<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
1st Amendment
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
ONE VOICE TECHNOLOGIES, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
NEVADA 95-4714338
- ------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
6333 Greenwich Drive, Ste 240, San Diego CA 92122
- ------------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(619) 552-4466 (619) 552-4474
- --------------------------- ---------------------------
(ISSUER'S TELEPHONE NUMBER) (ISSUER'S FACSIMILE NUMBER)
SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
- -------------------------------- --------------------------------------
- -------------------------------- --------------------------------------
SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT:
Common Stock - .001 Par Value
(TITLE OF CLASS)
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PART 1
ITEM 1
DESCRIPTION OF THE BUSINESS
General
One Voice Technologies, Inc. is filing this Form 10-SB on a voluntary basis in
order to make One Voice Technologies, Inc.'s financial information equally
available to any interested parties or investors and meet certain listing
requirements for publicly traded securities on the OTC Electronic Bulletin Board
which is sponsored by the National Association of Securities Dealers (NASD). The
Company's stock is currently listed for trading on the OTC Electronic Bulletin
Board under the stock symbol "ONEV".
Business Development
The Company was incorporated in Delaware on February 4, 1987 as Belridge
Broadcasting of Portland, Inc. On August 23, 1995, the Company formed a new
corporation, Belridge Holdings Corporation for the purpose of a merger in order
to facilitate a change of domicile of Belridge Broadcasting of Portland, Inc. to
Nevada. After the merger on August 28, 1995, the surviving company, Belridge
Holdings Corporation, a Nevada Corporation, was dormant until March 9, 1998 when
it filed a Disclosure Statement pursuant to Rule 15c2-11 with the National
Association of Securities Dealers in order to allow trading of its securities on
the OTC Electronic Bulletin Board. On July 30,1998 a special meeting of the
shareholders approved the acquisition of the assets, liabilities and operating
business of Dead On, LLC. in order to facilitate the Company's business plan to
manufacturer sporting goods equipment and apparel. On September 15, 1998 a
special meeting of the shareholders approved the name change of Belridge
Holdings Corporation to Dead On, Inc. On December 31, 1998 a special meeting of
the Board approved the discontinuance of the operating business related to the
manufacturer of sporting goods equipment and apparel after concluding that the
Company could not profitably operate that type of business. On May 14, 1999, the
Board signed an agreement to consummate the divestiture of the assets and
liabilities of the discontinued sporting goods equipment and apparel
manufacturing business. On June 16, 1999, a special meeting of the shareholders
approved the divestiture of the assets and liabilities of the discontinued
sporting goods equipment and apparel manufacturing business. On June 22, 1999, a
special meeting of the Board approved the merger of Dead On, Inc. with
Conversational Systems, Inc. in order to facilitate the Company's new business
plan to develop and market a software system that allows computer users to use
spoken words instead of keyboards to access and utilize the Internet. On July 9,
1999, a special meeting of the shareholders approved the merger of Dead On, Inc.
and Conversational Systems, Inc. and approved the name change of Dead On, Inc.
to ConversIt.com, Inc. On September 9, 1999, a special meeting of the
shareholders approved the name change of ConversIt.com, Inc. to One Voice
Technologies, Inc.
During September 1998 and May through July 14,1999 the Company raised capital
through the sale of common stock to investors in order to fund its business plan
obligations.
There have been no bankruptcy, receivership or similar proceedings.
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There have been no other material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
Business of the Issuer
On September 9, 1998, the Company's President, Dean Weber applied for a United
States Patent for a software system he developed that allowed a computer user to
interact with a computer through speech rather than a keyboard or mouse. The
essence of this system is to allow the computer user to speak directly to the
computer in order to access the Internet. Utilizing colloquial or conversational
English, the computer user does not have to learn menu commands, does not need
to be familiar with operating systems, and is not dependent on typing speed. The
primary features of this system are: utilizing commercially available speech
recognition that relies on how words sound in order to match those sounds to
words in a dictionary - analyzing words to determine their meaning - allowing
the computer to listen and then talk back to the user - processing speech at
very high speed. As the user speaks with the computer, it continues to "learn"
the meaning of what the user says. It asks questions of the user when it is
unsure what the user wants. It uses a conversational manner to quickly process
information while it keeps the user informed as it is performing requested
tasks. As an example, if the system is searching the Internet for the best price
available for a particular type of automobile purchase, it will describe its
search process and any problems it encounters, such as the unavailability of a
needed web page due to heavy Internet demand. It will then ask the user if it
should try again. It will offer suggestions, such as using a different time or
searching in a different geographical location. On October 5, 1998, Mr. Weber
applied for an additional patent that enhanced his original patent by adding
more detailed features, including network user interface capabilities. On
November 11, 1998, Mr. Weber applied to the United States Department of Commerce
Patent and Trademark Office to assign both of his original patent filings to
Conversational Systems, Inc., a closely held corporation in which he was
majority shareholder. On July 9, 1999, at a special meeting of the shareholders
of Dead On, Inc., the shareholders of Dead On, Inc. and Mr. Weber, representing
Conversational Systems, Inc., agreed to merge Conversational Systems Inc.,
including its pending United States Patents, with Dead On, Inc. and change the
name of the Company to ConversIt.com, Inc. On September 9, 1999, a special
meeting of the shareholders approved the name change of ConversIt.com, Inc. to
One Voice Technologies, Inc. As of the date of this filing, both patents are
still pending.
Since the merger of July 9, 1999, the Company has taken the following steps in
its product development: raised capital of $3,000,000 through the sale of
securities; leased commercial office space in San Diego, California; hired one
office manager, one sales manager, one marketing manager; continued development
of its software product.
During the next twelve months the Company intends to complete the following
steps with accompanying budget estimates: during months one through six complete
software programming - $500,000; secure license for commercially available voice
recognition software and develop marketing strategy - $500,000; setup web site -
$15,000; during months seven through ten beta test software - $50,000; during
months seven through twelve make software programming corrections - $100,000;
during months three through twelve market the Company's product to computer
manufacturers and Internet Service Providers - $100,000; and produce the
Company's product for delivery beginning in the first quarter after month
twelve.
