China Voice Holding Corp. 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2010

[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________

Commission file number 000-53366


CHINA VOICE HOLDING CORP. (Exact name of small business issuer as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)	16-1680725 (IRS Employer Identification No.)

4359 Lindbergh Dr., Addison, Texas 75001 (Address of principal executive offices)

(972) 248-2665 (Issuer’s telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [ ].

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act:

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act: Yes [ ] No [X ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of September 30, 2010: 231,020,688 shares of common stock.

Rule 10-01(d) of Regulation S-X requires that interim financial statements included in quarterly reports on Form 10-Q be reviewed by an independent public accountant using professional standards and procedures for conducting such reviews, as established by generally accepted auditing standards, as may be modified or supplemented by the Securities and Exchange Commission (SEC). The Company has been unable to obtain a review of its financial statements included in this report before the filing date because of material uncertainties regarding the Company’s viability and asset valuations. Consequently, the accompanying consolidated financial statements as of December 31, 2010 and for the quarter ended December 31, 2010 have not been reviewed by an independent public accountant in accordance with Statement of Auditing Standards No. 100, Interim Financial Information (“SAS 100”).

Furthermore, Section 201 of the Sarbanes-Oxley Act of 2002 (“Section 302”) requires our Chief Executive Officer and Chief Financial Officer to certify concerning the Company’s disclosure controls and procedures, internal controls over financial reporting in accordance with the rules of the SEC, and disclosures concerning their evaluation of those controls to the Company’s auditors and Audit Committee. Additionally, Section 906 of the Sarbanes-Oxley Act (“Section 906”) requires our Chief Executive Officer and Chief Financial Officer to certify that this Quarterly Report on information contained in the report fairly presents, in all material respects, our financial condition and results of operations. Those certifications are omitted from this filing only because the financial statements accompanying this report have not been reviewed by an independent public accountant under SAS 100. The Company believes that this report otherwise meets all of the qualifications of the Exchange Act and the rules and regulations thereunder governing the preparation and filing of periodic reports as referenced in the certifications. Before our officers can make such certifications, our independent public accounting firm must complete its review of the consolidated financial statements appearing elsewhere in this report under SAS 100, as required by SEC rules. Once our auditor completes its review under SAS 100, we will file an amendment to this report pursuant to which our Chief Executive Officer and Chief Financial Officer will make the certifications required under Section 302 and Section 906.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS






		CHINA VOICE HOLDING CORP.

		Condensed Consolidated Balance Sheets
		December 31, 2010 and June 30, 2010
		(Unaudited and Unvreviewed)


			December 31, 2010	June 30, 2010

ASSETS
Current assets:
	Cash and cash equivalents		$ 21,512	$ 58,452
	Accounts receivable, net		7,096	149,177
	Inventories			52,288
	Prepaid expenses and other current assets		7,540	3,506

	Total Current Assets		36,148	263,423

Long-term assets:
	Note receivable		145,255	125,295
	Goodwill		2,980,276
	Other assets		15,000	15,000

	TOTAL ASSETS		$ 3,176,679	$ 403,718

LIABILITIES AND EQUITY

Current liabilities:
	Accounts payable and accrued expenses		$ 112,105	$ 651,847
	Related party payables		124,854	134,039
	Current portion of long term debt, net of debt discount		47,000	946,133
	Current portion of capital lease obligation			48,367

	Current portion of related party notes			882,000

	Total Current Liabilities		283,959	2,662,386

Long-term liabilities
	Long-term debt, net of current portion		675,967
	Related party payables		431,516	322,784
	Capital lease obligation, net of current portion			29,591
	Related party long term debt		500,000

	Total liabilities		1,891,442	3,014,761


Equity
	Common Stock: par value $0.001; 400,000,000
	shares authorized; 231,020,688 and 171,020,688 shares issued
	at December 31, 2010 and June 30, 2010,respectively		231,020	171,020
	Series A Preferred Stock-par value $0.001
	20,000 shares authorized: 8,745 shares issued		9	5
	at Decemberr 31, 2010 and 5,248 at June 30, 2010, respectively
	(liquidation value of $8,745,000 on
	December 31, 2010 and 5,248,000 at June 30, 2010, respectively)
	Additional paid-in capital		48,335,723	43,299,856
	Accumulated deficit		(47,250,896)	(46,081,924)
	Total stockholders' equity		1,315,856	(2,611,043)
	Non-Controlling Interest		(30,619)
	Total equity		1,285,237	(2,611,043)

	Total liabilities and equity		$ 3,176,679	$ 403,718

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

F-1


CHINA VOICE HOLDING CORP.

Condensed Consolidated Statements of Operations
For the Six months Ended December 31, 2010 and 2009
(Unaudited and Unreviewed)

		Six Months Ended	Six Months Ended	Three Months Ended	Three Months Ended
		December 31,	December 31,	December 31,	December 31,

		2010	2009	2010	2009
Sales		$ 2,217,575	$ 472,047	262,042	$ 458,624
Cost of revenues		1,786,142	389,348	117,875	$ 371,030

Gross profit		431,433	82,699	144,167	87,594

Operating expenses:
	Professional fees	261,901	262,808	40,688	154,585
	Other selling, general and administration expenses	838,287	217,959	244,008	26,892
	Depreciation	13,526	48,444	7,262	24,238
	Total operating expenses	1,113,714	529,211	291,958	205,714

Loss from operations		(682,281)	(446,512)	(147,791)	(118,120)

Other income (expenses)
	Interest income	-	31		5
	Interest expense	(226,936)	(185,031)	(38,755)	(123,894)
	Other nonoperating income (expense)	-	122,020		1,580
	Total other income (expense)	(226,936)	62,980	(38,755)	(122,309)

Loss before Income taxes, loss on equity investment
	and noncontrolling interest	(909,217)	(383,532)	(186,546)	(240,430)

	Income tax expenses	-	-		-

Loss before loss on equity investment and noncontrolling interest		(909,217)	(383,532)	(186,546)	(240,430)

	Loss on equity investment	-	(1,679,361)	-	(840,000)

Net loss		(909,217)	(2,062,893)	(186,546)	(1,080,430)



