<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, 1998
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)
21 West Easy Street, Unit 106
Simi Valley, California 93065
(805) 578-8330
(Address and telephone number of principal executive offices)
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 ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes __X__ No ____
As of September 30, 1998, there were 90,245,360 shares of Voice Powered
Technology International, Inc. Common Stock $.01 par value outstanding.
Transitional Small Business Disclosure Format (check one) Yes ____ No __X__
<PAGE> 2
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
FORM 10-QSB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBER
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<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements -- unaudited
Balance Sheet as of September 30, 1998 3
Statements of Operations for the three and
nine months ended September 30, 1998 and 1997 4
Statements of Cash Flows for the nine
months ended September 30, 1998 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7-10
PART II -- OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 10
Item 5. Other Information 10
</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,
1998
--------
<S> <C>
Current assets
Cash and cash equivalents $ 55
Receivables, net of allowance for doubtful accounts 110
Inventory 637
Prepaid expenses 28
---------
Total current assets 830
Property and equipment
Equipment 408
Other 80
---------
488
Less accumulated depreciation 341
---------
Net property and equipment 147
Patents and technology rights, net of amortization 144
Deferred costs, net of amortization 113
Other assets 24
---------
Total assets $ 1,258
=========
Liabilities and Stockholders' Deficit
Current liabilities
Current portion, long term debt (Note 3) $ 50
Accounts payable 600
Accrued expenses 152
Deferred income 147
---------
Total current liabilities 949
Long term debt- loans payable (Note 3) 570
---------
Total liabilities 1,519
Stockholders' equity (deficit)
Common stock, 100,000,000 shares authorized; $.001 stated value,
90,245,360 shares issued and outstanding 90
Additional paid-in capital 30,057
Accumulated deficit (30,408)
----------
Total stockholders' equity (deficit) (261)
----------
Total liabilities and stockholders' equity (deficit) $ 1,258
==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 4
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1997 1998 1997 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $ 591 $ 588 $ 2,459 $ 1,480
Less price protection 128 -- 205 --
-------- -------- -------- --------
Net sales 463 588 2,254 1,480
Cost of goods sold 841 342 2,186 837
-------- -------- -------- --------
Gross profit (378) 246 68 643
Operating costs
Discontinued model costs -- -- 790 --
Marketing 140 55 974 188
General and administrative 426 234 1,720 756
Research and development 143 81 548 251
Warehouse 142 46 456 152
-------- -------- -------- --------
Total costs and expenses 851 416 4,488 1,347
-------- -------- -------- --------
Operating loss (1,229) (170) (4,420) (704)
Other income (expense)
Gain on sale of assets -- -- 141 --
Sale of technology license -- -- 700 --
Forgiveness of debt (Note 3) -- -- 1,388 1,288
Reorganization expense -- (2) -- (72)
Other expense, net (34) (13) (145) (22)
-------- -------- -------- --------
Net income (loss) $ (1,263) $ (185) $(2,336) $ 490
========= ======== ======== ========
Net income (loss) per common share $ (.08) $ (.002) $ (.16) $ .01
Weighted average common
shares outstanding 16,012 90,245 14,980 53,132
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
-4-
<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 1997 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(2,336) $ 490
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Compensatory stock options 2 --
Depreciation and amortization 469 308
Discontinued model costs 790 --
Gain on sale of assets (141) --
Gain on forgiveness of debt (1,388) (1,288)
Writedown of inventory 400
Changes in operating assets and liabilities
Decrease in restricted cash 150 --
Decrease in receivables 1,722 38
Decrease (increase) in inventory 640 (423)
Decrease (increase) in prepaid expenses 58 (18)
Increase in deferred costs (139) --
Decrease in other assets 69 4
Decrease in pre-petition accounts payable (1,866) --
Increase in post-petition accounts payable -- 536
Decrease in pre-petition accrued expenses (387) (208)
Decrease in post-petition accrued expenses -- (18)
Increase in Deferred Income -- 147
------- -------
Net cash used in operating activities (1,957) (434)
------- -------
Cash flows from investing activities:
Proceeds from sale of equipment 65 --
Capital expenditures (160) (14)
------- -------
Net cash provided by (used in) investing activities (95) (14)
------- -------
Cash flows from financing activities:
Proceeds from loan payable -- 468
Proceeds from note payable 1,709 --
Proceeds from sale of common stock 152 --
------- -------
Net cash provided by financing activities 1,861 468
------- -------
Net increase (decrease) in cash and cash equivalents (191) 20
Cash and cash equivalents at the beginning of the year 227 35
------- -------
Cash and cash equivalents, September 30 $ 36 $ 55
======= =======
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 130 $ --
======= =======
Non-cash financing and investing activities:
Issuance of preferred stock to vendor 500 (500)
Conversion of preferred stock to common stock 500
Issuance of common stock in consideration of pre-petition loan payable 1,734
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
-5-
<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,
1997. Operating results for the three and nine month periods ended September 30,
1998 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1998.