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Management intends to market its product through a business-to-business model of
distribution of its product through computer manufacturers such as Gateway,
Dell, IBM, Sony, Toshiba, NEC, etc. The Company intends to license its software
directly to the Company's anticipated major computer manufacturer distributors
in order that they may include the software with the sale of their hardware
products to the general public. In addition, software will be licensed to
anticipated Internet Service Providers such as AOL, Time Warner, EarthLink,
Mindspring, etc. for the direct Internet use of their subscribers. The Company
will earn a license fee every time the manufacturer or Internet Service Provider
delivers the Company's software to its customers. The Company will also seek
service agreements to provide in-depth voice interactive features to major
companies that provide Internet content through their own web sites. This will
allow Internet customers to use conversational speech to speak directly with a
web site in order to complete a variety of tasks such as ask questions and hear
immediate answers about items offered at an auction site, or ask for help about
how to assemble a product. Enhanced service agreements will be available for a
monthly fee to larger Internet web sites that will allow the licensed site
programmers and webmasters to change their site's conversational speech software
to fit their changing needs. The Company anticipates charging the following
fees: 1) computer manufacturers and distributors - $100,000 to $500,000 one time
fee depending on projected volume plus $10.00 license fee for each software
system bundled with hardware; 2) Internet Service Providers - $100,000 to
$500,000 one time fee depending on projected volume plus $10.00 license fee for
software downloaded from their web sites; 3) major companies with enhanced
service agreements - $100,000 to $500,000 one time fee depending upon projected
volume plus $5,000 to $10,000 monthly license fee. In addition to these fees,
the Company will offer annual advertising rates of $100,000 to $500,000 to
Internet sellers in order to include direct verbal links to their sites as
"preferred" web sites, e.g. if a software user asks for an automobile dealer in
his area the computer would verbally respond first with the name of a
"preferred" dealer's location and web site. The Company predicts it will be able
to generate sufficient revenues and profits from operations beginning in the
sixth quarter of operation to continue in business and fund anticipated growth.
Management has no market or distribution agreements with the above manufacturers
or Internet Service Providers. Per the Company's business plan, Management will
seek out partnership and distribution agreements with manufacturers and Internet
Service Providers in months three through twelve.
Investors in the Company should be particularly aware of the inherent risks
associated with the Company's plans and product. These risks include but are not
limited to: a lack of independent market testing of the Company's product; lack
of a proven market or market studies for the Company's product; the limited
experience of management; the Company's position of being in the starting stages
of its business plan; there has been no independent view or certification of
originality of its software; and the financial and personnel resources of the
Company are considerably less than its competitors.
Although Management intends to implement its business plan through the
foreseeable future and will do its best to mitigate the risks associated with
its business plan, there can be no assurance that such efforts will be
successful. Currently, Management is concentrating on advancing its business
plan. Management has no liquidation plans should the Company require additional
cash and be unable to receive funding. Should the Company be unable to implement
its business plan, Management would investigate all options available to retain
value for the shareholders. Among the options that would be considered are: the
sale of the rights to the patents, acquisition of another product or technology,
or a merger or acquisition (as a parent or target) of another business entity
that has revenue and/or long-term growth potential.
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Investors should evaluate all of these risks before considering an investment in
this Company.
The Company has no new product or service planned or announced to the public.
The size and financial strengths of the Company's competitors, such as
Conversational Computing Corporation and Grover Industries, are substantially
greater than those of the Company. However, management believes that the Company
can effectively compete with those other companies because of the unique nature
of its product. The Company's product uniqueness is primarily its ability to
direct computers to follow commands through the use of free format requests
using conversational speech. This unique feature, Management believes, will
allow the Company's product to compete effectively in the market. None of the
Company's competitors currently offer voice interaction with computers using
conversational speech. None of the Company's competitors have announced any
plans to offer software for voice interaction with computers using
conversational speech. Management is not aware of any significant barriers to
the Company's entry into the computer speech recognition market, however, the
Company at this time has no market share of the computer speech recognition
product category.
IBM Viavoice Runtime and Dragon Naturally Speaking Runtime are the two primary
suppliers of commercially available speech recognition software licensed for use
by advanced software application companies such as One Voice Technologies, Inc.
The Company integrates its advanced proprietary software systems with these
basic commercially available speech recognition software "platforms". The
Company is negotiating with both of these primary suppliers in order to gain the
most favorable licensing fees available. Management anticipates negotiating and
securing an annual license agreement after month six of its business plan with
current quoted license fees ranging from $300,000 to $450,000 per year. Blank
recordable CD-ROM discs are readily available through computer wholesalers or
retail stores throughout the Unites States. The Company intends to transfer its
software to CD-ROM discs at its own facilities at a cost not to exceed $2.00 per
disc. Management anticipates transferring only one to two hundred software
copies to master CD-ROM discs for its direct licensing program. The Company will
not require formal contracts with any suppliers or manufacturers of physical
products.
The Company intends to sell its products through a variety of computer
manufacturers and Internet Service Providers and will not depend on any one or a
few major customers.
The Company owns exclusive rights to the pending United States Patents per the
merger agreement ratified at a special meeting of the shareholders of Dead On,
Inc., the shareholders of Dead On, Inc. and Mr. Weber, representing
Conversational Systems, Inc., on July 9, 1999, in which all parties agreed to
merge Conversational Systems Inc., including its pending United States Patents,
with Dead On, Inc. and change the name of Dead On , Inc. to ConversIt. Com, Inc.
On September 9, 1999 ConversIt.com, Inc. changed its name to One Voice
Technologies, Inc. As of the date of this filing, both patents are still
pending. The two pending United States Patents define the primary features and
unique procedures that comprise the Company's product as described in its
business plan.
The Company does not need any governmental approval of its principal product.
The Company's business is not subject to material regulation by federal, state,
or local governmental agencies.
All research and development costs since inception have been immaterial in cost
and will not be passed on to customers.
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The Company currently has four employees.
Year 2000 Disclosure
Computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruption of normal business activities.
The Company's Management has hands-on familiarity with all of the software that
will be utilized in its business plan and has confirmation from third party
suppliers that its proposed software is certified Year 2000 compatible for all
of its computing requirements. In addition, proposed suppliers of office
equipment for the Company's business plan have confirmed that embedded
technology systems such as micro processors in telephone systems and other
non-computer devices that have been or will be purchased per the Company's
business plan are already Year 2000 compatible. While the Company has made what
it believes to be adequate inquiries of its software suppliers as to Year 2000
compliance, there can be no guarantee that the software suppliers will be
adequately prepared for every possible contingent Year 2000 software problem,
which could have minor or material adverse effects on the Company's results of
operations. In a most likely worst case scenario of moderate software problems,
the Company may experience minor adverse cash flow effects based upon a moderate
length of time needed to correct software problems. Due to Management's
knowledge and experience with software, the Company's contingency plan in a most
likely worst case scenario would be to modify and correct its own software and
rely upon other software suppliers such as Microsoft and IBM to provide software
corrections via Internet and telephone support systems.
The Company has purchased new off-the-shelf Year 2000 compatible software in
order to run its operations, has tested all of its software for Year 2000
compatibility and anticipates no material impact on its operating systems. The
total cost of this new software was $1,000.
