<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
5th 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)
(858) 552-4466 (858) 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 I
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 National Quotation Bureau
"Pink Sheets" 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 manufacture 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 manufacture 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
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
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.
On September 9, 1998, the Company's President, Dean Weber applied for a United
States Patent for his original design of the Company's software product. 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.
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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 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 forty 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 six 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.
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.
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.
Management determined through feedback from marketing presentations and informal
conversations with potential customers at their offices and at trade shows, that
the following estimated fees were acceptable to potential customers:
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;
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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.
4) 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.
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. As of the date of this filing, Management has no
market or distribution agreements with the above manufacturers or Internet
Service Providers. While Management believes its estimated fees are reasonable
because of the feedback from potential customers at marketing presentations and
trade shows, the Company may not be able to achieve its target pricing
structure.
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". 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.
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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.
The Company currently has six full time employees.
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:
Lack of Independent Market Testing
A lack of independent market testing of the Company's product increases
the possibility that the Company's product may not perform to
reasonable commercial standards under normal use. This could result in
unexpected performance failures, a significant product return rate, and
a material reduction in product demand.
Lack of Proven Market or Market Studies
A lack of a proven market or market studies for the Company's product
means that while Management, software engineers, and software magazine
writers may believe the public will enthusiastically accept voice
recognition software, the true market for this product may be minor or
nonexistent. This could result in little or no product sales.
Limited Experience of Management
The limited experience of Management in developing a new product from
inception through a fully tested, market usable status for national and
world wide consumer use may result in critical business judgement
errors as the Company grows in size and sales volume. In a product
rollout of the magnitude of the Company's business plan, Management
errors not timely corrected could result in excessive costs and
expenses, poor quality products, inability to deliver products on time,
detrimental business contract terms, and other significant errors which
could impede the Company's business plan.
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The Company is a Development Stage Company
The Company is in the developing or starting stages of its business
plan and is therefore more vulnerable to unexpected or uncontrollable
business and economic forces. It lacks any loyalty and brand name
recognition from potential customers and business partners. Unknown
software errors may not be corrected in time to develop a sustainable
customer base. Unfavorable product reviews or news reports could
squelch early sales efforts. A competitor may quickly release a better
version of a similar product before the Company can complete its
development efforts. Economic conditions such as a national or world
recession, international trade restrictions on computer product sales,
or a slowdown in Internet usage growth could reduce Company revenues
below financially healthy levels.
Possible Patent or Copyright Litigation
There has been no independent review or certification of originality of
the Company's software, which could lead to patent or copyright
infringement litigation. This could result in a detrimental allocation
of the Company's Management time and financial resources which could
lessen the Company's ability to remain a viable business.
Lack of Financial and Personnel Resources
The financial and personnel resources of the Company are considerably less than
its competitors. Therefore, the Company will be in a competitive disadvantage as
it seeks to develop its product, hire senior programmers, and conduct marketing
efforts. This could lead to a material reduction in cash flows and increase the
risk that the Company would be unable to achieve its business plan goals.
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. There are no pending
arrangements, understandings or agreements with outside entities for
acquisitions or mergers. While the aforementioned risks are presented as worst
case scenarios, Management, employees and shareholders should be aware that
there are no guarantees the Company will achieve any of its business plan goals
or be successful. The risks of a development stage company include a lack of job
security for employees and the possible loss of all investment funds by
investors. Investors should evaluate all of these risks before considering an
investment in this Company.
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 stated at the beginning of this filing on page 2,
the Company is voluntarily filing this Form 10-SB in order to make its financial
information equally available to any interested parties or investors. The
Company will be 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. Based upon its original Form
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10-SB filing acceptance date of October 7, 1999, the Company anticipates it will
become subject to disclosure filing requirements effective on December 6, 1999,
and, after that date, will be required to file Form 10-KSB annually and Form
10-QSB quarterly. In addition, the Company will be 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
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.