NOTE 2 -- On September 22, 1997, the Company filed a voluntary petition for
relief with the United States Bankruptcy Court, Central District of California
("Court"), under the provisions of Chapter 11 of the Bankruptcy Code. On January
21, 1998, the Company, in conjunction with Franklin Electronic Publishers, Inc.
("Franklin"), the Company's largest secured creditor, filed a combined Amended
Disclosure Statement and Plan of Reorganization (the "Plan") with the Bankruptcy
Court which became effective on May 12, 1998 (the "Effective Date"). The Plan
included a significant reduction of the Company's pre-petition obligations, in
addition to Franklin's waiving its pre-petition secured claim in the amount of
$1,733,990 in exchange for an 80% interest in the equity of the Company.
The financial statements have been prepared by the Company in accordance with
Statement of Position 90-7: Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code. The Company incurred an operating loss of $704,000
for the nine months ended September 30, 1998, had an accumulated deficit of
$30,407,704 and had negative working capital of $119,000 at September 30, 1998.
These matters raise substantial doubt about the ability of the Company to
continue as a going concern. The financial statements do not include any
adjustments to the financial statements that may be necessary should the Company
be unable to continue as a going concern.
NOTE 3 --In accordance with the Plan, on or about May 12, 1998, the following
occurred: 1)The Company received a loan of $350,000 from Franklin (the "Plan
Loan") to create a fund to be dedicated to the payment of creditor claims and
certain administrative expenses; 2) The 500,000 shares of outstanding
convertible preferred stock was converted into 2,000,000 shares of the Company's
common stock; and 3) the Company's Articles of Incorporation were amended to,
among other things, increase the authorized shares of common stock to
100,000,000. Pursuant to the Plan, Franklin was issued 72,196,288 shares of the
Company's common stock, which equates to an 80% equity interest in the Company
in exchange for Franklin's pre-petition secured claim in the amount of
$1,733,990. The Plan Loan accrues interest at 8% per annum, with interest only
payable in arrears on a monthly basis with principal all due and payable in a
lump sum payment five years from the Effective Date.
In addition, the Company renegotiated the terms of its post petition, secured
revolving Loan and Security Agreement with Franklin. As of the Effective Date,
the Company had borrowed $250,000 in accordance with the terms of this prior
agreement. Under the terms of the new agreement entered into as of the Effective
Date, interest accrues at 8% per annum payable monthly in arrears and the
principal balance and is payable in two installments; 1) $50,000 on or before
May 12, 1999 and; 2) the balance in a lump sum payment five years from the
Effective Date. On September 4, 1998, an additional $20,000 was borrowed under
this loan, thus increasing the above loan payable to $270,000.
The effects of the above transactions were recorded by the Company as of June
30,1998 resulted in an increase to long term debt in the amount of $570,000; a
decrease to liabilities subject to compromise in the amount of $3,240,000; a
decrease in accrued expenses of $135,000; a decrease to preferred stock of
$500,000, an increase to common stock of $74,000 and an increase to additional
paid-in capital of $2,160,000 resulting from the conversion of the preferred
stock as well as the new common stock issuance to Franklin; and a decrease to
the Company's accumulated deficit of $1,288,000 resulting from forgiveness of
debt.
