As Filed with the Securities and Exchange Commission on November 14, 2002
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED SEPTEMBER 30, 2002
COMMISSION FILE NO. 0-27589
-----------------------
ONE VOICE TECHNOLOGIES, INC.
(Name of Small Business Issuer in Its Charter)
NEVADA 95-4714338
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6333 GREENWICH DRIVE, STE. 240, SAN DIEGO, CA 92122
(Address of Principal Executive Offices)
(858) 552-4466
(Issuer's Telephone Number)
(858) 552-4474
(Issuer's Facsimile Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock at the latest practicable date.
As of November 13, 2002, the registrant had 37,828,981 shares of common stock,
$.001 par value, issued and outstanding.
Transitional small business disclosure format (check one): Yes ____ No __X__
================================================================================
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS. Page No.
--------
Balance Sheet F-3
Statements of Operations F-4
Statement of Stockholders' Equity F-5
Statements of Cash Flows F-8
Notes to Financial Statements F-10
F-2
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET - SEPTEMBER 30, 2002
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 601,551
Accounts receivable 325
Inventory 79,387
Prepaid expenses 94,077
------------
Total current assets $ 775,340
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization 475,257
OTHER ASSETS:
Software licensing, net of accumulated
amortization 6,776
Software development costs, net of
accumulated amortization 809,964
Deposits 49,310
Trademarks, net of accumulated amortization 117,407
Patents 62,200
------------
Total other assets 1,045,657
------------
$ 2,296,254
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES -
accounts payable and accrued expenses $ 596,085
4% CONVERTIBLE NOTE PAYABLE, due August 6, 2004 $ 150,000
Less unamortized discount (91,846)
------------
58,154
4% CONVERTIBLE NOTE PAYABLE, due August 6, 2004 405,000
Less unamortized discount (247,988)
------------
157,012
STOCKHOLDERS' EQUITY:
Preferred stock; $.001 par value, 10,000,000
shares authorized, no shares issued and
outstanding -
Common stock; $.001 par value, 50,000,000
shares authorized, 35,099,849 shares
issued and outstanding 35,099
Additional paid-in capital 26,673,933
Deficit accumulated during development stage (25,224,029)
------------
Total stockholders' equity 1,485,003
------------
$ 2,296,254
============
See accompanying notes to financial statements.
F-3
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(UNAUDITED)
FROM INCEPTION
ON JANUARY 1, 1999
NINE MONTHS ENDED THREE MONTHS ENDED TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001 2002
------------- ------------- ------------- ------------- -------------
REVENUE $ 314,931 $ 185,678 $ 30,000 $ 60,818 $ 577,481
COST OF REVENUES 30,364 25,950 180 1,970 169,555
------------- ------------- ------------- ------------- -------------
GROSS PROFIT 284,567 159,728 29,820 58,848 407,926
------------- ------------- ------------- ------------- -------------
GENERAL AND ADMINISTRATIVE EXPENSES 5,550,482 6,527,250 1,551,538 2,402,994 25,631,955
------------- ------------- ------------- ------------- -------------
NET LOSS $ (5,265,915) $ 6,367,522) $ (1,521,718) $ 2,344,146) $(25,224,029)
============= ============= ============= ============= =============
NET LOSS PER SHARE, basic and
diluted $ (0.18) $ (0.46) $ (0.05) $ (0.16)
============= ============= ============= =============
WEIGHTED AVERAGE COMMON EQUIVALENT
SHARES OUTSTANDING - BASIC AND
DILUTED 29,922,324 13,723,297 32,667,295 14,582,506
============= ============= ============= =============
See accompanying notes to financial statements.
F-4
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Deficit
accumulated
Common stock Additional during Total
----------------------------- paid-in development stockholders'
Shares Amount capital stage equity
------------- ------------- ------------- ------------- -------------
Balance at January 1, 1999 12,720,000 $ 12,720 $ - $ - $ 12,720
Net proceeds from issuance of
common stock in connection
with merger 7,000,000 7,000 106,236 - 113,236
Net proceeds from issuance of
common stock 1,500,000 1,500 2,544,422 - 2,545,922
Net issuance of common stock in
exchange for services 150,000 150 299,850 - 300,000
Redemption of common stock (10,000,000) (10,000) - - (10,000)
Net loss for the year ended
December 31, 1999 - - - (1,782,215) (1,782,215)
------------- ------------- ------------- ------------- -------------
Balance at December 31, 1999 11,370,000 11,370 2,950,508 (1,782,215) 1,179,663
Net proceeds from issuance of
common stock and warrants 312,500 313 1,779,523 - 1,779,836
Net proceeds from issuance of
common stock and warrants 988,560 988 12,145,193 - 12,146,181
Issuance of warrants in exchange
for services - - 55,000 - 55,000
Issuance of options in exchange
for services - - 199,311 - 199,311
Issuance of warrants in connection
with financing - - 1,576,309 - 1,576,309
Net loss for the year ended
December 31, 2000 - - - (9,397,620) (9,397,620)
------------- ------------- ------------- ------------- -------------
Balance at December 31, 2000 12,671,060 12,671 18,705,844 (11,179,835) 7,538,680
(Continued)
See accompanying notes to financial statements.
F-5
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
(UNAUDITED)
Deficit
accumulated
Common stock Additional during Total
-------------------------- paid-in development stockholders'
Shares Amount capital stage equity
------------ ------------ ------------ ------------ ------------
Conversion of debt to equity, net
of unamortized debt discount 3,220,765 3,220 571,867 - 575,087
Issuance of options in exchange
for services - - 58,864 - 58,864
Issuance of stock and warrants in
connection with settlement 110,000 110 247,940 - 248,050
Proceeds from sale of common stock
and warrants, net of offering costs 702,350 702 839,318 - 840,020
Issuance of warrants in connection
with debt financing - - 92,400 - 92,400
Beneficial conversion feature
embedded in debt securities - - 417,450 - 417,450
Conversion of debt to
equity - Laurus Master Fund 3,402,600 3,403 595,399 - 598,802
Conversion of debt to equity -
Stonestreet Capital 2,973,780 2,974 506,137 - 509,111
Net loss for the year ended
December 31, 2001 - - - (8,778,279) (8,778,279)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2001 23,080,555 23,080 22,035,219 (19,958,114) 2,100,185
Conversion of debt to equity 2,624,447 2,624 309,941 - 312,565
Issuance of warrants in connection
with debt financing - - 451,716 - 451,716
Beneficial conversion feature
embedded in debt securities - - 1,317,016 - 1,317,016
Issuance of options in exchange
for services - - 107,276 - 107,276
(Continued)
See accompanying notes to financial statements.
