<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the year ended December 31, 1999
Commission File Number 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) (ZIP CODE)
(858) 552-4466 (858) 552-4474
- -------------- --------------
(ISSUER'S TELEPHONE NUMBER) (ISSUER'S FACSIMILE NUMBER)
Securities registered under Section 12(g) of the Exchange Act:
Common Stock - .001 Par Value
(Title of Class)
<PAGE> 2
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 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
------- -------
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10 KSB
or any amendment to this Form 10-KSB.
Yes X No
------- -------
The issuer's revenues for the year ended December 31, 1999 were $25,423.
The approximate aggregate market value of the voting stock held by
non-affiliates of the registrant as of December 31, 1999, based on the average
of the closing bid and asked prices of one share of the Common Stock of the
Company, as reported on December 31, 1999 was $44,759,813.
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PART 1
ITEM 1 DESCRIPTION OF BUSINESS
Business Development
The Company was incorporated in Delaware on February 4, 1987 as Belridge
Broadcasting of Portland, Inc. On August 23, 1995, the Company merged with
Belridge Holdings Corporation, a Nevada corporation. Belridge Holdings
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 Belridge Holdings Corporation acquired the assets, liabilities
and operating business of Dead On, LLC. in order to manufacture sporting goods
equipment and apparel. On September 15, 1998, Belridge Holdings Corporation
changed its name to Dead On, Inc. On December 31, 1998 Dead On, Inc.
discontinued all business related to the manufacture of sporting goods equipment
and apparel.
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 July 9, 1999, a special meeting of the
shareholders approved the merger of Dead On, Inc. and Conversational Systems,
Inc. in order to develop and market a new software system, 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.
There have been no bankruptcy, receivership or similar proceedings.
There have been no 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
The Company's product is a software system that allows 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:
a) utilizing commercially available speech recognition that relies on
how words sound in order to match those sounds to words in a dictionary
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b) analyzing words to determine their meaning
c) allowing the computer to listen and then talk back to the user
d) 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.
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
salesperson, one marketing manager, one programmer; continued development of its
software product. The Company's software product is currently in a development
stage. Management estimates it is approximately seventy five percent complete in
the programming required to beta test its product. The Company currently has no
revenues. Its product is in a working prototype stage and is capable of
executing fundamental Internet searches as it obeys approximately eight hundred
commands. The Company currently uses its working prototype in product testing
and in sales demonstrations. Management estimates the development and testing
phase of the working prototype will be completed by June 30, 2000.
The Company has no agreements with any entities for the production, marketing,
or distribution of its development stage product. 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 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
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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". On
September 21, 1999, the Company signed a twenty four month Original Equipment
Manufacturer Software Agreement with IBM in order for the Company to be a
licensee for the IBM Viavoice Runtime system. The license cost is $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 two pending United States Patents for its
software per the merger agreement on July 9, 1999, between the Company and
Converstional Systems 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.
The Company currently has six full time employees.
The Company's bylaws do not require the Company to deliver an annual report to
its shareholders and the Company has no present plans to provide an annual
report to its shareholders. As of the date of this filing, the Company is
subject to the disclosure rules of Regulation S-B for a small business issuer
under the Securities Act of 1933 and the Securities Exchange Act of 1934. The
Company is subject to disclosure filing requirements, and is
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required to file Form 10-KSB annually and Form 10-QSB quarterly. In addition,
the Company is required to file Form 8 and other proxy and information
statements from time to time as required.
The public may read and copy any materials the Company files with the Securities
and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450
Fifth Street, N. W., Washington D. C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with SEC.
Year 2000 Disclosure
For several years, users of computers in business applications were concerned
that time-sensitive software might cause their computer systems to recognize a
date using "00" as the year 1900 rather than the year 2000. This date error
problem was expected to cause computer system errors adversely affecting normal
business activities in the first weeks of 2000.
The Company's business plan provided for the purchase of computer equipment and
software during 1999 and 2000. The Company's Management has hands-on familiarity
with all of the software utilized in its business plan and has experienced no
Year 2000 related systems problems as of the date of this filing. Management has
discussed Year 2000 computer systems issues with proposed goods and services
suppliers for the Company's business plan and they have confirmed their computer
related systems are already Year 2000 compatible.
Management's sole Year 2000 compliance plan is to utilize only computer systems
and software which are already Year 2000 compatible. Other than the
aforementioned plan, Management has no current or contemplated Year 2000
contingency plans related to Year 2000 compliance problems.
