is forming partnerships and franchises in various countries and is looking to raise funds to partly subsidize its expansion.
          
Patent and Trademarks
 
We currently do not own any patents or licenses of any kind and therefore we have no protected rights with respect to our services. However Voip Switch logo and name has been trademarked in the United Kingdom and Ireland as of 18th June 2010. Applications have been submitted to expand the trade mark across the European continent.
 
Governmental Regulations
 
There are no governmental approvals necessary to conduct our current business. Although this permits us to provide our services without the time and expense of governmental supervision it also allows competitors to more easily enter this business market.
 
ITEM 2.DESCRIPTION OF PROPERTY
 
Our registered offices are located at Grosvenor House 1 High Street Edgware, Middlesex HA8 7TA.  Voiceserve houses its equipment at the above address. There is a lease agreement between Voiceserve and the Landlord with a rent of approximately GBP801 per month. We believe that this space is sufficient and adequate to operate our current business
 
 
6

 
 
ITEM 3. LEGAL PROCEEDINGS
 
We are not presently parties to any litigation, nor to our knowledge and belief is any litigation threatened or contemplated.
 
ITEM 4. REMOVED AND RESERVED
 
 
PART II
 
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
Our common stock has traded on the OTC Bulletin Board system under the symbol “VSRV” since July 24, 2007.  There is a limited trading market for our Common Stock.  The following table sets forth the range of high and low bid quotations for each quarter within the last fiscal year.  These quotations as reported by the OTCBB reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
 
   
High
   
Low
 
January 1, 2010 to March 31, 2010
 
$
0.48
   
$
0.24
 
October 1, 2009 to December 31, 2009
 
$
0.25
   
$
0.16
 
July 1, 2009 to September 30, 2009
 
$
0.30
   
$
0.05
 
April 1 2009 to June 30 2009
 
$
0.30
   
$
0.25
 
 
The source of these high and low prices was the OTCBB Bulletin Board.  These quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not represent actual transactions. The high and low prices listed have been rounded up to the next highest two decimal places.
 
The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors,  many of which we have little or no control.  In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.
 
Holders
 
As of March 31, 2010, we had approximately 60 record holders of our common stock, holding 32,402,935 shares.
 
Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights.
 
Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of our common stock representing a majority of the voting power of our capital stock issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation.
 
Although there are no provisions in our charter or by-laws that may delay, defer or prevent a change in control, we are authorized, without shareholder approval, to issue shares of preferred stock that may contain rights or restrictions that could have this effect.
 
Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
 
 
7

 
 
The issued and outstanding shares of our Common Stock were issued in accordance with the exemptions from registration afforded by Section 4(2) of the Securities Act of 1933.
 
Dividends
 
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.
  
Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
 
ITEM 6.       SELECTED FINANCIAL DATA
 
Not applicable for smaller reporting company.
 
ITEM 7.        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS  OF OPERATIONS
 
The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. The following discussion contains forward-looking statements relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.
 
Overview
 
The following Management’s Discussion and Analysis (MD&A) is intended to help the reader understand the results of operations and financial condition of Voiceserve Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes to the financial statements (“Notes”).
 
We were founded December 9, 2005 by Michael Raleigh. On February 20, 2007, pursuant to a share exchange agreement, Voiceserve Limited, a United Kingdom Corporation founded in 2002, became our wholly owned subsidiary. Voiceserve Limited is a global Internet communications company that makes it possible for anyone with an Internet connection to make low cost, high quality voice calls over the Internet. Following the merger, we adopted Voiceserve Limited’s business plan, and began conducting business as a global Internet communications company. We changed our name to Voiceserve, Inc., to better reflect our new business plan.
 
Voiceserve Limited was founded in March 2002 by Michael Bibelman, Alexander Ellinson and Mike Ottie. The founders each have over 15 years of experience in the telecommunications industry.
 
 In their report dated June 29, 2010, our independent auditors stated that our financial statements for the fiscal years ended March 31, 2010 and 2009, were prepared assuming that we would continue as a going concern. Our ability to continue as a going concern is an issue raised as a result of our recurring losses from operations and our net working capital deficiency. We continue to experience net operating losses. Our ability to continue as a going concern is subject to our ability to generate a profit.
 
 
8

 
 
We generate revenue by developing, manufacturing, licensing, and supporting a wide range of VoIP software products and services for many different types of devices, including a wide range of cellular telephones. Their careers began in 1991 with Econophone Inc. (“Econophone”) a marketer of international “call-back” and calling cards. The founders worked as independent resellers of calling cards creating markets in Europe and third world countries transmitting the calls via universal 0800 numbers. While working at Econophone, the founders discovered a huge potential in the market for pre-paid calling cards and were one of the first groups in the industry to market such a product in Europe. Our founders introduced, among the many famous European distributors to market such a product, the Audax Group (“Au dax”), based in Holland with an annual turnover in excess of 850 million. Our founders were also instrumental in aiding Econophone LLC in its transformation from a privately held company to one listed on the New York Stock Exchange, known thereafter as Viatel. Once Viatel was listed on the New York Stock Exchange, our founders independently set up their own ISDN and VoIP platforms with the intention of developing and marketing a comprehensive VoIP solution.  Our marketing efforts are focused on VoIP wholesalers termination carriers, retail VoIP providers, Internet providers, including WiFi and WiMax operators, Cable TV networks, GSM providers, telecom resellers, prepaid serve companies, and small-to-medium size companies (businesses, hotels, hospitals, etc.).
 
On January 15, 2008, VoiceServe closed an Acquisition Agreement with VoipSwitch Inc. (“VoipSwitch”) whereby VoiceServe acquired all VoipSwitch issued and outstanding ordinary shares as well as all of VoipSwitch’s assets, including customer orders and intangible assets, for total consideration of $3,000,000, consisting of $450,000 cash, $150,000 notes payable due on demand, $600,000 notes payable in total monthly installments of $50,000 per month for 12 months, and 3,750,000 shares of VoiceServe common stock valued at $0.48 per share or $1,800,000.  Payment of the monthly installments of the $600,000 notes payable is contingent upon and limited each month to the future monthly net income of VoipSwitch.  Accordingly, pursuant to SFAS No. 141, this $600,000 “contingent consideration” portion of the $3,000,000 total purchase price was not included in the initial recorded cost of the acquisition or the recorded notes payable.  If and when the contingency is resolved and payments of the $600,000 notes payable are made, such paid amounts will be added to goodwill.
 
VoipSwitch
 
VoipSwitch is a complete IP telephony system offering a variety of services including device to phone technology, PC to phone/web to phone features, calling cards, SMS/ANI/PIN/DID/WEB callback, DIDs' mapping, call shops and more. Unlike competitive VoIP systems composed of many different parts, the VoipSwitch platform is fully integrated into one application, which makes it exceptionally easy to manage--all elements that are necessary for successful VoIP implementation are already built in.  All the features are integrated in one multiple server based application.  To-date, the Company has successfully installed over 16,000 VoipSwitch systems around the world.
 
The“VoipSwitch Brand” has gained recognition and popularity especially in countries where land-line telecommunication infrastructure are less developed.  Since the Company has increased its participation in telecom conferences and exhibitions over the last year, awareness of its comprehensive VoIP software offering has significantly increased.
 
To further the breadth of VoipSwitch’s system, the Company added VoIP dialers for cellular phones.  Over the last twelve months, the Company has introduced dialers for Blackberry and Apple’s iPhone, in addition to its existing dialers for Symbian (Nokia, Motorola, Samsung, Sony, etc.), Android and Windows® cellular phones.
 
The Company cultivates long-term growth of its businesses through technological innovation, engineering excellence, advanced functionality and security, and a commitment to delivering high-quality products and services. VoIPVoIP Our goal is to deliver products that provide the best platform with the lowest total cost of ownership.
 
We will continue to invest in research and development in existing and new lines of business, including IPTV. We will also invest in research and development of advanced technologies for future products. We believe that delivering innovative and high-value solutions through our integrated platform is the key to meeting customer needs and to our future growth.
 
We believe that we have laid a foundation for long-term growth by delivering innovative products, creating opportunities for wholesale and retail partners, and offering a comprehensive VoIP software platform with a low cost of ownership for service providers as well as end users. Our focus in fiscal year 2011 is to build on this foundation, and expand our marketing efforts into North, Central and South America and Asia.
 
 
9

 
 
Key market opportunities include:
 
VoipSwitch Softswitch Technology. We are focused on delivering consumers softswitch products that we believe are compelling in terms of design, features, and functionality. We also are working to define the next era of VoIP telephony through the development of innovative software that runs on a wide range of devices and connects people quickly and easily to the information, experiences, and communities they care about.
 
Mobile phone VoIP connectivity. The ability to combine the power of VoIP and mobile technology via the Internet represents an opportunity across all our businesses lines. We believe our approach will enable us to deliver new experiences to end users and new value to businesses.
 
Expanding our presence. Through our ability to deliver additional value in VoIP telephony, we believe we are well-positioned to build on our strength. In addition to wholesalers and retailers, we intend to market our VoIP software to small-to-medium size business, hotels, cruise lines, hospitals and schools/universities.
 
Plan of Operation
 
During the next twelve months, we expect to take the following steps in connection with the development of our business and the implementation of our plan of operations:
  
We have increased our presence at key exhibitions across the world and expect to maintain a high profile at industry conferences and exhibitions as a key component of our marketing strategy.
 
We hope to hire additional programmers on a dedicated basis in order to execute our plans to further enhance IPTV which is the future in technology. We anticipate paying either an annual salary or hourly fee to dedicated programmers depending upon the workload required. We expect that we will require a minimum of $150,000 for programmers in 2010 to optimally implement our plans.
   
It is Voiceserve’s aim to amass a large subscription base thus increasing revenues and hence profitability.
 
 
10

 
 
RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2010 COMPARE TO THE YEAR ENDED MARCH 31, 2009
 
The following table presents the statement of operations for the year ended March 31, 2010 as compared to the comparable period of the year ended March 31, 2009. The discussion following the table is based on these results.
 