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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.
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 - August 31, 1999:
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<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 27.3 (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.
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
</TABLE>
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<TABLE>
<S> <C> <C> <C>
George Kaelin 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 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.
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.
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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.
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
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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 $120,000 per year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other
Name & annual Restricted Options LTIP All other
principle Year Salary Bonus compen- stock SARs Payouts compen-
position ($) ($) sation ($) 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.
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.
13
<PAGE> 14
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 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. 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
14
<PAGE> 15
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.
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 were traded 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 was 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>
15
<PAGE> 16
As of August 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.
ITEM 2
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. Dead On Acquisition
Company, assumed all the assets and liabilities of Dead On, Inc. Dead On
Acquisition Company is currently insolvent. While management feels the
liabilities listed below are the responsibility of Dead On Acquisition Company,
these liabilities were incurred by the Company and are solely related to its
discontinued sporting goods equipment and apparel manufacturing business. It is
management's intention to investigate the claims listed below and to the extent
the Company is responsible for said claims, management will resolve the claims
expeditiously.
a. Color Service, Inc. v. Dead On, Case No. 98C01496, Municipal Court,
Inglewood Judicial District, filed July 13,1998. Conditional statement was
reached with plaintiff in the debt collection action seeking $4,950.12 plus
interest at 10% per annum on the outstanding balance due and owing from and
after March 15, 1999. This debt has been paid. A full Satisfaction of judgment
was filed by the Plaintiff with the court on September 30, 1999. Management is
informed and believes the settlement was paid in full and the claim has been
satisfied.
b. Rawlings Canada Inc. v. Dead On, Case No. 99C00504, filed March 12,
1999, Rawlings Canada seeks approximately $14,984.28 plus attorney's fees, costs
and interest. This matter is set for trial to commence on November 19, 1999. The
trial was to be taken off the court's calendar. Dead On has stipulated to the
entry of judgement against it in the amount of $20,249.25 plus 10% interest
after October 14, 1999.
c. Branded Emblem Co., Inc. v. Dead On , Case No. 99C01252, Inglewood
Judicial District, filed June 10, 1999. This is a debt collection action seeking
approximately $2,423.88 plus attorney's fees, costs and interest. Judgment was
entered on August 24, 1999, in the amount of $3,136.52.
d. Weaver v. Dead On, Case No. 98T03854, Municipal Court, West Los
Angeles Branch, filed November 23, 1998. This is debt collection action seeking
approximately $4,842.00 plus attorneys' fees, costs and interest. The Company
anticipates signing a stipulation of judgment in the amount of $6,662.00.
e. Corporate Event Planners v. Dead On, Small Claims Case No. 99S01811,
Inglewood Judicial District, filed on or about August 4, 1999. This is a small
claims debt collection action seeking approximately $4,101.25 plus costs. An
entry of judgment was entered against the company.
16
<PAGE> 17
f. Amy Zimmerman v. Dead On, Small Claims Case No. 99S00772, Inglewood
Judicial District, filed on or about March 26, 1999. This is a small claims debt
collection action seeking approximately $2,762.00 plus costs. Judgment was
entered against Dead On on June 3, 1999, for $2,810.
g. NCRL v. Dead On, et al., Case NO. 99C00966, Municipal Court,
Inglewood Judicial District, filed on May 7, 1999. This was a debt collection
action for approximately $8,064.88 plus attorneys' fees, costs and interest. Mr.
Jeff Cobb (a former officer and director of the Company) personally guaranteed
this debt, was named as a defendant, and settled the matter with Plaintiff.
However, Mr. Cobb may assert a resulting right to indemnity from the Company.
The case has been dismissed with prejudice.
h. American Express v. Scott Smith, Case No. SB99C01271, Municipal
Court, Inglewood Judicial District, filed on May 5, 1999. This is a debt
collection action filed against Scott Smith (a former officer) personally. The
suit is for approximately $12,219.04 plus attorneys' fees, costs and interest.