ITEM 2
PLAN OF OPERATION
The Company maintains a cash balance sufficient to sustain corporate operations
until December 31, 2001. The losses through August 1999 were due to software
development costs and operational expenses. Sales of the Company's equity
securities have allowed the Company to maintain a positive cash flow balance.
During the next twelve months, Management's business plan is for the Company to
take the following steps to market its product: during months one through six
complete software programming - $500,000, secure license for commercially
available voice recognition software and develop marketing strategy - $500,000,
setup web site - $15,000; during months seven through ten beta test software -
$50,000; during months seven through twelve make software programming
corrections - $100,000; during months three through twelve market the Company's
product to computer manufacturers and Internet Service Providers - $100,000; and
produce the Company's product for delivery beginning in the first quarter after
month twelve.
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Cash flow from sales is estimated to begin after the end of the next twelve
months. The Company may face considerable risk in completing each of its
business plan steps, such as cost overruns in each step, a lack of interest in
the Company's product in the market on the part of its anticipated computer
manufacturer partners and Internet Service Provider partners, and/or consumers,
and a shortfall of funding due to the Company's inability to raise capital in
the equity securities market. If further funding is required, and no funding is
received during the next twelve months, the Company would be forced to rely on
its existing cash in the bank or short term bridge loans. While Management
believes its current cash balance to be sufficient for the completion of its
product and marketing prior to receiving cash flow from sales per its business
plan, the Company may be unable to complete its product development until such
time as necessary funds could be raised in the equity market. In such a
restricted cash flow scenario, the Company would delay all cash intensive
activities.
While the Company plans to spend an additional $500,000 to finish programming of
its existing software product, the Company has no plans at this time to incur
new product research and development costs. There are no current plans to
purchase or sell any significant amount of fixed assets. The Company's business
plan provides for an increase of four employees during the next twelve months.
ITEM 3
DESCRIPTION OF PROPERTY
The Company's principal executive office address is 6333 Greenwich Drive, Suite
240, San Diego, California 92122. The Company has a lease for 3,350 square feet
of office space for a period of three years and eight and one half months
commencing on July 15, 1999 at a cost of $27,720 in year one, $70,806 in year
two, $75,291 in year three, $77,301 in year four, and $19,598 for the period
ending March 31, 2003. Management considers the Company's current principal
office space arrangement adequate for current and short-term estimated growth.
ITEM 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information on the ownership of the Company's
voting securities by Officers, Directors and major shareholders as well as those
who own beneficially more than five percent of the Company's common stock
through the most current date - July 31,1999:
<TABLE>
<CAPTION>
Title Of Name & Amount & Percent
Class Address Nature of owner Owned
- ----- ------- --------------- -----
<S> <C> <C> <C>
Common Dean Weber 3,957,800 34.8
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Common iVantage, Inc. 1,600,200 14.1 (a)
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
Common George Kaelin 303,100 2.7
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
Total 5,861,100
</TABLE>
(a) iVantage, Inc. is wholly owned by Dean Weber, Chairman of the Board, CEO,
and Secretary of One Voice Technologies, Inc.
ITEM 5
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS
The Directors and Officers of the Company, all of those whose terms will expire
12/31/99, or at such a time as their successors shall be elected and qualified
are as follows:
<TABLE>
<CAPTION>
Name & Address Age Position Date First Elected
- -------------- --- -------- ------------------
<S> <C> <C> <C>
Dean Weber 37 CEO, Secretary, 7/9/99
6333 Greenwich Dr, Ste 240 Chairman, of
San Diego, Ca 92122 the Board
Rahoul Sharan 37 CFO, Director 7/9/99
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
George Kaeliin 33 Director 7/9/99
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
</TABLE>
Each of the foregoing persons may be deemed a "promoter" of the Company, as that
term is defined in the rules and regulations promulgated under the securities
and Exchange Act of 1933.
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve until the meeting of the Board of Directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
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No Executive Officer or Director of the Corporation has been the subject of any
Order, Judgement, or Decree of any Court of competent jurisdiction, of any
regulatory agency enjoining him from acting as an investment advisor,
underwriter, broker or dealer in the securities industry, or as an affiliated
person, director or employee of an investment company, bank, savings and loan
association, or insurance company or from engaging in or continuing any conduct
or practice in connection with any such activity or in connection with the
purchase or sale of any securities nor has any such person been the subject of
any Order of a State authority barring or suspending for more than sixty (60)
days, the right of such a person to be engaged in such activities or to be
associated with such activities.
No Executive Officer or Director of the Corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.
No Executive Officer or Director of the Corporation is the subject of any
pending legal proceedings.
Resumes
Dean Weber, President & Director
1998-present Founder and President of Conversational Systems, Inc. in
San Diego, California. Specializing in the development of
computer interactive software for the consumer market.
1991-1998 Founder and President of EditPro Corporation in San Diego,
California. Specializing in the development, marketing and
consulting of software applications for the computer
engineering market.
1989-1991 Software Design Consultant to various companies including
Xerox and Rockwell to design and develop computer based
software systems.
1987-1989 Senior Project Engineer with Northrop Corporation in Pico
Rivera, California. Led engineering team which created
in-house publishing systems for the B2 Stealth Bomber
project.
1984-1987 Senior Software Engineer with United Technologies in
Hartford, Connecticut. Designed and developed real-time
software systems for NASA and U.S. Navy projects.
1984 B.S. in computer science, Central Connecticut State
University, New Britain, Connecticut.
Rahoul Sharan, CFO & Director
1988-present Partner in S & P Group in Vancouver, Canada, a company
which specializes in investment financing for venture
capital projects and real estate development and
construction.
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1987-present Director and President of KJN Management, Ltd. in
Vancouver, Canada, a company which specializes in
management of venture capital projects for a variety of
businesses.
1984-1987 Chartered Accountant with Coopers & Lybrand, C.A. in
Vancouver, Canada, duties included auditing, tax
preparation, preparation and review of financial
statements.
1984 Bachelor of Commerce degree with finance major, University
of British Columbia, Canada
George H. Kaelin, III, Director
1994-present Associate Attorney and Partner at the law firm of Endeman
Lincoln Turek & Heater, San Diego, California.
1993-1994 Associate Attorney at the law firm of Griffith &
Thornburgh, Santa Barbara, California.
1991-1993 Associate Attorney at the law firm of Jennings Engstrand &
Henrikson, San Diego, California.
1990-1991 Assistant to Alaska Legislature in drafting the Alaskan Non
Profit Corporations Code.