F-6
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
(UNAUDITED)
Deficit
accumulated
Common stock Additional during Total
----------------------------- paid-in development stockholders'
Shares Amount capital stage equity
------------- ------------- ------------- ------------- -------------
Issuance of common stock 2,666,667 2,667 721,166 - 723,833
Cashless exercise of warrants 10,512 11 (11) - -
Exercise of warrants for cash 20,000 20 3,380 - 3,400
Re-pricing adjustment for
warrants outstanding - - 6,000 - 6,000
Shares issued in re-pricing-
Stonestreet Capital 833,334 833 174,167 - 175,000
Conversion of debt to
equity - Laurus Master Fund 2,110,129 2,110 703,344 - 705,454
Conversion of debt to
equity - Stonestreet Capital 3,004,411 3,004 750,469 - 753,473
Conversion of debt to
equity - Alpha Capital 749,794 750 94,250 - 95,000
Net loss for the nine months ended
September 30, 2002 - - - (5,265,915) (5,265,915)
------------- ------------- ------------- ------------- -------------
Balance at September 30, 2002 35,099,849 $ 35,099 $ 26,673,933 $(25,224,029) $ 1,485,003
============= ============= ============= ============= =============
See accompanying notes to financial statements.
F-7
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
From inception on
Nine months ended Nine months ended January 1, 1999 to
September 30, 2002 September 30, 2001 September 30, 2002
------------------ ------------------ ------------------
CASH FLOWS PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net loss $ (5,265,915) $ (6,367,522) $ (25,224,029)
--------------- --------------- ---------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 637,600 958,896 2,961,929
Loss on disposal of assets 114 500,000 500,115
Amortization of discount and finance cost 1,869,858 342,892 3,124,883
Options issued in exchange for services 107,276 104,922 446,850
Warrants issued in exchange for services - - 221,650
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ASSETS:
Licensing revenue receivable 219 324,280 (249,739)
Advertising revenue receivable - - 249,455
Inventory 30,067 6,424 (79,387)
Prepaid advertising - 150,000 -
Prepaid mailing lists - - (750,000)
Prepaid expenses (27,438) 52,824 (94,078)
Deposits (1,008) (315) (49,310)
INCREASE (DECREASE) IN LIABILITIES:
Accounts payable and accrued expenses (90,363) (331,298) 793,649
Deferred revenue - (56,250) 250,000
--------------- --------------- ---------------
Total adjustments 2,526,325 2,052,375 7,326,017
--------------- --------------- ---------------
Net cash used for operating activities (2,739,590) (4,315,147) (17,898,012)
--------------- --------------- ---------------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchase of property and equipment 847 (63,694) (1,397,819)
Software licensing (6,013) - (1,145,322)
Software development costs (3,680) (262,278) (1,563,903)
Trademarks (3,585) (6,357) (238,766)
Patents (12,150) (1,790) (65,374)
Loan fees - - (200,000)
Increase in escrow account - 200,000 (200,000)
--------------- --------------- ---------------
Net cash used for investing activities (24,581) (134,119) (4,811,184)
--------------- --------------- ---------------
(Continued)
See accompanying notes to financial statements.
F-8
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS (CONTINUED)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
From inception on
Nine months ended Nine months ended January 1, 1999 to
September 30, 2002 September 30, 2001 September 30, 2002
------------------ ------------------ ------------------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING
ACTIVITIES:
Proceeds from issuance of common stock, net 727,233 840,020 18,461,747
Proceeds from loans payable - - 200,000
Proceeds from convertible note payable 1,903,000 956,000 4,859,000
Payments on loan payable officer stockholder - (200,000) (200,000)
Retirement of common stock, net - - (10,000)
--------------- --------------- ---------------
Net cash provided by financing activities 2,630,233 1,596,020 23,310,747
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH (133,938) (2,853,246) 601,551
CASH AND CASH EQUIVALENTS, beginning of year 735,489 4,387,622 -
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS, end of year $ 601,551 $ 1,534,376 $ 601,551
=============== =============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ - $ 1,266 $ 1,791,4750
=============== =============== ===============
Income taxes paid $ 800 $ - $ 5,023
=============== =============== ===============
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
ACTIVITIES:
Options issued in exchange for services $ 107,276 $ 23,522 $ 365,450
=============== =============== ===============
Shares issued for re-pricing of conversion rate $ 175,000 $ - $ 175,000
=============== =============== ===============
Warrants issued for settlement $ - $ - $ 221,650
=============== =============== ===============
Warrants issued in connection with financing $ 451,716 $ 394,400 $ 3,085,080
=============== =============== ===============
Common Stock issued in exchange for debt $ 1,860,062 $ 391,365 $ 3,543,062
=============== =============== ===============
Beneficial conversion feature of debt to equity $ 1,317,016 $ 325,000 $ 1,734,466
=============== =============== ===============
Common shares issued for settlement $ - $ 81,400 $ 81,400
=============== =============== ===============
See accompanying notes to financial statements.