Mr. Smith reports that judgment has been entered against him. If this debt was
incurred by Mr. Smith for the benefit of the Company, then Mr. Smith may assert
a claim for indemnity against the Company in connection with this debt.
i. Airport Industrial Investors v. Scott Smith and Dead On, Case Nos.
99L00390, 99L01976, and 99L02503, Municipal Court, Inglewood Judicial District,
filed on January 27, 1999, June 1, 1999, and July 9, 1999, respectively. These
are three separate unlawful detainer actions filed against Smith and the Company
since December 31, 1998. Judgement was entered in Case No. 99L02503 against the
Company for approximately $22,000.
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., was
sophisticated in that they were experienced in the business and the financial
matters of this merger and had adequate and reasonable opportunity and access to
corporate information regarding the Company. There was no general solicitation
regarding this share issuance the shares were issued with a rule 144 restrictive
legend and the issuance was to a small number of shareholders for their own
accounts.
In September 1998, the Company offered and sold 220,000 shares of common stock
at $.25 per share to a non-affiliated investor. The Company relied on an
exemption from registration pursuant to Regulation S as the basis of exemption
from registration. Regulation S was available to this investor as all sales
where made outside of the United States to an investor who was not a U.S.
resident, citizen or corporation, nor where any officers or directors of the
investing corporation, U.S.
17
<PAGE> 18
residents or citizens. Blue Sky filings were not required for the Regulation S
stock sale 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.
In January 2000, the Company offered and sold 312,500 shares of common stock at
$6.40 per share to a non-affiliated institutional investor. The institutional
investor completed a subscription confirmation letter and private placement
subscription agreement whereby the investor certified that it was purchasing the
shares for its own account and that the investor was accredited and
sophisticated 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 the sale was to foreign institutional investor that had adequate and
reasonable opportunity and access to corporate information regarding the
Company. The shares were issued with a Rule 144 restrictive legend.
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.
18
<PAGE> 19
ONE VOICE TECHNOLOGIES, INC.
(FORMERLY KNOWN AS CONVERSIT.COM, INC.)
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
EIGHT MONTHS ENDED AUGUST 31, 1999
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS:
Balance Sheets F-3
Statements of Operations F-4
Statement of Stockholders' Equity (Deficit) F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7-15
</TABLE>
F-1
<PAGE> 20
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 sheets of One Voice Technologies, Inc.,
a Nevada Corporation (a development stage enterprise) as of August 31, 1999, and
the related statements of operations, stockholders' equity and cash flows for
the eight months 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 August 31, 1999, and the results of its operations and its cash flows for the
eight months then ended in conformity with generally accepted accounting
principles.
/s/ Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS
Santa Monica, California
November 29, 1999
F-2
<PAGE> 21
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET - AUGUST 31, 1999
<TABLE>
<CAPTION>
ASSETS September 30, August 31,
1999 1999
------------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,709,309 $ 2,367,727
Cash - restricted 100,338 100,000
----------- -----------
Total current assets 1,809,647 2,467,727
----------- -----------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization 122,599 116,240
----------- -----------
OTHER ASSETS:
Software licensing 450,000 -
Deposits 40,055 39,956
Patent, net of accumulated amortization 33,956 33,956
----------- -----------
Total other assets 524,011 73,912
----------- -----------
$ 2,456,257 $ 2,657,879
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 79,184 $ 8,300
Loan payable 100,000 100,000
Loan payable, officer 10,000 10,000
Loan payable, officer-stockholder 4,500 4,500
----------- -----------
Total current liabilities 193,684 122,800
----------- -----------
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 11,370
Additional paid-in capital 2,950,508 2,950,508
Deficit accumulated during development stage (699,305) (426,799)
----------- -----------
Total stockholders' equity 2,262,573 2,535,079
----------- -----------
$ 2,456,257 $ 2,657,879
=========== ===========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-3
<PAGE> 22
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine months Eight months From inception on
ended ended January 1, 1999 to
September 30, 1999 August 31,1999 September 30, 1999*
------------------ -------------- ------------------
(unaudited)
<S> <C> <C> <C>
NET REVENUES $ 25,423 $ 25,422 $ 25,423
COST OF REVENUES 2,790 2,790 2,790
------------ ------------ ------------
GROSS PROFIT 22,633 22,632 22,633
GENERAL AND ADMINISTRATIVE
EXPENSES 721,938 449,431 721,938
------------ ------------ ------------
NET LOSS $ (699,305) $ (426,799) $ (699,305)
============ ============ ============
NET LOSS PER SHARE, basic and diluted $ (.06) $ (0.03)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING,
basic and diluted 12,422,198 12,552,099
============ ============
</TABLE>
* Audited from inception to August 31, 1999 and unaudited from September 1, 1999
to September 30, 1999.
