<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997 as restated
Or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _______________
Commissions file number: 0-23607
APPLIED VOICE RECOGNITION, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-051318
-------- ---------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
4615 Post Oak Place, Suite 111 Houston, TX 77027
-------------------------------------------------
(Address of principal executive offices including zip code)
(713) 621-5678
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
Number of shares of Common Stock outstanding as of June 30, 1997:
10,896,269 (Number of shares of common stock as of July 30, 1998:
13,982,309)
<PAGE>
RESTATEMENT
This 10-QSB/A is filed so as to reflect a restatement of Part I, including the
financial statements for the three month period and six month period ended June
30, 1997. See footnote 7 to the financial statements for an explanation of the
restatement.
FORWARD LOOKING STATEMENTS
Included in this report are "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations reflected in such forward-looking
statements will prove to have been correct. The Company's actual results could
differ materially from those anticipated in the forward-looking statements as a
result of certain factors including those set forth under Part I, Item 2
"Management's Discussion and Analysis of Results of Operations and Financial
Condition."
PART I: FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Index to Financial Statements
Description Page #
- --------------------------------------------------------------------------------
Balance sheet 1
Statement of operations 2
Statement of changes in stockholders equity 3
Statement of cash flows 4
Notes to financial statements 5
<PAGE>
APPLIED VOICE RECOGNITION, INC.
FORM 10QSB-A
QUARTER ENDED JUNE 30, 1997
Balance Sheets for the periods ending
June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1997
Restated June 30, 1996
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents 1,377 3,221
Escrow account 289,000 -
Accounts receivable 77,379 14,677
Inventory 49,764 15,000
Deposits, prepaid expenses, and deferred expenses 510,182 -
---------- ---------
Total current assets 927,702 32,898
Property plant and equipment, net 136,472 27,952
---------- ---------
TOTAL ASSETS 1,064,174 60,850
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade payable 287,644 124,010
Escrow account liability 289,000 -
Accrued expenses 26,036 -
Due to stockholders 180,000 349,270
Current portion of long-term debt 190,476 3,950
---------- ---------
Total current liabilities 973,156 477,230
Note payable to related party, net of current portion 125,000 -
Capital lease, net of current portion 43,299 -
Long-term debt, net of current portion 21,167 101,050
---------- ---------
Total liabilities 1,162,622 578,280
Common stock; $.001 par value; 50,000,000 shares
authorized; 10,896,269 and 5,820,000 issued and
outstanding for 1997 and 1996, respectively. 10,896 5,820
Paid-in-capital 2,641,018 56,832
Accumulated deficit (2,750,362) (580,082)
---------- ---------
Total stockholders' equity (98,448) (517,430)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 1,064,174 60,850
========== =========
See notes to financial statements
</TABLE>
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<PAGE>
APPLIED VOICE RECOGNITION, INC.
FORM 10QSB-A
QUARTER ENDED JUNE 30, 1997
Statement of operations for the periods ending
June 30, 1997 and 1996
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
--------------------------------------- ----------------------------------------
June 30, 1997 Restated June 30, 1996 June 30, 1997 Restated June 30, 1996
--------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C>
Net revenues 453,151 215,611 237,197 97,968
Cost of sales 270,875 141,609 135,335 68,534
-------------------------------- ------------------------------
Gross margin 182,276 74,002 101,862 29,434
Operating expenses:
Marketing and sales 318,626 27,473 155,846 4,178
General and administrative 1,067,737 179,074 619,324 92,431
Research and development 172,361 14,911 112,428 803
-------------------------------- ------------------------------
Total operating expenses 1,558,724 221,458 887,598 97,412
Operating margin (1,376,448) (147,456) (785,736) (67,978)
Other expenses:
Interest income 5,180 - 1,128 -
Interest expense (219,702) - (181,002) -
-------------------------------- -------------------------------
Total other expense (214,522) - (179,874) -
Net (Loss) (1,590,970) (147,456) (965,610) (67,978)
================================ ===============================
Basic and diluted (loss) per share (0.15) (0.03) (0.09) (0.01)
Weighted average shares outstanding 10,764,708 5,820,000 10,764,708 5,820,000
See notes to financial statements
</TABLE>
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<PAGE>
APPLIED VOICE RECOGNITION, INC.
