SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 10-QSB
__________________
(Mark One)
[ ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.
Commission File No. 00-22661
INVU, INC.
(Exact name of small business issuer as specified in charter)
Colorado 84-1135638
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
The Beren, Blisworth Hill Farm
Stoke Road
Blisworth, Northamptonshire NN7 3DB
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(Address of principal (Postal Code)
executive offices)
Issuer's telephone number, including area code: (01604) 859893
---------------
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the 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
-------- --------
As of December 16, 2002 there were 30,386,539 shares of the common stock, no par
value, of the registrant issued and outstanding.
Transitional Small Business Disclosure Format (check one)
YES NO X
---------- -------------
INVU, INC.
October 31, 2002
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION.........................................................................................F-1
Item 1. Financial Statements.................................................................................F-1
Consolidated Balance Sheets as of October 31, 2002...................................................F-2
Consolidated Statements of Operations................................................................F-3
Consolidated Statements of Deficit in Stockholders' Equity...........................................F-4
Consolidated Statements of Cash Flows................................................................F-5
Notes to Financial Statements........................................................................F-6
Item 2. Management's Discussion and Analysis or Plan of Operation..............................................1
Item 3. Controls and Procedures................................................................................8
PART II. OTHER INFORMATION...............................................................................................9
Item 1. Legal Proceedings......................................................................................9
Item 2. Changes in Securities..................................................................................9
Item 3. Default Upon Senior Securities.........................................................................9
Item 4. Submission of Matters to a Vote of Security Holders....................................................9
Item 5. Other Information......................................................................................9
Item 6. Exhibits and Reports on Form 8-K......................................................................10
SIGNATURES.............................................................................................................S-1
EXHIBIT INDEX..........................................................................................................E-1
CONSOLIDATED FINANCIAL STATEMENTS
INVU, INC. AND SUBSIDIARIES
OCTOBER 31, 2002
F-1
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------------------------------------------------
October 31, January 31,
2002 2002
(unaudited)
$ $
ASSETS
Current assets
Cash 134,240 -
Accounts receivable:
Trade, net 1,376,356 936,442
VAT recoverable and other 24,220 19,582
Inventories 126,728 78,782
Prepaid expenses 104,973 85,796
----------- -----------
Total current assets 1,766,517 1,120,602
----------- -----------
Equipment, furniture and fixtures
Computer equipment 264,563 148,579
Vehicles 263,747 287,722
Office furniture and fixtures 115,205 100,897
----------- -----------
643,515 537,198
Less accumulated depreciation 340,039 244,266
----------- -----------
303,476 292,932
----------- -----------
Intangible assets 91,262 117,775
Goodwill 1,308,227 -
----------- -----------
3,469,482 1,531,309
=========== ===========
LIABILITIES AND DEFICIT IN STOCKHOLDERS' EQUITY
Current liabilities
Short-term credit facility 693,227 276,203
Current maturities of long-term obligations 4,008,292 2,945,681
Accounts payable 558,106 506,161
Accrued liabilities 959,239 610,290
Deferred revenue 290,848 216,848
Taxation 1,781,931 -
----------- -----------
Total current liabilities 8,291,643 4,555,183
----------- -----------
Long-term obligations, less current maturities 1,413,739 2,093,740
Deficit in stockholders' equity
Preferred stock, no par value
Authorised - 20,000,000 shares; nil shares issued and outstanding - -
Common stock, no par value
Authorised - 100,000,000 shares; issued and outstanding - 30,386,539 1,746,223 1,746,223
Accumulated deficit (7,984,415) (7,086,082)
Accumulated other comprehensive income 2,292 222,245
----------- -----------
(6,235,900) (5,117,614)
----------- -----------
3,469,482 1,531,309
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-2
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------------------------------------------------------------------------------
For the three months ended For the nine months ended
October 31, October 31, October 31, October 31,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
Revenues 677,229 361,672 1,690,835 1,056,827
Expenses:
Production cost 68,452 58,314 174,736 159,089
Selling and distribution cost 239,201 184,929 679,946 532,968
Research and development cost 170,985 144,608 522,041 374,497
Administrative costs 286,435 242,998 863,146 722,040