See accompanying independent auditors' report and notes to financial statements.
F-4
<PAGE> 23
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 December 31, 1998 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 2,844,272 2,845,772
Net issuance of common stock in
exchange for services 150,000 150 150
Redemption of common stock (10,000,000) (10,000)
(10,000)
Net loss for the eight months
ended August 31, 1999 (426,799) (426,799)
----------- ----------- ------------ ------------ -----------
Balance at August 31, 1999 11,370,000 11,370 2,950,508 (426,799) 2,535,079
Net loss for the one month
ended September 30, 1999
(unaudited) (272,506) (272,506)
----------- ----------- ------------ ------------ -----------
Balance at September 30, 1999 11,370,000 $ 11,370 $ 2,950,508 $ (699,305) $ 2,262,573
=========== =========== ============ ============ ===========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-5
<PAGE> 24
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Nine months Eight months From inception on
ended ended January 1, 1999 to
September 30, 1999 August 31, 1999 September 30, 1999*
------------------ --------------- ------------------
(unaudited)
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net loss $ (699,305) $ (426,799) $ (699,305)
----------- ----------- -----------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES -
depreciation and amortization 5,564 2,118 5,564
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ASSETS -
deposits (40,055) (39,956) (40,055)
INCREASE (DECREASE) IN LIABILITIES -
accounts payable and accrued expenses 79,184 8,300 79,184
----------- ----------- -----------
Net cash used for operating activities (654,612) (654,612)
----------- ----------- -----------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchase of property and equipment (128,163) (118,358) (128,163)
Software licensing (450,000) - (450,000)
Patents (33,956) (33,956) (33,956)
Increase in escrow account (100,338) (100,000) (100,338)
----------- ----------- -----------
Net cash used for investing activities (712,457) (252,314) (712,457)
----------- ----------- -----------
CASH FLOWS PROVIDED BY (USED FOR)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 2,971,878 2,971,878 2,971,878
Retirement of common stock, net (10,000) (10,000) (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 100,000 100,000 100,000
----------- ----------- -----------
Net cash provided by financing activities 3,076,378 3,076,378 3,076,378
----------- ----------- -----------
NET INCREASE IN CASH 1,709,309 2,367,727 1,709,309
CASH, beginning of period - - -
----------- ----------- -----------
CASH, end of period $ 1,709,309 $ 2,367,727 $ 1,709,309
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ 17,124 $ 17,124 $ 17,124
=========== =========== ===========
Income taxes paid $ 1,823 $ 1,823 $ 1,823
=========== =========== ===========
</TABLE>
* Audited from inception to August 31, 1999 and unaudited from September 1, 1999
to September 30, 1999.
See accompanying independent auditors' report and notes to financial statements.
F-6
<PAGE> 25
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
EIGHT MONTHS ENDED AUGUST 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.
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.
See accompanying independent auditors' report.
F-7
<PAGE> 26
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EIGHT MONTHS ENDED AUGUST 31, 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
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.