   
Year Ended March 31,
 
   
2010
   
2009
 
Operating revenues:
           
    Software license fees
 
$
3,168,876
   
$
1,379,135
 
    Revenues from communications air time
   
141,189
     
552,394
 
    Total operating revenues
   
3,310,065
     
1,931,529
 
                 
Cost of operating revenues:
               
    Software license fees
   
1,038,671
     
696,999
 
    Communications air time
   
124,422
     
611,114
 
    Total cost of operating revenues
   
1,163,093
     
1,302,113
 
                 
Gross profit (loss)
   
2,146,972
     
629,416
 
                 
Operating expenses:
               
    Selling, general and administrative expenses, including
               
       stock-based compensation of $405,772 and
               
       $50,417,  respectively
   
2,812,453
     
998,767
 
   
               
      
               
                 
       Total operating expenses
   
2,812,453
     
998,767
 
                 
Income (loss) from operations
   
(665,481)
     
(369,351)
 
                 
Interest income
   
        39
     
        178
 
Interest expense
   
 -
     
 (1,840)
 
                 
Income (loss) before income taxes
   
(665,442)
     
(371,013)
 
                 
Income taxes (benefit)
   
    ---
     
    ---
 
                 
Net income (loss)
 
$
(665,442)
   
$
(371,013)
 
                 
Net income (loss) per share - basic and diluted
 
$
(0.02)
   
$
(0.01)
 
                 
Weighted average number of shares
               
    outstanding - basic and diluted
   
31,990,848
     
29,160,680
 
 
 
11

 
 
Revenues and Cost of Revenues
 
Cost of operating revenues decrease to $1,163,093 in the twelve month period from $1,302,113 reflecting the Company’s greater focus on software sales as compared to service and device sales.  As a result, the company’s gross margin increased from 34% for fiscal year 2009 to 65% for fiscal year 2010.
 
Total Revenues
 
Revenues were $3,310,065 for the twelve months ended March 31, 2010 and $1,931,529 for the twelve months ended March 31, 2009.  The increase in sales is primarily attributed to increased marketing at industry shows and conferences, the addition of softswitch modules and increased sales to existing clients. The company has been exhibiting globally at prominent and significant IT and VoIP exhibitions. Presence at shows increases awareness to the company’s broad spectrum of its software products and modules.  Furthermore, it has added three additional types of mobile dialers: Windows, Android and the Apple dialers. This allows connectivity to the VoipSwitch softphone not only from a PC, but even from a mobile phone while in WiFi, 3G or Edge environment.  The Company’s client base is spread globally. 60; The revenues were generated from 44% of sales in Asia, 27% of sales in North America,22% of sales in Europe and  7% across other  regions.  It should be noted that Deferred Revenue increase to $245,666 in fiscal year 2010 from $121, 993 in fiscal year 2009.  In most cases, Deferred Revenue will be recognized over the subsequent twelve month period.
 
Cost of Revenues
 
Cost of revenues for fiscal year 2010 was $1,163,093 compared to $1,302,113 for fiscal year 2009. The decrease in cost of revenues in 2010 reflects the additional purchases from the old clientele.  Gross margin averaged 65% in fiscal year 2010 compared to 33% for fiscal 2009.  The increase in gross margins reflects the Company’s focus on higher margin software sales as compared to service revenue.
 
Operating Expenses
 
Sales, General and Administrative Costs
 
SG&A for fiscal 2010 was $2,812,453 an increase of $1,813,686 over the prior year level of $998,767.  The increased costs represents the added costs of attending and presenting at industry conferences and trade shows, increased sales and marketing efforts, and development of Vippie mobile dialers for cellular phones. In addition, stock based compensation increased to $405,772 from $50,417 in fiscal year 2009. Also included in SG&A is amortization of intangible assets of $230,000 in both fiscal years 2010 and 2009.
 
Net Income (Loss)
 
The Company incurred a Loss from operations for the year ended March 31, 2010 of $(665,442) compared to $(371,013) for the year ended March 31, 2009.  It should be noted that the Company’s losses over the most recent two quarters were $47,985 and $43,598, respectively.
 
LIQUIDITY AND CAPITAL RESOURCES
 
As of June 30, 2010 we had $808,632 in cash and cash equivalents. On May 26, 2010 we raised $690,000 through the sale of shares of Company stock, which was accomplished through advice and support of professional investment consultants through a private placement. In connection with the private placement the Company and the investors executed a Securities Purchase Agreement and a Registration Rights Agreement. Among other things, the Registration Rights Agreement provides that the Company will prepare and file with the SEC a Registration Statement covering the resale of the Registrable Securities and use its commercially reasonable efforts to cause it to be declared effective. If the Registration Statement is not filed by July 30, 2010 or if the Registration Statement filed is not declared effective by the SEC within certain t ime periods (by December 27, 2010 in the event of a "full review" by the SEC) and the Company has not exercised its reasonable best efforts to secure the Registration Statement's effectiveness with the SEC, the Registration Agreement provides that the Company will pay monthly (until cured) partial liquidated damages to the investors equal to 1% of the purchase price paid by the investors, subject to a maximum of 10% of the purchase price paid by the investors. To date, the Company has been using its reasonable efforts to secure the Registration Statement’s effectiveness with the SEC and therefore, is not in violation of the Registration Rights Agreement. Further, none of the investors have demanded any payment pursuant to the Registration Rights Agreement. Thus, the Company is not obligated to pay or accrue for such liquidated damages.
 
Additional capital may be required in order to grow and sustain operations over the next twelve months. In addition, unless the Company becomes profitable and begins generating sufficient cash flow, we will need to raise additional capital to continue our operations past 12 months, and there is no assurance we will be successful in raising the needed capital. Management believes that, if the Company’s operational cash flow is not sufficient to support its operational and/or its marketing strategy, its short-term capital needs could range between $500,000 and $1,500,000 for which it would most probably seek to raise the capital in the equity markets.
  
 
12

 
 
Long term capital needs of the company highly depend upon the amount of time it takes for us to achieve market penetration.  If we are successful in growing market share and developing new markets around the world, it will be necessary for us to hire additional employees to support an expanding client base.  If additional working capital is needed to support an expanded operation, we will seek such capital in the form of debt and/or equity. Management believes that the Company’s long term capital needs, could potentially range between $1,500,000 and $3,000,000.
 
Currently, we have no material commitments for capital expenditures. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. In the short term, should the release of our new features and modules take longer than we anticipate capital will be required to finance the engineers working on these products. Long term, once the products are fully developed and enhanced capital will be required to expand the marketing prospects into different regions and markets.
 
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
Investment agreement
 
On August 20, 2007, VoiceServe entered into an Investment Agreement with Dutchess Private Equities Fund, Ltd. (the “Investor”).  Pursuant to this Agreement, the Investor shall commit to purchase up to $10,000,000 of our common stock over the course of thirty-six (36) months.  The amount that we shall be entitled to request from each purchase (“Puts”) shall be equal to, at our election, either (i) up to $250,000 or (ii) 200% of the average daily volume (U.S. market only) of the common stock for the ten (10) trading days prior to the applicable Put Notice Date, multiplied by the average of the three (3) daily closing bid prices immediately preceding the Put Date.  The Put Date shall be the date that the Investor receives a put notice of a draw down by us.  The purchase price shall be set a t ninety-three percent (93%) of the lowest closing Best Bid price of the Common Stock during the pricing period.  The pricing period shall be the five (5) consecutive trading days immediately after the put notice date.  There are put restrictions applied on days between the put date and the closing date with respect to that particular put.  During this time, we shall not be entitled to deliver another put notice.
 
In connection with the Agreement, we entered into a Registration Rights Agreement with the Investor (”Registration Agreement”).  Pursuant to the Registration Agreement, we were obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) covering 2,335,550 shares of the common stock underlying the Investment Agreement within 15 days after the execution date.  We filed a registration statement with the SEC covering the Investor shares on October 4, 2007, which was then declared effective on November 6, 2007.
 
CRITICAL ACCOUNTING PRONOUNCEMENTS
 
Our significant accounting policies are summarized in Note 2 of our financial statements included in our report on this Form 10-K.
 
Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would have materially effected our results of operations, financial position or liquidity for the periods presented in this report.
 
OFF-BALANCE SHEET ARRANGEMENTS
 
We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
 
ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOUSURES ABOUT MARKET RISK
 
Market risk is the risk of loss from adverse changes in market prices and interest rates. We do not have substantial operations at this time so they are not susceptible to these market risks.  If, however, we begin to generate substantial revenue, our operations may be materially impacted by interest rates and market prices.
 
 
13

 
 
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 
VOICESERVE, INC.
Index to Financial Statements
 
 
 
 
Page
Report of Independent Registered Public Accounting Firm
F-2
   
Financial Statements:
 
   
   Consolidated Balance Sheets as of March 31, 2010 and March 31, 2009
F-3
   
   Consolidated Statements of Operations for the years ended March 31, 2010 and 2009
F-4
   
   Consolidated Statements of Changes in Stockholders’ Equity for the years ended March 31, 2010 and 2009
F-5
   
   Consolidated Statements of Cash Flows for the years ended March 31, 2010 and 2009
F-6
   
   Notes to Consolidated Financial Statements
F-7
   
 
 
F-1

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of
Voiceserve, Inc.
 
I have audited the accompanying consolidated balance sheets of Voiceserve, Inc. and subsidiaries (the “Company”) as of March 31, 2010 and 2009, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management.  My responsibility is to express an opinion on these financial statements based on my audits.
 
I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
 
In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Voiceserve, Inc. and subsidiaries as of March 31, 2010 and 2009 and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.
 
The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
/s/ Michael T. Studer CPA P.C.
 
Freeport, New York
June 29, 2010 (except as to the fifth, sixth, seventh, and eighth paragraphs of Note 13, which are as of October 18, 2010)
 
 
F-2

 
 
VOICESERVE, INC. AND SUBSIDIARIES
 
Consolidated Balance Sheets
 
             
   
March 31,
 
   
2010
   
2009
 
Assets
           
             
Current assets:
           
   Cash and cash equivalents
 
$
218,438
   
$
175,072
 
   Accounts receivable, net of allowance
               
      for doubtful accounts of $0 and $0, respectively
   
32,839
     
31,243
 
   Prepaid expenses
   
16,901
     
19,837
 
                 
      Total current assets
   
268,178
     
226,152
 
                 
Property and equipment, net of accumulated depreciation
               
   of $60,227 and $53,986, respectively
   
11,662
     
13,084
 
Intangible assets, net of  accumulated amortization of
               
   $507,917 and $277,917, respectively
   
2,223,874
     
2,365,874
 
                 
Total assets
 
$
2,503,714
   
$
2,605,110
 
Liabilities and Stockholders' Equity (Deficiency)
               
                 
Current liabilities:
               
   Accounts payable
 
$
256,458
   
$
176,045
 
   Accrued expenses payable
   
57,705
     
48,347
 
   Deferred software license fees
   
245,666
     
121,993
 
   Loans payable to related parties
   
34,212
     
60,514
 
   Due sellers of VoiPSwitch Inc.
   