FORM 10QSB-A
QUARTER ENDED JUNE 30 1997
Statement of stockholders equity
Quarter Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
Issued
---------------------- APIC Retained
Shares Amount Common Earnings Total
---------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Beginning balance at January 1, 10,642,102 $ 10,642 $ 1,605,789 $(1,159,392) $ 457,039
Sale of 100,000 shares of
common stock for $250,000 100,000 $ 100 $ 249,900 $ - $ 250,000
Fair value of stock options
issued for consulting
services - $ - $ 224,500 $ - $ 224,500
Issuance of 50,000 shares of
common stock for consulting
services 50,000 $ 50 $ 199,950 $ - $ 200,000
Issuance of 50,000 shares of
common stock for consulting
services 50,000 $ 50 $ 74,950 $ - $ 75,000
Exercise of 54,167 stock
options 54,167 $ 54 $ 7,529 $ - $ 7,583
Fair value of warrant issued
in connection with Bridge
Loans - $ - $ 278,400 $ - $ 278,400
Net Loss for the six months
ended June 30, 1997 - - - (1,590,970) $(1,590,970)
------------------------------------------------------------------------------------
Ending Balance June 30, 1997,
as Restated 10,896,269 $ 10,896 $ 2,641,018 $(2,750,362) $ (98,448)
====================================================================================
See notes to financial statements
</TABLE>
-3-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
FORM 10QSB-A
QUARTER ENDED JUNE 30, 1997
Statements of Cash Flow for the periods ending
June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
June 30,
1997 -
Restated June 30, 1996
-----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) (1,590,970) (147,456)
Adjustments to reconcile net (loss) to cash provided by
operating activities:
Depreciation 20,631 506
Stock issued for services 275,000 -
Stock options and warrants issued for services 363,700 -
Changes in operating assets and liabilities:
Accounts receivable (39,375) (9,216)
Inventory (691) -
Deposits and prepaids (307,682) -
Accounts payable and accrued expenses 200,523 50,820
-----------------------------
NET CASH USED BY OPERATING ACTIVITIES (1,078,864) (105,346)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (139,222) (5,615)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash loaned by stockholders 180,000 103,019
Repayments of notes payable (27,500) (29,332)
Loan proceeds from third parties 69,884 -
Capital lease financing 48,712 -
Principal payments under capital lease (5,413) -
Warrants granted in connection with bridge loans 139,200 -
Stock options/warrants exercised 7,583 -
Proceeds from sale of stock 250,000 -
-----------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 662,466 73,687
NET INCREASE (DECREASE) IN CASH (555,620) (37,274)
-----------------------------
Cash at the beginning of the period 556,997 40,495
=============================
CASH AT END OF PERIOD 1,377 3,221
=============================
See notes to financial statements
</TABLE>
-4-
<PAGE>
APPLIED VOICE RECOGNITION, INC.
FROM 10-QSB/A
NOTES TO FINANCIAL STATEMENTS
For the quarter ended June 30, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION:
- ------------------------------
The accompanying unaudited interim financial statements of Applied Voice
Recognition, Inc., a Utah corporation (the "Company") have been prepared in
accordance with generally accepted accounting principals and the rules of the
Securities and Exchange Commission (the SEC), and should be read in conjunction
with the audited financial statements and notes thereto contained in the
Company's latest annual Report filed with the SEC on Form 10-KSB. In the
opinion of management, all adjustments consisting of normal recurring
adjustments, necessary for the fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations are not necessarily indicative of the results
to be expected for the full year. Notes to the financial statements which would
substantially duplicate the disclosure contained in the audited financial
statements for the most recent fiscal year, 1996, as reported in the Form 10-KSB
have been omitted.
