<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934
For the transition period from __________ to __________
Commission File No. 1-11476
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
(Name of small business issuer in its charter)
California 95-3977501
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
15260 Ventura Blvd. Suite 2200 91403
Sherman Oaks, California (Zip Code)
Registrant's telephone number, including area code: (818) 905-0950
Check whether the issuer (l) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes _X_ No ___
As of November 8, 1996, there were 13,949,072 shares of Voice Powered
Technology International, Inc. Common Stock $.001 par value
outstanding.
<PAGE> 2
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
FORM 10-QSB
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
NUMBER
ITEM 1. Financial Statements
<S> <C>
Balance Sheet as of September 30, 1996 3
Statements of Operations for the three and
nine months ended September 30, 1996 and 1995 4
Statements of Cash Flows for the nine
months ended September 30, 1996 and 1995 5
Notes to Financial Statements 6
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 7
PART II -- OTHER INFORMATION
ITEM 6. Exhibits 11
</TABLE>
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<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
BALANCE SHEET
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
--------------
<S> <C>
Current assets
Cash and cash equivalents (Note 2) $ 572
Receivables, net of allowance for doubtful accounts 2,707
Less receivables sold to financial institution (Note 2) 1,182
--------
Net receivables 1,525
Inventory 1,486
Prepaid expenses 54
--------
Total current assets 3,637
--------
Property and equipment
Equipment 1,804
Other 142
--------
1,946
Less accumulated depreciation 1.290
--------
Net property and equipment 656
Patents, net of amortization 156
Deferred costs, net of amortization 1,077
Other assets 323
--------
Total assets $ 5,849
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,041
Accrued expenses 1,094
Note payable 783
--------
Total current liabilities 3,918
--------
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000
shares authorized; none issued -
Common stock, $.001 stated value - shares
authorized, 50,000,000; issued and out-
standing, 13,949,072 14
Additional paid-in capital 27,735
Accumulated deficit (25,818)
--------
Total stockholders' equity 1,931
--------
Total liabilities and stockholders' equity $ 5,849
========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 4
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
STATEMENTS OF INCOME (LOSS)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 6,144 $ 1,910 $ 17,889 $ 6,368
Cost of goods sold 3,649 1,622 10,183 4,588
-------- -------- -------- --------
Gross profit 2,495 288 7,706 1,780
Operating costs
Marketing 888 840 2,991 1,685
General and administrative 807 639 2,415 1,922
Research and development 323 288 932 826
Warehouse 253 259 860 717
-------- -------- -------- --------
Total operating costs 2,271 2,026 7,198 5,150
-------- -------- -------- --------
Operating income (loss) 224 (1,738) 508 (3,370)
Other income (expense), net (25) (46) 39 (98)
-------- -------- -------- --------
Net income (loss) $ 199 $ (1,784) $ 547 $ (3,468)
======== ======== ======== ========
Net income (loss) per common share $ .02 $ (.13) $ .04 $ (.25)
Weighted average common
shares outstanding 13,007 13,949 12,794 13,644
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 5
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1995 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 547 $ (3,468)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Compensatory stock options 48 36
Depreciation and amortization 432 624
Changes in operating assets and liabilities:
(Increase) decrease in receivables, net (2,301) 3,538
(Increase) decrease in inventory (841) 1,476
Decrease in prepaid expenses 32 84
Increase in patents (31) -
Increase in deferred costs (626) (457)
Increase in other assets (115) (291)
Increase (decrease) in accounts payable (974) 977
Increase (decrease) in accrued expenses 287 (511)
-------------- -------------
Net cash provided by (used in) operating activities (3,542) 2,008
-------------- -------------
Cash flows from investing activities:
Capital expenditures (427) (181)
-------------- -------------
Net cash used in investing activities (427) (181)
-------------- -------------
Cash flows from financing activities:
Payments on note payable - (100)
Proceeds from (payments on) loan payable 1,965 (3,265)
Proceeds from the exercise of stock options and warrants 83 15
Payments on capital lease obligations (11) -
-------------- -------------
Net cash provided by (used in) financing activities 2,037 (3,350)
-------------- -------------
Net decrease in cash and cash equivalents (1,932) (1,523)
Cash and cash equivalents at the beginning of the year 4,012 2,095
-------------- -------------
Cash and cash equivalents, September 30 $ 2,080 $ 572
============== =============
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 52 $ 147
============== =============
Non-cash financing and investing activities:
Issuance of compensatory stock options to related party $ -- $ 50
Issuance of common stock to vendor -- 1,955
Conversion of accounts payable to note payable -- 883
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 6
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB. 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 only of normal recurring accruals)
considered necessary for a fair presentation have been included. For further
information, refer to the financial statements, and footnotes thereto, included
in the Company's Annual Report on Form 10-KSB for the year ended December 31,
1995. Operating results for the three and nine month periods ended September
30, 1996 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996.