150,000
     
150,000
 
                 
      Total current liabilities
   
744,041
     
556,899
 
                 
Stockholders' equity (deficiency):
               
   Preferred stock, $.001 par value; authorized
               
      10,000,000 shares, none issued and outstanding
   
-
     
-
 
   Common stock, $.001 par value; authorized
               
      100,000,000 shares, issued and outstanding
               
      32,402,935 and 29,402,935 shares, respectively
   
32,403
     
29,403
 
   Additional paid-in capital
   
4,733,537
     
4,330,765
 
   Deficit
   
(2,994,155
)
   
(2,328,713
)
   Accumulated other comprehensive income (loss)
   
(12,112
   
16,756
 
                 
      Total stockholders' equity (deficiency)
   
1,759,673
     
2,048,211
 
                 
Total liabilities and stockholders' equity (deficiency)
 
$
2,503,714
   
$
2,605,110
 
 
See notes to consolidated financial statements.
 
 
F-3

 
 
VOICESERVE, INC. AND SUBSIDIARIES
 
Consolidated Statements of Operations
 
             
   
Year Ended March 31,
 
   
2010
   
2009
 
Operating revenues:
           
   Software license fees
 
$
3,168,876
   
$
1,379,135
 
   Revenues from communications airtime and devices
   
141,189
     
552,394
 
                 
   Total operating revenues
   
3,310,065
     
1,931,529
 
                 
Cost of operating revenues:
               
   Software license fees
   
1,038,671
     
690,999
 
   Cost of communications airtime and devices
   
124,422
     
611,114
 
                 
   Total cost of operating revenues
   
1,163,093
     
1,302,113
 
                 
Gross profit (loss)
   
2,146,972
     
629,416
 
                 
Operating expenses:
               
   Selling, general and administrative expenses, including
               
      stock-based compensation of $405,772 and
               
      $50,417, respectively
   
2,812,453
     
998,767
 
                 
      Total operating expenses
   
2,812,453
     
998,767
 
                 
Income (loss) from operations
   
(665,481
)
   
(369,351
)
                 
Interest income
   
39
     
178
 
Interest expense
   
-
     
(1,840
)
                 
Income (loss) before income taxes
   
(665,442
)
   
(371,013
)
                 
Income taxes (benefit)
   
-
     
-
 
                 
Net income (loss)
 
$
(665,442
)
 
$
(371,013
)
                 
Net income (loss) per share - basic and diluted
 
$
(0.02
)
 
$
(0.01
)
                 
Weighted average number of shares
               
   outstanding - basic and diluted
   
31,990,848
     
29,160,680
 
 
See notes to consolidated financial statements.
 
 
F-4

 
 
VOICESERVE, INC. AND SUBSIDIARIES
 
Consolidated Statements of Changes in Stockholders' Equity
 
                                     
                           
Accumulated
   
Total
 
   
Common Stock
   
Additional
         
Other
   
Stockholders'
 
   
$.001 par value
   
Paid-In
         
Comprehensive
   
Equity
 
   
Shares
   
Amount
   
Capital
   
Deficit
   
Income (Loss)
   
(Deficiency)
 
                                     
Balances,
                                               
   March 31, 2008
   
28,877,935
   
$
28,878
   
$
4,231,445
   
$
(1,957,700
)
 
$
251
   
$
2,302,874
 
                                                 
Sale of shares in
                                               
   private placements
   
525,000
   
$
525
   
$
99,320
     
-
     
-
   
$
99,845
 
                                                 
Foreign currency
                                               
   translation
                                               
   adjustment
   
-
     
-
     
-
     
-
     
16,505
   
$
16,505
 
                                                 
Net income (loss)
   
-
     
-
     
-
   
$
(371,013
)
   
-
   
$
(371,013
)
                                                 
Balances,
                                               
   March 31, 2009
   
29,402,935
   
$
29,403
   
$
4,330,765
   
$
(2,328,713
)
 
$
16,756
   
$
2,048,211
 
                                                 
Shares issued for
                                               
    services
   
3,000,000
   
$
3,000
   
$
372,000
     
-
     
-
   
$
375,000
 
                                                 
Stock options
                                               
    expense
   
-
     
-
   
$
30,772
     
-
     
-
   
$
30,722
 
                                                 
Foreign currency
                                               
    translation
                                               
    adjustment
   
-
     
-
     
-
     
-
   
$
(28,868
)
 
$
(28,868
)
                                                 
Net income (loss)
   
-
     
-
     
-
   
$
(665,442
)
   
-
   
$
(665,442
)
                                                 
Balances,
                                               
   March 31, 2010
   
32,402,935
   
$
32,403
   
$
4,733,537
   
$
(2,994,155)
   
$
(12,112)
   
$
1,759,673
 
 
See notes to consolidated financial statements.
 
 
F-5

 
 
VOICESERVE, INC. AND SUBSIDIARIES
 
Consolidated Statements of Cash Flows
 
             
   
Year Ended March 31,
 
   
2010
   
2009
 
Cash flows from operating activities:
           
   Net income (loss)
 
$
(665,442
)
 
$
(371,013
)
   Adjustments to reconcile net income (loss) to net
               
      cash provided by (used in) operating activities:
               
      Depreciation
   
6,241
     
5,276
 
      Amortization
   
230,000
     
230,000
 
      Stock-based compensation
   
405,772
     
50,417
 
   Changes in operating assets and liabilities:
               
      Accounts receivable, net
   
(1,596
   
31,608
)
      Prepaid expenses and other current assets
   
2,936
     
95,586
)
      Accounts payable
   
80,413
     
15,994
 
      Accrued expenses payable
   
9,358
     
(29,468
 
      Deferred software license fees
   
123,673
     
57,659
 
                 
   Net cash provided by (used in) operating activities
   
191,355
     
86,059
)
                 
Cash flows from investing activities:
               
   Retirements (purchases) of property and equipment
   
(4,819
   
5,871
)
   Acquisition of VoIPSwitch Inc.
   
(88,000
)
   
(99,000
)
                 
   Net cash provided by (used in) investing activities
   
(92,819
)
   
(93,129
)
                 
Cash flows from financing activities:
               
   Proceeds from sales of common stock
   
-
     
99,845
 
   Increase (decrease) in loans payable to related parties
   
(26,302
   
15,746
 
                 
   Net cash provided by (used in) financing activities
   
(26,302
   
115,591
 
                 
Effect of exchange rate changes on cash and cash equivalents
   
(28,868
   
16,505
 
                 
Increase (decrease) in cash and cash equivalents
   
43,366
     
125,026
)
                 
Cash and cash equivalents, beginning of period
   
175,072
     
50,046
 
                 
Cash and cash equivalents, end of period
 
$
218,438
   
$
175,072
 
                 
Supplemental disclosures of cash flow information:
               
                 
   Interest paid
 
$
-
   
$
1,840
 
                 
   Income taxes paid
 
$
-
   
$
-
 
 
See notes to consolidated financial statements.
 
 
F-6

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
 
VoiceServe, Inc. (“VoiceServe”) was incorporated in the State of Delaware on December 9, 2005 under the name 4306, Inc.  On February 20, 2007, VoiceServe acquired 100% of the issued and outstanding stock of VoiceServe Limited (“Limited”), a corporation incorporated in the United Kingdom on March 21, 2002, in exchange for 20,000,000 shares of VoiceServe common stock (representing 100% of the issued and outstanding shares of VoiceServe after the exchange).  From October 1, 2006 to February 20, 2007, Limited owned 100% of the issued and outstanding shares of VoiceServe.  Accordingly, this acquisition was treated as a combination of entities under common control and was accounted for in a manner similar to pooling of interests accounting.
 
On January 15, 2008, VoiceServe acquired 100% of the issued and outstanding stock of VoipSwitch Inc. (“VoipSwitch”), a corporation incorporated in the Republic of Seychelles on May 9, 2005 (see Note 3).  VoipSwitch licenses software systems (online telephony management applications) to customers online.  Generally, the license of a system includes remote installation and initial configuration of the main system, training relating to the use of the system and modules, and 1 year technical support.
 
VoiceServe has had no operations; VoiceServe is a holding company for its wholly owned subsidiaries Limited (since February 20, 2007) and VoipSwitch (since January 15, 2008).
 
Limited is engaged in the telephone communications business, offering advanced VolP services under the brand name Call-to-PBX to customers through the VoipSwitch software platform. Call-to-PBX services enable customers to access the Company's exchange via the Internet and through exchange connections with numerous sources of telephone communications at discounted rates through telephone handsets, computers and cell phones. Its advanced VolP telephony services are designed for both residential and business use. Services include a personalized, highly sophisticated private branch exchange ("PBX") system that provides constant availability regardless of global location. All telephony services are delivered over Internet connections, eliminating the need for costly, on-premise phone systems. The software platform offers virtual office extensions, automated attendants, conference bridges, and extension to extension dialing, in addition to a rich variety of other features normally offered on physical PBX equipped systems
 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
(a) 
Principles of Consolidation
 
The consolidated financial statements include the accounts of VoiceServe and its wholly owned subsidiaries Limited and VoipSwitch (collectively, the “Company”). All intercompany balances and transactions have been eliminated in consolidation.
 
(b)  
Basis of presentation
 
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”).
 
 
F-7

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
The financial statements have been prepared on a “going concern” basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  However, as of March 31, 2010, the Company had negative working capital of $475,863.  Further, since inception, the Company has incurred losses of $2,994,155.  These factors raise substantial doubt as to the Company’s ability to continue as a going concern.  The Company plans to improve its financial condition by raising capital through sales of shares of its common stock.  Also, the Company plans to pursue new customers and certain acquisition prospects to attain profitable operations.  The financial statements do not include any adjustments that might be necessary should t he Company be unable to continue as a going concern.
 
(c)  Use of Estimates
 
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.
 
(d)  Fair Value of Financial Instruments
 
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, net, accounts payable, accrued expenses payable, loans payable to related parties, and due sellers of VoipSwitch Inc.  The fair value of these financial instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments.
 
(e)  Foreign Currency Translation
 
The functional currency of VoiceServe is the United States dollar.  The functional currency of Limited is the United Kingdom pound sterling (“£”).  The functional currency of VoipSwitch is the United States dollar.  The reporting currency of the Company is the United States dollar.  Limited’s assets and liabilities are translated into United States dollars at the period-end exchange rates ($1.517634 and $1.429640 at March 31, 2010 and March 31, 2009, respectively).  Limited’s revenue and expenses are translated at weighted average exchange rates ($1.592847 and $1.729932 for the years ended March 31, 2010 and March 31, 2009, respectively).  Translation adjustments are included in accumulated other comprehensive income (loss) in the stockholders ’ equity section of the balance sheets.
 