Less: Net income attributable
	to noncontrolling interest	5,729	58,655	5,729	69,932

Net loss before preferred dividend		(914,946)	(2,247,508)	(192,275)	(1,150,361)

Preferred dividend		254,026	(319,025)	(119,292)	(166,712)

Net loss attributable to common stockholders		(1,168,972)	(2,566,533)	(311,567)	(1,317,073)

Other comprehensive loss
	Total foreign currency translation gain (loss)	-	43,283	-	40,008
	Less: foreign currency translation gain (loss) attributable to noncontrolling interests	-	15,149	-	14,003
	Foreign currency translation gain (loss) attributable to CHVC common stockholders	-	28,134	-	26,005

Net loss attributable to common stockholders per common share - basic and diluted
Net loss from continuing operations per shares - basic and diluted		(0.004)	(0.012)	(0.001)	(0.006)
Net loss attributable to
	common stockholders per common share - basic and diluted	(0.005)	(0.014)	(0.001)	(0.007)

Common shares used in calculation per share data- basic and diluted		231,020,688	185,389,846	231,020,688	185,419,740

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

F-2


CHINA VOICE HOLDING CORP.

Condensed Consolidated Statements of Cash Flows
For the Six months ended December 31, 2010 and 2009
(Unaudited and Unreviewed)




			2010	2009

Operating activities
	Net loss		(914,946)	$ (2,247,508)
	Adjustments to reconcile net loss to net cash used in operations activities
	operating activities:
		Depreciation and amortization	13,526	53,844
		Common shares issued for services		6,433
		Loss on equity investment		1,679,361
		Net income attributable to noncontrolling interest	5,729	58,655
	Change in operating assets and liabilities
		Accounts receivable	142,081	(435,909)
		Inventories	52,288	-
		Prepaid expenses and other current assets	(4,034)	2,175
		Related party payables	(9,185)	-
		Accounts payable and accrued expenses	(539,742)	203,369
		Other current liabilities	(67,964)	-
	Total Adjustments		(407,301)	1,567,927
Net cash used in operating activities			(1,322,247)	(679,581)

Investing activities
	Purchase of property and equipment		(19,960)	(10,540)
	Purchase of assets in business combination		(2,980,276)	-
	Repayment of redeemable preferred stock from affiliate			193,763
Net cash provided by (used in) investing activities			(3,000,236)	183,223

Financing activities
Net increase (decrease) in:
		Repayments of long term debt	(300,124)	(95,281)
		Proceeds from issuance of preferred stock	3,295,871
		Proceeds from issuance of common stock	1,800,000	33,864
		Proceeds from related party notes	608,732	892,772
		Payment of preferred dividends	(236,936)	(319,025)

		Repayment of related party debt	(882,000)
Net cash provided by financing activities of continuing operations			4,285,543	512,330

Effect of exchange rate on changes in cash				83,421
Net increase (decrease) in cash and cash equivalents			(36,940)	$ 99,393
Cash and cash equivalents - beginning of period			58,452	185,420
Cash and cash equivalents - end of period			21,512	$ 284,813

Supplemental cash flow information
		Interest paid	188,202	$ 76,893
		Income taxes paid	-	$ -



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

F-3

_____________________________________________________________________________________________________________________

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

Six Months Ended December 31, 2010 and 2009

The Unaudited Financial Statements and accompanying Notes have not been audited or reviewed by an independent Public Accountant as required by Rule 8-02 of Regulation S-X.


	NOTE 1 – DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business – China Voice Holding Corp. (the “Company” or “CHVC”), a Nevada corporation formed on August 7, 2003, is a telecommunications company headquartered in Dallas, Texas. The Company offers VoIP communications services in the United States. Prior to June 30, 2010 the Company operated in China, but as of that date management determined that the Company’s China assets had been fully impaired and wrote off the book value and the China operation was subsequently abandoned.

Recapitalization and Reorganization – On April 1, 2004, Surf Franchise, Inc. (“Surf”), incorporated in the State of New York on August 7, 2003, entered into a stock exchange agreement with China Voice Corporation (“CVC”), incorporated in the State of Nevada on January 15, 2004, and certain shareholders. CVC was formed to effectuate an exchange of shares between VoIUM Technologies, Ltd. (“VoIUM”) and certain shareholders. The shareholders of VoIUM exchanged ownership interest in CVC to certain shareholders in exchange for an agreement to assign their exclusive interest in value-added telecommunication licenses issued by the PRC to CVC. Upon the exchange, VoIUM became a wholly-owned subsidiary of CVC.

Pursuant to the stock exchange agreement, Surf cancelled 43,012,500 shares of its previously issued and outstanding 49,602,500 common shares and issued 50,000,000 Rule 144 restricted Surf common shares to CVC shareholders in exchange for a 100% equity interest in CVC, making CVC a wholly-owned subsidiary of Surf.

F-4

CHINA VOICE HOLDING CORP.

Notes to Consolidated Financial Statements (Continued)

NOTE 1 – DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The above stock exchange transaction between Surf and CVC resulted in those shareholders of CVC obtaining a majority voting interest in Surf. Accounting principles generally accepted in the United States of America require that the company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting purposes. Consequently, the stock exchange transaction has been accounted for as a recapitalization of CVC as CVC acquired a controlling equity interest in Surf, as of April 1, 2004. The reverse acquisition process utilizes the capital structure of Surf and the assets and liabilities of CVC recorded at historical cost.

Subsequent to the stock exchange, a restructuring resulted in CVC leaving the group with VoIUM, remaining as the continuing operating entity for financial reporting purposes. Although VoIUM is deemed to be the acquiring corporation for financial accounting and reporting purposes, the legal status of Surf as the surviving corporation did not change. On April 22, 2004, Surf changed its name to China Voice Holding Corp. On June 10, 2008, the Company reorganized from a New York Corporation to a Nevada Corporation.

