SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 11, 1996
APPLIED VOICE RECOGNITION, INC.
(Exact name of registrant as specified in its charter)
UTAH
(State or other jurisdiction of incorporation)
33-1210-D 87-042552
(Commission File Number) (I.R.S. Employer
Identification No.)
4615 POST OAK PLACE, SUITE 227, HOUSTON, TEXAS 77027
(Address of principal executive offices, including zip code)
(713) 621-5678
(Registrant's telephone number, including area code)
SUMMA VEST, INC.
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 1 CHANGES IN CONTROL OF REGISTRANT
Effective December 11, 1996, Summa Vest, Inc., a Utah corporation
("Company"), acquired all of the issued and outstanding shares of
capital stock of Applied Voice Recognition, Inc., a Delaware
corporation ("Subsidiary"). In connection with such acquisition,
the Company issued an aggregate of 9,073,000 shares of authorized
but unissued common stock, $0.001 par value, to the shareholders of
Subsidiary ("Shareholders"). The Shareholders exchanged an
aggregate of 9,073,000 shares of Subsidiary common stock for the
9,073,000 shares of Company common stock. Currently therewith, the
Company issued 949,400 shares of common stock to certain
consultants, for services rendered, in non-capital raising
transactions, pursuant to a registration statement filed on Form
S-8 and 204,404 shares of common stock to an entity for services
rendered pursuant to Regulation S. Furthermore, concurrently with
the reorganization, the Company issued 380,000 shares of common
stock at a subscription price of $2.00 per share, to be utilized
for working capital. Of the 380,000 shares of Company common stock
issued, 105,000 shares were issued pursuant to Regulation S and
275,000 shares were issued pursuant to Regulation D.
In connection with the reorganization, Christopher Earl, Don
Morrison and Jeffrey Jenson resigned as directors and officers and
were replaced by the following: Timothy J. Connolly, Chairman of
the Board of Directors, President, and Chief Executive Officer; Jan
Carson Connolly, Vice President - Operations, Marketing and
Director; H. Russel Douglas, Vice President - Research and
Development and Director; Akin Olajuwon, Director; Jesse Marion,
Director; and David Klausmeyer, Director. These persons will hold
office until the next respective annual meeting of the stockholders
and directors or until their respective successors have been
elected and qualified or their prior resignations or terminations.
Upon the closing of the above-referenced transactions, there were
10,725,000 shares of Company common stock outstanding.
To the best of the Company's knowledge, there are no known
arrangements which may at a subsequent date result in a subsequent
change in control of the Company.
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
Inapplicable
ITEM 3 BANKRUPTCY OR RECEIVERSHIP
Inapplicable
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<PAGE>
ITEM 4 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Inapplicable
ITEM 5 OTHER EVENTS
Effective December 11, 1996, the Company issued 204,404 shares of
its Common Stock to Q-Marq Securities, Ltd. pursuant to Rule
903(c)(2) of Regulation S promulgated under the Securities Act of
1933, as amended. Such shares were issued for services rendered in
connection with the reorganization described in Item 1 above.
ITEM 6 RESIGNATIONS OF REGISTRANT'S DIRECTORS
Inapplicable
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
(b) Pro forma Financial Information
(c) Exhibits
3.1 Amended Articles of Incorporation
ITEM 8 CHANGE IN FISCAL YEAR
Inapplicable
-3-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
(formerly Voice Technologies, Ltd., and
Applied Voice Technologies Partners, Ltd.)
Financial Statements
Two Years Ended December 31, 1995
December 2, 1996
-4-
<PAGE>
December 2, 1996
(except for Note 9, as to which
the date is December 11, 1996)
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Applied Voice Recognition, Inc.