(f)  Cash and Cash Equivalents
 
The Company considers all liquid investments purchased with a maturity of three months or less to be cash equivalents.
 
 
F-8

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
(g)  Property and Equipment, Net
 
Property and equipment, net, is stated at cost less accumulated depreciation.  Depreciation is calculated using an accelerated declining balance method over the estimated useful lives of the respective assets.
 
(h)  Intangible Assets
 
Intangible assets, net, are stated at their estimated fair values at date of acquisition less accumulated amortization.  Amortization is calculated using the straight-line method over the estimated economic lives of the respective assets.
 
(i)  Goodwill and Intangible Assets with Indefinite Lives
 
The Company does not amortize goodwill and intangible assets with indefinite useful lives, but instead tests for impairment at least annually.  When conducting the annual impairment test for goodwill, the Company compares the estimated fair value of a reporting unit containing goodwill to its carrying value.  If the estimated fair value of the reporting unit is determined to be less than its carrying value, goodwill is reduced and an impairment loss is recorded.
 
(j)  Long-lived Assets
 
The Company reviews long-lived assets held and used, intangible assets with finite useful lives and assets held for sale for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  If an evaluation of  recoverability is required, the estimated undiscounted future cash flows associated with the asset is compared to the asset’s carrying amount to determine if a write-down is required.  If the undiscounted cash flows are less than the carrying amount, an impairment  loss is recorded to the extent that the carrying amount exceeds the fair value.
 
(k)  Revenue Recognition
 
Revenues from licenses of software are recognized upon delivery of the software when persuasive evidence of an arrangement exists, the fee is fixed or determinable, and collectability is probable.  The portion of the fee allocated to postcontract customer support and services is recognized ratably over the period of the agreed support and services.
 
Revenues from communications air time are recorded when the customer uses the air time.
 
 
F-9

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
Sales of communications devices are recorded when title passes to the customer which is generally at time of shipment to the customer. Substantially all sales are prepaid by the customer by credit card.
 
(l)  Advertising
 
Advertising costs are expensed as incurred and amounted to $436,901 and $142,493 for the years ended March 31, 2010 and 2009, respectively.
 
(m) Stock-Based Compensation
 
Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation”.
 
(n)  Income Taxes
 
Income taxes are accounted for under the assets and liability method.  Current income taxes are provided in accordance with the laws of the respective taxing authorities.  Deferred income taxes are provided for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.   Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets wi ll be realized.
 
(o)  Net Income (Loss) per Share
 
Basic net income (loss) per share is computed on the basis of the weighted average   number of common shares outstanding during the period.
 
Diluted net income (loss) per share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options and convertible securities) outstanding.  Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation.  For the year ended March 31, 2010, the diluted net loss per share calculation excluded the effect of stock options outstanding and exercisable into a total of 903,000 shares of common stock.
 
 
F-10

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
NOTE 3 – ACQUISITION OF VOIPSWITCH INC.
 
On January 15, 2008, VoiceServe closed an Acquisition Agreement with VoipSwitch Inc. (“VoipSwitch”) whereby VoiceServe acquired all VoipSwitch issued and outstanding ordinary
shares as well as all of VoipSwitch’s assets, including customer orders and intangible assets, for
total consideration of $3,000,000 ($450,000 cash, $150,000 notes payable due on demand, $600,000 notes payable in total monthly installments of $50,000 per month for 12 months, and 3,750,000 shares of VoiceServe common stock valued at $0.48 per share or $1,800,000).
 
Payment of the monthly installments of the $600,000 notes payable is contingent upon and limited each month to the future monthly net income of VoipSwitch.  Accordingly, this $600,000 “contingent consideration” portion of the $3,000,000 total purchase price was not included in the initial recorded cost of the acquisition or the recorded notes payable.  If and when the contingency is resolved and payments of the $600,000 notes payable are made, such paid amounts are added to goodwill.
 
The estimated fair values of the identifiable net assets of VoipSwitch at January 15, 2008 (date of acquisition) consisted of:
 
   Cash and cash equivalents
 
$
6,682
 
   Developed software (for licensing to customers)
   
2,000,000
 
   In-place contracts and customer list
   
100,000
 
   Trade name
   
100,000
 
   Accounts payable and accrued expenses
   
(2,999
)
   Deferred software license fees
   
(48,474
)
         
   Identifiable net assets
 
$
2,155,209
 
 
Goodwill of $244,791 (excess of the $2,400,000 consideration, excluding the $600,000 contingent consideration, over the $2,155,209 identifiable net assets) was recorded at the acquisition date January 15, 2008.  In February and March 2008, $100,000 of the $600,000 “contingent consideration” notes payable was paid and added to goodwill.  In the year ended March 31, 2009, an additional $99,000 of the $600,000 “contingent consideration” notes payable was paid and added to goodwill.
 
In the year ended March 31, 2010, an additional $88,000 of the $600,000 “contingent consideration” notes payable was paid and added to goodwill. The balance remaining on the “contingent consideration” notes payable at March 31, 2010 is $313,000.
 
 
F-11

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
NOTE 4 – INTANGIBLE ASSETS, NET
 
Intangible assets, net, consisted of:
 
   
March 31,
 
   
2010
   
2009
 
             
   Acquisition of VoipSwitch:
           
      Developed software (for licensing to customers)
 
$
2,000,000
   
$
2,000,000
 
      In-place contracts and customer list
   
100,000
     
100,000
 
      Trade name
   
100,000
     
100,000
 
      Goodwill
   
531,791
     
443,791
 
                 
     Total
   
2,731,791
     
2,643,791
 
                 
   Accumulated amortization
   
(507,917
)
   
(277,917
)
                 
   Intangible assets, net
 
$
2,223,874
   
$
2,365,874
 
 
The developed software, in-place contracts and customer list, and trade name are amortized using the straight-line method over their estimated economic lives (ten years for the developed software and trade name; five years for the in-place contracts and customer list).  Goodwill is not amortized.
 
For the years ended March 31, 2010 and 2009, amortization of intangible assets expense was $230,000 and $230,000, respectively.  $200,000 and $200,000, respectively, was included in cost of software license fees.  $30,000 and $30,000, respectively, was included in selling, general and administrative expenses.
 
Expected future amortization expense for acquired intangible assets as of March 31, 2010 follows:
 
   Year ended March 31,
 
Amount
 
   2011
 
$
230,000
 
   2012
   
230,000
 
   2013
   
225,833
 
   2014
   
210,000
 
   2015
   
210,000
 
   Thereafter
   
586,250
 
         
   Total
 
$
1,692,083
 
 
 
F-12

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
NOTE 5 – DEFERRED SOFTWARE LICENSE FEES
 
As described in Note 1, the licenses of the VoipSwitch systems generally include certain postcontract customer support (“PCS”).  In accordance with ASC Topic 985-605-25, “Software Revenue Recognition”, the Company allocates a portion of the license fees to PCS based on the vendor-specific objective evidence of fair value (generally $800 for 1 year technical support) of the PCS and recognizes the PCS revenues ratably over the period of the agreed PCS.
 
Deferred software license fees (attributable to PCS) for the years ended March 31, 2010 and 2009 were accounted for as follows:
 
   
Year Ended March 31,
 
   
2010
   
2009
 
   Balance, beginning of period
 
$
121,993
   
$
64,334
 
   Additions
   
424,800
     
168,800
 
   Recognized as revenue
   
(301,127
)
   
(111,141
)
                 
   Balance, end of period
 
$
245,666
   
$
121,993
 
 
NOTE 6 – LOANS PAYABLE TO RELATED PARTIES
 
Loans payable to related parties consisted of:
 
   
March 31,
 
   
2010
   
2009
 
   Due chief financial officer
 
$
75
   
$
71
 
   Due chairman of the board of directors
   
19,415
     
42,154
 
   Due chief operational officer
   
14,722
     
18,289
 
                 
   Total
 
$
34,212
   
$
60,514
 
 
 
The loans payable to related parties are all non-interest bearing, unsecured, and due on demand.
 
NOTE 7 – DUE SELLERS OF VOIPSWITCH INC.
 
The $150,000 notes payable due to the sellers of Voipswitch Inc, (see Note 3) are non-interest bearing and due on demand.
 
 
F-13

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
NOTE 8 – STOCKHOLDERS’ EQUITY
 
Common stock issuances
 
In the three months ended December 31, 2008, VoiceServe sold 25,000 shares of its common stock to an investor at a price of $0.40 per share for net consideration of $9,845.  In the three months ended December 31, 2008, VoiceServe sold 500,000 shares of its common stock to an investor at a price of $0.18 per share for net consideration of $90,000.
 
On May 21, 2009, Voiceserve issued a total of 3,000,000 shares of its common stock to the three sellers of VoipSwitch for services rendered. The $375,000 estimated fair value of the shares, which was calculated based on the nearest day trading price of $0.25 per share and a 50% restricted stock discount, is included in selling, general and administrative expenses in the three months ended June 30, 2009.
 
Stock options
 
Effective May 12, 2009, Voiceserve granted non-qualified stock options to 4 service providers exercisable into a total of up to 703,000 shares of common stock at an exercise price of $0.13 per share to December 23, 2013. The options vest 2/3 on December 23, 2010 and 1/3 on December 23,2011. The $81,618 estimated fair value of the options (calculated using the Black-Scholes option pricing model and the following assumptions: (i) $0.15 share price, (ii) 5 year term, (iii) 100% expected volatility, and (iv) 3% risk free interest rate) is being expensed ratably over the requisite service period from May 12, 2009 to December 23, 2011.
 
On January 4, 2010, Voiceserve granted non- qualified stock options to 2 service providers exercisable into a total of up to 200,000 shares of common stock at an exercise price of $0.13 per share to January 4, 2015.  The options vest 2/3 on January 4, 2012 and 1/3 on January 4, 2013. The $39,520 estimated fair value of the options (calculated using the Black-Scholes option pricing model and the following assumptions: (i) $0.24 share price, (ii) 5 year term, (iii) 100% expected volatility, and (iv) 2.65% risk free interest rate) is being expensed ratably over the three year requisite service period.
 
Stock options expense for the year ended March 31, 2010 was $30,772. As of March 31, 2010, there was $90,366 of total unrecognized compensation cost relating to unexpired stock options. That cost is expected to be recognized in the years ending March 31 2011, 2012, and 2013 in the amounts of $44,302, $36,030, and $10,034, respectively.
 