Basis of Consolidation – The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of China Voice Holding Corp (“CHVC”), NTELEC Networks LLC. (“NTE”), VoIUM Technologies, LTD (“VoIUM”), Sino-Connection Corp. (“Sino-Connection”), WIZE Prepaid Inc. (“WIZE”), CVC Globalcall Inc. (“CVC Global”), Voium USA Inc. (“Voium USA”), SteamJet Net, Inc. (“SJN”), Sino Beyond Ltd. (“SBL”), Vastland Holding Beijing Co. Ltd. (“Vastland”), and East West Global Communications, Inc. (“EWGC”). The Company additionally consolidated the financial statements of Candidsoft Technologies Co, Ltd of Beijing (“Candidsoft”) for which the Company owned a 65% interest for the six months ended December 31, 2009 and Lease Net LLC (“LNL”), for which the Company owned an 80% interest for the six months ended December 31, 2010. All intercompany accounts and transactions have been eliminated in consolidation. The results of subsidiaries acquired or disposed of during the respective periods are included in the consolidated statements of operations from the effective date of acquisition or up to the effective date of disposal, as appropriate. The portion of the income applicable to non-controlling interests in subsidiary undertakings is reflected in the consolidated statements of operations.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the unaudited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2010.

In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments consisiting only of normal recurring accruals considered necessary to present fairly the Company's financial position at December 31, 2010, the results of operations for the three-month and six month periods ended December 31, 2010 and 2009, and cash flows for the three months ended September 30, 2010 and 2009. The results for the period ended December 31, 2010 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2011.

Use of Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could differ from those estimates.

Significant estimates inherent in the preparation of the accompanying consolidated financial statements include accounting for depreciation and amortization, valuation of goodwill and other intangibles, business combinations, equity transactions, and contingencies.

F-5

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 1 – DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid accounts with an original maturity date of three months or less to be cash equivalents. The Company maintains bank accounts in US banks which, at times, may exceed federally insured limits. The Company has not experienced any losses on such accounts and believes it is not exposed to any significant risk on bank deposit accounts. Cash accounts of foreign subsidiaries are maintained on deposit in established financial institutions in their respective jurisdiction. Although these deposits are not subject to FDIC insurance coverage provided in the United States, the Company has not experienced any losses and believes that exposure to such risk is minimized by the quality of the institutions being utilized.

Accounts Receivable

Accounts receivable represent amounts currently due to the Company under contractual obligations for services performed or products sold. When necessary, the Company evaluates and maintains an allowance for these accounts to reduce such balances to the amount deemed collectible. The allowance for doubtful accounts is based on the Company's assessment of collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer's ability to pay.

Inventories

Inventory consists of finished goods and is valued at the lower of cost or market using the first-in, first-out method.

Investments

The Company values the equity investments in private companies and restricted stock of public companies using the cost method of accounting. The Company monitors these investments for factors indicating a permanent impairment of value. The Company recognized no impairment loss on investments for the six months ended December 31, 2010 and 2009, respectively.

F-6

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 1 - DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and any impairment loss where the recoverable amount of the asset is estimated to be lower than its carrying amount. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditures for additions, improvements and renewals are capitalized and normal expenditures for maintenance and repairs are charged to the income statement whereas significant improvements which materially increase values or extend useful lives are capitalized and depreciated over the remaining estimated useful lives of the related assets. When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the income statement. Depreciation is provided using the straight line method over the estimated useful lives of the related assets, ranging from 3 - 5 years, or over the lesser of the term of the lease or the estimated useful life of the assets under lease.

Business Combinations

The Company accounts for business combinations in accordance with Statement of Financial Accounting Standard No. 141(R) [FASB ASC 805], "Business Combinations". SFAS No. 141(R) [FASB ASC 805] requires that the purchase method of accounting be used for all business combinations. SFAS No. 141 [FASB ASC 805] requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually by comparing carrying value to the respective fair value in accordance with the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142) [FASB ASC 350]. This pronouncement also requires that the intangible assets with estimated useful lives be amortized over their respective estimated useful lives.

Goodwill and Other Intangible Assets

In accordance with Statement of Financial Accounting Standards No.142 [FASB ASC 350], "Goodwill and Other Intangible Assets," the Company tests its goodwill for impairment at least annually by comparing the fair value of these assets to their carrying values. As a result of such tests, the Company may be required to record impairment charges for these assets if in the future their carrying values exceed their fair values.

Other intangible assets are amortized using the straight-line method over their estimated useful period of 10 to 15 years. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.

F-7

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 1 - DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)

Stock Based Compensation

The Company applies the fair value method of Statement of Financial Accounting Standards No. 123R, "Accounting for Stock Based Compensation" (SFAS No. 123R) [FASB ASC 718] in accounting for its stock options. This standard states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The fair value for each option granted is estimated on the date of the grant using the Black-Scholes option pricing model.

The fair value of all vested options granted has been charged to salaries, wages and benefits in accordance with SFAS No. 123R [FASB ASC 718]. Common stock granted to employees, directors, and consultants is charged to operating expense based on the fair value of the stock at the date the stock purchase rights are granted. In accordance with EITF 96-18 [FASB ASC 505-50], the non-employee stock options or warrants are measured at their fair value by using the Black-Scholes option pricing model as of the earlier of the date at which a commitment for performance to earn the equity instruments is reached ("performance commitment date") or the date at which performance is complete ("performance completion date"). The stock-based compensation expenses are recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Accounting for non-employee stock options or warrants which involve only performance conditions when no performance commitment date or performance completion date has occurred as of reporting date requires measurement at the equity instruments then-current fair value. Any subsequent changes in the market value of the underlying common stock are reflected in the expense recorded in the subsequent period in which that change occurs.

Foreign Currency Translation

Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment are translated to U.S. dollars at exchange rates in effect at the balance sheet date; with the resulting translation adjustments directly recorded to cumulative currency translation adjustment. Income and expense accounts are translated at average exchange rates during the period. Where the U.S. dollar is the functional currency, translation adjustments are recorded in other comprehensive loss.

Impairment of Long-Lived Assets and Other Intangible Assets

The Company reviews the carrying value of its long-lived assets, including indefinite-lived intangible assets consisting primarily of goodwill and telecommunications licenses in China, whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the assets by estimating the future net cash flows expected to result from the assets, including eventual disposition. If the future net cash flows are less than the carrying value of the assets, an impairment loss is recorded equal to the difference between the asset's carrying value and its fair value. During the six months ended December 31, 2010 and 2009, the Company recorded no impairment of assets.