NOTE 2 -- On August 20, 1996, the Company entered into a $3.0 million accounts
receivable transfer and purchase agreement with a financial institution. Under
the terms of this agreement, the Company may sell certain accounts receivable
to the financial institution for an initial payment from the institution of 65%
of the net amount of the related invoices. The Company pays a fixed discount
of 1.25% of the net amount upon sale of the invoice, and a variable discount of
a base rate maintained by the institution plus 2% per annum (10.25% at
September 30, 1996) on the initial payment until the related invoices are paid
by the customer. Further, the Company is required to maintain a deposit
account at the financial institution to be used as a collateral account for an
amount that varies from zero to $750,000 depending on the amount of outstanding
uncollected accounts sold to the financial institution. In addition, the
Company has granted the financial institution a security interest in all assets
as security for the Company's performance under this agreement. This agreement
was used to pay off and replace the $2.0 million working capital line of the
credit facility previously used by the Company. At September 30, 1996, the
Company had $1,182,000 in accounts receivable which had been purchased under
this agreement, and $150,000 in cash collateral.
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<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
For the three and nine month periods ended September 30,
1996, the Company's performance continued to reflect the effects of the
carryover of 1995 year end inventories at retail stores, resulting from the
weak performance of the consumer electronics sector during the fourth
quarter of 1995, and price reductions in the first quarter of 1996, both of
which adversely affected the Company's sales for the first three quarters
of 1996. The Company's performance was further hindered by delays in the
production of its new, lower cost products planned for the middle of the
third quarter of 1996. Substantial shipments of these new products did not
commence until October 1996.
To accelerate sales of its older, higher cost products and
to facilitate the introduction of its new products, the Company had reduced
the pricing of its product line, accepted returns from customers of unsold
older merchandise in exchange for purchase commitments for new products
(which are expected to be fulfilled during the fourth quarter of 1996), and
entered into additional advertising commitments with its customers. These
procedures resulted in reduced net sales, lower gross profit margins, and
higher expenses as a percentage of sales. Also, the Company continued to
sell off, at book value, older inventory items which further depressed
gross margins.
RESULTS OF OPERATIONS
For the three and nine month periods ended September 30,
1996, the Company reported operating losses of $1,738,000 and $3,370,000,
respectively. For the three and nine month periods ended September 30,
1995 the Company reported operating income of $224,000 and $508,000,
respectively. After adding other expense and income, the Company reported
net losses of $1,784,000 and $3,468,000 for the three and nine months ended
September 30, 1996, and net income of $199,000 and $547,000 for the same
periods in 1995. The resulting net losses per common share for the three
and nine months ended September 30, 1996 were $.13 and $.25, respectively,
while for the three and nine months ended September 30, 1995, the Company
reported net income per common share of $.02 and $.04.