F-9
ONE VOICE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2002
(1) ORGANIZATION:
Conversational Systems, Inc. was incorporated under the laws of the
State of California on April 8, 1991. The Company commenced operations
in 1999.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INTERIM FINANCIAL STATEMENTS:
-----------------------------
The accompanying financial statements include all adjustments
(consisting of only normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the results
of operations for the periods presented. Interim results are not
necessarily indicative of the results to be expected for the full year
ending December 31, 2002. The financial statements should be read in
conjunction with the financial statements included in the annual report
of One Voice Technologies, Inc. (the "Company") on Form 10-KSB for the
year ended December 31, 2001.
BUSINESS ACTIVITY:
One Voice Technologies, Inc. is a developer of 4th Generation voice
solutions for the wireless, Telematics, TV/Internet appliance and
Interactive Multimedia markets.
REVENUE RECOGNITION:
The Company recognizes revenues when earned in the period in which the
service is provided. The Company's revenue recognition policies are in
compliance with all applicable accounting regulations, including
American Institute of Certified Public Accountants ("AICPA") Statement
of Position ("SOP") 97-2, Software Revenue Recognition, as amended by
SOP 98-4 and SOP 98-9. Any revenues from software arrangements with
multiple elements are allocated to each element of the arrangement
based on the relative fair values using specific objective evidence as
defined in the SOPs. If no such objective evidence exists, revenues
from the arrangements are not recognized until the entire arrangement
is completed and accepted by the customer. Once the amount of the
revenue for each element is determined, the Company recognizes revenues
as each element is completed and accepted by the customer. For
arrangements that require significant production, modification or
customization of software, the entire arrangement is accounted for by
the percentage of completion method, in conformity with Accounting
Research Bulletin ("ARB") No. 45 and SOP 81-1.
Service and license fees are deferred and recognized over the life of
the agreement. Revenues from the sale of products are recognized upon
shipment of the product.
F-10
(3) STOCKHOLDERS' EQUITY:
Conversion of Debt
------------------
During the three months ended March 31, 2002, approximately $381,075 of
notes payable was converted into approximately 1,047,000 shares of the
Company's common stock at an average conversion price of $0.36 per
share by Laurus Master Fund and Stonestreet Capital. In addition,
Neville converted the remaining principal balance of $550,000 ($312,565
carrying book value, net of unamortized debt discount) related to the
5% Note Payable into 2,624,447 common shares.
During the three months ended June 30, 2002, approximately $917,000 of
notes payable was converted into approximately 2,907,000 shares of the
Company's common stock at an average conversion price of $0.32 per
share by Laurus Master Fund and Stonestreet Capital.
During the three months ended September 30, 2002, approximately
$255,925 of notes payable was converted into approximately 1,910,000
shares of the Company's common stock at an average conversion price of
$0.13 per share by Laurus Master Fund, Stonestreet Capital, and Alpha
Capital Aktiengesellschaft.
Equity Financing
----------------
During May 2002, the Company entered into an equity financing agreement
of up to $5 million, with an initial put demand by the Company for
approximately $800,000 in exchange for 2,666,667 shares of the
Company's common stock at a price of $0.30 per share. Subsequently, on
August 8, 2002, $500,000 of the $800,000 investment was repriced and
833,334 shares (valued at $175,000) of common stock was issued to the
investors so that the average cost of the initial put was $0.22857 per
share. Pursuant to the original agreement, the Company can exercise its
right to require the Investor to purchase a discretionary amount of the
Company's common stock as determined by the Company, subject to the
terms of the agreement. The minimum put amount is $150,000 and the
offering price of the Company's common stock is determined on a
formula, as set forth in the agreement. The Company recognized an
expense of $175,000 from the issuance of additional 833,334 common
shares.
The Company also issued 300,000 warrants in May 2002, to purchase
shares of the Company's common stock at an exercise price of $0.43 per
share. Subsequently, on August 8, 2002, the Company adjusted the
exercise price on these warrants to $.20 per share due to a subsequent
financing. The Company paid a finders fee of $48,000 and issued 75,000
warrants with an exercise price of $0.43, the value of which has been
netted against the gross proceeds. During the period ended September
30, 2002, the Company accounted for the change in exercise under
variable accounting and recognized an expense of $6,000 during the
period
On August 8, 2002, we entered into securities purchase agreement with
two accredited investors, Stonestreet Limited Partnership and Alpha
Capital Aktiengesellschaft for the issuance of 4% convertible
debentures (effective interest rate of 45%) in the aggregate amount of
$650,000. The debentures are convertible into common stock at a
F-11
conversion price of the lower of $.242 or 80% of the average of the
five lowest closing bid prices for the common stock thirty days prior
to conversion. In addition, an aggregate of 491,400 common stock
purchase warrants were issued to the investors. Each common stock
purchase warrant has an exercise price of $.252. The commission for the
transaction was 8%. The offering of convertible debentures was exempt
from registration under Rule 506 of Regulation D and under Section 4(2)
of the Securities Act. No advertising or general solicitation was
employed in offering the securities. All persons were accredited
investors, represented that they were capable of analyzing the merits
and risks of their investment. Net proceeds amounted to $577,000, net
of debt issue cash cost of $73,000. The value of the warrants amounted
to $90,371 and the beneficial conversion feature amounted to $352,361
pursuant to EITF 00-27. Total debt issue cost of $515,732 is being
amortized over the life of the debt using the interest method. Upon
conversion of the debt, any unamortized debt issue costs will be
charged to expense.
(4) SUBSEQUENT EVENT:
During October 2002, Stonestreet Limited Partnership and Alpha Capital
Aktiengesellschaft converted $125,000 and $150,000 into 1,042,000 and 1,290,000
common shares, respectively. The approximate average conversion price was $0.12
per share.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
WITH THE EXCEPTION OF HISTORICAL MATTERS, THE MATTERS DISCUSSED HEREIN ARE
FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. FORWARD LOOKING
STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO STATEMENTS CONCERNING ANTICIPATED
TRENDS IN REVENUES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS
DISCUSSED IN SUCH FORWARD LOOKING STATEMENTS. THERE IS ABSOLUTELY NO ASSURANCE
THAT WE WILL ACHIEVE THE RESULTS EXPRESSED OR IMPLIED IN FORWARD LOOKING
STATEMENTS.