----------- ----------- ----------- -----------
Total operating expenses 765,073 630,849 2,239,869 1,788,594
----------- ----------- ----------- -----------
Operating loss (87,844) (269,177) (549,034) (731,767)
Other income (expense)
Interest, net (125,097) (144,010) (349,299) (241,479)
----------- ----------- ----------- -----------
Total other expense (125,097) (144,010) (349,299) (241,479)
----------- ----------- ----------- -----------
Loss before income taxes (212,941) (413,187) (898,333) (973,246)
Income taxes - - - -
----------- ----------- ----------- -----------
Net loss (212,941) (413,187) (898,333) (973,246)
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic and Diluted 30,386,539 30,386,539 30,386,539 30,386,539
=========== =========== =========== ===========
Net loss per common share
Basic and Diluted (0.01) (0.01) (0.03) (0.03)
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-3
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF DEFICIT IN STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
Accumulated
other
Common stock Accumulated comprehensive Comprehensive
Shares Amount deficit income Total loss
$ $ $ $ $
Balance at January 31, 2002 30,386,539 1,746,223 (7,086,082) 222,245 (5,117,614)
Comprehensive income (unaudited):
Foreign currency translation
adjustment (unaudited) - - - (219,953) (219,953) (219,953)
Net loss for the period (unaudited) - - (898,333) - (898,333) (898,333)
---------------
Total comprehensive income (unaudited) (1,118,286)
===============
------------ ------------ ------------ ------------ -----------
Balance at October 31, 2002
(unaudited) 30,386,539 1,746,223 (7,984,415) 2,292 (6,235,900)
============ ============ ============ ============ ===========
The accompanying notes are an integral part of these financial statements.
F-4
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------------------------------------------------------
For the nine months ended
October 31, October 31,
2002 2001
(unaudited) (unaudited)
$ $
Net cash flows used in operating activities
Net loss during the period (898,333) (973,246)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 143,102 95,114
(Profit)/loss on disposal of assets (374) 1,049
Changes in:
Accounts receivable (326,914) (436,973)
Inventories (37,745) 1,520
Prepaid expenses (9,549) 60,392
Accounts payable (2,111) (141,473)
Accrued liabilities 319,451 223,876
Taxation (17,524) -
---------- -----------
Net cash used in operating activities (829,997) (1,169,741)
---------- -----------
Cash flows provided by investing activities:
Acquisitions of property and equipment (98,954) (20,923)
Disposals of property and equipment 13,449 -
Acquisitions of intangible assets - (143,830)
Acquisition of subsidiary 478,338 -
---------- -----------
Net cash provided by investing activities 392,833 (164,753)
---------- -----------
Cash flows provided by financing activities:
Short-term credit facility 370,089 (545,856)
Borrowings received from notes payable 277,690 1,959,000
Repayment of borrowings (30,569) (22,055)
Principal payments on capital lease (53,825) (37,505)
---------- -----------
Net cash provided by financing activities 563,385 1,353,584
---------- -----------
Effect of exchange rate changes on cash 8,019 (19,090)
---------- -----------
Net increase in cash 134,240 -
Cash at beginning of period - -
---------- -----------
Cash at end of period 134,240 -
========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest 120,000 125,879
Non cash items during the period:
Taxation liability assumed on acquisition 1,750,108 -
The accompanying notes are an integral part of these financial statements.
F-5
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The accompanying financial statements have been prepared without audit pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to such rules
and regulations. These statements include all adjustments, consisting only of
normal recurring accruals, considered necessary for a fair presentation of
financial position and results of operations. The financial statements included
herein should be read in conjunction with the financial statements and notes
thereto included in the latest annual report on Form 10-KSB. The results of
operations for the nine month period ended October 31, 2002 are not necessarily
indicative of the results to be expected for the full year.
NOTE A - COMPANY DESCRIPTION
INVU, Inc. (the Company) is a holding company which operates one subsidiary INVU
Plc, which is a holding company for two subsidiaries of its own, INVU Services
(Services) and INVU International Holdings Limited (Holdings). Holdings has one
subsidiary of its own, INVU Netherlands BV (formerly Corsham Holding BV). The
Company was incorporated under the laws of the State of Colorado, United States
of America, in February 1997. INVU Plc, Services and Holdings are companies
incorporated under English Law. The Company operates in one industry segment
which includes developing and selling software for electronic management of many
types of information and documents such as forms, correspondence, literature,
faxes, technical drawings and electronic files. Services is the sales, marketing
and trading company for the UK market. INVU Netherlands BV is the sales,
marketing and trading company for the Benelux market and holds the licence to
the Benelux intellectual property rights to the INVU software. Holdings holds
the intellectual property rights to the INVU software.