NOTE 2 - PRIVATE PLACEMENT OF THE COMPANY'S STOCK:
- -------------------------------------------------
On June 15, 1997 the Company initiated a private placement of the Company's
stock in compliance with section 4(2) of Regulation D of the Securities and
Exchange act of 1933. The initial offering commencing on the above referenced
date consisted of placement of $1,000,000 minimum to $5,000,000 maximum of the
company's common stock at an offering price varying from a minimum of $1.60 to a
maximum of $2.00 per share. As of July 28, 1997, the Company has amended the
private placement increasing the maximum offering to $7,500,000 by the
authorization of the issuance of $2,500,000 of convertible preferred shares
priced at $8.00 share, convertible into common shares at a ratio of 5.4 to 1 and
bearing a dividend of 4% payable annually in shares of the company.
Additionally, the Company has increased the minimum on the offering
from$1,000,000 to $2,000,000. As of June 30, 1997, $289,000 was received from
investors for the offering. These funds received ($289,000) under the offering
are being held in escrow and the conditions for release of the funds have not as
yet been met.
NOTE 3 - BRIDGE LOANS, LOANS TO RELATED PARTIES:
- -----------------------------------------------
As of the June 30, 1997, amounts payable to stockholders and officers under a
bridge loan agreement, related to the private placement of the Company's stock
totaled $230,000. The bridge loans bear interest at 12% per annum and are
payable at the earlier of six months or the receipt of the minimum proceeds of
the private placement ($2,000,000). In addition the bridge loans entitle the
holder to one warrant to purchase one share of the Company's stock for $1.60 for
every dollar loaned to the Company.
-5-
<PAGE>
NOTE 4 - NET INCOME (LOSS) PER COMMON SHARE:
- -------------------------------------------
Net income per common share is calculated on the basis of the weighted average
number of common shares outstanding during the period. The dilutive effect of
common stock equivalents is immaterial and therefore fully dilutive income per
share is omitted from the presentation.
NOTE 5 - COMMON STOCK:
- ---------------------
Prior to August 15, 1996, the Company was organized as three separate Texas
limited partnerships. On August 15, 1996, the Company was incorporated and the
Partnership contributed assets and liabilities in exchange for 6,000,000 shares
of the Company. Because 3% of the Company was given up as partial consideration
for a $125,000 loan made July 16, 1996, the equivalent of 5,820,000 shares is
used as the total outstanding shares for the period December 31, 1995 through
December 31, 1996.
NOTE 6 - SUBSEQUENT EVENTS:
- --------------------------
Through August 8, 1997 the Company has received $934,000 in proceeds in
conjunction with its private placement (see note 2) and incurred a total of
$605,000 in bridge loans (see note 3). The funds received in conjunction with
the private placement offering ($934,000) are being held in an escrow account
and the conditions for release of the funds have not as yet been met.
Note 7 - RESTATEMENT:
- --------------------
The quarter ended and six months ended June 30, 1997 has been restated as
follows:
During 1997, the Company issued common stock and warrants to purchase the
Company's common stock in exchange for consulting services and did not
record the related expense and deferral. The Company is restating the
financial statements for the quarter ended and six months ended June 30,
1997 to record $129,750 of consulting expense based on the fair market
value of the common stock and warrants. At June 30, 1997, $165,000 of
deferred consulting expense remained on the balance sheet. The deferred
expense will be amortized ratably throughout the 1997 fiscal year.