ITEM 2 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 3 LEGAL PROCEEDINGS
On May 14, 1999, the Board signed an agreement, which was ratified in a
shareholder meeting, with Dead On Acquisition Company, a California Company, to
consummate the divestiture of the assets and liabilities of the discontinued
sporting goods equipment and apparel manufacturing business of the Company. Dead
On Acquisition Company, assumed all the
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assets and liabilities of Dead On, Inc. Dead On Acquisition Company is currently
insolvent. Former officers involved in the discontinued business have placed
$200,000 in an account controlled by the Company to be used for settlement of
all legal matters associated with the discontinued business, with any funds
remaining after settlement of legal matters to be returned to the former
officers. Management is in the process of investigating the legal liabilities
associated with the discontinued operations and, based on advice of legal
counsel, believes the settlement of the legal liabilities related to the
discontinued operations will not have a material adverse effect on the financial
position of the Company.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.
The Company's common stock is traded on the OTC Electronic Bulletin Board. The
OTC Electronic Bulletin Board is sponsored by the National Association of
Securities Dealers (NASD). The Electronic Bulletin Board is a network of
security dealers who buy and sell stocks.
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 markup, markdown, or commission and may not necessarily represent
actual transactions.
<TABLE>
<CAPTION>
Low High
---- ----
<S> <C> <C>
1999
First Quarter .25 .60
Second Quarter .25 5.38
Third Quarter 6.69 9.50
Fourth Quarter 4.00 8.50
</TABLE>
The Company's Board of Directors determines any payment of dividends. The Board
of Directors does not expect to authorize the payment of cash dividends in the
foreseeable future. Any future decision with respect to dividends will depend on
future earnings, operations, capital requirements and availability, restrictions
in future financing agreements, and other business and financial considerations.
As of December 31, 1999, there were approximately 79 holders of record of the
Company's Common Stock. The Board of Directors believe that the number of
beneficial owners is substantially greater than the number of record holders
because a portion of the Company's outstanding Common Stock is held of record in
broker "street names" for the benefit of individual investors.
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ITEM 6 MANAGEMENT'S PLAN OF OPERATION
The Company maintains a cash balance sufficient to sustain corporate operations
until December 31, 2001. The losses through December 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 first quarter the Company
plans to complete beta testing of the product along with completing their web
site hosting and development efforts. The initial product is scheduled to be
released in second quarter 2000 and will be available from direct download off
the Company's web site as well as ordering a CD mailer to be sent. The Company
will concurrently begin a nationwide advertising campaign to create public
awareness and branding of the product. After initial product launch the Company
plans to release an upgrade product which will add additional features and
capabilities to the initial product. This upgrade product is anticipated to be
released within 60 days from the launch of the initial product. 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 first quarter 2001. The initial localized product, UK
English, is anticipated to be released and publicly available in fourth quarter
2000.
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 $750,000 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.
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ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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.
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ONE VOICE TECHNOLOGIES, INC.
(FORMERLY KNOWN AS CONVERSIT.COM, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C>
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS:
Balance Sheet F-2
Statements of Operations F-3
Statement of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6-14
</TABLE>
<PAGE> 11
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, California
We have audited the accompanying balance sheet of One Voice Technologies, Inc.,
a Nevada Corporation (a development stage enterprise) as of December 31, 1999,
and the related statements of operations, stockholders' equity and cash flows
for the year 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 audit in accordance with generally accepted auditing standards.
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, 1999, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
/s/ STONEFIELD JOSEPHSON, INC.