NOTE 9 – INCOME TAXES
 
No provisions for income taxes were recorded in the years ended March 31, 2010 and 2009 since the Company incurred losses in those years.
 
Based on management‘s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset attributable to the future utilization of net operating loss carry forwards as of March 31, 2010 will be realized.  Accordingly, the Company has maintained a 100% allowance against the deferred tax asset in the financial statements at March 31, 2010.
 
 
F-14

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
The Company will continue to review this valuation allowance and make adjustments as appropriate.
 
NOTE 10 – SEGMENT INFORMATION
 
The Company operates in one business segment: telephone communications.
 
Operating revenues by customer geographic area follow:
 
   Asia
 
$
1,524,353
   
$
1,045,515
 
   North America
   
924,155
     
525,728
 
   Europe
   
732,965
     
279,637
 
   Other
   
128,592
     
80,654
 
                 
   Total
 
$
3,310,065
   
$
1,931,534
 
 
NOTE 11 – RELATED PARTY TRANSACTIONS
 
For the years ended March 31, 2010 and 2009, consulting fees paid to officers, directors, and their affiliates totaled $597,422 and $306,278 respectively.  These fees are included in selling, general, and administrative expenses in the accompanying statements of operations.
 
NOTE 12 – COMMITMENTS AND CONTINGENCIES
 
Investment agreement
 
 
F-15

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
On August 20, 2007, VoiceServe entered into an Investment Agreement with Dutchess Private Equities Fund, Ltd. (the “Investor”).  Pursuant to this Agreement, the Investor shall commit to purchase up to $10,000,000 of our common stock over the course of thirty-six (36) months. The amount that we shall be entitled to request from each purchase (“Puts”) shall be equal to, at our election, either (i) up to $250,000 or (ii) 200% of the average daily volume (U.S. market only) of the common stock for the ten (10) trading days prior to the applicable Put Notice Date, multiplied by the average of the three (3) daily closing bid prices immediately preceding the Put Date.  The Put Date shall be the date that the Investor receives a put notice of a draw down by us.  The purchase price shall be set at ninety-three percent (93%) of the lowest closing Best Bid price of the Common Stock during the pricing period.  The pricing period shall be the five (5) consecutive trading days immediately after the put notice date.  There are put restrictions applied on days between the put date and the closing date with respect to that particular put.  During this time, we shall not be entitled to deliver another put notice.
 
In connection with the Agreement, we entered into a Registration Rights Agreement with the Investor (”Registration Agreement”).  Pursuant to the Registration Agreement, we were obligated to file a registration statement with the Securities and Exchange Commission (“SEC”) covering 2,335,550 shares of the common stock underlying the Investment Agreement within 15 days after the execution date.  In addition, we were obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 90 days after the execution date, which occurred November 6, 2007.
 
To date, the Company has not exercised any Puts under this agreement. The Investment Agreement with the Investor expires on August 20, 2010.
 
Service agreements
 
In connection with the acquisition of VoipSwitch, VoiceServe entered into service agreements with the three sellers.  The agreements have a three year term (to January 15, 2011) and provide for monthly compensation of $6,000 for each of the three individuals, or $18,000 per month total.
 
Rental agreement
 
Limited rents office space at monthly rentals of £650 (or $986 translated at the March 31, 2010 exchange rate).  For the years ended March 31, 2010 and 2009, rent expense was $12,998 and $9,342, respectively.
 
 
F-16

 
 
VOICESERVE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
NOTE 13 – SUBSEQUENT EVENTS
 
On May 26, 2010, the Company closed on the sale to certain accredited investors of a total of 2,760,000 shares of common stock at a price of $0.25 per share and 1,380,000 warrants to purchase 1,380,000 shares of common stock, for $690,000 gross proceeds ($600,501 net proceeds after deducting costs of the private placement).  Each warrant entitles the holder to purchase one share of common stock at a price of $0.50 per share (the “Exercise Price”) to May 26, 2015.
 
The Exercise Price of the warrants is to be adjusted in the event of any stock splits or stock dividends or in the event that the Company issues or sells any shares of common stock, options, warrants or any convertible instruments (other than exempted issuances) at an effective price per share which is less than the Exercise Price.  Accordingly, in accordance with EITF Issue No. 07-05, “Determining whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock”, the Company will reflect the $457,608 fair value of the warrants at May 26, 2010 (calculated using the Black-Scholes option pricing model and the following assumptions: stock price of $0.45 per share, exercise price of $0.50 per share, risk-free interest rate of 2.06%, term of five years, and expected volatility of 100%) as a liabili ty and will remeasure the fair value of the warrants each quarter, adjust the liability balance, and reflect changes in operations as “income(expense) from revaluation of warrants with characteristics of liabilities at fair value”.
 
In connection with the sale, the Company and the investors executed a Securities Purchase Agreement and a Registration Rights Agreement. Among other things, the Registration Rights Agreement provides that the Company will prepare and file with the SEC a Registration Statement covering the resale of the Registrable Securities and use its commercially reasonable efforts to cause it to be declared effective.
 
If the Registration Statement is not filed by July 30, 2010 or if the Registration Statement filed is not declared effective by the SEC within certain time periods (by December 27, 2010 in the event of a “full review” by the SEC) and the Company has not exercised its reasonable best efforts to secure the Registration Statement’s effectiveness with the SEC, the Registration Agreement provides that the Company will pay monthly (until cured) partial liquidated damages to the investors equal to 1% of the purchase price paid by the investors, subject to a maximum of 10% of the purchase price paid by the investors.
 
On June 4, 2010, VoiceServe, Inc. executed employment agreements with (i) its President and Chairman, Alexander Ellinson, and (ii) its Chief Executive Officer, Michael Bibelman. Each agreement has a term of five (5) years and each provides for (i) an annual base salary of $240,000, (ii) an annual bonus of up to 100% of the base salary as determined in the sole discretion of the Board of Directors, and (iii) annual grants of stock options under the Company's Equity Incentive Stock Plan to purchase 250,000 shares of common stock at $0.25 per share for the first year, which shall occur on or before July 26, 2010, and at a 25% discount off the price on each June 4 thereafter in 2011, 2012, 2013, and 2014 (which vest at such time as approved by the Board of Directors). The Board has not yet approved the initial grant of the 250,000 com mon stock share options, which was to occur on or before July 26, 2010, for either Mr. Ellison or Mr. Bibelman.
 
Both employment agreements also provide for other employee benefits, such as an allowance for leasing a car for the Company or the Company providing one, healthcare insurance, vacation and other benefits provided in accordance with Company policy. In addition, each agreement contains provisions concerning early termination of the executive for death, disability, or with or without cause by the executive. In the event of death or disability, the Company is obligated to pay three months base salary plus accrued benefits. In the event of a termination of the executive "without cause," the Company is obligated to pay each executive, in lieu of "severance payments," his base pay and bonus, including percentage of profits, for the term in which the termination occurs for 36 months after the termination date in accordance with Company payroll practices, and maintain other benefits for that executive also for that 36 month period. Finally, the Company is obligated to pay the exercise price for the stock options to be granted as described in the preceding paragraph and the Company is required to issue 250,000 shares of common stock to the terminated executive with demand registration rights.
 
On September 30, 2010, VoiceServe, Inc. executed an employment agreement with Alfred Stefansky, its concurrently appointed Chief Financial Officer. The agreement has a term of five (5) years and provides for (i) a monthly base salary of $8,000, (ii) an annual bonus of up to 100% of the base salary as determined in the sole discretion of the Board of Directors, and (iii) a one-time issuance of 300,000 restricted shares of Company common stock. Additionally, the agreement provides that the Company shall provide standard health insurance coverage for the executive and each individual family member and the Executive shall be eligible to participate in any employee benefit plans of the Company. Either party may terminate the agreement without cause upon 60 days prior written notice. In the event of death or disability, the Company is obliga ted to pay three months base salary plus accrued benefits.
 
Also on September 30, 2010, VoiceServe, Inc, executed director agreements with Michael Taylor and Andrew Millet, concurrently appointed members of the Board of Directors. Both agreements have terms of one year, subject to a one year renewal term upon reelection by a majority of the Company stockholders. Both agreements provide for (i) a monthly retainer of $1,000 and (ii) a one-time issuance of 300,000 restricted shares of Company common stock. Additionally, the agreements provide that the Company shall provide reimbursements for all reasonable out-of- pocket expenses incurred.
 
 
F-17

 
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 
Off-Balance Sheet Arrangements
 
We do not have any off- balance sheet arrangements, financings or other relationships with unconsolidated entities or other persons, also  known as “special purpose entities” (SPEs)
 
ITEM 9A .  CONTROLS AND PROCEDURES
 
Evaluation of disclosure controls and procedures
 
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of  March 31, 2010. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that our di sclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure
 
Changes in internal controls
 
Our management has been actively engaged in the planning for, and implementation of, remediation measures to address our control deficits and to enhance our overall financial control environment. This is necessary for us to maintain a strong control environment, high ethical standards, and financial reporting integrity.
 
On September 30, 2010, we appointed Andrew Millet, as the chairmen of our newly formed Audit Committee to mitigate the risk of misstating compensation amounts. Thereafter the figures are reviewed by our auditor.
 
We intend to consider the results of our remediation efforts and related testing as part of our year-end 2011 assessment of the effectiveness of our internal control over financial reporting.
 
Management Report on Internal Control Over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
 
Management assessed our internal control over financial reporting as of March 31, 2010, which was the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process, documentation, accounting policies, and our overall control environment.
 
Based on our assessment, management has concluded that our internal control over financial reporting was not effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.
 
 
14

 
 
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation pursuant to temporary rules of the Securities and Exchange Commission.
 
PART III
 
ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE
 
Our executive officer’s and director’s and their respective age’s as of March 1, 2011 are as follows:
 
Aron Sandler
39
Chief Financial Officer
Michael Bibelman
40
Chief Executive Officer and Director
Alexander Ellinson
44
Chairman of the Board of Directors & President
Mike Ottie
41
Chief Operational Officer and Director
Krzysztof Oglaza
34
Chief Technical Officer and Director
Michael Taylor
44
Director
Andrew Millet
42
Director
 
Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.
 