F-8

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 1 - DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)

Leases

The Company leases its office space. Certain leases contain scheduled rent increases, and may include an initial period of free or reduced rent as an inducement to enter into the lease agreement ("rent holidays").The company recognizes rental expense for rent increases and rent holidays on a straight-line basis over the terms of the underlying leases, without regard to when rent payments are made. The calculation of straight-line rent is based on the "reasonably assured" lease term as defined in SFAS No. 98 [FASB ASC 840-40], Accounting for Leases: Sale-Leaseback Transactions Involving Real Estate, Sales Type Leases of Real Estate, Definition of the Lease Term, and Initial Direct Costs of Direct Financing Leases - an amendment of FASB Statements No. 13, 66 and 91 and a rescission of SFAS Statement No. 26 and Technical Bulletin No. 79-11 [FASB ASC 840-40]. This amended definition of the lease term may exceed the initial non-cancelable lease term.

Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, accounts payable, capital lease obligation and notes payable, as applicable, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions.

Revenue Recognition

Revenue from calling cards, prepaid cellular products and broadband hardware sales are recognized upon delivery or shipment of the hardware to broadband service providers at which time title is passed; there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exits; the sales price is fixed and determinable; and collectability is deemed probable. The Company recognizes revenues based on Gross Revenues Reporting pursuant to EITF 99-19 [FASB ASC 605-45]. Revenue from telecommunications services is recognized when the services are provided. Revenue from installation contracts is recognized on the completed contract method. A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications and has been accepted by the customer. Revenue from software communications development is recognized upon completion of installation and delivery to customers at which time title is passed; there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exits; the sales price is fixed and determinable; and collectability is deemed probable.

Shipping and Handling Costs

Shipping and handling costs are included in cost of revenues. Shipping and handling costs invoiced to customers, if any, are included in revenues.

F-9

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 1 - DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)

Net Income (Loss ) per Share

The Company follows the guidelines of Statement of Financial Accounting Standards No. 128, “ Earnings per share ” (“SFAS No. 128”) [FASB ASC 260-10] in calculating its loss per share. SFAS No. 128 [FASB ASC 260-10], states basic and diluted earnings per share are based on the weighted average number of common shares and equivalent common shares outstanding during the period. Common stock equivalents for purposes of determining diluted earnings per share include the effects of dilutive stock options, warrants and convertible securities. The effect on the number of shares of such potential common stock equivalents is computed using the treasury stock method or the if-converted method, as applicable. The Company has excluded all outstanding stock options and warrants as well as shares issued upon conversion of debt from the calculation of diluted loss per share because these securities are anti-dilutive.

The following table sets forth potential shares of common stock that are not included in the diluted net loss per share calculation because to do so would be anti-dilutive for the three months ended December 31, 2010 and 2009.


	For the three months ended December 31,	For the three months ended December 31,
	2010	2009
Warrants issued in conjunction with financing	350,000		350,000
Contingent shares potentially issuable for acquisitions	--		--
Common stock options	--		--

F-10

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 1 - DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)

Income Taxes

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS 109 [FASB ASC 740], the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. During the six months ended December 31, 2010 and 2009, the Company had significant operating losses which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s plans regarding those concerns are addressed in the following paragraphs. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As shown in the accompanying financial statements, the Company has incurred net losses of approximately $914,946 and $2,247,508 for the six months ended December 31, 2010 and 2009, respectively. Additionally, during the six months ended December 31, 2010 and 2009, the Company has used cash flow in continuing operations of approximately $1,322,247 and $679,581. Accumulated deficit amounted to $47,250,896 and $46,081,924 as of December 31, 2010 and June 30, 2010, respectively.

Currently, the operations of the Company are funded through issuance of debt and equity instruments and borrowings from related parties. Management’s plans to generate cash flow include expanding the Company’s existing operations through additional acquisitions. The Company may raise additional funds by raising additional capital through debt or equity offerings in an effort to fund the Company’s anticipated expansion. There is no assurance additional capital will be available to the Company on acceptable terms.

F-11

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 3 – BUSINESS COMBINATIONS

Effective October 1, 2010, the Company acquired 100% of the common stock of NTELEC Networks LLC. (“NTE”), which owned an 80% interest in Lease Net LLC, a VoIP telecommunications company headquartered in Dallas, Texas. The purchase price was $2,300,000 paid by issuance of 60,000,000 shares of the Company’s common stock and a note payable for $500,000. This transaction was closed subsequent to December 31, 2010.

The following table presents the allocation of the acquisition cost of NTE, including the assets acquired and liabilities assumed, based on their fair value.


Assets acquired	677,901
Goodwill	2,445,394
Total Assets	3,123,295
Liabilities	(853,914)
Minority interest	30,619
Net assets acquired	2,300,000

NOTE 4 - PROPERTY AND EQUIPMENT

Major categories of property and equipment at December 31, 2010 and June 30, 2010 were as follows:


	December 31, 2010		June 30, 2010

Computer equipment	$	152,517	$	130,295
Furniture, fixtures and equipment
Less: accumulated depreciation and amortization		(7,262)		(5,000	)

Total property and equipment	$	145,255	$	125,295

For the six months ended December 31, 2010 and 2009 depreciation expense totaled $13,526 and $48,444, respectively. For the three months ended December 31, 2010 and 2009 depreciation expense totaled $6,264 and $24,206, respectively.

NOTE 5 –CAPITAL LEASE OBLIGATIONS

There were no future minimum lease payments required under the capital lease and the present value of the net minimum lease payments as of December 31, 2010.

NOTE 6 – GOODWILL

In accordance with Statement of Financial Accounting Standards No. 142 (SFAS No. 142)(FASB ASC 350), the Company performs an evaluation of the fair values of its goodwill annually, and more frequently if an event occurs or circumstances change that may indicate that the fair value of a reporting unit is less that the carrying amount.

The Company’s balance sheet reflects goodwill of $2,980,276 and $0 as of December 31, 2010 and June 30, 2010, respectively.

