-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AHuy4fJl4uu+YI5V/g9pEvK7yhs40bmyqCJigmeX+h0kCBYolJYRlLNGt/tf4GlS tRHsk7lnngump/8JpA2vBw== 0000950148-96-000800.txt : 19960619 0000950148-96-000800.hdr.sgml : 19960619 ACCESSION NUMBER: 0000950148-96-000800 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOICE POWERED TECHNOLOGY INTERNATIONAL INC CENTRAL INDEX KEY: 0000890447 STANDARD INDUSTRIAL CLASSIFICATION: 3651 IRS NUMBER: 953977501 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-11476 FILM NUMBER: 96562956 BUSINESS ADDRESS: STREET 1: 15260 VENTURA BLVD STE 2200 CITY: SHERMAN OAKS STATE: CA ZIP: 91403 BUSINESS PHONE: 8189050950 10QSB 1 FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 1996 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 March 31, 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 (1) 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 May 6, 1996, there were 13,949,072 shares of Voice Powered Technology International, Inc. Common Stock $.001 par value outstanding excluding outstanding options and warrants. ================================================================================ 2 VOICE POWERED TECHNOLOGY INTERNATIONAL, INC. FORM 10-QSB TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION PAGE NUMBER ----------- ITEM 1. Financial Statements -- unaudited Balance Sheet as of March 31, 1996 3 Statements of Income (Loss) for the three months ended March 31, 1996 and 1995 4 Statements of Cash Flows for the three months ended March 31, 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 5. Other Information 9 ITEM 6. Exhibits and Reports on Form 8-K 9
-2- 3 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VOICE POWERED TECHNOLOGY INTERNATIONAL, INC. BALANCE SHEET (AMOUNTS IN THOUSANDS) (UNAUDITED) ASSETS
MARCH 31, 1996 --------- Current assets Cash and cash equivalents $ 1,374 Receivables, net of allowance for doubtful accounts 3,281 Inventory 2,246 Prepaid expenses 122 --------- Total current assets 7,023 --------- Property and equipment Equipment 1,682 Other 141 --------- 1,823 Less accumulated depreciation 1,124 --------- Net property and equipment 699 Patents, net of amortization 163 Deferred costs, net of amortization 963 Other assets 267 --------- Total assets $ 9,115 ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 596 Accrued expenses 1,467 Note payable 883 Loan payable to finance company 1,574 --------- Total current liabilities 4,520 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 27,711 Accumulated deficit (23,130) --------- Total stockholders' equity 4,595 --------- Total liabilities and stockholders' equity $ 9,115 =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. -3- 4 VOICE POWERED TECHNOLOGY INTERNATIONAL, INC. STATEMENTS OF INCOME (LOSS) (AMOUNTS IN THOUSANDS EXCEPT PER SHARE) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1995 1996 ------- -------- Net sales $ 5,704 $ 2,199 Cost of goods sold 2,918 1,361 ------- -------- Gross profit 2,786 838 Operating costs Marketing 1,202 435 General and administrative 792 680 Research and development 326 293 Warehouse 306 177 ------- -------- Total operating costs 2,626 1,585 ------- -------- Operating income (loss) 160 (747) Other income (expense), net 35 (33) ------- -------- Net income (loss) $ 195 $ (780) ======= ======== Net income (loss) per common share $ .02 $ (.06) ======= ======== Weighted average common shares outstanding 12,651 13,034 ======= ========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -4- 5 VOICE POWERED TECHNOLOGY INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1995 1996 ------- ------- Cash flows from operating activities: Net income (loss) $ 195 $ (780) Adjustments to reconcile net income (loss) to net cash used in operating activities: Compensatory stock options 16 12 Depreciation and amortization 147 144 Changes in operating assets and liabilities: Decrease in receivables 298 1,782 Decrease in inventory 82 716 Decrease in prepaid expenses 23 17 Increase in patents (19) -- Increase in deferred costs (307) (168) Increase in other assets (59) (105) Decrease in accounts payable (1,047) (467) Increase (decrease) in accrued expenses 447 (137) ------- ------- Net cash provided by (used in) operating activities (224) 1,014 ------- ------- Cash flows from investing activities: Capital expenditures (97) (58) ------- ------- Net cash used in investing activities (97) (58) ------- ------- Cash flows from financing activities: Payments on loan payable -- (1,692) Proceeds from exercise of stock options -- 15 ------- ------- Net cash used in financing activities (3) (1,677) ------- ------- Net decrease in cash and cash equivalents (324) (721) Cash and cash equivalents at the beginning of the year 4,012 2,095 ------- ------- Cash and cash equivalents, March 31 $ 3,688 $ 1,374 ======= ======= SUPPLEMENTAL DISCLOSURE Interest paid $ 8 $ 54 ======= ======= 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