MR. ARON SANDLER, CHIEF FINANCIAL OFFICER.   Joined Voiceserve Limited in September 2005, investing funds to complete the development of Voiceserve’s products. Mr. Sandler a well known entrepreneur from the North East of England amassed his wealth having developed a very large real estate portfolio in the United Kingdom. His experience in real estate encompasses the development of both residential and commercial properties.  Following Voiceserve Limited's successful launch of its complete range of products Mr. Sandler has taken an active role in the Company. On November 5, 2010, Mr. Sandler resigned his seat on the Company’s Board of Directors.
 
MR. MICHAEL BIBELMAN, CHIEF EXECUTIVE OFFICER AND DIRECTOR. Co-founder of Voiceserve Limited has been involved in telecommunications since 1994. Having completed his studies in the summer of 1994, Mr. Bibelman acquired his marketing telecommunication skills after becoming an independent reseller for Calling Card companies. Mr. Bibelman achieved contracts with major Belgium and United Kingdom calling card distributors. In 1996 he joined Ambro International bringing with his amassed calling card experience and introduced the United Kingdom and Scotland telecommunications market with the famous “Big Talk” calling card. In March 2002 Mr. Bibelman co-founded Voiceserve Limited with the goal of developing VoIP technology and offering a complete solution to end users.
 
Mr. Bibelman has over 15 years experience in the telecommunications industry.  His professional experience includes creating markets and marketing telephone calling card throughout Europe and third world countries. He was central in the introduction of the popular “Big Talk!” phone card to the United Kingdom and Scotland. He was also instrumental in advancing Econophone LLC, later renamed Viatel, from a privately held company to a publicly owned one listed on the New York Stock Exchange.  Shortly after Viatel listed on the NYSE, Mr. Bibelman created an integrated services digital network (ISDN) platform as the precursor to a comprehensive VoIP solution. He co-founded Voiceserve Ltd. with Mr. Ellinson. As a co-founder with 15 years of experience, Mr. Bibelman was appointed to serve on the C ompany’s Board of Directors.
 
MR. ALEXANDER ELLINSON, CHAIRMAN OF THE BOARD OF DIRECTORS & PRESIDENT. Co- founder of Voiceserve Limited has been involved in telecommunications since 1994. Having completed his studies in the summer of 1989, Mr. Ellinson became the senior Manager at Le Galerie Versailles Antique Auctioneers in Belgium. Mr. Ellinson's corporate telecommunication experience was gained after he became an Independent Marketing agent for a European Telecom provider. He achieved major contracts with blue chip companies in both Holland and Germany. In 1996 Mr. Ellinson relocated from Europe to the United Kingdom where he became involved with the corporate infrastructure of Ambro International. In March 2002 Mr. Ellinson co-founded Voiceserve Limi ted with the goal of developing VoIP technology and offering a complete solution to end users.
 
 
15

 
 
Mr. Ellinson, who serves as chairman of Voiceserve, Inc., is a co- founder of Voiceserve Limited and has over 15 years experience the telecommunications industry. He has served as an independent marketing agent for a European Telecom provider, during which he was responsible for developing major contracts with blue chip companies in both Holland and Germany. Mr. Ellinson worked in corporate management for Ambro International. In March 2002 Mr. Ellinson co-founded Voiceserve Ltd. with the goal of developing VoIP technology and offering a complete solution to end users. As a co-founder with over 15 years of experience, Mr. Ellinson was appointed to serve on the Company’s Board of Directors.
 
MR. MIKE OTTIE, CHIEF OPERATIONAL OFFICER AND DIRECTOR. Co-founding director of Voiceserve Limited has been involved in the telecommunications since August 1997. Having completed an accounting degree in July 1992, Mr. Ottie proceeded to acquire knowledge in computer and electronic systems. In August 1997 Mr. Ottie was appointed senior computer and switching engineer for Econophone UK. During September 2000 he became Chief Switching and Billing Manager for Ambro International, a United Kingdom telecom company which offered reduced rates to business and residential users. In March 2002 Mr. Ottie became the co-founder of Voiceserve Limited, with the goal of developing VoIP technology and offering a complete solution to end users.&# 160;In 2008, Voiceserve Limited was acquired by Voiceserve, Inc. and Mr. Ottie was appointed to serve as a director on the Voiceserve, Inc. Board of Directors, representing years of experience in the telecommunications industry.
 
MR. KRZYSZTOF OGLAZA, CHIEF TECHNICAL OFFICER Co-founding director of VoipSwitch Inc. Having completed his Engineering degree in Information Technology at the Politeck School of Opole in Poland, Mr Oglaza continued to secure a Masters in Technology in the college of Wroclaw Poland in 2000. During his studies for his masters he became a partner in Intermic S.C. a local Internet provider. Mr. Krysztof was a partner in Intermic S.C., a local Internet provider, which was acquired by Netia Holding, Poland’s largest private telcom company in 2002. In 2002, Mr. Oglaza became a co-founder of VoipSwitch, Inc., which was acquired by Vo iceserve, Inc. in 2008. At that time, because of his technological background, Mr. Oglaza was appointed to serve as a director on the Voiceserve, Inc. Board of Directors.
 
MR. MICHAEL TAYLOR, DIRECTORMr. Taylor was admitted to the Bar in England in 1986. Between 1996 and 1999, he served as Deputy General Counsel to the global mobile personal communications satellite operator, ICO Global Communications (”ICO”). At ICO, he provided legal and regulatory support in the US, Latin and South America, Europe, the Middle East, South Africa, India, the Far East and Australia. While at ICO, he chaired the interconnect working group of the European Telecommunications Platform in Brussels with the responsibility of producing a pan-European framework interconnect agreement. Mr. Taylor presented the framework agreement to the European C ommission who accepted it for use by operators and service providers across Europe.
 
From 1999 to 2001, Mr. Taylor served as Senior Vice President and General Counsel to FirstMark Communications Europe, a pan-European operator providing broadband wireless services and backbone fibre connectivity. There, he was responsible for managing a team of attorneys across Europe and was closely involved in the company’s fixed wireless frequency auctions and competitive tender license processes. In early 2001, he joined the ONSLOW Group, offering regulatory, legal, tax, business development and strategic services principally to clients in the telecoms, media and technology sectors. In 2005, he was elected as a Council Member of the UK Internet Telephony Service Providers Association (ITSPA). In 2009 Mr. Taylor was appointed to the board of OpenPlanet Limited. The company is involved in the establishment and provision of open access networks utilizing next generation access broadband fibre technology.
 
Mr. Taylor is also a founding director of The Oplan Foundation (the “Foundation”). The Foundation is an independent, non-political and not-for-profit organization that seeks to build greater awareness and understanding of the social and economic benefits that open networks will deliver to their communities.
Because of his legal background, as well as his insight into geographic markets of interest to the Company, Mr. Taylor was appointed a director of Voiceserve, Inc. on September 30, 2010.
 
 
16

 
 
MR. ANDREW MILLET, DIRECTOR – Mr. Millet qualified as a Chartered Accountant in England and Wales in 1995 and became a fellow member of the ICAEW in 2005. In 2000, he obtained an MBA at Henley Management College.Following an accountancy training contract with Stoy Hayward, Mr. Millet has held a number of senior commercial posts between 1998 and 2001. He was finance director for Maintel, a telecoms group, now an AIM listed company. Between 2002 and 2003 Mr. Millet was finance director for Huntress, a recruitment group, now owned by Nomura. In 2002, Mr. Millet established Wisteria, an accountancy practice. The practice specializes in tec hnology and growth businesses. He currently sits on the board of a number of technology and media clients as a non-executive director.  These clients include Activinstinct Ltd., Cyber-Duck Ltd. and Pinkunlimited.co.uk Ltd. Mr. Millet’s telecommunications legal expertise, as well as his financial background supported the decision to appoint Mr. Millet as a director of Voiceserve, Inc. on September 30, 2010.
 
Term of Office
 
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. 
 
All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. We have not compensated our Directors for service on our Board of Directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of our Board of Directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay Directors’ fees and reimburse Directors for expenses related to their activities.
 
None of our Officers and/or Directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past five (5) years.
 
Audit Committee
 
We do not have a standing audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 407(d) of Regulation SK is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its finan cial statements at this stage of its development.
 
Certain Legal Proceedings
 
No director, nominee for director, or executive officer of the Company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.
 
Compliance With Section 16(A) Of The Exchange Act.
 
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and are required to furnish copies to the Company. To the best of the Company’s knowledge, any reports required to be filed were timely filed in the fiscal year ended March 31, 2010.
 
 
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Code of Ethics
 
The company has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief Financial Officer. This Code of Ethics is attached hereto and is filed as Exhibit 14.1.
 
ITEM 11.  EXECUTIVE COMPENSATION
 
Compensation of Executive Officers
  
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the fiscal years ended March 31, 2010 and 2009 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
 
SUMMARY COMPENSATION TABLE
 
The following table sets forth information concerning annual and long-term compensation of our subsidiary, Voiceserve Limited, for their fiscal years ended March 31, 2010 and March 31, 2009, for their executive officers.
 
Name And Principal
Position
Year
 
Salary
 
($)
   
Bonus
 
($)
   
Stock
Awards
($)
   
Option
Awards
   
Non-Equity Incentive Plan Compensation ($)
   
Non-Qualified Deferred Compensation Earnings
($)
   
(1)
All Other Compensation
($)
   
Totals
($)
 
Aron Sandler,
2010
  $ 0       0       0       0       0       0       29,870       29,870  
Chief Financial
2009
  $ 0       0       0       0       0       0       0       0  
Officer
                                                                 
                                                                   
Michael
2010
  $ 0       0       0       0       0       0       257,970       257,970  
Bibelman,
2009
  $ 0       0       0       0       0       0       107,432       107,432  
Chief Executive
                                                                 
Officer
                                                                 
                                                                   
Alexander
2010
  $ 0       0       0       0       0       0       266,575       266,575  
Ellinson,
2009
  $ 0       0       0       0       0       0       128,783       128,783  
Chairman of
                                                                 
the Board &
                                                                 
President
                                                                 
                                                                   
Mike Ottie,
2010
  $ 0       0       0       0       0       0       43,007       43,007  
Chief
2009
  $ 0       0       0       0       0       0       70,063       70,063  
Operations
                                                                 
Officer (4)
                                                                 
 
(1) 
Each of these individuals and their affiliates were paid consulting fees for services rendered to Voiceserve Limited.
 
Our executive officers are treated as independent contractors because they serve our holding company and wholly owned subsidiaries. We therefore decided that they should not be included on any one company’s payroll. Their fiduciary duties and obligations as executive officers of the Company do not change based upon the officers’ status as independent contractors versus employees. Each of our executive officers owes the same duty of loyalty and duty of care to the Company and our shareholders.
 