Net sales and gross profit for the three and nine months
ended September 30, 1996 were $1,910,000 and $288,000, and $6,368,000 and
$1,780,000, respectively. For the three and nine months ended September
30, 1995, net sales and gross profit were $6,144,000 and $2,495,000, and
$17,889,000 and $7,706,000, respectively. Gross profit percentage
decreased to 15% from 41% for the three month periods, and to 28% from 43%
for the nine month periods ended September 30, 1996. The decreases in
sales and gross profit, as stated above, resulted from slower sales of the
Company's products, due in part to retail inventory carryover resulting
from the weak performance of the consumer electronics sector during the
fourth quarter of 1995. Further contributing to those decreases, as well
as the decreases in gross profit percentages, were the previously noted
price reductions effected by the Company, returns accepted by the Company
in exchange for purchase commitments from customers for new products,
production delays on the Company's new products, and the sale at book value
of older product lines.
Sales for the three months ended September 30, 1996 as
compared to the three month periods ended June 30, 1996 and March 31, 1996
decreased by $348,000 and $290,000, respectively. Gross profit percentage
decreased by approximately 14 and 23 percentage points from the same
respective periods. The decreases in sales and gross profit relate to the
Company's continued efforts to recover from the effects of the fourth
quarter of 1995, specifically the price reductions implemented earlier in
1996 and the acceptance of returns of older products in exchange for
orders for the newer models, as well as to the noted production delays for
the Company's new, lower cost products which occurred during the third
quarter of 1996.
Total operating expenses for the three and nine months
ended September 30, 1996 were $2,026,000 and $5,150,000. Total operating
expenses for the three and nine months ended September 30, 1995 were
$2,271,000 and $7,198,000. The decreases in expenses primarily relate to
the Company's decreased sales which resulted in lower variable costs,
largely marketing and general and administrative expenses, combined with
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<PAGE> 8
the Company's efforts to decrease its fixed costs in all areas of
operations. For the three months ended September 30, 1996, as compared to
the three months ended June 30, 1996 and March 31, 1996, total operating
expenses increased by $488,000 and $441,000, respectively. These increases
primarily relate to increased marketing expenses incurred by the Company in
order to balance inventories and stimulate sales of older product lines, as
well as costs associated with development of advertising campaigns for the
new product lines.
Marketing expenses for the three and nine months ended
September 30, 1996 were $840,000 and $1,685,000 respectively. For the same
periods in 1995, marketing expenses were $888,000 and $2,991,000. The
decrease in marketing expenses for the nine month periods is associated
with both the lower volume of sales and the related lower distribution
costs such as sales commission, advertising allowances for retail accounts,
international sales expenses, and targeted direct response print
advertising expenses, as well as decreased fixed costs including salaries
and amortization. Marketing expenses for the three month periods only
slightly decreased due to increased expenses incurred by the Company in the
third quarter of 1996 in order to stimulate sales of its product lines.
Included in these expenses are increased advertising allowances for retail
accounts to accelerate sales of both the older inventory in the retail
channels as well as costs associated with advertising campaigns for the new
product lines, various costs associated with certain returns accepted by
the Company to balance inventories, and also increased international sales
expenses. Marketing expenses for the three month period ended September
30, 1996 increased from the three months ended June 30, 1996 and March 31,
1996 by $430,000 and $406,000, respectively due primarily to the same
items.
General and administrative expenses decreased to $639,000
and $1,922,000 for the three and nine month periods ended September 30,
1996 from $807,000 and $2,415,000 for the three and nine months ended
September 30, 1995. The decreases are primarily the result of decreased
fixed costs including salaries, consulting fees, and public costs, and are
also associated with the decreased volume of sales and the related
decreases in variable general and administrative costs. General and
administrative expenses for the three month period ended September 30, 1996
remained relatively consistent from the three month periods ended June 30,
1996 and March 31, 1996.
Research and development expenses decreased to $288,000
and $826,000 for the three and nine months ended September 30, 1996 from
$323,000 and $932,000 for the three and nine months ended September 30,
1995. The decreases are primarily the result of decreased salaries,
consulting fees, and materials. Research and development expenses for the
three month period ended September 30, 1996 remained relatively consistent
from the three month periods ended June 30, 1996 and March 31, 1996 as the
Company continues its new product development activities.