Houston, Texas
We have audited the accompanying balance sheet of Applied Voice Recognition,
Inc. (formerly Voice Technologies, Ltd. and Applied Voice Technologies Partners,
Ltd.) as of December 31, 1995, and the related statements of income,
stockholders' equity, and cash flows for the year ended December 31, 1995 and
the period from inception (November 14, 1994) through December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted 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 Applied Voice Recognition, Inc.
as of December 31, 1995, and the results of its operations and its cash flows
for the year ended 1995 and the initial period in 1994 in conformity with
generally accepted accounting principles.
-5-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
Balance Sheet
December 31, 1995
ASSETS
Cash ......................................................... $ 40,495
Accounts receivable .......................................... 5,461
Inventory .................................................... 15,000
---------
Total Current Assets ...................................... 60,956
Property and equipment, net of accumulated
depreciation of $5,572 .................................... 22,843
---------
TOTAL ASSETS .............................................. $ 83,799
=========
LIABILITIES
Current portion of long-term debt ............................ $ 15,871
Due to stockholders .......................................... 7,500
Accounts payable and accrued expenses ........................ 73,190
---------
Total Current Liabilities ....................................... 96,561
DUE TO STOCKHOLDERS ............................................. 214,902
LONG-TERM DEBT .................................................. 142,310
---------
TOTAL LIABILITIES ......................................... 453,773
---------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 50,000,000 shares
authorized, 5,820,000 shares issued and outstanding ....... 58
Paid in capital .............................................. 63,894
Retained (deficit) ........................................... (433,926)
---------
TOTAL STOCKHOLDERS' EQUITY ................................ (369,974)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................ $ 83,799
=========
See notes to financial statements.
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<PAGE>
APPLIED VOICE RECOGNITION, INC.
INCOME STATEMENTS
Year Ended December 31, 1995, and the Period from Inception
(November 14, 1994) through December 31, 1994
1995 1994
--------- --------
Net sales ................................. $ 422,697 $ 13,535
Cost of sales ............................. 290,435 10,074
--------- --------
Gross Margin ........................ 132,262 3,461
Selling ................................... 113,592 9,767
General and administrative ................ 330,018 74,737
Research and development .................. 39,535 --
--------- --------
Operating Deficit ................... (350,883) (84,504)
Interest expense .......................... 2,000 --
--------- --------
Net deficit ......................... $(352,883) $(84,504)
========= ========
See notes to financial statements.
-7-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Year Ended December 31, 1995, and the Period from Inception
(November 14, 1994) through December 31, 1994
<TABLE>
<CAPTION>
PARTNERS' RETAINED
CAPITAL (DEFICIT) TOTALS
-------- --------- ---------
<S> <C> <C> <C>
At inception
Contributions of cash ...................... $ 45,524 -- $ 45,524
Contributions of property and equipment .... 29,278 -- 29,278
Increase in partner subscriptions receivable 12,500 -- 12,500
Net deficit for the period from Inception
(November 14, 1994) through December 31,
1994 ....................................... -- $ (81,043) (81,043)
-------- --------- ---------
At December 31, 1994 ....................... 87,302 (81,043) 6,259
Contributions of cash ......................... 70,013 -- 70,013
less: prior year partner subscriptions
received ........................... (12,500) -- (12,500)
adjustment to prior year property
contribution ....................... (863) -- --
Purchase of partner's interest by issuance
of note payable ............................ (80,000) -- (80,000)
Net deficit ................................... -- (352,883) (352,883)
-------- --------- ---------
At December 31, 1995 ....................... $ 63,952 $(433,926) $(369,974)
======== ========= =========
</TABLE>
Note: The Company was incorporated on August 15, 1996. All footnote disclosures
relating to Company ownership for fiscal 1995 and 1994 have been restated
as shareholder transactions.
See notes to financial statements.