 
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Employment Agreements
 
On June 4, 2010, we executed employment agreements with (i) our President and Chairman, Alexander Ellinson, and (ii) our Chief Executive Officer, Michael Bibelman. The employment agreements with Mr. Ellinson and Mr. Bibelman are attached hereto as Exhibits 10.4 and 10.5, respectively. Each agreement has a term of five (5) years and each provides for (i) an annual base salary of $240,000, (ii) an annual bonus of up to 100% of the base salary as determined in the sole discretion of the Board of Directors, and (iii) annual grants of stock options under the Company’s Equity Incentive Stock Plan to purchase 250,000 shares of common stock at $0.25 per share for the first year, which shall occur on or before July 26, 2010, and at a 25% discount off the price on each June 4 thereafter in 2011, 2012, 2013, and 2014 (which vest a t such time as approved by the Board of Directors). Annual bonuses are determined by the Board of Directors and are based on the Company’s ability to generate revenues.The Board has not yet approved the initial grant of the 250,000 common stock options, which was to occur on or before July 26, 2010, for either Mr. Ellison or Mr. Bibelman.
 
Both employment agreements also provide for other employee benefits, such as an allowance for leasing a car for the Company or the Company providing one, healthcare insurance, vacation and other benefits provided in accordance with Company policy. In addition, each agreement contains provisions concerning early termination of the executive for death, disability, or with or without cause by the executive. In the event of death or disability, the Company is obligated to pay three months base salary plus accrued benefits. In the event of a termination of the executive “without cause,” the Company is obligated to pay each executive, in lieu of “severance payments,” his base pay and bonus, including percentage of profits, for the term in which the termination occurs for 36 months after the termination date in accorda nce with Company payroll practices, and maintain other benefits for that executive also for that 36 month period. Finally, the Company is obligated to pay the exercise price for the stock options to be granted as described in the preceding paragraph and the Company is required to issue 250,000 shares of common stock to the terminated executive with demand registration rights.
 
ITEM 12 . SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTER
 
The following information table sets forth certain information regarding the Common Stock owned on March 31, 2010 by (i) each person who is known by the Company to own beneficially more than 5% of its outstanding Common Stock, (ii) each director and officer, and (iii) all officers and directors as a group:
 
 
Names and Address (1)
Shares Owned
Number
Percentage (2)
     
Aron Sandler
Chief Financial Officer and Director
5,000,000
15.43%
     
Alexander Ellinson
President & Chairman of the Board of Directors
3,375,000
10.42%
     
Michael Bibelman
Chief Executive Officer & Director
3,375,000
10.42%
     
Lukasz Nowak
Chief  Integration Officer
2,250,000
6.94%
     
Mike Ottie
Chief Operational Officer & Director
4,500,000
13.89%
     
Krzysztof Oglaza
Chief Technical Officer and Director
2,250,000
6.94%
     
Michal Kozlowski
Chief  Development Officer
2,250,000
6.94%
     
Daphne Arnstein (3)
1,068,750
3.30%
     
Rachel Weissbart (4)
1,111,815
3.43%
     
All Directors and Officers as a Group (7 persons)
23,000,000
70.98%
 
 
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(1)
The persons named in this table have sole voting and investment power with respect to all shares of common stock reflected as beneficially owned by each.
   
(2) 
Based on 32,402,935 shares of common stock outstanding as of March 31, 2010.
   
(3)
Wife of Alexander Ellinson.
   
(4)
Wife of Michael Bibelman.
 
ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
On August 29, 2007, VoiceServe reached a settlement agreement with a consultant who rendered services relating to the reverse acquisition.  Pursuant to the settlement, 50,000 (of the 300,000 shares issued to this consultant in February 2007) shares of common stock were returned to VoiceServe and cancelled.
 
For the years ended March 31, 2010 and 2009, consulting fees paid to officers, directors, and their affiliates totaled $597,422 and $306,278 respectively.  These fees are included in selling, general, and administrative expenses in the accompanying statements of operations.
 
 
ITEM 14.      PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
Audit Fees
 
For our fiscal years ended March 31, 2010 and March 31, 2009,  we were billed approximately $37,000 and $37,000 respectively for professional services rendered for the audit and reviews of our financial statements.
 
Audit Related Fees
 
For our fiscal years ended March 31, 2010 and 2009 we did not incur any audit related fees.
 
Tax Fees
 
For our fiscal years ended March 31, 2010 and 2009, we did not incur any fees for professional services rendered for tax compliance, tax advice, and tax planning.
 
All Other Fees
 
The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended March 31, 2010 and 2009.
 
Audit and Non-Audit Service Pre-Approval Policy
 
In accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated there under, the Board of directors has adopted an informal approval policy that it believes will result in an effective and efficient procedure to pre-approve services performed by the independent registered public accounting firm.
 
 
20

 
 
Audit Services. Audit services include the annual financial statement audit (including quarterly reviews) and other procedures required to be performed by the independent registered public accounting firm to be able to form an opinion on our financial statements. The Board of directors pre-approves specified annual audit services engagement terms and fees and other specified audit fees. All other audit services must be specifically pre-approved by the Board of directors. The Board of directors monitors the audit services engagement and may approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope or other items.
 
Audit-Related Services. Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of our financial statements which are consistent with the SEC’s rules on auditor independence. The Board of directors pre-approves specified audit-related services within pre-approved fee levels. All other audit-related services must be pre-approved by the Board of directors.
 
Tax Services. The Board of directors pre-approves specified tax services that the Audit Committee believes would not impair the independence of the independent registered public accounting firm and that are consistent with SEC rules and guidance. The Board of directors must specifically approve all other tax services.
  
All Other Services. Other services are services provided by the independent registered public accounting firm that do not fall within the established audit, audit-related and tax services categories. The Board of directors pre-approves specified other services that do not fall within any of the specified prohibited categories of services.
 
Procedures. All proposals for services to be provided by the independent registered public accounting firm, which must include a detailed description of the services to be rendered and the amount of corresponding fees, are submitted to the Chairman of the Board of directors and the Chief Financial Officer. The Chief Financial Officer authorizes services that have been pre-approved by the Board of directors. If there is any question as to whether a proposed service fits within a pre-approved service, the Board of Directors chair is consulted for a determination. The Chief Financial Officer submits requests or applications to provide services that have not been pre-approved by the Board of directors, which must include an affirmation by the Chief Financial Officer and the indep endent registered public accounting firm that the request or application is consistent with the SEC’s rules on auditor independence, to the Board of directors (or its Chair or any of its other members pursuant to delegated authority) for approval.
 
 
 
PART IV
 
ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
a) Documents filed as part of this Annual Report
 
1. Consolidated Financial Statements
 
2. Financial Statement Schedules
 
3. Exhibits
 
3.1
Articles of Incorporation
3.2
Bylaws
10.1
Stock Purchase Agreement and Share Exchange by and among 4306, Inc. and Voiceserve, Ltd.*
14.1
Code of Ethics**
31.1
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
31.2
Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer
32.1
Section 1350 Certification of Chief Executive Officer
32.2 
Section 1350 Certification of Chief Financial Officer
 
*   Attached as Exhibit 10.1 to the Form 8-k filed on February 22, 2007 and herein incorporated by reference.
**  Attached as Exhibit 14.1 to the Form 10K/A for the period ending March 31, 2010 filed on November 10, 2010 and herein incorporated by reference.
 
 
21

 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
 
 
Voiceserve, Inc.
 
Dated:   March 1, 2011 
By:
/s/ Michael Bibelman   
   
Michael Bibelman
Chief Executive Officer and Director
 
Dated:   March 1, 2011 
By:
/s/ Aron Sandler
   
Aron Sandler
Chief Financial Officer,
Principal Accounting Officer and Director
 
 
In accordance with the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
  
Name
 
Title
 
Date
         
         
/s/ Michael Bibelman
 
Chief Executive Officer,
 
March 1, 2011
Michael Bibelman
 
and Director
   
         
/s/ Aron Sandler
 
Chief Financial Officer, Principal
 
March 1, 2011
Aron Sandler
 
Accounting Officer and Director
   
         
/s/ Alexander Ellinson
 
President and
 
March 1, 2011
Alexander Ellinson
 
Chairman of the Board of Directors
   
         
/s/ Mike Ottie
 
Chief Operational Officer
 
March 1, 2011
Mike Ottie
 
and Director
   
         
/s/ Krzysztof Oglaza
 
Chief Technical Officer
 
March 1, 2011
Krzysztof Oglaza
 
and Director
   
         
/s/ Michal Kozlowski
 
Chief Development Officer
 
March 1, 2011
Michal Kozlowski
       
         
/s/ Lukasz Nowak
 
Chief Integration Officer
 
March 1, 2011
Lukasz Nowak
       
 
 
 
22
 

 
Exhibit 3.1

CERTIFICATE OF INCORPORATION
 
 
FIRST: The name of the corporation shall be: 4306, Inc.
 
SECOND: Its registered office in the State of Delaware is to be located at 2771 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle and its registered agent at such address is CORPORATION SERVICE COMPANY.
 
THIRD: The purpose or purposes of the corporation shall be:
 
To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
 
FOURTH: The total number of shares of stock, which this corporation is authorized to issue is One-Hundred million (100,000,000) shares of Common Stock with par value of .001 per share and Ten million (10,000,000) shares of preferred stock with $.001 par value.
 
FIFTH: The name and address of the incorporator is as follows:
 
The Company Corporation
2711 Centerville Road
Suite 400
Wilmington, Delaware 19808
 
SIXTH: The Board of Directors shall have the power to adopt, amend or repeal the by-laws.
 
SEVENTH: No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law, (i) for breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omi ssions of such director occurring prior to such amendment.
 
IN WITNESS WHEREOF, the undersigned, being the incorporator herein before named, has executed signed and acknowledged this certificate of incorporation this 9th day of December 2005 A.D.
 
The Company Corporation, Incorporator
 
/s/ Keith R. Jones
Name: Keith R. Jones
Assistant Secretary
 
 
 
 
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Delaware
The First State
 
 
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "4306 INC.", CHANGING ITS NAME FROM "4306 INC." TO "VOICESERVE, INC.", FILED IN THIS OFFICE ON THE TWENTY-SECOND DAY OF FEBRUARY, A. D_ 2007, AT 2:48 O'CLOCK P.M.
 
    A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.
 
 
4074112 8100
070208644 [SEAL]
 
 
/s/ Harriet Smith Windsor
Harriet Smith Windsor, Secretary of State
AUTHENTICATION: 5454957
DATE: 02-22-07
 
 
 
 
 
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
4306, INC.
 