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.
COMPREHENSIVE INCOME:
Comprehensive loss consists of net loss only.
See accompanying independent auditors' report.
F-8
<PAGE> 27
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EIGHT MONTHS ENDED AUGUST 31, 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
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 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.
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 eight months ended August 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.
See accompanying independent auditors' report.
F-9
<PAGE> 28
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EIGHT MONTHS ENDED AUGUST 31, 1999
(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", 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.
INTERIM FINANCIAL STATEMENTS (UNAUDITED):
The accompanying unaudited condensed financial statement for the
interim period ended September 30, 1999 has been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to
Regulation S-B. 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 one month ended
September 30, 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> 29
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EIGHT MONTHS ENDED AUGUST 31, 1999
(4) PROPERTY AND EQUIPMENT:
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:
The loans are not collateralized, non-interest bearing and due on
demand.
(6) 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 $2,845,000. An additional 150,000 shares of the Company's
common stock was issued for services rendered in connection with this
private placement.
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 shares of the common
stock of Dead On, Inc. (Note 13).
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.
See accompanying independent auditors' report.
F-11
<PAGE> 30
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EIGHT MONTHS ENDED AUGUST 31, 1999
(7) INCOME TAXES:
For federal income tax return purposes, the Company has available net
operating loss carryforwards of approximately $749,000, 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 August 31, 1999 are as follows:
<TABLE>
<S> <C>
Net operating loss carryforwards $ 299,600
Valuation allowance (299,600)
-------------
Net deferred taxes $ -
=============
</TABLE>
(8) 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.
Salaries paid totaled $44,505 for the eight month period ending August
31, 1999.
(9) 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 $36,650 for the eight month period ending August
31, 1999.
(10) COMMITMENTS:
Effective July 1999, the Company leases its office facility under a
noncancellable operating lease expiring March 31, 2003.
See accompanying independent auditors' report.
F-12
<PAGE> 31
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EIGHT MONTHS ENDED AUGUST 31, 1999
(10) COMMITMENTS, CONTINUED:
At August 31, 1999, minimum rental payments under the operating lease is
as follows:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
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.
(11) 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 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 August
31, 1999, 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.
See accompanying independent auditors' report.
F-13
<PAGE> 32
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EIGHT MONTHS ENDED AUGUST 31, 1999
(12) 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.
(13) BUSINESS COMBINATION:
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"), 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 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."
Conversational Systems, Inc. was liquidated with and into Dead On, Inc.
Dead On, Inc. then changed its legal name to One Voice Technologies,
Inc.
The following proforma results of activities assume that the acquisition
of Conversational Systems, Inc. occurred as of the beginning of 1999.
The proforma financial information is presented for informational
purposes only and may not necessarily be indicative of the operating
results that would have occurred had these acquisitions been consummated
as of the beginning of each period presented, nor is it necessarily
indicative of future operation results.
<TABLE>
<CAPTION>
Eight months ended
August 31, 1999
------------------
<S> <C>
Revenues $ 25,422
===========
Operating loss $ (426,799)
===========
Loss per share, basic and diluted $ (.04)
===========
</TABLE>
(14) LICENSING AGREEMENT (UNAUDITED):
In September 1999, the Company entered into a 24-month software
licensing agreement with a software developer. The software developer
shall provide the speech recognition software which is utilized as the
Company's "platform." 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.
See accompanying independent auditors' report.
F-14
<PAGE> 33
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EIGHT MONTHS ENDED AUGUST 31, 1999
(15) SUBSEQUENT EVENT (UNAUDITED):
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.
See accompanying independent auditors' report.
F-15
<PAGE> 34
DEAD ON, INC.
(FORMERLY KNOWN AS
BELRIDGE HOLDINGS CORP. AND
BELRIDGE BROADCASTING OF PORTLAND, INC.)