-8-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
STATEMENTS OF CASH FLOWS
Year Ended December 31, 1995, and the Period from Inception
(November 14, 1994) through December 31, 1994
1995 1994
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) ................................. $(352,882) $(81,043)
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation ............................ 4,108 1,464
Increases in Due to Shareholders for
unpaid compensation and out-of-pocket
expense reimbursements ............... 179,441 42,961
Changes in operating assets and liabilities:
Accounts receivable ..................... (5,461)
Inventory ............................... (15,000)
Accounts payable and accrued expenses ... 123,771 2,600
--------- --------
NET CASH USED BY OPERATING ACTIVITIES ...... (66,024) (34,018)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash contributed by shareholders ........... 70,013 45,524
Loan proceeds from third parties ........... 25,000
--------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES .. 95,013 45,524
--------- --------
NET INCREASE IN CASH .......................... 28,989 11,506
Cash at beginning of period ................... 11,506
Cash at end of period ......................... $ 40,495 $ 11,506
========= ========
Supplemental Disclosure of Cash Paid For:
Interest ................................... $ 2,000
In 1995, the Company bought out a
partner by the issuance of an
$80,000 note payable.
In 1994, property and equipment was
contributed by a shareholder and
recorded at its estimated fair
value of $29,278.
See notes to financial statements.
-9-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE 1 - ACCOUNTING POLICIES
NATURE OF BUSINESS. Applied Voice Recognition, Inc. ("Company") was incorporated
in Delaware on August 15, 1996. Prior to this date, it operated as various Texas
Limited Partnerships, including Voice Technologies, Ltd., created November 14,
1994; Applied Voice Technologies Partners, Ltd., created September 1, 1995; and
Applied Voice Recognition, L.P., created July 16, 1996. The Company and its
predecessors were formed for the purpose of developing and selling
micro-computer voice recognition software to commercial and government markets.
REVENUE is recognized when products are installed at customer locations.
Accounts are written off when deemed uncollectible. As of December 31, 1995 and
1994, no accounts receivable were considered uncollectible.
INVENTORY is stated at cost.
OFFICE EQUIPMENT consists of computers, software and furniture. Depreciation is
computed using the straight-line method, based on an estimated useful life of 5
years.
ACCOUNTS PAYABLE was $117,079 and ACCRUED EXPENSES was $9,292, totaling
$126,371.
COMMON STOCK. In October, 1996, the Board of Directors declared a 100 for 1
stock split and increased the total number of authorized shares to 15,000,000
from 150,000. All amounts in this financial statement have been adjusted for
this split as if it had occurred on November 14, 1994, the date of inception of
the Company. The total authorized shares of 50,000,000 and the par value used of
$.001 are characteristics of the stock received in the merger discussed in Note
9.
INCOME TAXES are not applicable as the corporation was formed subsequent to year
end. Income tax deductions prior to the balance sheet date are allocable to the
various partners, based on their individual contributions.
NOTE 2 - ACCOUNTS PAYABLE TO RELATED PARTIES
As of December 31, 1995, amounts payable to stockholders was $222,402 and was
payable on demand, carried no interest and was mostly accrued compensation. As
of July 16, 1996, amounts due of $214,902 were contributed in a recapitalization
of the Company in consideration for a $125,000 note payable made by a third
party.
-10-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE 3 - LONG-TERM DEBT
1995
---------
Note payable to a former owner, with no interest, due
$2,500 August, 1996, and $750 per month from
September, 1996 through December, 1997, with a
balloon due of the remainder on December 31, 1997 $ 80,000
Note payable to American Express, with no interest,
due $2,500 per month, beginning September, 1996,
with a balloon due of the remainder if the
Company "goes public" and raises a minimum
of $1,000,000 in net stock sales ................. 53,181
Note payable to a trust, with interest at 10%
APR, due $300 per month from
September, 1996 through December, 1997,
with a balloon due of the remainder
on December 31, 1997 ............................. 25,000
---------
Total ...................................... 158,181
Less: current maturities .................. (15,871)
---------
Net long-term debt ......................... $ 142,310
=========
The balance of long-term debt is due $99,129 in 1997, $30,000 in 1998, and
$13,181 in 1999.
On July 16, 1996, an additional $125,000 was loaned to the Company by an
unrelated trust. In connection with this loan, the trust and the individual
beneficiary received a total of 3% ownership (the equivalent of 180,000 shares)
in the Company.