F-12

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 7 –NOTES PAYABLE

The Company’s notes payable to financial institutions and third parties consist of the following as of:


	December 31,			June 30,
	2010		2010

Note payable to a third party, due on demand. Interest accrues at 24% and is payable monthly.		-		100,000

Note payable to a financial institution. The note is uncollateralized and is due on demand.		47,000
Note payable to an individual without interest. The note is collateralized by 900 shares of Lease Net Inc. stock, representing 90% of the equity, and is due July 31, 2014.		675,967
Note payable to an individual, interest accrues at 24% and is payable monthly. The note is collateralized by certain assets held by a related party, and is due on demand.				50,000
Note payable by WIZE Prepaid Inc. secured by assets of WIZE Prepaid Inc. The Note is disputed and in litigation.				617,800

Note payable to an individual due October 5, 2010 with interest at 18% and collateralized by certain assets held by a related party.				45,000

Note payable to an individual due July 31, 2010 without interest and collateralized by certain Company Stock.				133,333

Less discounts		-		-

Subtotal		722,967		946,133
Less current portion		47,000		946,133

Long Term Debt	$	675,967	$	-

The Company’s notes payable to related parties consist of the following as of December 31, 2010 and June 30, 2010:


	December 31,					June 30,
	2010					2010

Note payable to an Officer and Director issued in connection with the acquisition of NTELEC Networks LLC. The note is collateralized by the Company’s NTELEC stock, bears interest at 12%, and is due March 31, 2014.			500,000
Notes Payable to investment entities controlled by a related party with interest at 18% and due on August 15, 2010. The notes are secured by certain assets of the Company.								782,000

Note Payable to a relative of a related party and due on demand								100,000


				.			.
Total				500,000			882,000
Less current portion							882,000

Long term debt		$		500,000	$		-

The future maturities of the notes payable to third parties and related parties are as follows:

Year Ended December 31,


2011		-
2012		47,000
2013		1,175,967
Total	$	1,222,967

F-13

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 8 –EQUITY

Preferred Stock

During the year ended June 30, 2006, the Company’s board of directors authorized the issuance of up to 20,000 shares of $0.001 par value Series A Preferred Stock. The Series A Preferred Stock is preferred as to dividends and liquidation over common stock, has a liquidation value of $1,000 per share, and has a dividend rate of 12% of liquidation value per year.

Preferred shares issued during the quarter ended December 31, 2010 are as follows:



Category	Number of Shares		Value
Issued in exchange for debt		1,682		1,681,486
Total		1,682	$	1,681,486

Common Stock

During the quarter ended December 31, 2010 the Company issued the following common stock.


Category	Number of Shares	Value
Issued in connection with the acquisition of NTELEC Networks LLC	60,000,000	$1,800,000
Total	60,000,000	$1,800,000

F-14

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Employment Agreements

On August 31, 2006, the Company entered into an employment agreement with Bill Burbank, the Company’s Chief Executive Officer. The employment agreement is for an initial term of three years with automatic renewals on six month intervals thereafter; and provides entitlement to a base salary equal to $10,000 per month with discretionary cash or stock option bonuses based on performance.

Litigation

From time to time we are involved in various claims and other legal proceedings which arise in the normal course of our business. Such matters are subject to many uncertainties and outcomes that are not predictable. However, based on the information available to us and after discussions with legal counsel, we do not believe any such proceedings have a material adverse effect on our business, results of operations, financial position or liquidity.

Since July 2008, the Company has been subject of an ongoing investigation by the U.S. Securities and Exchange Commission (“SEC”). The Company and its officers and directors have been cooperating with the investigation and will continue to do so. The SEC’s investigation has been wide in scope, but has focused on press releases and disclosures regarding the prospects of the Company’s business in China, press releases and disclosures related to Flint Telecom’s 2009 acquisition of certain of the Company’s subsidiaries, related party transactions and disclosures regarding the same, and investor awareness of the Company’s stock conducted by third parties. The Company and certain of its officers have received several subpoenas for documents and testimony during the SEC’s investigation. The Company cannot predict when the investigation will be completed or the further timing of any other developments in connection with the investigation nor can the Company predict the result or outcome of the SEC investigation. The outcomes could include payments of fines or disgorgement or other relief with respect to the Company or its officers, directors, or employees that could be material to the Company. Further, expenses incurred in connection with the investigation (which include substantial fees for lawyers) continue to adversely affect the Company’s cash position and profitability.

Operating Leases

The Company’s rent expense amounted to $45,774 and $39,441 for the six months ended December 31, 2010 and $20,629 and $18,794 for the three months ended December 31, 2010 and 2009. The Company did not have any long-term non-cancelable lease commitments for its offices, warehouse and other facilities. There were no minimum rental commitments under non-cancelable long-term operating leases within the next five years.

F-15

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)


	NOTE 10 - RELATED PARTY TRANSACTIONS

Related Party Payables

A company owned or controlled by a major shareholder, director and officer of CHVC has loaned funds to the Company secured by all of the assets of the Company. These advanced funds are due on demand and bear interest at 18%. The balance as of December 31, 2010 and June 30, 2010was $431,516 and $322,784, respectively.

An individual who is an employee and/or director of the Company has advanced funds to the Company on unsecured terms bearing interest at 8%. The balance on these advances was $0 and $27,500 as of December 31, 2010 and June 30, 2010, respectively.

Accrued unpaid compensation of $124,854 and $106,539 is due to officers and directors as of December 31, 2010 and June 30, 2010.

Related Party Notes Payables

As disclosed in Note 7, notes payable of $0 and $782,000 as of December 31, 2010 and June 30, 2010 were payable to investment entities controlled by a related party. The notes are secured by certain assets of the Company and bear interest at 18% per annum and were due on August 15, 2010.

As disclosed in Note 7, a note payable of $0 and $100,000 was payable to a relative of a Company Officer as of December 31, 2010 and June 30, 2010.

As disclosed in Note 7, a note payable of $500,000 to an Officer and Director of the Company was issued in connection with the acquisition of NTELEC Network LLC. The note is collateralized by the Company’s stock in NTELEC Corp., bears interest at 12%, and is due March 31, 2014.

Interest paid under these notes was $10,000 and $81,795 for the quarter ended December 31, 2010 and June 30, 2010.