-6-
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Since the calendar quarter ended December 31, 1995, the Company has
experienced sustained significant operating losses. These losses were the result
of multiple factors inclusive of unsuccessful introductions of new models of the
Company's core product line (the IQoVOICE(TM) Organizer), failed launches of new
products, increased competition from lower priced digital recorders, and a
general decline in domestic retail sales of the entire hand-held electronics
category.
Through 1996 and the first nine months of 1997, the Company attempted
to improve its financial condition by reducing fixed operating costs,
liquidating inventories, streamlining operating departments, and entering into
two significant transactions in an attempt to strengthen the Company's financial
position. Despite these efforts, the Company was unable to generate sufficient
revenues and gross profit to sustain its ongoing operations, further depleting
cash and working capital.
On September 22, 1997, the Company filed a voluntary petition for
relief with the United States Bankruptcy Court, Central District of California,
under the provisions of Chapter 11 of the Bankruptcy Code.
Since the commencement of the Bankruptcy Proceedings, the Company
discontinued shipments of its IQoVOICE Organizer products, the Company's primary
product line, to many of its major retail customers. For the nine months ended
September 30, 1998, the Company's domestic business activities have consisted of
sales of IQoVOICE Organizer products to smaller retailers and wholesale accounts
and through various direct marketing programs. As a result of this contraction,
the Company has significantly decreased its variable and fixed operating costs,
including the reduction of a number of its officers and other employees.
In March, 1998, the Company entered into an distribution agreement with
Calidad Valor Garantia S.A.DE C.V., a television marketing company headquartered
in Mexico ("CVG"), granting CVG exclusive marketing rights for its IQoVOICE
Organizer products within the country of Mexico contingent upon CVG's achieving
certain minimum sales objectives. CVG's primary method of marketing is via
direct sales to end users through television advertising. CVG, at its sole cost
and expense, produced a thirty (30) minute television program, known as an
infomercial, featuring the IQoVOICE Organizer (the "Infomercial"). This form of
direct sales was successful in Mexico until September 1998, at which time sales
decreased significantly as a result of the declining economic conditions in
Mexico and their related impact on consumer purchasing in that country. For the
three months ended September 30, 1998, sales to CVG totaled $292,645,
representing fifty percent (50%) of the Company's total sales for this three
month period.
On September 30, 1998, CVG, with the Company's consent, assigned its
rights and obligations in the foregoing distribution agreement to Porque Yo Lo
Pedi S.A. DE C.V. ("PYLP"), a company affiliated with CVG. Simultaneously, the
Company entered into a new distribution agreement and a license agreement with
PYLP. The new distribution agreement; (i) expanded the marketing and
distribution territory to include the countries of Brazil and Chile; (ii)
canceled certain outstanding purchase orders previously issued by CVG and
rescheduled extended delivery dates for the remaining purchase orders and; (iii)
revised the payment terms for the remaining purchase orders requiring a twenty
five percent (25%) non-refundable deposit on all such orders, of which $130,038
had been received by the Company and recorded as Deferred Income as of September
30, 1998. To date, PYLP has not complied with the required shipment schedule
pursuant to the new distribution agreement, however, the Company has continued
to cooperate with PYLP and has deferred exercising its rights under the new
agreement including forfeiture of the deposits or termination. In addition, the
Company entered into a license agreement with PYLP pursuant to which the Company
was granted a worldwide right (excluding Mexico, Brazil and Chile) to license to
unrelated third parties the right to broadcast the Infomercial including the
right to reproduce, edit, modify, add voice-overs, prepare derivative works and
otherwise alter the Infomercial. In consideration of the license granted by
PYLP, the Company agreed to pay royalties to PYLP based upon the Company's sales
of its IQ Voice Organizer products to licensees of the Infomercial. The Company
is actively pursuing potential licensees with experience in marketing and
distributing products using television marketing. To date, the Company has
entered into an agreement with a television marketing company in Spain and is
negotiating agreements for France, Belgium, and countries in the Far East and
the Middle East. No assurance can be given that Infomercial, when aired in other
countries, will generate the level of sales experienced in Mexico.