1990 Clerk to the Honorable Milton L. Schwartz, U.S. District
Court, Eastern District.
1991 J. D. degree, University of California at Davis
1988 B.B.A. Summa Cum Laude, University of San Diego, California
ITEM 6
EXECUTIVE COMPENSATION
The Company's CEO is paid a salary of $180,000 per year. The Company's CFO is
paid a service fee of $120,000 per year.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name & Year Salary Bonus Other Restricted Options LTIP All other
principle ($) ($) annual stock SARs Payouts compen-
position compen- awards($) ($) sation($)
sation($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D. Weber 1999 180,000 -0- -0- -0- -0- -0- -0-
CEO
R Sharan 1999 120,000 -0- -0- -0- -0- -0- -0-
CFO
</TABLE>
The Company has one employment agreement with its CEO, Dean Weber. The terms
consist of payment of a salary to Mr. Weber of $180,000 per year commencing on
July 14, 1999 and ending on July 14, 2002.
The Company has one personal service agreement with its CFO, Rahoul Sharan. The
terms consist of payment of a fee to Mr. Sharan of $120,000 per year commencing
on July 14, 1999 and ending on July 14, 2002.
The Officers and the Board of Directors have the responsibility to determine the
amount of remuneration for key personnel based upon such factors as positive
cash flow to include stock sales, product sales, estimated cash expenditures,
accounts receivable, accounts payable, notes payable, and a cash balance of not
less than $100,000 at each month end.
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the Corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the Corporation or any of its subsidiaries, if any.
ITEM 7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the years 1997 and 1998 and the interim period ended August 31, 1999 a
director of the Company provided the Company with the use of a telephone number
and a business mailing address. The costs associated with the use of the
telephone and mailing address were deemed by management to be immaterial as the
telephone and mailing address were almost exclusively used by the director for
other business and personal purposes.
The Company's chief executive officer has advanced $4,500 to the Company. The
Company's chief financial officer has advanced $10,000 to the Company. Both of
these cash advances are recorded on the Company's financial statements as
current liabilities with no written or verbal agreement regarding loan terms of
repayment or stated interest rate.
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ITEM 8
DESCRIPTION OF SECURITIES
The Company's Certificate of Incorporation authorizes the issuance of 50,000,000
Shares of Common Stock, $.001 par value per share, and 10,000,000 shares of
preferred stock, $.001 par value per share. Holders of shares of Common Stock
are entitled to one vote for each share on all matters to be voted on by the
stockholders. Holders of Common Stock have cumulative voting rights. Holders of
shares of Common Stock are entitled to share ratably in dividends, if any, as
may be declared, from time to time by the Board of Directors in its discretion,
from funds legally available therefor. In the event of a liquidation,
dissolution, or winding up of the Company, the holders of shares of Common Stock
are entitled to share pro rata all assets remaining after payment in full of all
liabilities. Holders of Common Stock have no preemptive or other subscription
rights, and there are no conversion rights or redemption or sinking fund
provisions with respect to such shares. All of the outstanding Common Stock is,
and the shares offered by the Company pursuant to this offering will be, when
issued and delivered, fully paid and non-assessable. The Board of Directors,
from time to time in its sole discretion, has the authority to fix the powers,
rights, qualifications, limitations, and restrictions pertaining to the
preferred stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which established
the definition of a "penny stock", for the purposes relevant to the Company, as
any equity security that has a market price of less than $5.00 per share or with
an exercise price of less than $5.00 per share, subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules require:
(i) that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain financial
information and investment experience objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks are suitable for
that person and the person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form, (i) sets forth the basis on which the
broker or dealer made the suitability determination; and (ii) that the broker or
dealer received a signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
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PART II
ITEM 1
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS
The Company's common stock shares currently trade on the OTC Electronic Bulletin
Board which is sponsored by the National Association of Securities Dealers
(NASD). The OTC Electronic Bulletin Board is a network of security dealers who
buy and sell stock. The dealers are connected by a computer network which
provides information on current "bids" and "asks" as well as volume information.
The Company is scheduled to be de-listed from the OTC Bulletin Board on November
30, 1999, and listed on the National Quotation Bureau, Inc., (the "Pink Sheets")
pursuant to NASD Rule 6530. Once the Company has completed the comment period on
this Form 10SB filing the Company shall seek to be listed again on the OTC
Bulletin Board.
For the periods indicated, the following table sets forth the high and low bid
prices per share of common stock. These prices represent inter-dealer quotations
without retail mark-up, mark-down, or commission and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
Low High
<S> <C> <C>
1998
First Quarter .00 .00
Second Quarter .00 .00
Third Quarter .00 .00
Fourth Quarter .50 .55
1999
First Quarter .25 .60
Second Quarter .25 5.38
Third Quarter 6.69 9.50
</TABLE>
As of July 31, 1999, the Company had 76 shareholders of record, however,
Management believes that an undetermined number of shareholders hold the
company's common stock shares registered through the depository trust company,
CEDE & Company. The Company has paid no cash dividends. The Company has no
outstanding options, however, a stock option plan has been approved whereby the
Board of Directors may grant stock options to eligible participants rendering
services to the Corporation. The Company has no plans to register any of its
securities under the Securities Act for sale by security holders. There is no
public offering of equity and there is no proposed public offering of equity.
13
<PAGE> 14
ITEM 2
LEGAL PROCEEDINGS
The Company is involved in the following legal proceedings which are solely
related to its discontinued sporting goods equipment and apparel manufacturing
business: $47,025 in collection actions filed in California small claims and
superior court filings, and one $22,000 judgement awarded to Airport Industrial
Investors, the Company's former landlord. As disclosed in the Company's
financial statements included with this filing, the former officers of the
Company have deposited $100,000 into an escrow account in the care of the
Company's attorneys, Luce, Forward, Hamilton & Scripps LLP, to be used to settle
prior legal obligations of the Company. The Company anticipates settling all of
its legal claims and judgements by December 31, 1999.
ITEM 3
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
CONTROL AND FINANCIAL DISCLOSURE
None.
ITEM 4
RECENT SALES OF UNREGISTERED SECURITIES
On July 9, 1999, the Company's shareholders authorized the issuance of 7,000,000
shares of unregistered, restricted common stock to the nineteen shareholders of
Conversational Systems, Inc., in exchange for all of the issued and outstanding
shares of Conversational Systems, Inc. The Company relied upon Section 4(2) of
Securities Act of 1993, as amended (the "Act") as the basis of exemption from
registration. Each shareholder of Conversational Systems, Inc., had adequate and
reasonable opportunity and access to corporate information regarding the
Company.
