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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED JUNE 30, 2000
COMMISSION FILE NO. 0-27589
_______________________
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)
(858) 552-4466
(Issuer's Telephone Number)
(858) 552-4474
(Issuer's Facsimile Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock at the latest practicable date.
As of June 30, 2000, the registrant had 12,671,060 shares of common stock,
$.001 par value, issued and outstanding.
Transitional small business disclosure format (check one): Yes [_] No [X]
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PART 1
FINANCIAL INFORMATION
Item 1. Financial Statements.
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET - JUNE 30, 2000
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 9,956,355
Cash - restricted 200,000
Inventory 95,612
Prepaid advertising 231,389
Prepaid expenses 506,589
-----------
Total current assets $10,989,945
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization 774,674
OTHER ASSETS:
Software licensing 256,004
Software development costs 560,782
Deposits 27,866
Trademark 140,178
Patent 41,204
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Total other assets 1,026,034
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$12,790,653
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 659,446
Loan payable 200,000
Loan payable, officer 10,000
Loan payable, officer-stockholder 4,500
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Total current liabilities $ 873,946
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, 12,671,060 shares issued and outstanding 12,671
Additional paid-in capital 16,914,163
Deficit accumulated during development stage (5,010,127)
-----------
Total stockholders' equity 11,916,707
-----------
$12,790,653
===========
See accompanying notes to financial statements.
2
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended Three months ended From inception on
June 30, June 30, January 1, 1999 to
2000 1999 2000 1999 June 30, 2000
----------- ----------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
NET REVENUES $ -- $ 25,423 $ -- $ 25,423 $ 25,423
COST OF REVENUES -- 2,790 -- 2,790 2,790
----------- ----------- ----------- ----------- -----------
GROSS PROFIT -- 22,633 -- 22,633 22,633
GENERAL AND ADMINISTRATIVE EXPENSES 3,227,912 23,500 2,135,024 23,500 5,032,760
----------- ----------- ----------- ----------- -----------
NET LOSS $(3,227,912) $ (867) $(2,135,024) $ (867) $(5,010,127)
=========== =========== =========== =========== ===========
NET LOSS PER SHARE, BASIC AND DILUTED $(0.27) $ -- $ (0.17) $ --
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING,
BASIC AND DILUTED 12,169,912 13,482,500 12,671,060 14,245,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
3
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
<TABLE>
<CAPTION>
Common stock Additional Total
------------------------ paid-in Accumulated stockholders'
Shares Amount capital deficit equity
------------ --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1999 12,720,000 $ 12,720 -- -- $ 12,720
Issuance of common stock in
connection with merger 7,000,000 7,000 106,236 -- 113,236
Net proceeds from issuance of
common stock 1,500,000 1,500 2,544,422 -- 2,545,922
Net issuance of common stock in
exchange for services 150,000 150 299,850 -- 300,000
Redemption of common stock (10,000,000) (10,000) -- -- (10,000)
Net loss for the year
ended December 31, 1999 -- -- -- (1,782,215) (1,782,215)
Net proceeds from issuance of
common stock 312,500 313 1,779,523 -- 1,779,836
Net proceeds from issuance of
common stock 988,560 988 12,184,132 -- 12,185,120
Net loss for the six months
ended June 30, 2000 -- -- -- (3,227,912) (3,227,912)
------------ --------- ----------- ----------- ------------
Balance at June 30, 2000 12,671,060 $ 12,671 $16,914,163 $(5,010,127) $ 11,916,707
=========== ======== =========== =========== ============
</TABLE>
See accompanying notes to financial statements.
4
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended Three months ended From inception on
June 30, June 30, January 1, 1999 to
2000 1999 2000 1999 June 30, 2000
----------- ----- ----------- ----- ------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net loss $(3,227,912) $(867) $(2,135,024) $(867) $(5,010,127)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES -
depreciation and amortization 395,394 -- 238,824 -- 521,649
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ASSETS:
Inventory (95,612) -- -- -- (95,612)
Prepaid advertising (231,389) -- (231,389) -- (231,389)
Prepaid expenses (506,589) -- 16,118 -- (506,589)
Deposits (20,970) -- (7,131) -- (27,866)
INCREASE (DECREASE) IN LIABILITIES -
accounts payable and accrued expenses 252,552 -- 159,521 -- 659,446
----------- ----------- -----------
Net cash used for operating activities (3,434,526) (867) (1,959,081) (867) (4,690,488)
----------- ----- ----------- ----- -----------
</TABLE>
(Continued)
5
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS (CONTINUED)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended Three months ended From inception on
June 30, June 30, January 1, 1999 to
2000 1999 2000 1999 June 30, 2000
----------- ---------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchase of property and equipment (714,236) (51,857) (238,898) (51,857) (868,198)
Software licensing (202,913) -- (201,529) -- (662,908)
Software development (408,449) -- (241,469) -- (576,467)
Increase in escrow account -- (100,000) -- (100,000) (200,000)
Trademark (145,714) -- (145,714) -- (145,714)
Patents (7,248) (11,705) (7,248) (11,705) (41,204)
----------- ---------- ----------- ---------- -----------
Net cash used for investing
activities (1,478,560) (163,562) (834,858) (163,562) (2,494,491)
----------- ---------- ----------- ---------- -----------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING
ACTIVITIES:
Proceeds from issuance of common stock, net 13,964,956 2,959,158 12,185,120 2,959,158 16,936,834
Retirement of common stock, net -- -- -- -- (10,000)
Proceeds from loan payable,
officer-stockholder -- 4,500 -- 4,500 4,500
Proceeds from loan payable, officer -- 10,000 -- 10,000 10,000
Proceeds from loans payable -- 100,000 -- 100,000 200,000
----------- ---------- ----------- ---------- -----------
Net cash provided by financing
activities 13,964,956 3,073,658 12,185,120 3,073,658 17,151,334
----------- ---------- ----------- ---------- -----------
NET INCREASE IN CASH 9,051,870 2,909,229 9,391,181 2,909,229 9,956,355
CASH, beginning of period 904,485 -- 565,174 -- --
----------- ---------- ----------- ---------- -----------
CASH, end of period $ 9,956,355 $2,909,229 $ 9,956,355 $2,909,229 $ 9,956,355
=========== ========== =========== ========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ 46 $ -- $ 29 $ -- $ 17,170
=========== ========== =========== ========== ===========
Income taxes paid $ 1,600 $ -- $ -- $ -- $ 3,423
=========== ========== =========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
6
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INTERIM FINANCIAL STATEMENTS:
The accompanying financial statements include all adjustments
(consisting of only normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the
results of operations for the periods presented. Interim results are
not necessarily indicative of the results to be expected for a full
year. The financial statements should be read in conjunction with the
financial statements included in the annual report of One Voice
Technologies, Inc. (the "Company") on Form 10-KSB for the year ended
December 31, 1999.