NOTE 4 - COMMON STOCK
Prior to August 15, 1996, the Company was organized as three different Texas
limited partnerships (see Note 1). On August 15, 1996, the Company was
incorporated and the Partnership contributed all assets and liabilities in
exchange for 6,000,000 shares. Because 3% of the Company was given up as partial
consideration for a $125,000 loan made July 16, 1996 (see Note 3), an equivalent
5,820,000 shares is used as the total outstanding shares as of December 31,
1995.
-11-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE 4 - COMMON STOCK (continued)
On August 15, 1996, 2 additional stockholders purchased 2,473,000 shares of
stock for $135,000. In November, 1996, 500,000 additional shares were issued for
services in connection with marketing and promotion of Company products (see
Note 5) and 100,000 shares were issued in connection with the acquisition of
other voice recognition software development technology and talent (see Note 8).
In October, 1996, the Company commenced the sale of its common stock in a
private placement offering. As of December 2, 1996, 384,000 shares had been sold
at $2 per share for a total consideration of $768,000.
As of December 2, 1996, a total of 9,457,000 shares of stock were outstanding.
NOTE 5 - STOCK OPTIONS / WARRANTS
On August 15, 1996, the Company enacted Employee and Director Stock Option
Plans. Each Plan allows for the creation / granting of both qualified (as
defined by the Internal Revenue Service) and non-qualified options.
Pursuant to this plan, the Company authorized an immediate grant of 5-year
warrants to purchase 250,000 shares to officers at $.14 per share and 5-year
options to purchase 150,000 shares to non-employee directors, at $1.375 per
share.
On September 16, 1996, the Company entered into a 2 Year Licensing Agreement
with Hakeem Olajuwon to use his name and likeness in marketing and promotional
materials to be produced and published by the Company. Consideration paid for
this licensing arrangement was 500,000 shares of common stock (included in the
total shares outstanding at December 2, 1996, given in Note 4 above), and a
warrant to purchase another 500,000 shares at $1.50 per share anytime on or
before August 31, 2001.
NOTE 6 - JOINT VENTURE AGREEMENT
In April, 1996, the Company entered into negotiations with Nevada Gold and
Casinos, Inc. ("NGCI") for the joint development of Voice Commander Gambler, a
voice activated gaming device. The Company will contribute the name and
technology and NGCI is to put up all sales and marketing monies, with profits to
be split 50/50 after all expenses are recovered. No activity has occurred to
date.
-12-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE 7 - EMPLOYMENT AGREEMENTS
On August 15, 1996, the Company signed 3 employment agreements with current
officers for annual salaries aggregating $96,750 for the remainder of 1996, and
$360,000 per year thereafter, including car allowances.
NOTE 8 - ACQUISITION
On September 25, 1996, the Company acquired other voice recognition software
technology and talent for 100,000 shares of Company stock and $135,000, payable
$5,000 per month for 27 months, commencing October, 1996.
NOTE 9 - MERGER WITH A PUBLIC COMPANY
On December 11, 1996, the Company entered into an agreement to be acquired by
"reverse merger" with a public company, Summa Vest, Inc ("SVI"). SVI currently
has no assets, no liabilities, and no operations since 1993. This acquisition
will be accomplished by reducing the number of shares outstanding of SVI and
issuing 9,073,000 new shares of $.001 par value SVI stock in exchange for the
equal number of total outstanding shares of the Company. The acquisition is
summarized as follows:
Existing shares of SVI: ......................................... 325,198
- shares canceled ............................................ (225,000)
Shares issued for 100% of the Company:
- equivalent outstanding as of December 31, 1995 ............. 5,820,000
- equivalent issued for $125,000 loan on July 16, 1996 ....... 180,000
- issued for $135,000 cash on August 15, 1996 ................ 2,473,000
- issued for promotion agreement signed
September 16, 1996 ......................................... 500,000
- issued for technology acquisition on September
25, 1996 ................................................... 100,000
- issued in the private stock sale, November, 1996 ........... 384,000
Shares issued to investment bankers in connection with the merger 1,171,802
----------
Total shares outstanding after merger ..................... 10,729,000
==========
In connection with this merger, all officers and directors of SVI will resign
and be replaced by those of the Company, and SVI's name will be changed to that
of the Company.