In September 1998, the Company offered and sold 220,000 shares of common stock
at $.25 per share to a non-affiliated private investor. The Company relied on an
exemption from registration pursuant to Regulation S as the basis of exemption
from registration. Blue Sky filings were not required for the private placement
as all sales were to a foreign investor.
From the period of approximately May 1, 1999 until July 14, 1999, the Company
offered and sold 1,500,000 shares of Rule 144 restricted stock at $2.00 per
share to thirty-two non-affiliated private investors. Each investor completed a
subscription confirmation letter and private placement subscription agreement
whereby the investors certified that they were purchasing the shares for their
own accounts and that the investors were accredited as defined. This offering
was not accompanied by general advertisement or general solicitation. The
Company relied on Section 4 (2) of the Securities Act of 1993, as amended (the
"Act") as the basis of exemption from registration. Blue Sky filings were not
required for the private placement as all sales were to foreign investors.
14
<PAGE> 15
ITEM 5
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's By-Laws allow for the indemnification of Company Officers and
Directors in regard to their carrying out the duties of their offices. The
By-Laws also allow for reimbursement of certain legal defenses.
As to indemnification for liabilities arising under the Securities Act of 1933
for directors, officers or persons controlling the Company, the Company has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy and unenforceable.
PART F/S
The audited financial statements of the Company and related notes which are
included in this offering have been examined by Stonefield Josephson, Inc.,
Certified Public Accountants, and have been so included in reliance upon the
opinion of such accountants given upon their authority as an expert in auditing
and accounting.
15
<PAGE> 16
ONE VOICE TECHNOLOGIES, INC.
(FORMERLY KNOWN AS CONVERSIT.COM, INC.,
DEAD ON, INC., BELRIDGE HOLDINGS CORP. AND
BELRIDGE BROADCASTING OF PORTLAND, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
CONTENTS
Page
----
<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Balance Sheets 2
Statements of Operations 3
Statement of Stockholders' Equity (Deficit) 4
Statements of Cash Flows 5-6
Notes to Financial Statements 7-15
</TABLE>
<PAGE> 17
Stonefield Josephson, Inc.
1620 26th Street, Suite 400 South
Santa Monica, CA 90404-4041
310-453-9400
Board of Directors
One Voice Technologies, Inc.
San Diego, CA
We have audited the accompanying balance sheet of One Voice Technologies, Inc. A
Nevada Corporation as of December 31, 1998 and 1997, and the related statements
of operations, stockholders' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audits in accordance with generally accepted accounting
practices. Those standards require that we 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.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of One Voice Technologies, Inc. as
of December 31, 1998 and 1997, and the results of operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Stonefield Josephson, Inc.
Certified Public Accountants
Santa Monica, CA
September 13, 1999
<PAGE> 18
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS August 31, December 31, December 31,
1999 1998 1997
----------- ------------ -----------
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $2,367,727 $ 30,024 $ 30,024
Cash - restricted 100,000 -- --
---------- ---------- ----------
Total current assets 2,467,727 30,024 30,024
---------- ---------- ----------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization 116,240 49,739 49,739
---------- ---------- ----------
OTHER ASSETS:
Deposits 39,956 -- --
Patent, net of accumulated amortization 33,956 11,705 11,705
---------- ---------- ----------
Total other assets 73,912 11,705 11,705
---------- ---------- ----------
$2,657,879 $ 91,468 $ 91,468
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 8,300 $ 8,300 $ 8,300
Loan payable 100,000 -- --
Loan payable, officer 10,000 10,000 10,000
Loan payable, officer-stockholder 4,500 13,500 13,500
Officers advances -- -- 3,922
---------- ---------- ----------
Total current liabilities 122,800 31,800 35,722
---------- ---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock; $.001 par value, 10,000,000 shares
authorized, no shares issued and outstanding -- -- --
Common stock; $.001 par value, 50,000,000 shares
authorized, 11,370,000, 19,720,000 and 9,500,000
shares issued and outstanding as of August 31, 1999,
December 31, 1998 and 1997, respectively 11,370 19,720 9,500
Additional paid-in capital 3,285,393 439,471 127,605
Deficit accumulated during development stage (761,684) (399,523) (81,359)
----------- ----------- ----------
Total stockholders' equity (deficit) 2,535,079 59,668 55,746
----------- ----------- ----------
$ 2,657,879 $ 91,468 $ 91,468
=========== =========== ==========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-2
<PAGE> 19
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Eight months
ended Year ended Year ended From inception on
August 31, December 31, December 31, February 4, 1987 to
1999 1998 1997 August 31, 1999*
------------ ------------ ----------- -------------------
(unaudited)
<S> <C> <C> <C> <C>
NET REVENUES $ -- $ -- $ 25,422 $ 25,422
COST OF REVENUES -- -- 2,790 2,790
------------ ------------ ----------- ------------
GROSS PROFIT -- -- 22,632 22,632
GENERAL AND ADMINISTRATIVE
EXPENSES 362,161 -- 101,169 466,152
------------ ------------ ----------- ------------
LOSS FROM CONTINUING OPERATIONS (362,161) -- (78,537) (443,520)
LOSS ON DISCONTINUED OPERATIONS -- (299,161) (299,161)
GAIN ON DISPOSAL OF SEGMENT, NET OF
PROVISION OF $110,788 FOR OPERATING
LOSSES DURING THE PHASE-OUT PERIOD -- (19,003) -- (19,003)
------------ ------------ ----------- ------------
NET LOSS $ (362,161) $ (318,164) $ (78,537) $ (761,684)
============ ============ =========== ============
NET LOSS PER SHARE, basic and diluted
from continuing operations $ (0.02) $ -- $ --
============ ============ ===========
NET LOSS PER SHARE, basic and diluted
from discontinued operations $ -- $ (0.01) $ --
============ ========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING,
basic and diluted 19,698,767 21,370,000 21,370,000
============ ============ ===========
</TABLE>
* Audited from inception to December 31, 1998 and unaudited from January 1, 1999
to August 31, 1999.
See accompanying independent auditors' report and notes to financial statements.