Between May 15, 1997 and July 24, 1997, the Company granted to officers, a
director, and others, warrants to purchase the Company's common stock
(warrants to purchase 430,000 shares to officers, warrant to purchase
50,000 shares to a director, and warrants to purchase 100,000 shares to
others) at an exercise price of $1.60 per share. The warrants were granted
in connection with bridge loans made by these individuals. Finance costs
related to these warrants were not recognized. The Company is restating the
financial statements for the quarter ended and six months ended June 30,
1997 to record finance costs of $139,200, based on the fair value of the
underlying stock of the warrants issued. At June 30, 1997, $139,200 of
related deferred interest expense remained on the balance sheet. The
deferred expense
-6-
<PAGE>
will be amortized in the third quarter of the 1997 fiscal year.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
OVERVIEW
Applied Voice Recognition Inc. (the Company or AVRI) develops, markets and
supports speech driven computer applications. Founded in 1994, the Company was
an early entrant in Automated Speech Recognition (ASR) software application
marketplace. In 1995, the Company introduced VoiceCommander, a personal
computer windows based, speech-driven, office suite software product. The
VoiceCommander enables the user to dictate and print letters and office memos,
dictate and send faxes, dictate data and computer based forms, maintain a
database of business and personal contacts, automatically dial telephone
numbers, manage e-mail and "surf" the world-wide web all via voice commands. In
December 1996 AVRI completed a reverse merger with a public company. As a
result, the Company is now traded on the Nasdaq OTCBB under the symbol "AVRI".
For the periods under discussion in this document, sales of the VoiceCommander
product have been the primary source of revenues for AVRI.
The Company's revenues are derived from license fees for software products,
training fees for assisting the customer in the use of the Company's products,
software support and maintenance and sales of hardware used in conjunction with
the Company's software. Software licenses are typically granted on a per user
basis, however the Company may grant enterprise-wide licenses for multi user
sites. Revenues have been derived in the main from direct sales to end users
through the Company's direct field sales force. Since inception, AVRI has
focused its sales and marketing resources in the Houston, Texas marketplace and
consequently most of the revenues in 1996 and 1997 are derived from this market.
During the first two quarters of 1997, the Company has significantly increased
its research and development efforts to produce a new version of its
VoiceCommander product and increased its sales, marketing and administrative
staff to capitalize on the launch of VoiceCommander 4.0. The Company
anticipates that the VoiceCommander 4.0 product will be released in the third
quarter of 1997.
The Company's operating results have fluctuated and may continue to fluctuate on
an annual and quarterly basis, as a result of a number of factors, many of which
are outside the Company's control. These factors include the timing of
significant orders, the length of the sales cycle, the timing of the release of
new products, the ability of the Company to recruit and train an effective field
sales force, the acceptance of new and enhanced versions of the Company's
product and conditions and events in the computer industry and the general
economy. Additionally, the Company has expensed all research and development
-7-
<PAGE>
costs to date and therefore financial periods may reflect higher than normal
expenses in advance of the financial periods in which material sales revenues
can be realized on any newly developed products.
RESULTS OF OPERATIONS
REVENUES
Revenues were $237,197 and $97,968 for the three months ended June 30, 1997 and
1996 respectively, representing an increase of $139,229 or 142%. Revenues were
$453,151 and $215,611 for the six months ended June 30, 1997 and 1996
respectively, representing and increase of $237,540 or 110%. The increases for
the three months and the six months ended June 30, 1997 resulted primarily from
the addition of sales personnel in direct sales and a marketing and promotional
campaign launched in the first quarter of 1997.
OPERATING EXPENSES, NONOPERATING ITEMS
Cost of sales as a percentage of revenues was 57% in the second quarter of
fiscal 1997 compared to 70% in the second quarter of fiscal 1996 and 60% for the
first two quarters of 1997 versus 66% for the first two quarters of 1996. The
favorable trend in both periods is attributable to the negotiation of favorable
contracts with suppliers of the speech engine upon which the Company's software
applications run. Additionally, the Company realized lower costs of hardware
purchased as a result of volume discounts due to increased customer sales.
Sales and marketing expenses were $155,846 in the second quarter of 1997 and
$4,178 in the second quarter of 1996 representing an increase of $151,668. For
the first two quarters of 1997 and 1996 sales and marketing expenses equaled
$318,626 and $27,473 respectively, representing and increase of $291,153. For
the current period and the year to date, the increase was attributable to the
addition of incremental sales personnel and the launch of a radio and print
marketing campaign featuring Hakeem Olajuwon, the NBA star.
Research and development expenses increased from $803 in the second quarter of
1996 to $112,428 in the same quarter of 1997 and for the six months ended June
30, 1997, these expenses totaled $172,361 versus $14,911 for the same period in
1996. In both periods the increase was attributable to the addition of
programming personnel to develop the latest version of the Company's core
product, VoiceCommander.