-13-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE 10 - OPERATING LEASES
The Company is obligated on two small equipment leases and an office lease, with
total monthly payments of $5,095. Future minimum lease payments are $33,496 for
1996, $56,211 for 1997, $56,676 for 1998, $55,186 for 1999 and $4,425 for 2000.
-14-
<PAGE>
SUMMA VEST, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 1996
December 30, 1996
-15-
<PAGE>
INDEPENDENT ACCOUNTANT'S REPORT
December 30, 1996
To the Board of Directors and Stockholders of
Summa Vest, Inc.
Houston, Texas
We have reviewed the pro forma adjustments reflecting the transaction described
in Note 1 and the application of those adjustments to the historical amounts in
the accompanying pro forma consolidated condensed balance sheet of Summa Vest,
Inc. as of September 30, 1996 and the related pro forma statement of income for
the nine months then ended, and the year ended December 31, 1995. The historical
financial statements are derived from the unaudited historical financial
statements of Applied Voice Recognition, Inc., which were reviewed by us on
which we have issued our report dated December 2, 1996, and of Summa Vest, Inc.,
which were reviewed by other accountants, and are incorporated by reference.
Such pro forma adjustments are based upon management's assumptions described in
Note 2. Our review was conducted in accordance with standards established by the
American Institute of Certified Public Accountants.
A review is substantially less in scope than an examination, the objective of
which is the expression of an opinion on management's assumptions, the pro forma
adjustments and the application of those adjustments to historical financial
information. Accordingly, we do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effects on the historical information might have been had the
transaction occurred at an earlier date. However, the pro forma condensed
financial statements are not necessarily indicative of the results of operations
or related effects on financial position that would have been attained had the
above-mentioned transaction actually occurred earlier.
Based on our review, nothing came to our attention that caused us to believe
that management's assumptions do not provide a reasonable basis for presenting
the significant effects directly attributable to the above to the
above-mentioned transaction described in Note 1, that the related pro forma
adjustments do not give appropriate effect to those assumptions, or that the pro
forma column does not reflect the proper application of those adjustments to the
historical financial statement amounts in the pro forma condensed balance sheet
of Summa Vest, Inc. as of September 30, 1996, and the related pro forma
condensed statements of income for the nine months then ended, and the year
ended December 31, 1995.
-16-
<PAGE>
SUMMA VEST, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
The following pro forma balance sheet has been derived from the balance
sheets of Summa Vest Inc. ("SVI") and Applied Voice Recognition, Inc. ("AVR") at
September 30, 1996 and adjusts such information to give effect to the merger
which occurred in December, 1996, as if such merger had occurred on September
30, 1996. The pro forma balance sheet is presented for informational purposes
only and does not purport to be indicative of the financial condition that
actually would have resulted if the merger had been consummated at September 30,
1996. The pro forma balance sheet should be read in conjunction with the notes
thereto and the financial statements of Applied Voice Recognition, Inc. and
related notes thereto contained elsewhere in this Form 8-K.