Preferred Stock

A total of 3,143, or 36% of the Company’s preferred stock shares are directly or indirectly owned by entities that are owned or controlled by an officer and director of the Company. As such, this officer has all voting rights relating to those shares of stock.

Guarantees

As disclosed in Note 7, certain of the Company’s notes payable due to third parties have been guaranteed by companies owned or controlled by an officer and director of the Company.

F-16

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 11 – INCOME TAXES (Continued)

The following table represents the effective tax rate of the Company:


	December 31, 2010			December 31, 2009

Loss from operations	914,946			2,247,508

Tax benefit:
Federal current		-			-
Federal deferred		-			-
U.S. State		-			-
Foreign		-			-

Total tax benefit	$	-		$	-

Effective tax benefit rate		0.0	%		0.0	%


	The difference between the tax benefit rate and the statutory benefit rate is as follows:


	December 31, 2010			December 31, 2009

Statutory benefit rate		34.0	%		34.0	%

Non taxable income		(34.0	%)		(34.0	%)


Effective tax benefit rate		0.0	%		0.0	%

F-17

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 11 – INCOME TAXES (Continued)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets are as follows:


	December 31, 2010		June 30, 2010

Deductible temporary differences:
U.S. federal deferred operating loss	$	4,326,600	$	4,015,517
State deferred operating loss		337,628		331,704


Less: valuation allowance	(4,664,228)		(4,347,221)

Total tax assets	$	-	$	-

At December 31, 2010, the Company had carry forward losses for income tax purposes of approximately $12,725,293 that may be offset against future taxable income. Due to the uncertainty regarding the success of future operations, management has recorded a valuation allowance equal to 100% of the resultant deferred tax asset.

The carry forward losses expire in future years through 2031 as follows:


Expiration Year	Amount

2025	$	109,872
2026		1,499,867
2027		4,790,794
2028		3,863,427
2029		1,546,387
2030		914,946
2031

F-18

CHINA VOICE HOLDING CORP.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 12 – WARRANTS

The Company has issued warrants to purchase its common stock in connection with financing transactions. As of December 31, 2010, the warrants are exercisable and have terms as follows:


	Exercise Price per Share		Termination Date	In connection with financing transactions		Shares

	$	0.40	July 2011		350,000		350,000

Total					350,000		350,000

NOTE 13 – TRANSACTION WITH FLINT TELECOM GROUP INC.

On January 29, 2009, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) and a Stock Purchase Agreement with Flint Telecom Group, Inc. (“FLTT”), a U.S. Telecommunications Technology and Services Company which is traded on the OTC BB market under the symbol FLTT. The agreement was modified on April 24, 2009 and May 28, 2010.

Under the Merger Agreement, the Company’s six subsidiaries having U.S. business operations will merge into subsidiaries of FLTT. The six subsidiaries, CVC INTL Inc., Phone House Inc. (CA), Cable and Voice Corporation, StarCom Alliance Inc., Dial Tone Communications Inc., and Phone House Inc. (FL), (“U.S. Subsidiaries”), will become wholly owned subsidiaries of FLTT. The U.S. Subsidiaries accounted for sales of $35,486,367 in the year ended June 30, 2008 and $29,356,234 in the six months ended December 31, 2008 representing 97.4% and 99%, respectively, of the Company’s sales. The total assets of the U.S. Subsidiaries as of December 31, 2008 were $9,112,691, or 41% of total assets. Contemporaneously with the Merger Agreement, pursuant to the Stock Purchase Agreement, the Company issued 15,000,000 shares of Restricted Common Stock to FLTT on January 29, 2009 at closing.

The Company received total consideration of $500,000 cash and 21,000,000 shares of Restricted Common Stock of FLTT at the January 29, 2009 closing. In addition, the Company received payments of $700,000, for a total cash payment of $1,200,000 cash and $1,800,000 of FLTT Preferred Stock, along with FLTT’s non interest bearing Promissory Note for $7,000,000 payable in three equal installments on December 31, 2009, July 31, 2010, and December 31, 2010. Prior to June 30, 2009, FLTT has also redeemed $550,000 worth of Preferred Stock. The total consideration was $1,200,000 cash, $1,800,000 of redeemable Preferred Stock, the $7,000,000 Promissory Note and 21,000,000 shares of Restricted Common Stock of FLTT, valued at $7,980,000, for a total consideration of $17,980,000. The Company has allocated $3,150,000 of the total consideration for the issuance of stock and $14,830,000 to the sale of the subsidiaries and recognized a gain of $4,648,937. The Company has deferred a gain of $3,850,000 as of June 30, 2009 until the receipt of the proceeds of the $7,000,000 Promissory Note is no longer uncertain. The $7,000,000 was due from FLTT in three equal installments on December 31, 2009, July 31, 2010 and December 31, 2010. Flint failed to make the payments due December 31, 2009, and has issued an 8-K outlining a retrenchment of its business.

On May 28, 2010 the Company entered into a Settlement and General Release Agreement which allowed the Company to take back the business formerly operated by CVC INTL, Inc., Phone House of Florida, Inc., Dial Tone Communications, Inc., and StarCom Alliance Inc. In return the Company reduced the Flint obligations to the Company from $8,076,479 to $1,520,242 to be paid in installments until May 31, 2011 and reduced its Flint shareholding to 5,200,000 Shares. The Company has established a reserve of $1,500,000 against the Note, which is currently in default, and has written off the Flint Stock. Finally, the Company took back 15,000,000 shares of its Common Stock which Flint had not paid for. The Company has written off the balance of its investment, $7,821,566, as of June 30, 2010.

The Company accounted for its interest in FLTT under the equity method of accounting for the six months and quarter ended December 31, 2009 and the Company reported a loss of $1,679,361 and $840,000, respectively.

NOTE 14 – SINO BEYOND LTD. TRANSACTIONS

During the year ended June 30, 2009 the Company incorporated Sino Beyond Ltd., a wholly owned Hong Kong subsidiary, in order to facilitate acquisitions of companies in China. On September 10, 2009 the Company issued 100,000,000 shares of its common stock to Sino Beyond Limited in exchange for a note receivable of $15,000,000. The note was subsequently cancelled and the stock was transferred to another subsidiary company, Voium USA Inc. As of December 31, 2010, the stock is treated as being outstanding because it is owned by a wholly owned subsidiary.