- -------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
Santa Monica, California
March 16, 2000
F-1
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET - DECEMBER 31, 1999
ASSETS
<TABLE>
<S> <C> <C>
CURRENT ASSETS:
Cash $ 904,485
Cash - restricted 200,000
------------
Total current assets $ 1,104,485
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization 141,040
OTHER ASSETS:
Software licensing, net of
accumulated amortization of $113,333 346,662
Software development costs, net of
accumulated amortization 168,018
Deposits 6,896
Patent 33,956
------------
Total other assets 555,532
-----------
$ 1,801,057
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 406,894
Loan payable, related parties 200,000
Loan payable, officer 10,000
Loan payable, officer-stockholder 4,500
------------
Total current liabilities $ 621,394
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 shares issued and outstanding 11,370
Additional paid-in capital 2,950,508
Deficit accumulated during development stage (1,782,215)
------------
Total stockholders' equity 1,179,663
-----------
$ 1,801,057
===========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-2
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From inception on
Year ended January 1, 1999 to
December 31,1999 December 31, 1999
---------------- ------------------
<S> <C> <C>
NET REVENUES $ 25,423 $ 25,423
COST OF REVENUES 2,790 2,790
------------ -----------
GROSS PROFIT 22,633 22,633
GENERAL AND ADMINISTRATIVE
EXPENSES 1,804,848 1,804,848
------------ -----------
NET LOSS $ (1,782,215) $(1,782,215)
============ ===========
NET LOSS PER SHARE, basic and diluted $ (.15)
============
WEIGHTED AVERAGE SHARES OUTSTANDING,
basic and diluted 12,156,986
============
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-3
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<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)
----------- -------- ---------- ----------- ----------
Balance at December 31, 1999 11,370,000 $ 11,370 $2,950,508 $(1,782,215) $1,179,663
=========== ======== ========== =========== ==========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-4
<PAGE> 15
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
From inception on
Year ended January 1, 1999 to
December 31, 1999 December 31, 1999
----------------- -----------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net loss $(1,782,215) $(1,782,215)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES -
depreciation and amortization 126,255 126,255
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ASSETS -
deposits (6,896) (6,896)
INCREASE (DECREASE) IN LIABILITIES -
accounts payable and accrued expenses 406,894 406,894
----------- -----------
Net cash used for operating activities (1,255,962) (1,255,962)
----------- -----------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchase of property and equipment (153,962) (153,962)
Software licensing (459,995) (459,995)
Software development (168,018) (168,018)
Increase in escrow account (200,000) (200,000)
Patents (33,956) (33,956)
----------- -----------
Net cash used for investing activities (1,015,931) (1,015,931)
----------- -----------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 2,971,878 2,971,878
Retirement of common stock, net (10,000) (10,000)
Proceeds from loan payable, officer-stockholder 4,500 4,500
Proceeds from loan payable, officer 10,000 10,000
Proceeds from loans payable 200,000 200,000
----------- -----------
Net cash provided by financing activities 3,176,377 3,176,377
----------- -----------
NET INCREASE IN CASH 904,485 904,485
CASH, beginning of period -- --
----------- -----------
CASH, end of period $ 904,485 $ 904,485
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 17,124 $ 17,124
=========== ===========
Income taxes paid $ 1,823 $ 1,823
=========== ===========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-5
<PAGE> 16
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(1) ORGANIZATION:
Conversational Systems, Inc. was incorporated under the laws of the
State of California on April 8, 1991. The Company commenced
operations in 1999.
Effective June 22, 1999, pursuant to a Merger Agreement and Plan of
Reorganization between Dead On, Inc. ("acquiree") and Conversational
Systems, Inc. a California corporation ("acquiror" or the
"Company"), Dead On, Inc. has been reversed merged into
Conversational Systems, Inc. The Company accounted for the
acquisition of Dead On, Inc. using the purchase method of
accounting. The shares of Conversational Systems were exchanged for
7,000,000 newly issued shares of Dead On, Inc. Because the former
shareholders of Conversational Systems, Inc. then became the
majority shareholders of Dead On, Inc., Conversational Systems was
treated as the acquiror under APB Opinion No. 16, "Business
Combinations."
In July 1999, the Company repurchased and retired 10,000,000 shares
of its common stock, $.001 par value per share. Due to the
retirement of shares, the former shareholders of Conversational
Systems, Inc. have significant control in Dead On, Inc.
Due to the contemplation and timing of the merger between Dead On,
Inc. and Conversational Systems, Inc. and the retirement of
10,000,000 shares of the Company's common stock, these events were
accounted for as a single transaction.
Conversational Systems, Inc. was liquidated with and into Dead On,
Inc., which then changed its legal 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.
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.
See accompanying independent auditors' report.
F-6
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ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
DEVELOPMENT STAGE ENTERPRISE:
The Company is a development stage company as defined in Statement
of Financial Accounting Standards No. 7, "Accounting and Reporting
by Development Stage Enterprises." The Company is devoting
substantially all of its present efforts to establish a new
business, which is unrelated to the business of Dead On, and its
planned principal operations have not yet commenced. All losses
accumulated since inception of One Voice Technologies, Inc. have
been considered as part of the Company's development stage
activities.
FAIR VALUE:
The Company's financial instruments consist principally of accounts
payable and notes payable to an individual and related parties as
defined by Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments." The
carrying value of the financial instruments approximate their fair
value due to the short-term nature of these instruments.