In June, 1998, the Company purchased $457,000 of inventory from
Franklin which included a variety of models of electronic organizers. The
Company intends to utilize its channels of distribution to generate additional
sales and working capital through the sale of this inventory. As of September
30, 1998, sales which can be attributed to Franklin products amounted to
$60,000.
-7-
<PAGE> 8
Results of Operations
For the three and nine month periods ended September 30, 1998, the
Company reported operating losses of $170,000 and $704,000, respectively. For
the three and nine month periods ended September 30, 1997, the Company reported
operating losses of $1,229,000 and $4,420,000, respectively. After adding other
expense and income, the Company reported net loss of $185,000 for the three
months and net income of $490,000 for the nine months ended September 30, 1998,
while net losses of $1,263,000 and $2,336,000 were incurred for the same periods
in 1997. The Company reported a net loss per common share of $.002 for the three
months and net income of $.01 per common share for the nine months ended
September 30, 1998, while for the three and nine month periods ended September
30, 1997, the Company reported net losses of $.08 and $.16 per common share
respectively.
For the three and nine month periods ended September 30, 1998, sales
were $588,000 and $1,480,000, respectively. For the three and nine months ended
September 30, 1997, sales were $591,000 and $2,459,000, respectively. For the
three months ended September 30, 1998, the slight decrease in sales related
primarily to significantly decreased levels of sales to retail customers as a
result of the Company's bankruptcy filing as compared to the same period in
1997. This reduction in sales has been substantially offset by the sales to
Mexico as described above. For the nine months ended September 30, 1998, the
decrease in sales related primarily to decreased levels of sales to retail
customers as a result of the Company's bankruptcy filing as compared to the same
period in 1997.
Gross profit and gross profit percentage were $246,000 and 42% and
$643,000 and 44% for the three and nine months ended September 30, 1998,
respectively. For the three months ended September 30, 1997, the Company
incurred a $400,000 writedown of inventory related to various discontinued
models in accordance with lower of cost or market valuation resulting in cost of
goods exceeding net sales by $378,000. For the nine months ended September 30,
1997 gross profit and gross profit percentage were $68,000 and 2.7%
respectively. For the three and nine month periods ended September 30, 1998, the
increase in the gross profit and gross profit percentage related to the fact
that 1998 sales consisted of primarily newer products which carry a higher gross
profit margin as well as the impact of $52,500 in licensing revenues received by
the Company during the first six months of 1998 as compared to 1997 sales which
included a high percentage of liquidation sales relating to older products that
were sold at or near book value.
Total operating costs for the three and nine months ended September 30,
1998 were $416,000 and $1,347,000. Total costs and expenses for the three and
nine months ended September 30, 1997 were $851,000 and $4,488,000. The decreases
in costs and expenses primarily relate to the Company's lower variable costs
associated with its international distribution channels, the Company's efforts
to decrease its fixed costs in all areas of operations as well as the
elimination of charges resulting from discontinued model costs.
For the three and nine months ended September 30, 1998, marketing
expenses were $55,000 and $188,000, respectively. For the three and nine months
ended September 30, 1997, marketing expenses were $140,000 and $974,000
respectively. The decreases in marketing expenses are associated with the lower
volume of sales to domestic retail customers in comparison with the same period
for 1997 which, typically, require a high level of advertising and promotional
costs in contrast to the lower costs associated with the Company's international
distribution channels which, in the nine months ended September 30, 1998,
accounted for a significantly higher percentage of sales. The Company was also
successful in decreasing other fixed marketing costs including consultants,
promotional costs, and amortization.