General and administrative expenses were $619,324 in the second quarter of 1997
and $92,431 in the second quarter of 1996, representing an increase of $526,893.
For the six months ended June 30, 1997, general and administrative expenses
totaled $1,067,737, representing an increase of $888,663 over the $179,074
incurred for the six months ended June 30, 1996. The increase in both periods is
partly attributable to the addition of senior level management and
administrative personnel. The variance also includes incremental expenditures
associated with consulting services. These consultants
-8-
<PAGE>
were retained to assist the Company with strategic planning and analysis.
Net interest expense of $179,874 and $214,522 were incurred for the second
quarter and year to date of 1997, respectively and no interest was incurred for
the same periods in 1996. The increase in both periods was due to increased
third party debt financing and incremental finance costs associated with
warrants issued in connection with bridge loans.
NET(LOSS)
Net loss for the second quarter of fiscal 1997 was $965,610 compared to a net
loss of $67,978 for the same period in 1996. For the six months ended June
30,1997, the net loss for the Company totaled $1,590,970 compared to a net loss
of $147,456 for the same period in 1996. The increases in net loss for both
periods is attributable to the incremental sales, marketing, research and
development, and general and administrative expenses incurred in conjunction
with the launch of the Company's new VoiceCommander product. Part of the
increased loss is also attributed to additional consulting expense and finance
costs.
LIQUIDITY AND FINANCIAL CONDITION
Net cash used by operating activities increased to $1,078,864 for the six months
ended June 30, 1997 from $105,346 for the six months ended June 30, 1996. Net
loss for the six months ended June 30, 1997 amounted to $1,590,970 and $147,456
for the six months ended June 30, 1996. In both periods, the increase was
primarily attributed to the increase in net loss for the Company for the two
periods.
The Company utilized $139,222 of its funds for purchasing equipment for the six
months ended June 30, 1997 versus $5,615 for the same period in 1996. The
increase of $133,607 was attributable to the purchase of computer and office
equipment.
Cash flows from financing activities totaled $662,466 and $73,687 for the six
months ended June 30, 1997 and for the six months ended June 30, 1996,
respectively. The increase of $588,779 was attributable to $250,000 received as
the result of sales of the Company's stock, a net increase of $191,996 of funds
received from loan proceeds and capital lease financing, $7,583 related to
warrants exercised and $139,200 of non-cash activity.
The Company is currently engaged in the private placement (the "Private
Placement") of up to 3,125,000 shares of common stock, par value $.001 per
share(the "Common Stock") and up to 312,500 shares of Series A Preferred Stock,
par value $.01 per share (the Series A Preferred Stock"). The Company intends
to offer the Common Stock and Series A Preferred Stock in several separate
closings extending to December 1, 1997. The Company closed the first offering
of 125,000 shares of the Series A Preferred Stock on August 1, 1997 for a
purchase price of $8.00 per share, for aggregate cash proceeds of $1,000,000,
and closed the second offering of 187,500 shares of the Series A Preferred
Stock, on August 12, 1997 for a purchase price of $8.00 per share or aggregate
cash proceeds of $1,500,000. Additionally, the Company has
-9-
<PAGE>
received funds totaling $934,000 for the purchase of Common Stock at a purchase
price of $1.60 per share. The Minimum Offering is $2,000,000 and the Maximum
Offering is $7,500,000 under the Private Placement. See Part II, Item 2, below
for a further description for the Private Placement.
The Company has received $580,000 in loan proceeds from corporate directors,
officers and outsiders in the form of a bridge loan as of August 8, 1997. The
bridge loans bear interest at 12% per annum and the maker will receive one
warrant to purchase the Company's stock for $1.60 for every dollar loaned to the
Company. The bridge loan is repayable at the sooner of six months or the
receipt of the net proceeds from the Minimum Offering.