F-19

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

General

Certain statements contained in this Report and other written material and oral statements made from time to time by us do not relate strictly to historical or current facts. As such, they are considered “forward-looking statements” that provide current expectations or forecasts of future events. Such statements are typically characterized by terminology such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “strategy” and similar expressions. Our forward-looking statements generally relate to the prospects for future sales of our products, the success of our marketing activities, and the success of our strategic corporate relationships. These statements are based upon assumptions and assessments made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factor our management believes to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including the following: our ability to achieve profitable operations and to maintain sufficient cash to operate its business and meet its liquidity requirements; our ability to obtain financing, if required, on terms acceptable to it, if at all; the success of our research and development activities; competitive developments affecting our current products; our ability to successfully attract strategic partners and to market both new and existing products; exposure to lawsuits and regulatory proceedings; our ability to protect our intellectual property; governmental laws and regulations affecting operations; our ability to identify and complete diversification opportunities; and the impact of acquisitions, divestiture, restructurings, product withdrawals and other unusual items. A further list and description of these risks, uncertainties and other mattes can be found elsewhere in this Registration Statement. Except as required by applicable law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Plan of Operation

We were incorporated on August 7, 2003 and began business as China Voice Holding Corp after a reorganization and name change on April 1, 2004. The Company obtained licenses to provide telecommunications services in The People’s Republic of China in 2005 and acquired its Chinese operating subsidiary, Candidsoft Technologies Co. Ltd. of Beijing (“Candidsoft”) effective January 18, 2006.

Further delays in implementing the Company’s plans in China have resulted in a write off of the value of the Company’s China operations, $6,372,932, in the year ended June 30, 2010 and the Chinese operations were subsequently abandoned.

During the year ended June 30, 2009, our products began to be utilized in China, but we were subjected to a long delay in implementing our plan because of the merger between China Netcom and China Unicom. The delay led to the Company to determine that the values of its telecom licenses and software licenses, totaling $6,214,574, had been impaired as of June 30, 2009 because the licenses were not generating current revenue.

In addition to our business in China, during the years ended June 30, 2008 and 2009, we have established businesses in the United States in telecommunications services, prepaid calling card distribution, prepaid cellular products and services distribution and advanced broadband hardware distribution.

These businesses were sold on January 29, 2009, to Flint Telecom Group, Inc. (“FLTT or Flint”), a U.S. telecommunications technology and services company which is traded on the OTCBB market under the symbol FLTT. The Company also issued 15,000,000 shares of Restricted Common Stock to FLTT on January 29, 2009 at closing.

The sales contract to FLTT called for total consideration of $500,000 cash and 21,000,000 shares of Restricted Common Stock of FLTT at the January 29, 2009 closing. In addition, the Company received payments of $700,000, for a total cash payment of $1,200,000 cash and $1,800,000 of FLTT Preferred Stock, along with FLTT’s non interest bearing Promissory Note for $7,000,000 payable in three equal installments on December 31, 2009, July 31, 2010, and December 31, 2010. Prior to June 30, 2009, FLTT has also redeemed $550,000 worth of Preferred Stock. Flint failed to make the payments due December 31, 2009, and the Company has written off the balance of its investment, $7,821,566, as of June 30, 2010. The Company also took back 15,000,000 shares of its Common Stock which Flint had not paid for.

Because of delays experienced in receiving payments from Flint, in late 2009 and early 2010, CHVC began to rebuild its U.S. operations as a provider of prepaid calling cards and as a provider of wholesale telecommunications services. During the quarter ended December 31, 2010 the Company acquired NTELEC Networks LLC., a VoIP communications service provider based in Dallas, Texas and moved its headquarters to Dallas, Texas. The Company curtailed its calling card and wholesale services in order to focus on the VoIP communications business.

The Company anticipates that it will expand through synergistic acquisitions of VoIP service providers and will require additional working capital to fund the expansion in the fiscal year ended June 30, 2011. It is planning to obtain the funding from debt and equity offerings, but there can be no assurance that such financing will be obtained.

F-20

Comparisons by Period

The financial information discussed herein has not been reviewed by our independent public accountant as required by Rule 10-01(d) of Regulation S-X.

Six Months Ended December 31, 2010 and 2009

Revenues. Revenues for the six months ended December 31, 2010 were $2,217,575, a $1,745,528 increase as compared to $472,047 for the six months ended December 31, 2009. The increase in revenues for the six months is primarily attributed to prepaid calling card business activities during the six months ended December 31, 2010.

Gross Income. Gross income for the six months ended December 31, 2010 was $431,433, $348,734 increase as compared to $82,699 for the six months ended December 31, 2009. The increase in gross income is attributed to increased sales in the U.S.

Operating Expenses. For the six months ended December 31, 2010 expenses were $1,113,714 versus the $529,211 reported for the six months ended December 31, 2009. The $584,503 increase in expenses is attributed primarily to increased expenses related to U.S. operations.

Non Operating Income and Expenses. The Company’s non operating losses for the six months ended December 31, 2010 was $236,936 compared to $62,981 for the six months ended December 31, 2009. The $163,955 increase in net loss was caused primarily by an accounting fee refund of $115,000, and in increase of $41,955 in interest expense and other financing costs.

Loss on Equity Investment. For the six months ended December 31, 2009 the Company recorded a loss on it equity investment in Flint of $1,679,361, representing the Company’s estimated portion of the Flint loss for the six months.

Net Loss. For the six months ended December 31, 2010 the Company reported a net loss of $914,946 compared to a loss of $2,247,508 for the prior period. The decreased net loss of $1,332,562 was primarily the result of the $1,679,361 loss on equity investment, reduced by the $235,769 decrease in net operating income.

Quarter Ended December 31, 2010 and 2009

Revenues. Revenues for the quarter ended December 31, 2010 were $268,042, $160,582 decrease as compared to $428,624 for the quarter ended December 31, 2009. The decrease is primarily attributed to the shift to VoIP communications business during the quarter ended December 31, 2010.