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.
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.
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.
See accompanying independent auditors' report.
F-7
<PAGE> 18
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PROPERTY AND EQUIPMENT, CONTINUED:
The Company has adopted Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 121
requires that long-lived assets and certain identifiable intangibles
be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to
future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amounts
of the assets exceed the fair values of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair
value less costs to sell. Adoption of this statement did not
materially impact the Company's financial position, results of
operations or liquidity.
SOFTWARE DEVELOPMENT COSTS
The Company has adopted Statement of Financial Accounting Standards
No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed," ("SFAS No. 86"). SFAS No. 86 requires
the Company to capitalize the direct costs and allocate overhead
associated with the development of software products. Initial costs
are charged to operations as research prior to the development of a
detailed program design or a working model. Costs incurred
subsequent to the product release, and research and development
performed under contract will be charged to operations. Capitalized
costs are amortized over the estimated product life on the straight
line basis. Unamortized costs are carried at the lower of book value
or net realizable value. The software developed had not been placed
into service at December 31, 1999. Therefore no amortization costs
has been recognized.
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 year
ended December 31, 1999, as the patent is pending.
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.
COMPREHENSIVE INCOME:
Comprehensive loss consists of net loss only.
See accompanying independent auditors' report.
F-8
<PAGE> 19
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
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 year ended December 31, 1999, 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.
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 adoption of
this statement did not have a material effect on the Company's
financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", the effective date
for which was deferred by SFAS No. 137 until 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.
See accompanying independent auditors' report.
F-9
<PAGE> 20
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
(3) CASH RESTRICTED:
In connection with an Escrow Agreement dated July 14, 1999, former
officers of Dead On, Inc. have placed $200,000 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 1). The funds are restricted through
January 2001. In the case that no claims are made against the Company for
the prior obligation, the funds will be repaid to the former officers.
Accordingly, the amount has been recorded as a loan payable at December
31, 1999.
(4) PROPERTY AND EQUIPMENT:
A summary is as follows:
<TABLE>
<S> <C>
Equipment $121,592
Furniture and fixtures 32,370
--------
153,962
Less accumulated depreciation and amortization 12,922
--------
$141,040
========
</TABLE>
Depreciation and amortization expense totaled $12,922 for the year ended
December 31, 1999.
(5) SOFTWARE LICENSING AGREEMENTS:
In September and October 1999, the Company entered into a 24-month
software licensing agreement with two software developers. A final payment
of $450,000 is due in September 2000. The agreement can be cancelled by
either party by giving 60 days written notice. The asset is being
amortized using the straight-line method over the life of the agreement.
Amortization expense totaled $113,333 for the year ended December 31,
1999.
(6) LOANS PAYABLE, OFFICER AND/OR STOCKHOLDER:
The loans are not collateralized, non-interest bearing and due on demand.
(7) COMMON STOCK:
In May 1999, 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. The
Private Placement was 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 Placement were restricted securities as defined in Rule 144. The
offering generated proceeds, net of offering costs, of approximately
$2,846,000. An additional 150,000 shares of the Company's common stock was
issued for services rendered in connection with this private placement,
which was valued at $2.00 per share.
See accompanying independent auditors' report.
F-10
<PAGE> 21
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
(7) COMMON STOCK, CONTINUED:
On June 22, 1999, in connection with a Merger Agreement and Plan of
Reorganization with Dead On, Inc., the Company exchanged all of its
outstanding shares of common stock for 7,000,000 newly issued shares of
the common stock of Dead On, Inc. (Note 1).
Pursuant to a plan approved by One Voice Technologies' Board of Directors
in July 1999, the Company repurchased and retired 10,000,000 shares of its
common stock, $.001 par value per share.
(8) INCOME TAXES:
For federal income tax return purposes, the Company has available net
operating loss carryforwards of approximately $2,626,000, which includes
approximately $323,000 acquired from Dead On, Inc. The net operating loss
carryforwards expire through 2018 and are available to offset future
income tax liabilities.
Temporary differences which give rise to deferred tax assets and
liabilities at December 31, 1999 are as follows:
<TABLE>
<S> <C>
Net operating loss carryforwards $ 1,179,500
Valuation allowance (1,179,500)
-----------
Net deferred taxes $ --
===========
</TABLE>
(9) EMPLOYMENT AGREEMENT:
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.
Under this agreement, salaries totaled $104,505 for the year ended
December 31, 1999.