With millions of PC-based voice products deployed globally, One Voice is one of
the voice sectors top technology providers behind Microsoft. One Voice has the
products and technology to develop voice driven user interfaces for the Telecom,
Interactive Multimedia and Telematics markets.
Our sales goals are divided into both near-term and long-term objectives. In the
near-term, we are heavily targeting the Interactive Multimedia sector. This
sector includes Home Video DVD revenue by integrating our voice technology on
DVD-ROM content. Our product, called One Voice DVD(TM), allows motion picture
studios to add voice technology to their DVD-ROM special features. This allows
viewers to voice navigate the DVD-ROM, play interactive voice driven games, and
much more. The One Voice DVD product is a creative tool for content developers
and works seamlessly with standard tools including HTML, JavaScript and
Macromedia Flash. To date, we have generated revenue from three DVD-ROM titles
in up to six languages for worldwide distribution. Our first premier customer in
this sector was Warner Home Video who selected One Voice to create a
spellbinding experience for their super blockbuster hit Harry Potter and the
Sorcerer's Stone. One Voice DVD allows viewers to talk to Harry Potter on the
F-12
DVD-ROM to voice navigate the special features disc and is included on all Harry
Potter and the Sorcerer's Stone DVD's sold globally. Subsequently, we have
generated sales from two additional DVD titles. We see this segment of the
business will continue to grow as voice gains exposure in the Home Entertainment
sector. We feel One Voice is in a strong position for growth in this industry by
having the Warner Home Video account and our strong partnership with
InterActual, a leading technology provider and integrator in this sector. We are
currently in talks with several other major motion picture studios regarding our
voice solutions for their DVD-ROM content.
Additional near-term revenue goals in our Interactive Multimedia segment include
bundling our IVAN technology with PC and Tablet PC manufacturers. We are
currently in talks with several major PC manufacturers to bundle our technology
on their PC's. We feel the need for powerful voice solutions in this sector has
never been higher. Today, the vast majority of new PC's are multimedia enabled
which means they ship with a microphone, speakers, high-end CPU and sound card.
Our IVAN product and technology is the only product in the voice sector to offer
free-form, natural conversational input allowing for a dynamic human-to-computer
interaction and free-form natural languages searching. We believe this segment
of the business will grow and eventually lead to revenue generation due to
renewed interest from PC manufacturers and the recent launch of the new Tablet
PC market. The Tablet PC market is strongly supported by Microsoft, which
recently launched Windows XP Tablet PC Edition. We announced a partnering with
Philips Electronics (NYSE: PHG) to jointly develop voice-enabled applications
for the Tablet PC sector. Our partnering with Philips will accelerate our
technological development of voice solutions in multiple languages with support
in up to 20 languages.
Our long-term sales goals are in the Telecom sector to develop voice subscriber
services for wireless and wireline carriers. Our MobileVoice(TM) Platform
consists of a comprehensive suite of voice services which include:
Voice-Dialing, E-Mail Reading, E-Mail Sending and Voice-to-Text Messaging. One
Voice is the first and only company to offer free-form Voice-to-Text Email, SMS,
Instant Messaging and Paging from any phone, all by voice. This technology was
designed based on years of R&D and patented technology. MobileVoice delivers
high accuracy performance in mobile environments. It operates in a speaker
independent mode for services including Voice-Activated Dialing, Email Readback
and Voice Mail. For Voice-to-Text messaging the system can be trained to
recognize the user's speech in just seven minutes. Once training is completed,
the system allows subscribers to send free-form SMS, E-Mail and Paging messages
to anyone, anytime and from any phone. We see tremendous revenue opportunity and
growth potential for our solutions in this sector and are currently in the
proposal stage with two large carriers. Additionally, we are in talks with
wireline and digital telephone cable operators along with several wireless
carriers. The market for voice subscriber services is growing but the sales
cycle is longer than the Interactive Multimedia segment of our business. This is
due to many factors including the slowdown in the Telecom sector and the
multi-decision, multi-departmental sales process typical with carriers.
Recently, we announced a partnering with Philips Electronics to offer
speech-enabled telephony solutions to European carriers. Our partnering with
Philips has proven to be very successful resulting in several introductions and
on-going discussions with carriers in Europe. We also announced a partnering
with IBM where IBM has funded testing of our MobileVoice solutions in their
in-house labs. This has resulted in the qualification of MobileVoice on IBM
xSeries servers and the development of joint sales/marketing materials for both
companies.
To further support our near-term and long-term sales goals we are finalizing
additional funding with our current investors and anticipate this will close
very shortly. This funding will give us several months additional working
capital and we feel confident that our investor will continue to fund us until
such time that we generate sufficient revenue to sustain operations.
In July, 2002 we announced impressive results from a major quantitative research
study among current mobile phone subscribers in the U.S. The study was conducted
with subscribers from carriers including: Verizon, Cingular, AT&T Wireless,
Sprint PCS and Nextel. As representative of the entire subscriber base of these
carriers, the results were overwhelming in terms of demand and willingness to
pay for One Voice's MobileVoice Activated Dialing, MobileVoice Send and
F-13
MobileVoice Read services. The study was performed by the independent firm
Harris Interactive, one of the world's largest and most respected market
research firms and creator of the well-known Harris Poll(TM). The study
delivered results that are highly accurate (+/- 4%) in terms of representation
of the entire customer base and the ability to project the results. The study
also showed that an overwhelming majority (over 75%) of mobile phone users were
interested in MobileVoice and were willing to pay an average of $20 per month
incremental to their current phone bill. Specifically, the percentages of mobile
phone users indicating interest in MobileVoice were as follows: MobileVoice
Activated Dialing (76%), MobileVoice Send - sending E-Mail, Instant and SMS
messages (63%) and MobileVoice Read - E-Mail reader (49%). These results
highlight the opportunity for the MobileVoice services and the ability to
generate incremental revenue, with high margins, for carriers who are under
increasing profit pressure and are looking for ways to generate incremental
revenue from their existing infrastructure and handsets, while minimizing
capital expenditures. The MobileVoice services utilize existing infrastructure
equipment, require little upfront carrier cost and can be offered to 100% of a
carrier's subscriber base immediately, regardless of the phone make, model or
technology (GSM, CDMA, TDMA, iDEN).