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT F-17
FINANCIAL STATEMENTS:
Balance Sheets F-18
Statements of Operations F-19
Statement of Stockholders' Equity (Deficit) F-20
Statements of Cash Flows F-21
Notes to Financial Statements F-22-26
</TABLE>
F-16
<PAGE> 35
Stonefield Josephson, Inc.
1620 26th Street, Suite 400 South
Santa Monica, CA 90404-4041
310-453-9400
Board of Directors
Dead On, Inc.
San Diego, California
We have audited the accompanying balance sheets of Dead On, Inc., a Nevada
Corporation as of December 31, 1998 and 1997, and the related statements of
operations, stockholders' equity (deficit) 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 audits.
We conducted our audits 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 audits provide 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 Dead On, Inc. as of December
31, 1998 and 1997, and the results of its 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, California
September 13, 1999
F-17
<PAGE> 36
DEAD ON, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS December 31, December 31,
1998 1997
-------- -------
<S> <C> <C>
TOTAL ASSETS $ -- $ --
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES --
officers advances $ -- $ 3,922
-------- -------
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, 12,720,000 and 2,500,000 shares issued
and outstanding as of December 31, 1998 and 1997,
respectively 12,720 2,500
Additional paid-in capital 310,366 (1,500)
Deficit accumulated during development stage (323,086) (4,922)
-------- -------
Total stockholders' equity (deficit) -- (3,922)
-------- -------
$ -- $ --
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-18
<PAGE> 37
DEAD ON, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1998 1997
----------- -----------
<S> <C> <C>
NET REVENUES $ - $ -
COST OF REVENUES - -
----------- -----------
GROSS PROFIT - -
GENERAL AND ADMINISTRATIVE EXPENSES - 2,100
----------- -----------
LOSS FROM CONTINUING OPERATIONS - (2,100)
LOSS ON DISCONTINUED OPERATIONS (299,161) -
GAIN ON DISPOSAL OF SEGMENT, NET OF PROVISION OF
$110,788 FOR OPERATING LOSSES DURING THE
PHASE-OUT PERIOD (19,003) -
----------- -----------
NET LOSS $ (318,164) $ (2,100)
NET LOSS PER SHARE, basic and diluted from
continuing operations $ - $ -
NET LOSS PER SHARE, basic and diluted from
discontinued operations $ (0.05) $ -
WEIGHTED AVERAGE SHARES OUTSTANDING,
basic and diluted 5,888,000 2,500,000
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-19
<PAGE> 38
DEAD ON, INC.
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)
Net loss for the year ended
December 31, 1997 (2,100) (2,100)
----------- ------- --------- --------- ---------
Balance at December 31, 1997 2,500,000 2,500 (1,500) (4,922) (3,922)
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 12,720,000 $12,720 $ 310,366 $(323,086) $ -
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-20
<PAGE> 39
DEAD ON, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net loss $(318,164) $ (2,100)
INCREASE (DECREASE) IN LIABILITIES -
officer advances (3,922) 2,100
--------- ---------
Net cash used for operating activities (322,086) -
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES -
proceeds from issuance of common stock 322,086 -
--------- ---------
NET INCREASE (DECREASE) IN CASH - -
CASH, beginning of year - -
--------- ---------
CASH, end of year $ - $ -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ - $ -
Income taxes paid $ - $ -
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-21
<PAGE> 40
DEAD ON, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998 AND 1997
(1) ORGANIZATION:
Dead On, Inc. (formerly known as 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 4).
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 5).
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"), Dead On, Inc. has been reversed merged into
Conversational Systems, Inc. The shares of Conversational Systems
were exchanged for 7,000,000 newly issued shares of Dead On, Inc.
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:
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:
The Company's financial instruments consist principally of
officer advances 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.
See accompanying independent auditors' report.
F-22
<PAGE> 41
DEAD ON, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
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.
COMPREHENSIVE INCOME:
Comprehensive loss consists of net loss only.
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.
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.