Warehouse and distribution expenses were $259,000 and
$717,000 for the three and nine months ended September 30, 1996, and were
$253,000 and $860,000 for the three and nine months ended September 30,
1995. The decrease for the nine month periods is the result of the
decreased sales and related decreases in shipping costs, as well as
decreases in salaries, consultants, and travel. These decreases were
partially offset by increases in temporary labor costs and warranty parts
expenses. Further, while returned goods, including the retail returns
accepted in the third quarter of 1996, contributed to a reduction in net
sales, variable shipping expenses to both process such returns and to
repackage the returned goods for sale were incurred. Warehouse and
distribution expenses for the three month period ended September 30, 1996
were consistent with the three months ended June 30, 1996, but increased by
$82,000 from the three month period ended March 31, 1996, again relating to
the above costs.
Other expense for the three and nine months ended
September 30, 1996 was $46,000 and $98,000, primarily relating to fees and
interest expense associated with the Company's agreements regarding its
receivables financing as noted in the liquidity section. For the three and
nine months ended September 30, 1995, other expense was $25,000 and other
income was $39,000, respectively, resulting from interest expense offset by
interest income.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had negative working
capital of $281,000. The effects of the carryover of 1995 year end
inventories at retail stores, resulting from the weak performance of the
consumer electronics sector during the fourth quarter of 1995, and price
reductions effected in the first quarter of 1996 adversely affected the
Company's sales for the first three quarters of 1996, and have negatively
impacted the
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<PAGE> 9
Company's working capital and cash positions. The Company's performance
was further hindered by delays in the production of its new, lower cost
products originally planned for the mid third quarter of 1996, and by the
need to stock balance retailer inventories as a requirement for gaining
distribution of its new product models.
As a result of the foregoing, management is actively
seeking a strategic relationship, including merger opportunities, in order
to strengthen and grow its financial base. The Company is also seeking
funding of approximately $1,500,000 in order to satisfy cash requirements in
the ordinary course of business during 1996 and into 1997, develop a major
new voice recognition product, and provide funding for the costs that may be
associated with effecting such strategic relationship. Such funding
activities are directed toward raising capital in the form of equity or
debt. At present, no definitive agreements for such funding or strategic
relationship exist, and failure to obtain such funding could result in the
Company having insufficient cash resources to meet its obligations in the
first quarter of 1997.
Other than the development of a new voice recognition
product and costs associated with effecting a strategic relationship, both
of which are contingent on the raising of capital as noted above, no
significant capital expenditures are expected in the near future.
On August 20, 1996, the Company entered into a $3.0
million accounts receivable transfer and purchase agreement with a financial
institution. Under the terms of this agreement, the Company may sell
certain accounts receivable to the financial institution for an initial
payment from the institution of 65% of the net amount of the related
invoices. The Company pays a fixed discount of 1.25% of the net amount upon
sale of the invoice, and a variable discount of a base rate maintained by
the institution plus 2% per annum (10.25% at September 30, 1996) on the
initial payment until the related invoices are paid by the customer.
Further, the Company is required to maintain a deposit account at the
financial institution to be used as a collateral account for an amount that
varies from zero to $750,000 depending on the amount of outstanding
uncollected accounts sold to the financial institution. In addition, the
Company has granted the financial institution a security interest in all
assets as security for the Company's performance under this agreement. This
agreement was used to pay off and replace the $2.0 million working capital
line of the credit facility previously used by the Company. At September
30, 1996, the Company had $1,182,000 in accounts receivable which had been
purchased under the agreement, and $150,000 in cash collateral.
In the first quarter of 1996, the Company executed an
agreement with its prior contract manufacturer which established the terms
and conditions pursuant to which the Company is winding down its affairs
with this manufacturer. The terms of this agreement included the issuance
to the manufacturer of 1,372,000 shares of the Company's common stock at
market value, the proceeds of which, $1,955,000, were applied to the
Company's outstanding debt to the manufacturer. Furthermore, the agreement
required that the Company make periodic cash payments to amortize the
remaining balance of $1,283,668, and the Company granted a security interest
subordinate to the financial institution noted above in its inventory,
accounts receivable and equipment to secure the foregoing. The balance as
of September 30, 1996 for this obligation is $783,668. The Company has not
made payments due on various dates pursuant to this agreement. The
manufacturer has not declared the Company in default, and is in discussion
with the Company regarding a revised payment schedule. No assurance can be
given that an agreement with regard to the foregoing will be reached, or if
reached, as to the terms thereof.