In July, 2002 we announced we had joined Microsoft, Cisco, Intel, Comverse and
several other industry leading companies in the SALT (Speech Application
Language Tags) Forum. The SALT Forum is chartered with developing an open,
platform-independent solution for telephony and multimodal speech applications.
This Forum brings together a diverse group of companies sharing a common
interest in developing and promoting speech technologies for multimodal
applications.
In July, 2002 we were selected by The Kelsey Group, a leading research firm
focused on wireless and next-generation communications networks, to demonstrate
our MobileVoice solutions at the Cool Demo Lounge portion of the VOX2002
conference. We were selected as one of a small number of industry leaders to
demonstrate breakthrough wireless applications. The Kelsey Group expects
voice-activation of `everyday' services to have a much needed multiplier effect
on telecommunications carriers' top line revenues. The conference focused on
voice and wireless applications and their use in a variety of markets. Attendees
include telecommunications operators, unified messaging vendors and corporations
interested in applying voice technology in a variety of different solutions. The
Cool Demo Lounge event focused on hot new applications that solve real world
problems and drive return on investment in the wireless telecommunications
industry. During our presentation, we sent a Voice-to-Text E-Mail, SMS and
Paging message consisting of "The Pledge of Allegiance" spoken into a mobile
phone and sent as a text message to multiple wireless devices. This
demonstration was significant as it showcased our outstanding technology to the
voice industry and highlighted the fact that we are the first and only company
with Voice-to-Text mobile capabilities that addresses real-world solutions for
mobile text messaging by voice.
In July, 2002 we were selected by SAIC (Science Applications International
Corporation), a leading technology integrator for the government and
telecommunications industries, to be included in their Request For Information
(RFI) for a telematics solution for a large automotive manufacturer. We were
selected for inclusion in this RFI based on our technology and expertise in the
voice sector. SAIC assembled a team of companies, including One Voice, to
provide a telematics solution for the requesting automotive manufacturer. Our
position on the team would be to create the voice interface for the project.
Subsequently, we were informed that SAIC was not awarded this contract.
In July, 2002 we were selected by an educational software company to develop a
prototype voice driven PC based application. Both companies jointly agreed to
work together to add our voice technology into one of their existing PC based
educational titles. This prototype was completed in August 2002 and will be
evaluated for full deployment in their educational titles. If accepted, we
anticipate this project to be royalty based with domestic distribution. We are
in continued talks with this company to identify appropriate titles for voice
interactivity if their decision is to move forward with this project.
F-14
In August, 2002 we announced that we received a Nasdaq Staff Determination on
August 14, 2002 that we failed to comply with the Minimum Bid Price requirement
for continued listing as set forth in Marketplace Rule 4310(c)(4). As a result,
the common stock of One Voice was removed from The Nasdaq SmallCap Market and
listed on the Over-the-Counter Bulletin Board on August 22, 2002.
In August, 2002 we announced that we have been awarded a patent by the U.S.
Patent and Trademark Office. Specifically, U.S. Patent No. 6,434,524 was issued
covering "Object Interactive User Interface Using Speech Recognition and Natural
Language Processing. The patent was filed in October 1999 and is the first of a
series of patents filed on One Voice's 4th Generation voice technology covering
human to computer interaction with Natural Language Processing (NLP)
intelligence and Speech Recognition input from desktop, embedded and wireless
devices. This is another critical step in establishing our position in the voice
technology market for the wireless and desktop computer industries. It is a
strong validation of our efforts to-date and will pave the way for advances of
our innovative technology in the market.
In September, 2002 we announced that One Voice and Philips Electronics' Speech
Processing business unit, a leading provider of speech recognition technology,
that both companies will work closely to offer speech-enabled telephony
solutions to the European carrier markets. These solutions will combine
technology from both companies to create European language versions of One
Voice's MobileVoice(TM) E-mail, MobileVoice SMS and MobileVoice
InstantMessenger, allowing wireless phone users the ability to send free-format
voice-to-text messages from any phone, make or model, by using only their voice.
Under the partnership, Philips will provide core speech technology in major
European languages and assistance with integration into One Voice's MobileVoice
Platform. MobileVoice is the industry's only free-format voice-to-text solution
available that enables wireless phone users to compose and send e-mail, SMS
(Short Message Service) and Instant Messaging - using only their voice. This
partnership will accelerate the development of MobileVoice in Spanish, French,
German and Italian.
While billions of SMS messages are sent phone-to-phone each year in Europe, the
major obstacle has always been tapping messages on the 10-digit keypad. A simple
message such as "send the sales proposal" takes over 50 keystrokes to enter,
while using MobileVoice Messaging you simply speak the message and it's sent in
seconds. The benefits in terms of time, efficiency, ease of use and hands-free
mobility are tremendous and the opportunities to capture a percentage of the
European SMS traffic has large revenue potential for wireless carriers.
In September, 2002 we announced a partnership with IBM to deliver
high-performance, telco-grade solutions for carriers and enterprise customers
around the world. The terms of the partnership include extensive support from
IBM for One Voice's MobileVoice(TM) Platform. This support was funded by IBM and
included rigorous IBM in-house testing of One Voice's MobileVoice(TM) Platform
and optimization of the architecture for large-scale deployment in telco and
enterprise environments. IBM will also offer hosting services, integration
support and provide technical assistance as a core part of One Voice's services.