 
Under Section 242 of the Delaware General Business Law
 
4306, Inc,, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (hereinafter called the "Corporation"), does hereby certify that:
 
1.    The name of the Corporation prior to the filing of this Certificate of Amendment is 4306, Inc,
 
 
2.    The Certificate of Incorporation of the Corporation is hereby amended to change the name of the Corporation to VoiceServe, Inc. by amending Article FIRST thereof to read as follows:
 
FIRST: The name of this Delaware corporation is: VoiceServe, Inc.
 
 
3.    This Certificate of Amendment and the amendments of the Certificate of Incorporation contained herein were duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
 
 
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by its President this 21st day of February, 2007.
 
 
4306, Inc.
 
 
By: /s/ Alexander Ellinson
Alexander Ellinson
President
 
 
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Exhibit 3.2
 
--------------------
BY-LAWS
--------------------
 
 
ARTICLE I
The Corporation
 
 
Section 1. Name. The legal name of this corporation (hereinafter called the "Corporation") is 4306, Inc.
 
Section 2. Offices. The Corporation shall have its principal office in the State of Delaware. The Corporation may also have offices at such other places within and without the United States as the Board of Directors may from time to time appoint or the business of the Corporation may require.
 
Section 3. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". One or more duplicate dies for impressing such seal may be kept and used.
 
 
ARTICLE II
Meetings of Shareholders
 
Section 1. Place of Meetings. All meetings of the shareholders shall be held at the principal office of the Corporation in the State of New Delaware or at such other place, within or without the State of Delaware, as is fixed in the notice of the meeting.
 
Section 2. Annual Meeting. An annual meeting of the shareholders of the Corporation for the election of directors and the transaction of such other business as may properly come before the meeting shall be held on the 1st day of February in each year if not a legal holiday, and if a legal holiday, then on the next secular day. If for any reason any annual meeting shall not be held at the time herein specified, the same may be held at any time thereafter upon notice, as herein provided, or the business thereof may be transacted at any special meeting called for the purpose.
 
Section 3. Special Meetings. Special meetings of shareholders may be called by the President whenever he deems it necessary or advisable. A special meeting of the shareholders shall be called by the President whenever so directed in writing by a majority of the entire Board of Directors or whenever the holders of one-third (1/3) of the number of shares of the capital stock of the Corporation entitled to vote at such meeting shall, in writing, request the same.
 
 
 
 
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Section 4. Notice of Meetings. Notice of the time and place of the annual and of each special meeting of the shareholders shall be given to each of the shareholders entitled to vote at such meeting by mailing the same in a postage prepaid wrapper addressed to each such shareholders at his address as it appears on the books of the Corporation, or by delivering the same personally to any such shareholder in lieu of such mailing, at least ten (10) and not more than fifty (50) days prior to each meeting. Meetings may be held without notice if all of the shareholders entitled to vote thereat are present in person or by proxy, or if notice thereof is waived by all such shareholders not present in person or by proxy, before or after the meeting. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in t he United States mail. If a meeting is adjourned to another time, not more than thirty (30) days hence, or to another place, and if an announcement of the adjourned time or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the Board of Directors, after adjournment fix a new record date for the adjourned meeting. Notice of the annual and each special meeting of the shareholders shall indicate that it is being issued by or at the direction of the person or persons calling the meeting, and shall state the name and capacity of each such person. Notice of each special meeting shall also state the purpose or purposes for which it has been called. Neither the business to be transacted at nor the purpose of the annual or any special meeting of the shareholders need be specified in any written waiver of notice.
 
Section 5. Record Date for Shareholders. For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than fifty (50) days nor less than ten (10) days before the date of such meeting, nor more than fifty (50) days prior to any other action. If no record date is fixed, the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given, or, if no notice is given, the day on which the meeting is held; the record date for determining shareholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed; and the record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
 
Section 6. Proxy Representation. Every shareholder may authorize another person or persons to act for him by proxy in all matters in which a shareholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the shareholder or by his attorney-in-fact. No proxy shall be voted or acted upon after eleven (11) months from its date unless such proxy provides for a longer period. Every proxy shall be revocable at the pleasure of the shareholder executing it, except as otherwise provided in Section 608 of the Delaware Business Corporation Law.
 
Section 7. Voting at Shareholders' Meetings. Each share of stock shall entitle the holder thereof to one vote. In the election of directors, a plurality of the votes cast shall elect. Any other action shall be authorized by a majority of the votes cast except where the Delaware Business Corporation Law prescribes a different percentage of votes or a different exercise of voting power. In the election of directors, and for any other action, voting need not be by ballot.
 
 
 
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Section 8. Quorum and Adjournment. Except for a special election of directors pursuant to the Delaware Business Corporation Law, the presence, in person or by proxy, of the holders of a majority of the shares of the stock of the Corporation outstanding and entitled to vote thereat shall be requisite and shall constitute a quorum at any meeting of the shareholders. When a quorum is once present to organize a meeting, it shall not be broken by the subsequent withdrawal of any shareholders. If at any meeting of the shareholders there shall be less than a quorum so present, the shareholders present in person or by proxy and entitled to vote thereat, may adjourn the meeting from time to time until a quorum shall be present, but no business shall be transacted at any such adjourned meeting except such as might have been lawfully transac ted had the meeting not adjourned.
 
Section 9. List of Shareholders. The officer who has charge of the stock ledger of the Corporation shall prepare, make and certify, at least ten (10) days before every meeting of shareholders, a complete list of the shareholders, as of the record date fixed for such meeting, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder. Such list shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be ins pected by any shareholder who is present. If the right to vote at any meeting is challenged, the inspectors of election, if any, or the person presiding thereat, shall require such list of shareholders to be produced as evidence of the right of the persons challenged to vote at such meeting, and all persons who appear from such list to be shareholders entitled to vote thereat may vote at such meeting.
 
Section 10. Inspectors of Election. The Board of Directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, and at the request of any shareholder entitled to vote thereat shall, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of the inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting or any shareholder entitled to vote thereat, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. Any report or certificate made by the inspector or inspectors shall be prima facie evidence of the facts stated and of the vote as certified by them.
 
Section 11. Action of the Shareholders Without Meetings. Any action which may be taken at any annual or special meeting of the shareholders may be taken without a meeting on written consent, setting forth the action so taken, signed by the holders of all outstanding shares entitled to vote thereon. Written consent thus given by the holders of all outstanding shares entitled to vote shall have the same effect as a unanimous vote of the shareholders.
 
 
 
B-3

 
 
 
ARTICLE III
Directors
 
Section 1. Number of Directors. The number of directors which shall constitute the entire Board of Directors shall be at least one (1). Subject to the foregoing limitation, such number may be fixed from time to time by action of a majority of the entire Board of Directors or of the shareholders at an annual or special meeting, or, if the number of directors is not so fixed, the number shall be one (1). No decrease in the number of directors shall shorten the term of any incumbent director.
 
Section 2. Election and Term. The initial Board of Directors shall be elected by the incorporator and each initial director so elected shall hold office until the first annual meeting of shareholders and until his successor has been elected and qualified. Thereafter, each director who is elected at an annual meeting of shareholders, and each director who is elected in the interim to fill a vacancy or a newly created directorship, shall hold office until the next annual meeting of shareholders and until his successor has been elected and qualified.
 
Section 3. Filling Vacancies, Resignation and Removal. Any director may tender his resignation at any time. Any director or the entire Board of Directors may be removed, with or without cause, by vote of the shareholders. In the interim between annual meetings of shareholders or special meetings of shareholders called for the election of directors or for the removal of one or more directors and for the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the resignation or removal of directors for cause or without cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director.
 
Section 4. Qualifications and Powers. Each director shall be at least eighteen (18) years of age. A director need not be a shareholder, a citizen of the United States or a resident of the State of Delaware. The business of the Corporation shall be managed by the Board of Directors, subject to the provisions of the Certificate of Incorporation. In addition to the powers and authorities by these By-Laws expressly conferred upon it, the Board may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done exclusively by the shareholders.
 
Section 5. Regular and Special Meetings of the Board. The Board of Directors may hold its meetings, whether regular or special, either within or without the State of Delaware. The newly elected Board may meet at such place and time as shall be fixed by the vote of the shareholders at the annual meeting, for the purpose of organization or otherwise, and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a majority of the entire Board shall be present; or they may meet at such place and time as shall be fixed by the consent in writing of all directors. Regular meetings of the Board may be held with or without notice at such time and place as shall from time to time be determined by resolution of the Board. Whenever the time or place of regular meetings of the Board shall have been determined by resolution of the Board, no regular meetings shall be held pursuant to any resolution of the Board altering or modifying its previous resolution relating to the time or place of the holding of regular meetings, without first giving at least three (3) days written notice to each director, either personally or by telegram, or at least five (5) days written notice to each director by mail, of the substance and effect of such new resolution relating to the time and place at which regular meetings of the Board may thereafter be held without notice.
 
 
 
B-4

 
 
 
Special meetings of the Board shall be held whenever called by the President, Vice-President, the Secretary or any director in writing. Notice of each special meeting of the Board shall be delivered personally to each director or sent by telegraph to his residence or usual place of business at least three (3) days before the meeting, or mailed to him to his residence or usual place of business at least five (5) days before the meeting. Meetings of the Board, whether regular or special, may be held at any time and place, and for any purpose, without notice, when all the directors are present or when all directors not present shall, in writing, waive notice of and consent to the holding of such meeting, which waiver and consent may be given after the holding of such meeting. All or any of the directors may waive notice of any meetin g and the presence of a director at any meeting of the Board shall be deemed a waiver of notice thereof by him. A notice, or waiver of notice, need not specify the purpose or purposes of any regular or special meeting of the Board.
 
Section 6. Quorum and Action. A majority of the entire Board of Directors shall constitute a quorum except that when the entire Board consists of one director, then one director shall constitute a quorum, and except that when a vacancy or vacancies prevents such majority, a majority of the directors in office shall constitute a quorum, provided that such majority shall constitute at least one-third (1/3) of the entire Board. A majority of the directors present, whether or not they constitute a quorum, may adjourn a meeting to another time and place. Except as herein otherwise provided, and except as otherwise provided by the Delaware Business Corporation Law, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board.
 
Section 7. Telephonic Meetings. Any member or members of the Board of Directors, or of any committee designated by the Board, may participate in a meeting of the Board, or any such committee, as the case may be, by means of conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time, and participation in a meeting by such means shall constitute presence in person at such meeting.