(10) CONSULTING AGREEMENT:
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 $76,650 for the year ended December 31, 1999.
(11) COMMITMENTS:
Effective July 1999, the Company leases its office facility under a
noncancellable operating lease expiring March 31, 2003. The lease calls
for a 3% increase on the anniversary of the lease agreement.
See accompanying independent auditors' report.
F-11
<PAGE> 22
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
(11) COMMITMENTS, CONTINUED:
At December 31, 1999, minimum rental payments under the operating lease is
as follows:
<TABLE>
<S> <C>
Year ending December 31,
2000 $ 70,806
2001 75,291
2002 77,301
2003 19,598
-----------
$ 242,996
===========
</TABLE>
Building rental expense totaled $28,280 for the year ended December 31,
1999.
(12) INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN:
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 equally over a three-year period
from the date of the grant or sooner if approved by the Board of
Directors. All options issued pursuant to the Plan are nontransferable and
subject to forfeiture.
The number and weighted average exercise prices of options granted under
the plan, for the year ended December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Average
Exercise
Number Price
------- --------
<S> <C> <C>
Outstanding at beginning of the year -- $ --
Outstanding at end of the year 400,500 6.01
Exercisable at end of the year 225,000 6.08
Granted during the year 400,500 6.01
Exercised during the year -- --
</TABLE>
See accompanying independent auditors' report.
F-12
<PAGE> 23
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
(12) INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN, CONTINUED:
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. 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.
Pro forma information regarding the effect on operations is required by
SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that statement. Pro
forma information using the Black-Scholes method at the date of grant
based on the following assumptions:
<TABLE>
<S> <C>
Expected life 5 Years
Risk-free interest rate 6.75%
Dividend yield --
Volatility 70%
</TABLE>
This option valuation model requires input of highly subjective
assumptions. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing model does
not necessarily provide a reliable single measure of fair value of its
employee stock options.
For purposes of FASB 123 pro forma disclosures, the estimated fair value
of the options is amortized to expense over the option's vesting period.
The Company's proforma information is as follows:
<TABLE>
December 31, 1999
-----------------
<S> <C>
Net loss, as reported $(1,782,215)
Pro forma net loss $(2,674,675)
Basic and diluted historical loss per share $ (.15)
Pro forma basic and diluted loss per share $ (.22)
</TABLE>
(13) CONTINGENCIES:
The Company is party to various legal proceedings arising from the
discontinued operations of the Company's apparel division. 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-13
<PAGE> 24
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
(14) SUBSEQUENT EVENTS:
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 warrants expire on
January 5, 2001. Net proceeds raised from the shares and warrants total
approximately $1,800,000.
The following pro forma balance sheet assumes that the transaction
occurred at December 31, 1999. The pro forma financial information is
presented for informational purposes only and may not necessarily be
indicative of the results that would have occurred had this transaction
been consummated as of December 31, 1999, nor is it necessarily indicative
of future results.
<TABLE>
<CAPTION>
December 31, Pro forma December 31,
1999 Adjustments 1999
------------ ----------- ------------
(audited) (proforma)
<S> <C> <C> <C>
Current assets $1,104,485 $1,800,000 $2,904,485
Property and equipment 141,040 -- 141,040
Total other assets 555,532 -- 555,532
---------- ---------- ----------
Total assets $1,801,057 $1,800,000 $3,601,057
========== ========== ==========
Current liabilities 621,394 -- 621,394
Shareholders' equity 1,179,663 1,800,000 2,979,663
---------- ---------- ----------
Total liabilities and
shareholders' equity $1,801,057 $1,800,000 $3,601,057
========== ========== ==========
</TABLE>
In March 2000, the Company commenced an offering (the "Offering") of
approximately 750,000 units consisting of 1 share of the company's common
stock and 1/2 common stock purchase warrant for each unit purchased. The
Company plans to raise gross proceeds totaling approximately $5,000,000
and $10,000,000. Pursuant to the Offering statement, the gross proceeds
raised are held in a non-interest bearing escrow account until the private
placement period has ended. Management estimates that closing will take
place in April 2000. As of the date of this report, the Company had raised
gross proceeds totaling approximately $6,745,000 from the issuance of
511,060 shares of common stock and 255,530 common stock purchase warrants.
See accompanying independent auditors' report.
F-14
<PAGE> 25
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on accounting
and financial disclosure.