These efforts will provide carriers and enterprise customers with One Voice's
telco-ready solutions, running on IBM's latest xSeries Servers, and will help
accelerate the penetration of these solutions in the carrier and enterprise
markets. Additionally, the two companies will develop joint sales and marketing
plans to maximize MobileVoice's impact in the market.
In September, 2002 we announced the completion of the second voice interactive
DVD title for the Warner Home Video box office hit Scooby-Doo: The Movie. The
street date for the DVD was October 11, 2002. We are seeing tremendous demand
for our voice technology in the entertainment industry and look forward to
additional titles in the future. One Voice is in a unique position currently as
the only provider of voice recognition technology for DVD-ROM titles.
In September, 2002 we announced that we had received a Notice of Allowance from
the U.S. Patent and Trademark Office regarding its patent entitled "Interactive
User Interface Using Speech Recognition and Natural Language Processing". This
F-15
patent, filed in September 1998, is the core and initial patent in a series of
4th Generation voice technology patents covering human-to-computer interaction
with Natural Language Processing (NLP) intelligence and Speech Recognition input
from desktop, embedded and wireless devices. One Voice is now entering the final
patent stage by filing the appropriate issuance documents and fees and
anticipates formal issuance in the coming months.
In September, 2002 we announced the commercial availability of their MobileVoice
Sync(TM) product - a powerful addition to their portfolio of server-based
messaging applications. MobileVoice Sync(TM) works seamlessly with Microsoft
Outlook(TM) on any user's PC, allowing them to setup their MobileVoice
Voice-Activated Dialing and Email address books with potentially thousands of
names and numbers. Synchronization tools are critical for the adoption and
retention of users to quickly and easily import their contacts. With MobileVoice
Sync, One Voice offers a complete solution from voice services to
synchronization tools.
In October, 2002 we announced we would open testing of our MobileVoice E-Mail
services to interested users. We encouraged people of all wireline and wireless
networks (GSM, iDEN, CDMA and TDMA) to participate using any telephone make or
model.
In October, 2002 we announced that we have completed extensive testing of the
MobileVoice system at IBM's in-house testing facility. The tests were completed
using IBM's xSeries servers in both a large and small-scale system
configurations. The testing results demonstrated that MobileVoice is capable of
handling millions of subscribers in real-world usage. These results are critical
for carriers looking to deploy large-scale solutions.
In October, 2002 we announced that we were awarded a contract to provide voice
interactivity for a third DVD title. The details of the DVD title will be
disclosed at a later date. The potential use of voice technology in the DVD
market as a premium add-on is significant. The major players in the market are
searching for ways to differentiate and add-value in new and exciting ways to a
variety of content. Voice technology is a natural fit, because it adds a new
dimension of interactivity to dynamic DVD content.
In October, 2002 we announced that we have completed the development of our
MobileVoice platform in Spanish. The project was started in conjunction with
testing to begin with several carriers in Latin America. This is the first
localization effort of the MobileVoice platform in another language with
full-scale carrier testing to begin shortly. We are leveraging strategic
partnerships with Philips and IBM to open the doors to carriers and enterprise
customers in markets outside the U.S. We have already had several discussions
with carriers outside the U.S. through introductions from our partners. We are
focused on working closely with Philips and IBM to accelerate the penetration
with these carriers.
In November, 2002 we announced that we will work closely with Philips
Electronics to offer voice enabled solutions for the Tablet PC market. These
solutions will be targeted at Tablet PC manufacturers as a core component of
their Tablet PC's and will add features including voice navigation, application
launching, Internet browsing, Outlook integration along with e-mail and letter
dictation.
RESULTS OF OPERATIONS
The following table sets forth selected information from the statements of
operations for the three months ended September 30, 2002 and 2001.
F-16
SELECTED STATEMENT OF OPERATIONS INFORMATION
--------------------------------------------
Quarter Ended Quarter Ended
----------------------------------------------------------------------
September 30, 2002 September 30, 2001
----------------------------------------------------------------------
----------------------------------------------------------------------
Net Revenues $ 30,000 $ 60,818
----------------------------------------------------------------------
Operating expenses $ 1,551,538 $ 2,402,994
----------------------------------------------------------------------
Net loss $(1,521,718) $(2,344,146)
----------------------------------------------------------------------
Discussion of the three months ended September 30, 2002 compared with the three
months ended September 30, 2001.
Net revenues totaled $30,000 for the three months ended September 30, 2002. Net
revenues of $60,818 were earned for the three months ended September 30,
2001.The recognition of revenues in the third quarter of 2002 resulted primarily
from work performed in the DVD/Multimedia sector.
Operating expenses decreased to $1,551,538 for the three months ended September
30, 2002 from $2,402,994 for the same period in 2001. The decrease in operating
expenses over the same quarter in 2001 was a direct result of a decrease of all
major expense categories for the period as compared to the year prior. Salary
and wage expense was $355,606 for the three months ended September 30, 2002 as
compared to $437,284 for the same period in 2001. The decrease in 2002 as
compared to 2001 arose primarily from the decreased labor force, which we have
restructured to accommodate our new direction into the telecom, telematics and
TV/Internet appliance initiatives. Advertising and promotion expense totaled
$14,597 for the three months ended September 30, 2002 as compared to $92,335 for
the same period in 2001. Advertising and promotion expense reduction resulted
from the company discontinuing all direct to consumer marketing campaigns and
focusing on other distribution channels. Legal and consulting expenses decreased
to $60,208 for the three months ended September 30, 2002 from $258,638 for the
same period in 2001. Depreciation and amortization expenses decreased to
$213,082 for the three months ended September 30, 2002 from $303,047 for the
same period in the prior year, primarily due to the IBM License having been
fully amortized in the prior period. Amortization and Depreciation expenses
consisted of patent and trademarks, computer equipment, consultant fees, and
tradeshow booth. Interest expense increased to $440,000 in 2002, as compared to
$276,000 in 2001, primarily due to non-cash debt issue cost from warrants
granted, shares issued and beneficial conversion feature.