F-3
<PAGE> 20
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Total
Common stock Additional stockholders'
------------------------------ paid-in Accumulated equity/
Shares Amount capital deficit (deficit)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 2,500,000 $ 2,500 $ (1,500) $ (2,822) $ (1,822)
Issuance of common stock due in
connection with merger
agreement (Note 1) 7,000,000 7,000 129,105 136,105
Net loss for the year ended
December 31, 1997 (78,537) (78,537)
----------- ----------- ----------- ----------- ----------
Balance at December 31, 1997 9,500,000 9,500 127,605 (81,359) 55,746
Net proceeds from issuance of
common stock 10,000,000 10,000 257,086 267,086
Net proceeds from issuance of
common stock 220,000 220 54,780 55,000
Net loss for the year ended
December 31, 1998 (318,164) (318,164)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 19,720,000 19,720 439,471 (399,523) 59,668
Net proceeds from issuance of
common stock 1,500,000 1,500 2,546,072 2,547,572
Net issuance of common stock in
exchange for services relating to
private placement 150,000 150 299,850 300,000
Retirement of common stock (10,000,000) (10,000) (10,000)
Net loss for the eight months
ended August 31, 1999
(unaudited) (362,161) (362,161)
----------- ----------- ----------- ----------- ----------
Balance at August 31, 1999
(unaudited) 11,370,000 $ 11,370 $3,285,393 $(761,684) $2,535,079
=========== =========== =========== =========== ==========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-4
<PAGE> 21
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Eight months ended Year ended Year ended From inception on
August 31, December 31, December 31, February 4, 1987 to
1999 1998 1997 August 31, 1999
------------------ ------------- ------------ -------------------
(unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net loss $(362,161) $(318,164) $ (78,537) $(761,684)
--------- --------- --------- ---------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES -
depreciation and amortization -- -- 2,118 2,118
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ASSETS -
deposits (39,956) -- -- (39,956)
INCREASE (DECREASE) IN LIABILITIES:
Officer advances -- (3,922) 2,100 --
Accounts payable and accrued expenses -- -- 8,300 8,300
--------- --------- --------- ---------
Total adjustments (39,956) (3,922) 12,518 (29,538)
--------- --------- --------- ---------
Net cash used for operating activities (402,117) (322,086) (66,019) (791,222)
--------- --------- --------- ---------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchase of property and equipment (66,501) -- (51,857) (118,358)
Patents (22,251) -- (11,705) (33,956)
Increase in escrow account (100,000) -- -- (100,000)
--------- --------- --------- ---------
Net cash used for investing activities (188,752) -- (63,562) (252,314)
--------- --------- --------- ---------
</TABLE>
(Continued)
* Audited from inception to December 31, 1998 and unaudited from January 1, 1999
to August 31, 1999.
See accompanying independent auditors' report and notes to financial statements.
F-5
<PAGE> 22
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS (CONTINUED)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Eight months ended
August 31, Year ended Year ended From inception on
1999 December 31, December 31, February 4, 1987 to
(unaudited) 1998 1997 August 31, 1999
------------------- ------------ ------------ -------------------
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 2,847,572 322,086 136,105 3,306,763
Retirement of common stock, net (10,000) -- -- (10,000)
Proceeds (payments) from loan payable,
officer-stockholder (9,000) -- 13,500 4,500
Proceeds from loan payable, officer -- -- 10,000 10,000
Proceeds from loans payable 100,000 -- -- 100,000
----------- ----------- ----------- -----------
Net cash provided by financing activities 2,928,572 322,086 159,605 3,411,263
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 2,337,703 -- 30,024 2,367,727
CASH, beginning of year 30,024 30,024 -- --
----------- ----------- ----------- -----------
CASH, end of year and/or period $ 2,367,727 $ 30,024 $ 30,024 $ 2,367,727
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ 17,124 $ -- $ -- $ 17,124
=========== =========== =========== ===========
Income taxes paid $ 1,823 $ -- $ -- $ 1,823
=========== =========== =========== ===========
</TABLE>
* Audited from inception to December 31, 1998 and unaudited from January 1, 1999
to August 31, 1999.
See accompanying independent auditors' report and notes to financial statements.
F-6
<PAGE> 23
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998 AND 1997
(1) ORGANIZATION:
One Voice Technologies, Inc. (formerly known as ConversIt.Com,
Inc., Dead On, Inc., Belridge Holdings Corp. and Belridge
Broadcasting of Portland, Inc.) was incorporated under the laws
of the State of Delaware on February 4, 1987.
During August 1995, the Company formed Belridge Holdings Corp.
under the laws of the State of Nevada. Belridge Broadcasting of
Portland merged into Belridge Holdings Corp. thereby changing
the domicile from Delaware to Nevada. The Delaware corporation
was discontinued.
During September 1998, Belridge Holdings Corp. entered into a
Plan of Exchange with Dead On, LLC, a Delaware limited liability
company whereby 10,000,000 shares of its common stock were
issued in exchange for all of the membership interest of Dead
On, LLC. Dead On, LLC was liquidated and the assets and
liabilities of Dead On, LLC were transferred to Belridge
Holdings Corp. Subsequent to the exchange, Belridge Holdings
Corp. changed its name to Dead On, Inc., a Nevada corporation
(Note 7).
During May 1999, in connection with an Agreement for Acquisition
of Assets of Dead On, Inc., the Company sold substantially all
of its assets and liabilities relating to its apparel, accessory
and sports equipment division (Note 8).
Effective June 22, 1999, in connection with a Merger Agreement
and Plan of Reorganization with Conversational Systems, Inc., a
California corporation, Dead On, Inc., a Nevada corporation and
certain shareholders of Dead On, Inc. issued 7,000,000 shares of
its common stock in exchange for all the outstanding common
stock of Conversational Systems, Inc. based on a conversion
ratio of 700 shares of the Company's common stock for each share
of Conversation Systems common stock. The merger qualified as a
tax-free reorganization and has been accounted for as a pooling
of interests. Accordingly, the Company's consolidated financial
statements have been restated for all periods prior to the
business combination to include the combined financial results
of Dead On, Inc. and Conversational Systems, Inc.
Subsequent to the merger, Dead On, Inc. changed its name to
ConversIt.Com, Inc., a Nevada corporation.
Effective September 9, 1999, the Company changed its name to One
Voice Technologies, Inc.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS ACTIVITY:
The Company develops and markets computer software using Intelligent
Voice Interactive Technology (IVIT(TM)) to website owners in the United
States and other countries.
See accompanying independent auditors' report.
F-7
<PAGE> 24
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
USE OF ESTIMATES:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
FAIR VALUE:
Unless otherwise indicated, the fair values of all reported
assets and liabilities which represent financial instruments,
none of which are held for trading purposes, approximate the
carrying values of such amounts.
CASH:
Equivalents
For purposes of the statement of cash flows, cash equivalents
include all highly liquid debt instruments with original
maturities of three months or less which are not securing any
corporate obligations.
Concentration
The Company maintains its cash in bank deposit accounts which,
at times, may exceed federally insured limits. The Company has
not experienced any losses in such accounts.
PROPERTY AND EQUIPMENT:
Property and equipment are valued at cost. Depreciation is being
provided by use of the straight-line method over the estimated
useful lives of the assets.