General and administrative expenses decreased to $234,000 and $756,000
for the three and nine month periods ended September 30, 1998 from $426,000 and
$1,720,000 for the three and nine month periods ended September 30, 1997.
General and administrative expenses continue to decrease as a result of the
Company's ongoing efforts to reduce fixed costs in categories including rent,
telephone, salaries, consulting fees and legal fees.
Research and development expenses decreased to $81,000 and $251,000 for
the three and nine months ended September 30, 1998 from $143,000 and $548,000
for the three and nine months ended September 30, 1997. The decreases are
primarily the result of decreased salaries and amortization. The Company had
substantively suspended development of new and existing products during the
course of the bankruptcy proceedings. The Company has resumed its research and
development activities on a limited basis and will increase expenditures in this
category if sales and gross profits increase.
-8-
<PAGE> 9
Warehouse and distribution expenses decreased to $46,000 and $152,000
for the three and nine months ended September 30, 1998 from $142,000 and
$456,000 for the three and nine months ended September 30, 1997. The decreases
are directly related to the decreased sales and related reductions in shipping
costs, supplies, and temporary help.
Other income for the nine months ended September 30, 1998 included
$1,288,000 in forgiveness of debt as a result of the settlements achieved on
pre-petition obligations through the bankruptcy proceedings. Other income items
included in the second quarter of 1997 relate to the Company's sale of a portion
of its product line to Franklin and the use of the resulting proceeds to settle
outstanding obligations with the Company's manufacturers and other trade
creditors. These transactions resulted in a gain of $141,000 from the sale of
assets and other income of $700,000 from the sale of certain technology rights.
The agreements with the Company's manufacturers and other trade creditors
resulted in forgiveness of debt of $1,388,000.
Other expense for the three and nine months ended September 30, 1998 was
$13,000 and $22,000 respectively. Other expense for the three and nine months
ended September 30, 1997 was $34,000 and $145,000. Other expense for the three
and nine months ended September 30, 1998 primarily relates to interest expense
accrued for loans owed to Franklin.
As a result of the Company's Bankruptcy Proceedings, reorganization
expenses incurred for the three and nine months ended September 30, 1998 was
$2,000 and $72,000 relating primarily to legal fees.
Liquidity
The Company has incurred significant, sustained net losses for the
past three years. Because of these and other factors, on September 22, 1997, the
Company filed a voluntary petition for relief with the United States Bankruptcy
Court, Central District of California, under the provisions of Chapter 11 of the
Bankruptcy Code. On January 21, 1998, the Company, in conjunction with Franklin
Electronic Publishers, Inc., the Company's largest secured creditor, filed a
combined Amended Disclosure Statement and Plan of Reorganization with the
Bankruptcy Court. At a hearing held on April 23, 1998, the Company's motion for
confirmation of the Plan was granted and the order confirming the Plan was
entered by the Court on April 29,1998. The Plan became effective on May 12,
1998.
The effect of the transactions related to the implementation of the
Plan which were effected as of June 30, 1998 resulted in an increase to long
term debt in the amount of $570,000; a decrease to liabilities subject to
compromise in the amount of $3,240,000 as a result of the settlement of such
liabilities in accordance with the terms of the Plan; a decrease in accrued
expenses of $135,000 as a result of the payment of administrative expenses of
the Bankruptcy Proceedings; a decrease to preferred stock of $500,000 resulting
from its conversion to common stock; an increase to common stock of $74,000 and
an increase to additional paid-in capital of $2,160,000 resulting from the
conversion of the preferred stock as well as the new common stock issuance to
Franklin; and a decrease to the Company's accumulated deficit of $1,288,000
resulting from forgiveness of debt.
After recognizing the effects of the above transactions, as of
September 30, 1998, the Company had an accumulated deficit of $30,407,000,
including an operating loss of $704,000 for the nine months ended September 30,
1998, and had negative working capital of $119,000 as of September 30, 1998.