We had a net loss of $1,521,718 or basic and diluted net loss per share of $0.05
for the three months ended September 30, 2002 compared to $2,344,146 or basic
and diluted net loss per share of $0.16 for the same period in 2001.
F-17
SELECTED STATEMENT OF OPERATIONS INFORMATION
--------------------------------------------
9 Months Ended 9 Months Ended
----------------------------------------------------------------------
September 30, 2002 September 30, 2001
----------------------------------------------------------------------
----------------------------------------------------------------------
Net Revenues $ 314,931 $ 185,678
----------------------------------------------------------------------
Operating expenses $ 5,550,482 $ 6,527,250
----------------------------------------------------------------------
Net loss $(5,265,915) $(6,367,522)
----------------------------------------------------------------------
Discussion of the nine months ended September 30, 2002 compared with the nine
months ended September 30, 2001.
Net revenues totaled $314,931 for the nine months ended September 30, 2002. Net
revenues of $185,678 were earned for the nine months ended September 30, 2001.
The recognition of revenues in the first nine months of 2002 resulted primarily
from work performed for Warner Home Video. The recognition of revenues in the
first nine months of 2001 resulted primarily from product licensing in exchange
for advertising.
Operating expenses decreased to $5,550,482 for the nine months ended September
30, 2002 from $6,527,250 for the same period in 2001. Although non-cash interest
expense associated with debt financing increased over the same period as
compared to the prior year, the majority of all other expense categories
decreased, resulting in an overall reduction in operating expenses for the nine
months ended September 30, 2002 as compared to 2001. Salary and wage expense was
$1,100,075 for the nine months ended September 30, 2002 as compared to
$1,677,305 for the same period in 2001. The decrease in 2002 as compared to 2001
arose primarily from the decreased labor force, which we have restructured to
accommodate our new direction into the telecom, telematics and TV/Internet
appliance initiatives. Advertising and promotion expense totaled $14,597 for the
nine months ended September 30, 2002 as compared to $499,594 for the same period
in 2001. Advertising and promotion expense reduction resulted from the company
discontinuing all direct to consumer marketing campaigns and focusing on other
distribution channels. Legal and consulting expenses decreased to $365,122 for
the nine months ended September 30, 2002 from $574,104 for the same period in
2001. Depreciation and amortization expenses decreased to $637,600 for the nine
months ended September 30, 2002 from $958,896 for the same period in the prior
year, primarily due to the IBM License having been fully amortized in the prior
period. Amortization and Depreciation expenses consisted of patent and
trademarks, computer equipment, consultant fees, and tradeshow booth. Interest
expense increased to $1,870,000 in 2002, as compared to $343,000 in 2001,
primarily due to non-cash debt issue cost from warrants granted, shares issued
and beneficial conversion feature.
We had a net loss of $5,265,915 or basic and diluted net loss per share of $0.18
for the nine months ended September 30, 2002 compared to $6,367,522 or basic and
diluted net loss per share of $0.46 for the same period in 2001.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2002, we had working capital of $179,255 as compared with
$1,410,936 at September 30, 2001.
F-18
Net cash used for operating activities was $740,658 for the quarter ended
September 30, 2002 compared to $1,171,116 for the quarter ended September 30,
2001. From inception on January 1, 1999 to September 30, 2002, net cash used for
operating activities was $17,898,012.
Net cash used for investing activities was $8,427 for the quarter ended
September 30, 2002 compared to net cash provided of $177,724 for the quarter
ended September 30, 2001. From inception on January 1, 1999 to September 30,
2002, net cash used for investing activities was $4,811,184.
Net cash provided by financing activities was $580,400 for the quarter ended
September 30, 2002 compared to $756,000 for the quarter ended September 30,
2001. From inception on January 1, 1999 to September 30, 2002 net cash provided
by financing activities was $23,310,747.
We incurred a net loss of $1,521,718 during the quarter ended September 30,
2002, and had an accumulated deficit of $25,224,029. Our losses through
September 2002 included interest expense, amortization of software licensing
agreements and development costs and operational and promotional expenses. Sales
of our equity securities have allowed us to maintain a positive cash flow
balance from financing activities.
Cash flow from sales began in the first quarter 2002.
On August 8, 2002, we entered into securities purchase agreement with two
accredited investor, Stonestreet Limited Partnership and Alpha Capital
Aktiengesellschaft for the issuance of 4% convertible debentures in the
aggregate amount of $650,000. The debentures are convertible into common stock
at a conversion price of the lower of $.242 or 80% of the average of the five
lowest closing bid prices for the common stock thirty days prior to conversion.
In addition, an aggregate of 491,400 common stock purchase warrants were issued
to the investors. Each common stock purchase warrant has an exercise price of
$.252. The commission for the transaction was 8%. The offering of convertible
debentures was exempt from registration under Rule 506 of Regulation D and under
Section 4(2) of the Securities Act. No advertising or general solicitation was
employed in offering the securities. All persons were accredited investors,
represented that they were capable of analyzing the merits and risks of their
investment.
On August 8, 2002, we repriced Stonestreet's May 2002 investment and issued them
833,334 shares of common stock. In addition, we repriced Stonestreet's common
stock purchase warrants exercise price to $.20 per share.
The losses through the quarter ended September 30, 2002 were due to minimal
revenue and our operating expenses, with the majority of expenses in the areas
of: debt issue costs, salaries, legal fees, consulting fees, insurance,
licensing cost, as well as amortization expense relating to software
development. We face considerable risk in completing each of our business plan
steps, including, but not limited to: a lack of funding or available credit to
continue development and undertake product rollout; potential cost overruns; a
lack of interest in our solutions in the market on the part of wireless carriers
or other customers; potential reduction in wireless carriers which could lead to
significant delays in consummating revenue bearing contracts; and/or a shortfall
of funding due to an inability to raise capital in the securities market. Since
further funding is required, and if none is received, we would be forced to rely
on our existing cash in the bank or secure short-term loans. This may hinder our
ability to complete our product development until such time as necessary funds
could be raised. In such a restricted cash flow scenario, we would delay all
cash intensive activities including certain product development and strategic
initiatives described above.