PART III
ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
<TABLE>
Director Age Date Elected Position
- -------- --- ------------ --------
<S> <C> <C> <C>
Dean Weber 37 7/9/99 CEO, Secretary,
Chairman of the Board
Rahoul Sharan 37 7/9/99 CFO, Director
George Kaelin 33 7/9/99 Director
</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 for one year until the next annual meeting of
stockholders and until their successors have been elected and qualified.
Officers are appointed to serve for one year until the meeting of the Board of
Directors following the next annual meeting of stockholders and until their
successors have been elected and qualified.
No Executive Officer or Director of the Corporation has been the subject of any
Order, Judgment, or Decree of any Court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring suspending or
otherwise limiting 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.
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.
10
<PAGE> 26
Resumes
Dean Weber, President & Director
<TABLE>
<S> <C>
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.
</TABLE>
Rahoul Sharan, CFO & Director
<TABLE>
<S> <C>
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.
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
</TABLE>
11
<PAGE> 27
George H. Kaelin, III, Director
<TABLE>
<S> <C>
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
</TABLE>
ITEM 10 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 $120,000 per year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other
Name & annual Restricted Options LTIP All other
principle Salary Bonus compen- stock SARs Payouts compen-
position Year ($) ($) sation($) awards ($) ($) 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.
12
<PAGE> 28
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 11 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 - December 31, 1999:
<TABLE>
<CAPTION>
Title Of Name & Amount & Percent
Class Address Nature of owner Owned
- -------- ------- --------------- -------
<S> <C> <C> <C>
Common Dean Weber, CEO, 5,558,000 48.9(a)
Secretary, Chairman of Board
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
Common iVantage, Inc. 1,600,200 14.1(a)
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
Common Rahoul Sharan, CFO, Director -0-
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
Common George Kaelin, Director 303,100 2.7
6333 Greenwich Dr, Ste 240
San Diego, Ca 92122
Total securities held by management as a group 5,861,100 51.6
</TABLE>
(a) iVantage, Inc. is wholly owned by Dean Weber, Chairman of the Board, CEO,
and Secretary of One Voice Technologies, Inc. Mr. Weber is the beneficial owner
of the 1,600,200 shares in the name of iVantage, Inc. and those shares are also
included in the amount presented in this table for Mr. Weber.
13
<PAGE> 29
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's chief executive officer, Mr. Weber, has advanced $4,500 to the
Company for the purchase of a computer. The Company's chief financial officer,
Mr. Sharan, has advanced $10,000 to the Company for travel expenses. 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.
In May 1999, 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 Company, the
group transferred 6,075,000 shares of the Company's common stock to Dead On
Acquisition Company in exchange for shares of Dead On Acquisition Company stock.
On July 14, 1999, 150,000 restricted shares of the Company's common stock were
issued as a commission to Compass Investment Management, a non-affiliated
entity, for services rendered in connection with the July 1999 private
placement.
On May 14, 1999, the Company sold all of its operating assets and liabilities
relating to its discontinued operations apparel, accessory, and sports equipment
division to Dead On Acquisition Company for $1.00 per an agreement for
acquisition resulting in a gain of $91,785 and a provision for operating losses
of $110,788, equaling a net financial statement loss of $19,003.
ITEM 13 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Exhibit 27 Financial Data Schedule
Reports filed on Form 8-K: None
Reports required to be filed by Regulation S-X: None
14
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 and 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
One Voice Technologies, Inc.
Date April 12, 2000 By /s/ DEAN WEBER
--------------------------------- -----------------------------------
Dean Weber, CEO, Secretary,
Director
Date April 12, 2000 By /s/ RAHOUL SHARAN
--------------------------------- -----------------------------------
Rahoul Sharan, CFO, Director
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH ONE VOICE TECHNOLOGIES, INC. 10-KSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,104,485
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,104,485
<PP&E> 153,962
<DEPRECIATION> (12,922)
<TOTAL-ASSETS> 1,801,057
<CURRENT-LIABILITIES> 621,394
<BONDS> 0
0
0
<COMMON> 11,370
<OTHER-SE> 1,168,293
<TOTAL-LIABILITY-AND-EQUITY> 1,801,057
<SALES> 25,423
<TOTAL-REVENUES> 25,423
<CGS> 2,790
<TOTAL-COSTS> 2,790
<OTHER-EXPENSES> 1,804,848
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,782,215)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,782,215)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,782,215)
<EPS-BASIC> (.15)
<EPS-DILUTED> (.15)
</TABLE>