Further, in the first quarter of 1996, the Company
entered into an agreement with a related party, the inventor of an integral
part of the voice recognition technology, which resulted in the Company
obtaining unrestricted exclusive world wide ownership rights to the
technology subject to ongoing royalties. In accordance with this agreement,
the Company agreed to pay $100,000 in cash ($50,000 of which had previously
been paid, and $50,000 of which was paid in the third quarter of 1996), and
granted stock options which were cumulatively $50,000 lower than market
value to the related party. The cost of the technology acquired is included
in other assets in the accompanying balance sheet.
The decrease in accounts receivable is attributable
mainly to collections on customer receivables which existed at December 31,
1995, the sale of certain accounts to a financial institution as noted
above, and lower sales in the third quarter.
The decrease in inventory is attributable to the
Company's sales of its December 31, 1995 inventories which were, as
previously stated, unexpectedly high.
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<PAGE> 10
The increase in deferred costs is primarily attributable
to costs associated with the manufacturing start-up of the Company's new
products, the IQ#VOICE(TM) Pocket Organizer and the Voice Organizer Pager.
Included in the increase in other assets is the
acquisition of unrestricted exclusive world-wide ownership rights, subject
to ongoing royalties, of the Company's voice recognition technology, as
described above.
The net increase in accounts payable and accrued expenses
of $466,000 as of September 30, 1996 is mainly attributable to payables to
the Company's current contract manufacturer relating to the purchase of
inventory.
The Company had entered into an agreement with
MobileComm for the purchase and joint marketing of a Voice Organizer/Pager
in December of 1995. The agreement was revised as of November 1996. Under
the revised agreement, MobileComm will cooperate with the Company in the
marketing of the Voice Organizer/Pager to MobileComm customers, continue
to provide paging services in support of the product, and pay certain
other sums to the Company in consideration for the elimination of future
purchase commitments and activation fees.
The information in the preceding paragraphs is forward
looking and involves risks and uncertainties that could significantly impact
the Company's expected liquidity requirements in the short and long term.
While it is impossible to itemize the many factors and specific events that
could affect the Company's outlook for its liquidity requirements, such
factors would include the Company's actual sales and their timing, the
actual receipt of outstanding accounts receivables and their timing,
unanticipated inventory problems, the need to react to unanticipated
competitive price moves, unanticipated product quality problems,
unanticipated productions problems, etc., which could reduce the Company's
revenues and increase its expenses, resulting in a greater burden on the
Company's liquidity than that which the Company has described above.
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<PAGE> 11
PART II. OTHER INFORMATION
The Company was not required to report any matters or changes for any items of
Part II except as disclosed below.
ITEM 6. EXHIBITS
Exhibit 11 -- Calculations of Earnings Per Share
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<PAGE> 12
EXHIBIT 11
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
9/30/95 9/30/96 9/30/95 9/30/96
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ENDING MARKET PRICE PER SHARE $ 3.63 $ .78 $ 3.63 $ 0.78
----------- ------------ ---------- ------------
AVERAGE MARKET PRICE PER SHARE $ 3.56 $ 1.01 $ 2.68 $ 1.35
----------- ------------ ---------- ------------
EARNINGS:
Net income (loss) applicable
to common stock $ 199,000 $ (1,784,000) $ 547,000 $(3,468,000)
========= ============= ========= ============
PRIMARY EARNINGS PER SHARE:
Weighted average number of common
shares outstanding 12,558,629 13,949,072 12,542,846 13,644,191
Incremental shares assuming all dilutive
options and warrants exercised and proceeds
used to purchase shares in the market at the
average stock price during the period 448,632 0 251,479 0
----------- ------------ ---------- ------------
Total 13,007,261 13,949.072 12,794,325 13,644,191
========== ========== ========== ============
Primary earnings (loss) per share $ .02 $ ( .13) $ .04 $ (.25)
========== ============ ========== ============
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number of common
shares outstanding 12,558,629 13,949.072 12,542,846 13,644,191
Incremental shares assuming all dilutive
options and warrants exercised and proceeds
used to purchase shares in the market at the
average stock price during the period, or the
stock price at the end of the period, whichever
is higher 467,470 0 472,696 0
----------- ------------ ---------- ------------
Total 13,026,099 13,949.072 13,015,542 13,644,191
========== ========== ========== ============
Fully diluted earnings (loss) per share $ .02 $ (.13) $ .04 $ (.25)
========== ============ ========== ============
</TABLE>
Note: Common stock equivalents for the three and nine month periods ended
September 30, 1996 have not been considered because their effect would be
anti-dilutive.