Gross Income. Gross income for the quarter ended December 31, 2010 was $144,167, a $56,573 increase as compared to $87,594 for the quarter ended December 31, 2009. The increase in gross income is attributed to higher margin sales in the U.S. VoIP communications business.

Operating Expenses. For the quarter ended December 31, 2010 expenses were $291,958 versus the $205,714 reported for the quarter ended December 31, 2009. The $86,244 increase in expenses is attributed primarily to higher corporate overhead costs.

Non Operating Income and Expenses. The Company’s non operating loss for the quarter ended December 31, 2010 was $38,755 compared to $122,309 for the quarter ended December 31, 2009. The $83,554 decrease in net loss was caused primarily by a decrease of $85,139 in interest expense and other financing costs.

Loss on Equity Investment. For the quarter ended December 31, 2009 the Company recorded a loss on its equity investment in Flint of $840,000, representing the Company’s estimated portion of the Flint loss for the quarter.

Net Loss. For the quarter ended December 31, 2010 the Company reported a net loss of $192,275 compared to a loss of $1,150,361for the prior period. The decreased net loss of $958,086 was primarily the result of the $840,000 loss on equity investment and the $83,554 decrease in net operating expenses.

Liquidity and Cash Resources

For the six months ended December 31, 2010 the Company reported a net loss of $192,275 compared to a loss of $1,150,361 for the prior period. The Company’s cash balance at December 31, 2010 was $21,512.

The Company had a decrease in cash of $36,940 for the six months ended December 31, 2010, compared to an increase in cash of $99,393 for the comparable period of 2009. Cash resources of $1,322,247 were used in operations for the six months ended December 31, 2010 as compared to $679,581 used in operations for the same period of 2009. Cash used by investing activities was $3,000,236 for the six months ended December 31, 2010 as compared to $183,223 provided by investing activities for the same period of 2009. Cash provided by financing activities was $4,285,543 for the six months ended December 31, 2010 as compared to $512,330 provided in the same period in 2009. Our principal sources of cash during the quarter ended December 31, 2010 were the proceeds from equity financing and related party notes.

F-21


ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable to Smaller Reporting Companies.


ITEM 4T.	CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of its disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the Exchange Act) means controls and other procedures of a company that are designed to ensure that this information is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based upon their evaluation of its disclosure controls and procedures, Assure Data’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31,2010 and as of the date of filing, the controls, and procedures were effective at a reasonable assurance level and will continue to operate as designed, except as related to the Company’s inability to obtain an audit or review because of material uncertainties regarding viability and asset valuations.

Registrant maintains certain internal controls over financial reporting that are appropriate, consistent with cost-benefit considerations, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.


	(b)	Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Our management has concluded that, as of December 31, 2010, our internal control over financial reporting is effective based on these criteria, except as related to the Company’s inability to obtain an audit or review because of material uncertainties regarding viability and asset valuations. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in the company’s internal control over financial reporting that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

F-22

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings

The Company has also filed a lawsuit against a lender to one of its subsidiaries claiming damages for breach of contract and other claims. The amount in dispute is $617,800, which the Company has disclosed in its financial statements as a contingent liability.

Item 1A. Risk Factors - Not applicable to Smaller Reporting Companies.

Item 2. Unregistered Sales of Equity Securities

The following issuances have occurred during the Quarter Ended September 30, 2009:

Common Stock

From October 1, 2010 to December 31, 2010, we issued 60,000,000 shares of Common Stock.

60,000,000 shares were issued to 1 U.S. person in connection with the acquisition of NTELEC Networks LLC, valued at $1,800,000. (1)

Preferred Stock

From October 1, 2010 to December 31, 2010, we issued 1,682 shares of Series A Preferred Stock.


	·	1,682 shares were issued 1 U.S. person in exchange for debt, for net proceeds of $1,681,486. (1)

The information above is a summary of transactions by our company within the Quarter Ended December 31, 2008 involving sales of its securities that were not registered under the Securities Act of 1933 (the “Act”). For each transaction we relied upon the following exemption(s) from registration under the Act, and each such issuance is noted at the end to correspond to one of these exemptions:


	(1)	Exempt under Section 4(2) of the Act as a sale for cash to a small group of accredited or otherwise sophisticated investors not involving any public offering.


	(2)	Exempt under Section 4(2) of the Act as an issuance of securities as consideration for an acquisition of a company or block of assets from a small group of sophisticated sellers.


	(3)	Exempt under Regulation S promulgated under the Act as issuances of restricted shares to non-US persons who provided subscription representations in private transactions without any advertising or public solicitation.


	(4)	Exempt under Regulation D promulgated under the Act and Rule 506 thereof as sales to all accredited investors who provided subscription representations in offerings that were not subject to public solicitation and in which Form D notices were filed.


	(5)	Exempt under Section 4(2) as issuances of stock in lieu of compensation or consulting fees to a small member of sophisticated persons not involving any public offering.


	(6)	Exempt under such 3(a)(9) of the Act as an exchange of securities for other outstanding securities of the Registrant.


	(7)	Exempt under Section 4(2) of the Act as issuance of shares as additional consideration for loans to the Registrant or in lieu of interest on loans, to institutional and other accredited investors.

In the case of all issuances other than pursuant to Regulation D or Regulation S, the Company believes the investor or its purchase representative was reasonably believed to have such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment, (b) the investor or its purchaser representative were provided with required information and an opportunity to obtain additional information a reasonable period of time prior to the transaction, (c) the investor or its purchaser representative were advised of the limitations on resale of the Common Stock, (d) the investor represented its intention to acquire the securities for investment only and not with view to or for sale in connection with any distribution thereof, and (e) appropriate legends were affixed to the instruments issued in the transactions.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits .

4.6

Stock Sale Agreement dated March 31, 2011 between NTELEC Networks LLC, its shareholders, and China Voice Holding Corp. relating to the acquisition of NTELEC Networks LLC.

SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: April 15, 2011

CHINA VOICE HOLDING CORP.

By: /s/ D. Ronald Allen

D. Ronald Allen, Chief Financial Officer

December 31,
2010

June 30,
2010

Capital lease obligation bearing an interest rate of 6.676% per annum

Less: Current portion of capital lease obligation

Non-current portion of capital lease obligation, less current portion