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.
7
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
REVENUE RECOGNITION:
The Company recognizes revenues when earned in the period in which the
service is provided. Service fees are deferred and recognized over the
life of the service agreement. Initial distribution fees are
recognized when the software is delivered.
(2) COMMON STOCK:
In January 2000, the Company entered into a Subscription Agreement
with an unrelated foreign party providing for the sale of 312,500
shares of the Company's common stock at $6.40 per share and 156,250
common stock purchase warrants. Each warrant entitles the holder to
purchase one share of common stock at an exercise price of $8.00. The
value of the warrants amount to $13,750 and is included in additional
paid-in capital. The warrants expire on January 5, 2001. Net proceeds
raised from the shares and warrants total approximately $1,800,000.
In March 2000, the Company commenced a private placement of
approximately 1,000,000 units consisting of 1 share of the company's
common stock and 1/2 common stock purchase warrant for each unit
purchased. The Company raised net proceeds totaling approximately
$12,185,000 from the issuance of 988,560 shares of common stock and
494,280 common stock purchase warrants. Each warrant entitles the
holder to purchase one share of common stock at an exercise price of
$18.00. The value of the warrants amount to approximately $96,800 and
is included in additional paid-in capital. The warrants expire at
various times through April 2001. Net proceeds raised from the shares
and warrants total approximately $12,185,000.
8
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Item 2. Management's Plan of Operations.
The Company maintains a cash balance sufficient to sustain corporate operations
until July 31, 2001. The losses through the quarter ended June 30, 2000 were due
to operating expenses of the Company. 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 operating plan is for the Company to
take the following steps to market its products: during the third quarter of
2000 the Company plans to complete final testing of its initial myIVAN product
along with completing their web site hosting and development efforts. This
initial free product, called myIVAN, is scheduled to be released as a public
preview version the week of July 24, 2000 and will be available for direct
download off the Company's product web site, http://www.myivan.com, as well as
ordering a CD mailer to be sent. This CD mailer is anticipated to be available
for public distribution by the beginning of September 2000. In the fourth
quarter of 2000, the Company will begin a nationwide advertising campaign to
create public awareness and branding of the myIVAN product. After initial
product launch the Company plans to begin selling an upgrade version of the
myIVAN product, which will add additional features and capabilities to the
initial free myIVAN product. This upgrade product is anticipated to be released
in the fall of 2000. The Company plans to begin localization efforts of the
product for the following languages: UK English, Spanish, German, French and
Italian. These additional language versions of the product will begin
development in third quarter 2000 and continue on through the third quarter 2001
with European rollout and sales anticipated beginning in the fourth quarter of
2000. The initial localized free and upgrade product for UK English is
anticipated to be released and publicly available in the fourth quarter of 2000.
Cash flow from sales is estimated to begin at the projected product release date
in the summer of 2000. 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 and/or 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 initial products and initial marketing
prior to receiving cash flow from sales per its business plan, the Company may
be unable to complete its localization efforts and anticipated rollout of
products into the European market until such time as necessary funds could be
raised. 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 finalize the
development of the myIVAN product and web site hosting, the Company plans to
begin new product research and development into wireless (cellular telephone)
and PDA (personal digital assistant) devices beginning in the third quarter of
2000. Management has not determined a budget for new product research and
development at this time. There are no current plans to purchase or sell any
significant amount of fixed assets. The Company plans to increase its staff by
twenty full time employees over the next twelve months.
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PART II
OTHER INFORMATION
ITEM 1. NOT APPLICABLE.
ITEMS 2-4. NOT APPLICABLE.
ITEM 5. INFORMATION REQUIRED IN LIEU OF FORM 8-K: None.
ITEM 6. EXHIBITS AND REPORTS ON 8-K:
a) Exhibit No. 27.1, "Financial Data Schedule."
b) No reports on Form 8-K were filed during the fiscal quarter
ended June 30, 2000.
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SIGNATURES
In accordance with the requirements of the Exchange Act of 1933, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ONE VOICE TECHNOLOGIES, INC., a Nevada Corporation
Date: August 14, 2000 By: /s/ Dean Weber
--------------- ----------------------------------------------
DEAN WEBER, Chairman & Chief Executive Officer
Date: August 14, 2000 By: /s/ Rahoul Sharan
--------------- ----------------------------------------------
RAHOUL SHARAN, Chief Financial Officer