PATENTS:
The Company's patent costs consist of legal fees paid in
connection with a patent pending. The Company amortizes patents
using the straight-line method over the period of estimated
benefit, generally five years. There was no amortization expense
charged for the eight months ended August 31, 1999 (unaudited)
as the patent is pending.
See accompanying independent auditors' report.
F-8
<PAGE> 25
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PATENTS, CONTINUED:
The Company periodically evaluates whether events or
circumstances have occurred that may affect the estimated useful
life or the recoverability of the remaining balance of the
patent. Impairment of the patent is triggered when the estimated
future undiscounted cash flows do not exceed the carrying amount
of the intangible asset. If the events or circumstances indicate
that the remaining balance of the patent may be permanently
impaired, such potential impairment will be measured based upon
the difference between the carrying amount of the patent and the
fair value of such assets, determined using the estimated future
discounted cash flows generated.
NET INCOME (LOSS) PER SHARE:
The Company has adopted Statement of Financial Accounting
Standard No. 128. Earnings per Shares ("SFAS No. 128"), which is
effective for annual and interim financial statements issued for
periods ending after December 15, 1997. SFAS No. 128 was issued
to simplify the standards for calculating earnings per share
("EPS") previously in APB No. 15, Earnings Per Share. SFAS No.
128 replaces the presentation of primary EPS with a presentation
of basic EPS. The new rules also require dual presentation of
basic and diluted EPS on the face of the statement of
operations.
For the years ended December 31, 1997 and 1998, the per share
data is based on the weighted average number of common and
common equivalent shares outstanding, and are calculated in
accordance with Staff Accounting Bulletin of the Securities and
Exchange Commission (SAB) No. 98 whereby common stock, options
or warrants to purchase common stock or other potentially
dilutive instruments issued for nominal consideration must be
reflected in basic and diluted per share calculation for all
periods in a manner similar to a stock split, even if
anti-dilutive. Accordingly, in computing basic earnings per
share, nominal issuances of common stock are reflected in a
manner similar to a stock split or dividend. In computing
diluted earnings per share, nominal issuances of common stock
and potential common stock are reflected in a manner similar to
a stock split or dividend.
See accompanying independent auditors' report.
F-9
<PAGE> 26
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
INCOME TAXES:
Deferred income taxes are reported using the liability method.
Deferred tax assets are recognized for deductible temporary
differences and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
RECENT PRONOUNCEMENTS EFFECTIVE SUBSEQUENT TO 1998
In April 1998, Statement of Position 98-5 "Reporting on the Costs
of Start-Up Activities" ("SOP 98-5") was issued. SOP 98-5
provides guidance on the financial reporting of start-up costs
and organization costs. The SOP is effective for financial
statements for fiscal years beginning after December 15, 1998.
The Company does not anticipate that the adoption of this
statement will have a material effect on its financial
statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", effective for
fiscal years beginning after June 15, 1999. The Company
anticipates that due to its limited use of derivative
instruments, the adoption of SFAS No. 133 will not have a
material effect on its financial statements.
INTERIM FINANCIAL STATEMENTS (UNAUDITED):
The accompany unaudited financial statements for the interim
period ended August 31, 1999 have been prepared in accordance
with generally accepted accounting principles for interim
financial information and with the instructions to Form 10.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the eight months ended August 31, 1999 are
not necessarily indicative of the results that may be expected
for the year ending December 31, 1999.
(3) CASH RESTRICTED:
In connection with an Escrow Agreement dated July 14, 1999,
former officers of Dead On, Inc. have placed $100,000 in an
escrow account. The funds are to be used for prior obligations of
Dead On, Inc. relating to its apparel, accessory and sports
equipment division which was discontinued in December 1998 (Note
8). The funds are restricted through January 2000.
See accompanying independent auditors' report.
F-10
<PAGE> 27
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(4) PROPERTY AND EQUIPMENT (UNAUDITED):
A summary is as follows:
<TABLE>
<S> <C>
Equipment $ 87,378
Furniture and fixtures 30,980
-----------
118,358
Less accumulated depreciation and amortization 2,118
-----------
$ 116,240
===========
</TABLE>
Depreciation and amortization expense totaled $2,118 for the eight
months ended August 31, 1999.
(5) LOANS PAYABLE (UNAUDITED):
The loans are not collateralized, non-interest bearing and due on
demand.
(6) RELATED PARTY TRANSACTION:
During 1997 and 1996, a director of the Company provided office
facilities to the Company. The costs related to the transaction are
immaterial to the financial statements.
(7) COMMON STOCK:
In February 1987, the Company issued 1,000 shares of its common stock
for $1,000. In August 1995, the Company effected a 2,500 for one stock
split for shareholders of record on August 23, 1995.
In September 1998, the Company issued 10,000,000 shares of its common
stock in exchange for all of the membership interest of Dead On, LLC
(Note 1).
In September 1998, the Company commenced a private placement of 220,000
shares of its common stock at a purchase price of $0.25 per share. In
May 1999 (unaudited), the Company commenced a private placement of
1,500,000 shares of the Company's common stock at a purchase price of
$2.00 per share (collectively referred to as the "Private Placements").
The Private Placements were exempt from the registration provisions of
the Act by virtue of Section 4(2) of the Act, as transactions by an
issuer not involving any public offering. The securities issued pursuant
to the Private Placements were restricted securities as defined in Rule
144. The offerings generated proceeds, net of offering costs of
approximately $55,000 and $2,994,000, respectively.
See accompanying independent auditors' report.
F-11
<PAGE> 28
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(7) COMMON STOCK, CONTINUED:
In May 1999 (unaudited), a group of officers, directors and shareholders
of the Company (the "group") formed a new company, Dead On Acquisition
Company, a California Corporation. Subsequent to the formation of Dead
On Acquisition, the group transferred 6,075,000 shares of the Company's
common stock to Dead On Acquisition in exchange for shares of Dead On
Acquisition stock.
On July 14, 1999 (unaudited), 150,000 shares of the Company's common
stock was issued for services rendered in connection with the July 1999
private placement.
Pursuant to a plan approved by One Voice Technologies' Board of
Directors in July 1999 (unaudited), the Company repurchased and retired
10,000,000 shares of its common stock, $.001 par value per share.
(8) DISCONTINUED OPERATIONS:
On December 31, 1998, the Company was the subject of a formal plan to
dispose of substantially all of its assets and liabilities relating to
its apparel, accessory and sports equipment division. In May 1999, the
Company sold substantially all of its assets and liabilities under an
Agreement for Acquisition of Assets of Dead On, Inc. (Note 9) resulting
in a gain of $91,785 including a provision for operating losses during
the phase-out period of $110,788. The loss from operations totaled
$299,161 from revenues of $307,755 for the year ended December 31, 1998.