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -5- 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 month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. NOTE 2 -- During the three months ended March 31, 1996, the Company issued to its former manufacturer 1,371,966 shares of the Company's common stock at market value, the proceeds of which were applied to the Company's trade debt to the manufacturer. The stock issuance was in accordance with a Termination Agreement which the Company executed with the manufacturer, establishing the terms and conditions pursuant to which the Company would wind down its relationship with the manufacturer. NOTE 3 -- During the three months ended March 31, 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 ownership rights to the technology. In accordance with this agreement, the Company agreed to pay $100,000 in cash, $50,000 of which has already been paid, 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. -6- 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The results of the Company's first quarter performance as compared to a year ago continues to reflect the weak performance of the consumer electronics sector during the fourth quarter of 1995, which in turn adversely affected the Company's sales, resulting in higher year end inventories at retail stores, and lower sales volumes for the first quarter. To accelerate sales, and facilitate the introduction of new, lower costing products planned for the second half of 1996, the Company has reduced the pricing of its product line, which resulted in lower gross profit margins and higher expenses as a percentage of sales. RESULTS OF OPERATIONS For the three months ended March 31, 1996, the Company reported an operating loss of $747,000, as compared to operating income of $160,000 for the three months ended March 31, 1995. After adding other income and expense, the Company reported a net loss of $780,000, or $.06 per share, for the three months ended March 31, 1996, and net income of $195,000, or $.02 per share, for the three months ended March 31, 1995. Net sales and gross profit for the three months ended March 31, 1996 were $2,199,000 and $838,000, as compared to $5,704,000 and $2,786,000 for the three months ended March 31, 1995. Gross profit percentage decreased to 38% from 49%. The decrease in sales and gross profit, as stated above, resulted from slower sales of the Company's products, due in part to the weak performance of the consumer electronics sector during the fourth quarter of 1995. The decrease in gross profit percentage reflects the price reductions effected by the Company. Total operating expenses for the three months ended March 31, 1996 and 1995 were $1,585,000 and $2,626,000, respectively. The decrease in expenses is a result of the Company's decreased sales which resulted in lower variable costs, primarily marketing and warehousing (distribution) expenses, combined with the Company's efforts to decrease its fixed costs in all areas of operations. Marketing expenses for the three months ended March 31, 1996 and 1995 were $435,000 and $1,202,000, respectively. The decrease in marketing expenses is associated with both the lower volume of sales and the related lower distribution costs such as sales commission, advertising allowances for retail distributors, international sales expenses, and targeted direct response print advertising expenses, as well as decreased fixed costs including salaries and consulting fees. General and administrative expenses decreased to $680,000 for the three months ended March 31, 1996 from $792,000 for the three months ended March 31, 1995. The decrease is primarily the result of decreased fixed costs including decreases in salaries and consulting fees. Research and development expenses decreased slightly to $293,000 for the three months ended March 31, 1996 from $326,000 for the three months ended March 31, 1995. The decrease is primarily the result of decreased consulting fees, while the Company continues to develop new products as well enhance its proprietary technology. Warehouse and distribution expenses decreased to $177,000 for the three months ended March 31, 1996 from $306,000 for the three months ended March 31, 1995. The decrease is the result of the decreased sales and related decrease in shipping costs, as well as a decrease in salaries. Other expense was $33,000 for the three months ended 1996, primarily relating to interest expense associated with the Company's loan payable, offset by interest