<TABLE>
<CAPTION>
ASSETS Adjustments
SVI AVR DR (CR) CONSOLIDATED
--------- --------- ------------- ------------
<S> <C> <C> <C> <C>
Current assets
Cash .................................. $ 128,734 $ 641,000 (1) $ 769,734
Accounts receivable ................... 12,000 12,000
Inventory ............................. 14,128 14,128
--------- -----------
Total current assets ............... 154,862 795,862
--------- -----------
Equipment, net ........................... 20,019 20,019
--------- --------- -----------
$ 0 $ 174,881 $ 815,881
========= ========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt ..... 10,161 $ 10,161
Due to stockholders ................... $ 2,019 7,500 2,019 7,500
Accounts payable ...................... 23,372 175,355 23,372 175,355
--------- --------- -----------
Total current liabilities .......... 25,391 193,016 193,016
--------- --------- -----------
Due to stockholders ...................... 125,000 125,000
Long-term debt ........................... 91,015 91,015
Stockholders' equity
Common stock, par value $.001;
authorized 50,000,000 shares;
issued and outstanding 18,154,000 .. 18,154 7,809
(384)(1) 10,729
Common stock, par value $.01;
authorized 15,000,000 shares;
issued and outstanding 9,073,000 ... 90,730 90,730 -
Paid-in capital ....................... 304,018 358,174 249,024
(640,616)(1) 1,053,784
Retained (deficit) .................... (347,563) (683,054) (347,563)(2)
--------- --------- -----------
(25,391)(3) (657,663)
-----------
(25,391) (234,150) 406,850
--------- --------- -----------
$ 0 $ 174,881 $ 815,881
========= ========= ===========
</TABLE>
See accountants' report and notes to pro forma consolidated financial
statements.
-17-
<PAGE>
SUMMA VEST, INC.
PRO FORMA COMBINED INCOME STATEMENT
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Adjustments
SVI AVR DR (CR) CONSOLIDATED
------------ --------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales ............................. -- $ 278,545 -- $ 278,545
Cost of sales ......................... -- 189,289 -- 189,289
--------- ---------
Gross Margin .................... -- 89,256 -- 89,256
Selling ............................... -- 85,457 -- 85,457
General and administrative ............ $ 168 183,045 -- 183,213
Research and development .............. -- 66,030 -- 66,030
------------ ------- -------
Operating Deficit ............... (168) (245,276) -- (245,444)
Interest (expense) .................... -- 3,852 -- 3,852
------------ ------- -------
Deficit before extraordinary item (168) (249,128) -- (249,296)
Extraordinary item - debt forgiveness,
less applicable income taxes of $0 . -- -- (25,391)(3) 25,391
------------ ------- -------
Net income (deficit) .................. $ (168) $(249,128) -- $(223,905)
============ ========= =========
Pro Forma
Net (loss) per share ............... $ (.02)
=========
Weighted average shares outstanding 10,729,000
==========
</TABLE>
See accountants' report and notes to pro forma consolidated financial
statements.
-18-
<PAGE>
SUMMA VEST, INC.
PRO FORMA COMBINED INCOME STATEMENT
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Adjustments
SVI AVR DR (CR) CONSOLIDATED
------------ --------- ---------- ---------
<S> <C> <C> <C>
Net sales ............................ -- $ 422,697 $ 422,697
Cost of sales ........................ -- 290,435 290,435
--------- ---------
Gross Margin ................... -- 132,262 132,262
Selling .............................. -- 113,592 113,592
General and administrative ........... 541 330,018 330,559
Research and development ............. -- 39,535 39,535
------------ --------- ---------
Operating Deficit .............. (541) (350,883) (351,424)
Interest expense ..................... -- 2,000 2,000
------------ --------- ---------
Net deficit .................... $ (541) $(352,883) $(353,424)
============ ========= =========
Pro Forma
Net (loss) per share .............. $ (.03)
Weighted average shares outstanding 10,729,000
</TABLE>
See accountants' report and notes to pro forma consolidated financial
statements.
-19-
<PAGE>
SUMMA VEST, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
9 Months Ended September 30, 1996, and the
Year Ended December 31, 1995
On December 11, 1996, Summa Vest, Inc. ("SVI"), a Utah corporation, completed a
"reverse acquisition" of Applied Voice Recognition, Inc., a Delaware
corporation. SVI has had no operations since 1993, and AVR develops and sells
micro-computer voice recognition software to commercial and government markets.