The Company's results of operations have been classified as discontinued
operations and prior periods have been restated.
(9) AGREEMENT FOR ACQUISITION:
Effective May 14, 1999, in connection with an Agreement for Acquisition
of Assets of Dead On, Inc. with Dead On Acquisition Company, the Company
sold all of its operating assets and liabilities of Dead On, Inc. to
Dead On Acquisition Company for $1.00 (Note 8).
See accompanying independent auditors' report.
F-12
<PAGE> 29
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(10) BUSINESS COMBINATION:
Pursuant to a Merger Agreement and Plan of Reorganization dated June 22,
1999, a merger consummated between the Company and Conversational
Systems, Inc., a California Corporation. The stock-for-stock transaction
was approved by the shareholders of Conversational Systems, after which
Conversational Systems was merged with and into Dead On, Inc., with Dead
On continuing as the surviving corporation in the merger. As a result of
the merger, the separate existence of Conversational Systems ceased.
Under the merger agreement, each outstanding share of Conversational
Systems common stock was converted into the right to receive 700 Dead On
common shares and resulted in the issuance of approximately 7,000,000
shares. This transaction has been accounted for as a pooling of
interests, and accordingly, financial information for periods prior to
the merger reflect retroactive restatement of the companies combined
financial position and operating results. For periods preceding the
merger, there were no intercompany transactions which required
elimination from the combined consolidated results of operations and
there were no adjustments necessary to conform the account practices of
the two companies.
Selected financial information for the combining entities included in
the statement of operations for the eight months ended August 31, 1999
(unaudited), December 31, 1998, and 1997 are as follows:
<TABLE>
<CAPTION>
August 31, December 31, December 31,
1999 1998 1997
---------- ------------- ---------
(Unaudited)
<S> <C> <C> <C>
Net sales:
Dead On $ - $ - $ -
Conversational Systems - - 25,422
---------- ------------- ---------
Combined $ - $ - $ 25,422
========== ============= =========
Net loss:
Dead On $ - $ 318,164 $ 2,100
Conversational Systems 362,161 - 76,437
---------- ------------- ---------
Combined $ 362,161 $ 318,164 $ 78,537
========== ============= =========
</TABLE>
(11) INCOME TAXES:
For federal income tax return purposes, the Company has available net
operating loss carryforwards of approximately $768,000, which expire
through 2018 and are available to offset future income tax liabilities.
See accompanying independent auditors' report.
F-13
<PAGE> 30
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(11) INCOME TAXES, CONTINUED:
Temporary differences which give rise to deferred tax assets and
liabilities at August 31, 1999 are as follows:
<TABLE>
<S> <C>
Net operating loss carryforwards $ 307,200
Valuation allowance (307,200)
-------------
Net deferred taxes $ -
=============
</TABLE>
(12) EMPLOYMENT AGREEMENT (UNAUDITED):
In July 1999, the Company entered into an employment agreement with an
officer stockholder of the Company to pay an annual base salary of
$180,000 through July 2002. Annual increases are determined annually by
the Board of Directors.
Salaries paid totaled $44,505 for the eight month period ending August
31, 1999.
(13) CONSULTING AGREEMENT (UNAUDITED):
In July 1999, the Company entered into a consulting agreement with a
personal service corporation owned by an officer of the Company to pay
an annual consulting fee of $120,000 through July 2002.
Consulting fees totaled $36,650 for the eight month period ending August
31, 1999.
(14) COMMITMENTS:
Effective July 1999, the Company leases its office facility under a
noncancellable operating lease expiring March 31, 2003.
At August 31, 1999, minimum rental payments under the operating lease is
as follows:
<TABLE>
<S> <C>
Year ending December 31,
1999 $ 27,720
2000 70,806
2001 75,291
2002 77,301
2003 19,598
-----------
$ 270,716
===========
</TABLE>
Building rental expense totaled $6,281 for the eight months ended August
31, 1999 (unaudited).
See accompanying independent auditors' report.
F-14
<PAGE> 31
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(15) INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN (UNAUDITED):
On July 14, 1999, the Company enacted an Incentive and Nonqualified Stock
Option Plan (the "Plan") for its employees and consultants under which a
maximum of 500,000 options may be granted to purchase common stock of the
Company. Two types of options may be granted under the Plan: (1) Incentive
Stock Options (also know as Qualified Stock Options) which may only be
issued to employees of the Company and whereby the exercise price of the
option is not less than the fair market value of the common stock on the
date it was reserved for issuance under the Plan; and (2) Nonstatutory
Stock Options which may be issued to either employees or consultants of
the Company and whereby the exercise price of the option is greater than
85% of the fair market value of the common stock on the date it was
reserved for issuance under the plan. Grants of options may be made to
employees and consultants without regard to any performance measures. All
options issued pursuant to the Plan vest at the rate of 20% per year over
a five-year period from the date of the grant. All options issued pursuant
to the Plan are nontransferable and subject to forfeiture. As of December
31, 1998, the Company had not issued any options pursuant to the Plan.
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under FASB Statement No.
123, "Accounting for Stock-Based Compensation," requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on
the date of grant, no compensation expense is recognized.
(16) CONTINGENCIES:
The Company is party to various legal proceedings arising from the
discontinued operations of the Company's apparel division (Note 8).
Although the ultimate disposition of these proceedings is not
determinable, management, based on advice of legal counsel, does not
believe that adverse determinations in any or all of such proceedings will
have a material adverse effect on the financial position of the Company.
See accompanying independent auditors' report.
F-15
<PAGE> 32
PART III
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit 2 Plan of acquisition, reorganization or liquidation Included in Original Filing
Exhibit 3(i) Articles of Incorporation Included in Original Filing
Exhibit 3(ii) Bylaws Included in Original Filing
Exhibit 4 Instruments defining the rights of holders None
Exhibit 9 Voting Trust Agreement None
Exhibit 10 Material contracts Included in Original Filing
Exhibit 11 Statement re: computation of per share earnings See Financial Stmts.
Exhibit 16 Letter on change of certifying accountant None
Exhibit 21 Subsidiaries of the registrant None
Exhibit 23 Consent of experts and counsel Included in Original Filing
Exhibit 24 Power of Attorney None
Exhibit 27 Financial Data Schedule Included in Original Filing
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
One Voice Technologies, Inc.
Date October 14, 1999 By /s/ DEAN WEBER
-----------------------------------
Dean Weber, President & Director
Date October 14, 1999 By /s/ RAHOUL SHARAN
-----------------------------------
Rahoul Sharan, Director