income. Other income for the three months ended 1995 was $35,000 primarily relating to interest income. -7- 8 LIQUIDITY At March 31, 1996, the Company had working capital of $2,503,000. During the first quarter of 1996, the Company entered into an amendment to its working capital line of credit agreement. Under this amendment, the lender agreed to waive certain requirements regarding financial covenants as of December 31, 1995 and to amend the required financial covenants through the expiration of the agreement on July 31, 1996, and the Company agreed to a reduction in the aggregate amount of the line of credit from $4,000,000 to $2,000,000. Net payments on this line were $1,692,000 in the first quarter of 1996. In addition, the Company has secured a commitment from a new lender for a $3,000,000 accounts receivable financing agreement which the Company intends to use to replace the working capital line of credit. Also in the first quarter of 1996, the Company executed an agreement with its prior contract manufacturer which establishes 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. 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 ownership rights to the technology. In accordance with this agreement, the Company agreed to pay $100,000 in cash, $50,000 of which has already been paid, 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 Management believes that its current funds, along with cash flows from projected sales of products, liquidation of discontinued inventory, and availability under the $3,000,000 accounts receivable financing agreement, will satisfy the Company's cash requirements in the ordinary course of business during 1996. The Company's cash flows are largely dependent on the sale of its products. Should anticipated sales levels not be generated, additional funding may be required. The decrease in accounts receivable is attributable mainly to collections on customer receivables which existed at December 31, 1995. Such decrease was offset partially by new receivables from customers from sales made in the first quarter of 1996. The net decrease in accounts payable and accrued expenses of $600,000 as of March 31, 1996 is mainly attributable to payments made to the Company's prior contract manufacturer. -8- 9 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 February 1996, Mr. H. Ben Taub, a director since 1994, resigned in order to dedicate greater time to his personal business affairs. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 11 -- Calculations of Earnings Per Share (b) The Company filed a Current Report on Form 8-K, dated March 15, 1996, with the Commission, reporting information under Item 5 of said Form. -9- 10 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: May 13, 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.
Signature Title Date /s/ Edward M. Krakauer - - -------------------------- Edward M. Krakauer President and Chief Executive Officer May 13, 1996 /s/ Mitchell B. Rubin - - -------------------------- Mitchell B. Rubin Vice President-Finance and Operations, Chief Financial Officer, Chief Accounting Officer, Secretary May 13, 1996
-10- EX-11 2 CALCULATIONS OF EARNINGS PER SHARE 1 EXHIBIT 11 VOICE POWERED TECHNOLOGY INTERNATIONAL, INC. COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE (UNAUDITED)
THREE MONTHS ENDED THREE MONTHS ENDED 3/31/95 3/31/96 -------------------------------------- ENDING MARKET PRICE PER SHARE $ 2.25 $ 1.56 ----------- ------------ AVERAGE MARKET PRICE PER SHARE $ 2.19 $ 1.66 ----------- ------------ EARNINGS: Net income applicable to common stock $ 194,600 $ (780,400) =========== ============ PRIMARY EARNINGS PER SHARE: Weighted average number of common shares outstanding 12,532,606 13,034,429 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 118,425 0 ----------- ------------ Total 12,651,031 13,034,429 =========== ============ Primary earnings (loss) per share $ .02 $ (.06) =========== ============ FULLY DILUTED EARNINGS (LOSS) PER SHARE: Weighted average number of common shares outstanding 12,532,606 13,034,429 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 127,689 0 ----------- ------------ Total 12,660,295 13,034,429 =========== ============ Fully diluted earnings (loss) per share $ .02 $ (.06) =========== ============
Note: Common stock equivalents for 1996 have not been considered as their effect would be anti-dilutive. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) BALANCE SHEET, STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 MAR-31-1996 1,374 0 3,281 0 2,246 7,023 1,823 1,124 9,115 4,520 0 0 0 14 4,581 9,115 2,199 2,199 1,361 1,361 1,585 0 33 (780) 0 (780) 0 0 0 (780) (.06) (.06)
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