The "reverse acquisition" by SVI will be accounted for by the purchase method of
accounting for the fiscal year ended December 31, 1996. Consequently, all prior
history of SVI is eliminated in the combination. SVI financed the purchase by
(1) reducing its 18,154,000 outstanding shares by a 55.824452-for-one reverse
split, (2) canceling 225,000 shares of the 325,198 resulting shares, (3)
exchanging 9,457,000 newly-issued shares on a 1 for 1 basis for the same number
of shares representing 100% of the outstanding stock of AVR as of that date, and
(4) issuing an additional 1,171,802 shares to financial advisors.
The transaction occurred as follows: - - - Shares Outstanding - - -
SVI AVR
At September 30, 1996 18,154,000 9,073,000
Reverse split by SVI (17,828,802)
Cancellation of a portion of remaining shares (225,000)
Issuance of stock to financial advisors 1,171,802
Sale of stock by AVR in a private placement
(Reg. D) at $2 per share 384,000
------------- ---------------
Sub-total, immediately prior to
December 11, 1996, merger 1,272,000 9,457,000
Merger 9,457,000 (9,457,000)
------------- ---------------
Ending balances, at December 11, 1996 10,729,000 0
============ ===============
A summary of the consolidation elimination entries to the Pro Forma Combined
Balance Sheet is as follows:
(1) Additional $2 per share stock (384,000 shares) sold by AVR in November,
1996, prior to the December 11, 1996 merger. Accrued related costs of this
offering are $127,000, shown as paid and accounted for as a reduction of
paid-in capital, for net proceeds of $641,000.
(2) 55.824452 to 1 reverse split, immediately prior to December 11 merger,
followed by cancellation of 225,000 shares, issuance of 1,171,802 shares
to financial advisors, and the exchange of 9,457,000 shares of post-split
SVI stock for all previously issued AVR stock.
(3) Cancellation of $25,391 in contingent liabilities carried on the books of
SVI, most of which is not payable unless the Company enters the nursing
service business in California, which is considered remote.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUMMA VEST, INC.
By /s/ TIMOTHY J. CONNOLLY
TIMOTHY J. CONNOLLY, President
Dated: January 29, 1997
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<PAGE>
EXHIBIT INDEX
NO. DESCRIPTION PAGE
- -- ----------- ----
3.1 Amended Articles of Incorporation 3
EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
SUMMA VEST, INC.
Pursuant to the provisions of Section 16-10a-1006 of the Utah
Revised Business Corporation Act, the undersigned corporation hereby adopts the
following Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is Summa Vest, Inc. (the
"Company").
SECOND: The following amendments to the Articles of Incorporation of
the Company were duly adopted by the stockholders of the Company at a meeting
held January 3, 1997, in the manner prescribed by the Utah Revised Business
Corporation Act, to-wit.
ARTICLE I - NAME
The name of this corporation is "APPLIED VOICE RECOGNITION, INC."
THIRD: These amendments do not provide for any exchange,
reclassification or cancellation of issued shares.
FOURTH: The amendment adopting the change of name to "Applied Voice
Recognition, Inc.", was adopted by the stockholders at a meeting held January 3,
1997.
FIFTH: This amendment was not adopted by the incorporators or the
Board of Directors without stockholder action.
SIXTH: (a) The designation and number of outstanding shares of each
class entitled to vote thereon as a class were as follows, to-wit:
CLASS NUMBER OF SHARES
----- ----------------
Common 9,683,000
(b) The number of shares voted for the amendment was 7,336,500, with
none opposing and none abstaining.
<PAGE>
IN WITNESS WHEREOF, the undersigned President and Secretary, having
been thereunto duly authorized, have executed the foregoing Articles of
Amendment for the Company under the penalties of perjury this 13th day of
January, 1997.
SUMMA VEST, INC.
By /s/ TIMOTHY J. CONNOLLY
TIMOTHY J. CONNOLLY, President
ATTEST:
By /s/ JAN CARSON CONNOLLY
JAN CARSON CONNOLLY, Secretary