See accompanying independent auditors' report.
F-23
<PAGE> 42
DEAD ON, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
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.
(3) RELATED PARTY TRANSACTION:
During 1998 and 1997, a director of the Company provided office
facilities to the Company. The costs related to the transaction are
immaterial to the financial statements.
(4) 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
collectively referred to as the "Private Placement". 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
offerings generated proceeds, net of offering costs of approximately
$55,000.
See accompanying independent auditors' report.
F-24
<PAGE> 43
DEAD ON, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(5) 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, which consists primarily of revenues
from sales of the Company's apparel, accessory and sports equipment line
less advertising, trade show, commissions, payroll and payroll tax costs
associated therewith. 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.
(6) 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, the Management's estimate of the
fair value of assets and liabilities of Dead On (Note 5).
(7) INCOME TAXES:
For federal income tax return purposes, the Company has available net
operating loss carryforwards of approximately $323,000, which 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, 1998 are as follows:
<TABLE>
<S> <C>
Net operating loss carryforwards $ 129,000
Valuation allowance (129,000)
-------------
Net deferred taxes $ -
</TABLE>
Temporary differences which give rise to deferred tax assets and
liabilities at December 31, 1997 have not been presented as their
amounts are immaterial.
(8) COMMITMENTS:
At December 31, 1998, the Company neither owned or leased any real or
person property. Office services are provided without charge by a former
director of Dead On, Inc. Such costs are immaterial to the financial
statements and, accordingly, have not been reflected therein.
See accompanying independent auditors' report.
F-25
<PAGE> 44
DEAD ON, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1998 AND 1997
(9) CONTINGENCIES:
The Company is party to various legal proceedings arising from the
discontinued operations of the Company's apparel division (Note 5).
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.
(10) SUBSEQUENT EVENT:
Pursuant to a plan approved by Dead On, Inc.'s Board of Directors, in
July 1999, the Company repurchased and retired 10,000,000 shares of its
common stock, $.001 par value per share.
See accompanying independent auditors' report.
F-26
<PAGE> 45
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 2nd Amendment
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
Exhibit 27.2 Financial Data Schedule Included
</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 March 1, 2000 By /s/ Dean Weber
---------------------- ----------------------------------
Dean Weber, President & Director
Date March 1, 2000 By /s/ Rahoul Sharan
---------------------- ----------------------------------
Rahoul Sharan, Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS FOR NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH ONE VOICE TECHNOLOGIES, INC. 10-SB 5TH
AMENDMENT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,809,647
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,809,647
<PP&E> 128,163
<DEPRECIATION> (5,564)
<TOTAL-ASSETS> 2,456,257
<CURRENT-LIABILITIES> 193,684
<BONDS> 0
0
0
<COMMON> 11,370
<OTHER-SE> 2,950,508
<TOTAL-LIABILITY-AND-EQUITY> 2,456,257
<SALES> 25,423
<TOTAL-REVENUES> 24,423
<CGS> 2,790
<TOTAL-COSTS> 2,790
<OTHER-EXPENSES> 721,938
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (699,305)
<INCOME-TAX> 0
<INCOME-CONTINUING> (699,305)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (699,305)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR YEARS ENDED DECEMBER 31, 1997 AND 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH DEAD ON, INC. 10-SB 5TH AMENDMENT.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 0
<CURRENT-LIABILITIES> 0 3,922
<BONDS> 0 0
0 0
0 0
<COMMON> 12,720 2,500
<OTHER-SE> 310,366 (1,500)
<TOTAL-LIABILITY-AND-EQUITY> 0 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 2,100
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 (2,100)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 (2,100)
<DISCONTINUED> (299,161) 0
<EXTRAORDINARY> (19,003) 0
<CHANGES> 0 0
<NET-INCOME> (318,164) (2,100)
<EPS-BASIC> (.05) .00
<EPS-DILUTED> (.05) .00
</TABLE>