The Company has received the $2,500,000 from the sales of the Series A Preferred
Stock and therefore has exceeded the amount of the Minimum Offering. The Company
should be able to utilize such proceeds together with the revenues generated
from the Company's existing operations to develop the Company's products and
services, and the markets for those products and services, to the extent
necessary for the Company to meet its future capital requirements for the
Company's future operations.
If the Company does not receive the proceeds of the Maximum Offering, the
Company intends to focus its sales efforts on establishing a sales force located
in Houston, Texas, interacting with the customers primarily via telephone,
internet and fax communication. If, on the other hand, the Company receives the
net proceeds from the Maximum Offering, the Company intends to focus its efforts
on establishing a field based sales force, interacting with customers primarily
via face to face communication. In connection with the latter scenario, the
Company may undertake to open additional sales offices to serve as bases for
such field based sales force.
The Company anticipates, therefore, based upon its currently proposed plans,
that upon receipt of the net proceeds from the Maximum Offering, the Company
will continue to lose money in the near term as a result of the Company
increasing its expenditures in connection with marketing its products and
services on a national scale, increasing its sales force and technical support
staff and opening additional sales offices. The Company believes, however, that
upon receipt of such Maximum Offering proceeds, the Company will be able to
utilize such proceeds together with the revenues generated from the Company's
existing operations to develop the Company's products and services and the
markets for those products and services, to the extent necessary for the Company
to meet its future capital requirements for the Company's future operations.
Notwithstanding the foregoing, the Company's business plan anticipates
additional financing in the next twelve months. There can be no assurance,
however, that the Company will be able to develop its products and services, or
the markets for such products and services to the extent required to meet its
future capital requirements from the revenues generated by the Company's future
operations. If cash provided by operating activities is insufficient to provide
internal sources of liquidity, the Company will rely upon external sources of
liquidity. There can be no assurance that the Company will be able to obtain
additional cash resources from the sale of its securities or from debt sources
on reasonable terms, it at all. Lower than expected revenues resulting from
adverse economic conditions
-10-
<PAGE>
or otherwise, could restrict the Company's ability to expand its business as
planned and if severe enough, may shorten the period during which its available
cash may be expected to satisfy the Company's capital requirements.
As of the date of this report the company has no material capital commitments.
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
No. Description of the Exhibit
*3.1 -- Articles of Amendment to Articles of Incorporation Dated July 29,
1997.
*3.2 -- Articles of Amendment to Articles of Incorporation.
*6.1 -- Letter from Malone and Bailey, PLLC dated August 12, 1997.
27 -- Financial Data Schedule.
- --------
* Incorporated by reference to the Company's form 10-QSB for the period ended
June 30, 1997 as filed on August 14, 1997.
(b) Reports on Form 8-K
None.
-11-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act (and Rule 12b-15
promulgated thereunder), the registrant caused this amendment to this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
APPLIED VOICE RECOGNITION, INC.
/s/ WILLIAM T. KENNEDY
-----------------------------------------------
William T. Kennedy
Chief Financial Officer
July 24, 1998
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 1,317 3,221
<SECURITIES> 0 0
<RECEIVABLES> 77,379 14,677
<ALLOWANCES> 0 0
<INVENTORY> 49,764 15,000
<CURRENT-ASSETS> 927,702 32,898
<PP&E> 169,187 44,309
<DEPRECIATION> 32,715 16,357
<TOTAL-ASSETS> 1,064,174 60,850
<CURRENT-LIABILITIES> 973,156 479,230
<BONDS> 0 0
0 0
0 0
<COMMON> 10,896 3,820
<OTHER-SE> (109,344) (523,250)
<TOTAL-LIABILITY-AND-EQUITY> 1,064,174 60,850
<SALES> 453,151 215,611
<TOTAL-REVENUES> 453,151 215,611
<CGS> 270,875 141,609
<TOTAL-COSTS> 1,558,724 221,458
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 214,522 0
<INCOME-PRETAX> (1,590,970) (147,456)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,590,970) (147,456)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,590,970) (147,456)
<EPS-PRIMARY> (.15) (.03)
<EPS-DILUTED> (.15) (.03)
</TABLE>