ITEM 3. CONTROLS AND PROCEDURES
As of September 30, 2002, an evaluation was performed under the
supervision and with the participation of the Company's management, including
the Chief Executive Officer and the Chief Accounting Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on that evaluation, the Company's management, including
the Chief Executive Officer and the Chief Accounting Officer, concluded that the
Company's disclosure controls and procedures were effective as of September 30,
2002. There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to September 30, 2002.
F-19
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The securities described below represent our securities sold by us for the
period starting January 1, 2002 and ending September 30, 2002 that were not
registered under the Securities Act of 1933, as amended, all of which were
issued by us pursuant to exemptions under the Securities Act. Underwriters were
involved in none of these transactions.
PRIVATE PLACEMENTS OF COMMON STOCK AND WARRANTS FOR CASH
On May 7, 2002, we issued 2,666,666 shares of our common stock to Stonestreet
Limited Partnership for $800,000. In addition we issued to Stonestreet 300,000
warrants exercisable into shares of our common stock at $.43 per share. We paid
$48,000 and issued 75,000 warrants exercisable at $.43 per share as a finder's
fee to Stonestreet Corporation.
On August 8, 2002, we repriced Stonestreet's May 2002 investment and issued them
833,334 additional shares of common stock. In addition, we repriced
Stonestreet's common stock purchase warrants exercise price to $.20 per share.
SALES OF DEBT AND WARRANTS FOR CASH
On January 7, 2002, we entered into a securities purchase agreement with the
Laurus Master Fund, Ltd. and Stonestreet Limited Partnership for the issuance of
an aggregate of $1.45 million principal amount of 4% convertible notes and an
aggregate of 500,000 common stock purchase warrants in reliance on Section 4(2)
of the Act and Rule 506. Each warrant entitles the holder to purchase one share
of common stock at an exercise price of $.96. The commission for the transaction
was $87,500 and a 4% convertible note in the amount of $52,500. The notes bear
interest at 4%, matures on January 7, 2004, and are convertible into our common
stock, at the holder's option, at the lower of (i) $0.997 or (ii) 80% of the
five lowest VWAPs for the common stock on a principal market for the 30 trading
days before but not including the conversion date. VWAP means the daily volume
weighted average prices of our common stock. The note may not be paid, in whole
or in part, before January 7, 2004 without the consent of the holder. The full
principal amount of the convertible notes are due upon default under the terms
of convertible notes. The warrants are exercisable until January 5, 2005 at a
purchase price of $.96 per share. Subsequently, on May 7, 2002, due to an
additional financing, these warrants were repriced at $0.90 per share pursuant
to the terms of this financing agreement.
On August 8, 2002, we entered into securities purchase agreement with two
accredited investor, Stonestreet Limited Partnership and Alpha Capital
Aktiengesellschaft for the issuance of 4% convertible debentures in the
aggregate amount of $650,000. The debentures are convertible into common stock
at a conversion price of the lower of $.242 or 80% of the average of the five
lowest closing bid prices for the common stock thirty days prior to conversion.
In addition, an aggregate of 491,400 common stock purchase warrants were issued
to the investors. Each common stock purchase warrant has an exercise price of
$.252. The commission for the transactions were 8%. The offering of convertible
debentures was exempt from registration under Rule 506 of Regulation D and under
Section 4(2) of the Securities Act. No advertising or general solicitation was
employed in offering the securities. All persons were accredited investors,
represented that they were capable of analyzing the merits and risks of their
investment.
OPTION GRANTS
During the quarter ended September 30, 2002, we issued an aggregate total of
850,000 options to employees in recognition of their services to One Voice. In
addition , we issued 50,000 options to a consultant who provided human resources
services. All of the options were pursuant to our stock option plan and have an
exercise price of $0.14 per share.
F-20
ISSUANCES OF STOCK FOR SERVICES OR IN SATISFACTION OF OBLIGATIONS
None.
All of the above offerings and sales were deemed to be exempt under Regulation D
and Section 4(2) of the Securities Act. No advertising or general solicitation
was employed in offering the securities. The offerings and sales were made to a
limited number of persons, all of whom were accredited investors, business
associates of One Voice or executive officers of One Voice, and transfer was
restricted by One Voice in accordance with the requirements of the Securities
Act of 1933. In addition to representations by the above-referenced persons, we
have made independent determinations that all of the above-referenced persons
were accredited or sophisticated investors, and that they were capable of
analyzing the merits and risks of their investment, and that they understood the
speculative nature of their investment. Furthermore, all of the above-referenced
persons were provided with access to our Securities and Exchange Commission
filings.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON 8-K:
(a) Exhibits.
Exhibit Number Description
-------------- -----------
99.1 Certification of the Chief Executive Officer of One Voice Technologies,
Inc. Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification of the Chief Financial Officer of One Voice Technologies,
Inc. Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(b) No reports on Form 8-K were filed during the fiscal quarter ended
September 30, 2002.
F-21
SIGNATURES
In accordance with the requirements of the Exchange Act of 1933, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ONE VOICE TECHNOLOGIES, INC., a Nevada Corporation
Date: November 14, 2002 By: /s/ Dean Weber
----------------------------------------------
DEAN WEBER, Chairman & Chief Executive Officer
Date: November 14, 2002 By: /s/ Rahoul Sharan
----------------------------------------------
RAHOUL SHARAN, Chief Financial Officer
F-22
CERTIFICATION
I, Dean Weber, CEO, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of One Voice
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
November 14, 2002
/s/ Dean Weber
-----------------------
Dean Weber
Chief Executive Officer
F-23
CERTIFICATION
I, Rahoul Sharan, CFO, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of One Voice
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
November 14, 2002
/s/ Rahoul Sharan
-----------------------
Rahoul Sharan
Chief Financial Officer
F-24