Success of the Company is dependent, among other things, upon reaching a
satisfactory level of profitability and generating sufficient cash flow
resources to meet ongoing obligations. The Company intends to obtain adequate
working capital resources through internally generated cash flow in order to
continue to increase its sales and distribution of its products, resume research
and development activities for improvements to its Technology, explore further
improvements to its PC compatible IQoVOICE Organizers inclusive of improvements
to its PCLink software and dedicate additional resources to the development of
licensing opportunities for its Technology. No assurance can be given that the
Company will be able to achieve such level of profitability and thereby obtain
the required working capital. These matters raise substantial doubt about the
ability of the Company to continue as a going concern. Further, as of the
Effective Date, the Company became an 82% controlled subsidiary of Franklin, and
therefore subject to Franklin's direction and discretion regarding future
business activities.
The decrease in accounts receivable of $38,000 is attributable mainly
to the Company's emphasis on direct marketing and international sales for which
the Company typically requires payment at the time of purchase.
-9-
<PAGE> 10
The increase in inventory of $423,000 and accounts payable of $536,000
is primarily attributable to the Company's purchase of inventory for resale from
Franklin. The Company intends to utilize its channels of distribution to
generate additional sales and working capital through the sale of this
inventory.
The increase in deferred income of $147,000 is attributable to the
deposits received from international distributors, primarily Mexico, against
pending purchase orders.
The Company evaluates on a continuous basis software enhancements and
updates based on new technologies to improve its information systems. The
Company has assessed its current systems that support that Company's operations
in conjunction with year 2000 compliance. The Company has undertaken a program
to modify its existing operational software to ensure functionality and
continued operations beyond the year 2000. The cost is estimated to be less than
$25,000 and will be expenses as incurred.
Except for the historical information, the matters discussed herein are
forward looking statements that involve risks to and uncertainties in the
Company's business, including, among other things, the availability of adequate
working capital, changes in technology, the impact of competitive products, the
Company's dependence on third party component supplies and manufacturers, and
other risks and uncertainties that may be detailed from time to time in this and
other of the Company's SEC reports.
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 5. Other Information
In September, 1998, Mr. Barry J. Lipsky was appointed as a director of the
Company.
Also in September, 1998, Mr. Michael R. Strange resigned as the Company's
Chairman of the Board, director and Chief Executive Officer and Mr. Kenneth H.
Lind resigned as a director.
Further, in September, 1998, Mr. Gregory J. Winsky was appointed by the
Board of Directors to the positions of Chairman of the Board of Directors and
Chief Executive Officer.
Lastly, in September, 1998, the Board of Directors appointed the firm
of Radin, Glass & Co., LLP as auditors for the Company's fiscal year ending
December 31, 1998 in substitution for the firm of BDO Seidman LLP.
Item 6. Exhibits and Reports on Form 8K
(a) The Company filed a Current Report on Form 8-K, dated September 11,
1998, with the Commission, reporting information under Item 4 of said Form
regarding the Company's change of auditors.
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 __, 1998 By: /s/ Mitchell B. Rubin
------------------------------------
Mitchell B. Rubin, President,
and Chief Financial Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the
company's balance sheet and statement of operations
AND IS QUALIFIED IN ITS ENTRIES BY REFERENCE TO SUCH financial statements
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 55
<SECURITIES> 0
<RECEIVABLES> 110
<ALLOWANCES> 0
<INVENTORY> 637
<CURRENT-ASSETS> 830
<PP&E> 488
<DEPRECIATION> 341
<TOTAL-ASSETS> 1258
<CURRENT-LIABILITIES> 949
<BONDS> 0
0
0
<COMMON> 90
<OTHER-SE> (261)
<TOTAL-LIABILITY-AND-EQUITY> 1258
<SALES> 588
<TOTAL-REVENUES> 588
<CGS> 342
<TOTAL-COSTS> 416
<OTHER-EXPENSES> 15
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (185)
<INCOME-TAX> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (185)
<EPS-PRIMARY> (.002)
<EPS-DILUTED> (.002)
</TABLE>