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<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
VOICE POWERED TECHNOLOGY
INTERNATIONAL, INC.
Date: November 11, 1996 By: /s/ Edward M. Krakauer
--------------------------------
Edward M. Krakauer, President and
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Edward M. Krakauer
- ----------------------------------
Edward M. Krakauer President and Chief Executive
Officer November 11, 1996
/s/ Mitchell B. Rubin
- ----------------------------------
Mitchell B. Rubin Vice President Finance and Operations,
Chief Financial Officer, Chief Accounting
Officer, Secretary November 11, 1996
</TABLE>
<PAGE> 1
EXHIBIT 11
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
9/30/95 9/30/96 9/30/95 9/30/96
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ENDING MARKET PRICE PER SHARE $ 3.63 $ .78 $ 3.63 $ 0.78
----------- ------------ ---------- ------------
AVERAGE MARKET PRICE PER SHARE $ 3.56 $ 1.01 $ 2.68 $ 1.35
----------- ------------ ---------- ------------
EARNINGS:
Net income (loss) applicable
to common stock $ 199,000 $ (1,784,000) $ 547,000 $(3,468,000)
========= ============= ========= ============
PRIMARY EARNINGS PER SHARE:
Weighted average number of common
shares outstanding 12,558,629 13,949,072 12,542,846 13,644,191
Incremental shares assuming all dilutive
options and warrants exercised and proceeds
used to purchase shares in the market at the
average stock price during the period 448,632 0 251,479 0
----------- ------------ ---------- ------------
Total 13,007,261 13,949.072 12,794,325 13,644,191
========== ========== ========== ============
Primary earnings (loss) per share $ .02 $ ( .13) $ .04 $ (.25)
========== ============ ========== ============
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number of common
shares outstanding 12,558,629 13,949.072 12,542,846 13,644,191
Incremental shares assuming all dilutive
options and warrants exercised and proceeds
used to purchase shares in the market at the
average stock price during the period, or the
stock price at the end of the period, whichever
is higher 467,470 0 472,696 0
----------- ------------ ---------- ------------
Total 13,026,099 13,949.072 13,015,542 13,644,191
========== ========== ========== ============
Fully diluted earnings (loss) per share $ .02 $ (.13) $ .04 $ (.25)
========== ============ ========== ============
</TABLE>
Note: Common stock equivalents for the three and nine month periods ended
September 30, 1996 have not been considered because their effect would be
anti-dilutive.
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AND STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 572
<SECURITIES> 0
<RECEIVABLES> 1,525
<ALLOWANCES> 0
<INVENTORY> 1,486
<CURRENT-ASSETS> 3,637
<PP&E> 1,946
<DEPRECIATION> 1,290
<TOTAL-ASSETS> 5,849
<CURRENT-LIABILITIES> 3,918
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 27,735
<TOTAL-LIABILITY-AND-EQUITY> 1,931
<SALES> 6,368
<TOTAL-REVENUES> 6,368
<CGS> 4,588
<TOTAL-COSTS> 5,150
<OTHER-EXPENSES> 98
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,468)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,468)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,468)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
</TABLE>