NOTE B - GOING CONCERN
The financial statements have been prepared on a going concern basis which
assumes that the Company can meet its financial obligations as they fall due in
the ordinary course of business. The Company's liabilities exceeded its assets
by $6,235,900 at October 31, 2002 and the Company had negative cash flows from
operations of $829,997 for the nine months to October 31, 2002. Operations to
date have been funded principally by equity capital and borrowings. However, the
Company needs to raise sufficient financing to meet current obligations and to
fund operations until the operations become profitable. The Company is in the
process of negotiating the necessary additional financing to fund its
operations. The Company's ability to continue to develop its operations depends
on its ability to raise further financing. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
NOTE C - SHORT-TERM CREDIT FACILITY
The Company has a $312,900 ((pound)200,000) (January 31, 2002 $282,660
((pound)200,000)), 6% short-term credit facility with an English bank. The
credit facility is collateralized by all assets of the Company and a corporate
guarantee given by Vertical Investments Limited, a company in which a
non-executive director of this Company has an interest. The amount drawn against
the facility at October 31, 2002 was $302,102 ((pound)193,098), (January 31,
2002 $276,203 ((pound)195,431)). The amount drawn is payable on demand at the
bank's discretion. The credit facility is currently under review.
The Company also has a $391,125 ((pound)250,000) (January 31, 2002 $nil
((pound)nil)), base rate plus 3% short-term credit facility with an English
bank. The credit facility is collateralized by all assets of the Company and a
corporate guarantee given by Vertical Investments Limited, a company in which a
non-executive director of this Company has an interest. The amount drawn against
the facility at October 31, 2002 was $391,125 ((pound)250,000), (January 31,
2002 $nil ((pound)nil)). The amount drawn is payable on demand at the bank's
discretion. The facility is due for review in December 2002.
F-6
NOTE D - LONG-TERM OBLIGATIONS
Long-term obligations at October 31, 2002 and January 31, 2002, consist of the
following:
October 31, January 31,
2002 2002
(unaudited)
$ $
Unsecured loan from an individual, no stated maturity date; bearing interest
of $4,687 per month ((pound)3,000) 803,079 735,818
4% above Libor rate (Libor rate was 3.97% and 4% at October 31, 2002 and January
31, 2002 respectively) notes payable to an English bank, monthly payment
aggregating to (pound)500, matured in March 2002, collateralised by all assets
of the Company and a corporate guarantee given by Vertical Investments
Limited - 940
4% above Libor rate (Libor rate was 3.97% and 4% at October 31, 2002 and January
31, 2002 respectively) notes payable to an English bank, monthly payments
aggregating to (pound)1,333, maturing in June 2004, collateralised by all assets
of the Company, unlimited multilateral guarantees between subsidiary
undertakings and a corporate guarantee given by Vertical Investments Limited; a
quarterly loan guarantee premium of 1.5% per annum is payable on 85%
of the outstanding balance 45,892 56,530
2% above the banks base rate notes payable to an English bank, monthly payments
aggregating to (pound)50,000, starting in November 2002 (the repayment terms for
this loan are currently being renegotiated with the Company's bankers) and
maturing in October 2003, collateralised by all assets of the Company, unlimited
multilateral guarantees between subsidiary undertakings
and a corporate guarantee given by Vertical Investments Limited 938,700 847,980
Convertible A Note 1999-2002, with interest at 6%; interest due in
arrears biannually on January 1 and July 1 600,000 600,000
Convertible B Note 1999-2002, bearing interest of 8% per annum for the first six
months, 9% per annum for the next six months and 10% per annum
thereafter; interest due in arrears biannually on January 1 and July 1 400,000 400,000
Convertible loans 2001-2003 (i) with interest rate per annum of 1.5% above
UK bank base rates 159,000 159,000
Loan notes 2001-2005 (ii) with interest rate per annum of 7% 1,000,000 1,000,000
Loan notes 2001-2005 (iii) with interest rate per annum of 12% 500,000 500,000
Convertible loan 2001-2003 (iv) with interest rate per annum of 1.5% above 300,000 300,000
UK bank base rate
Convertible loan 2001-2005 (v) with interest rate per annum of 12% 550,000 275,000
Capital leases for vehicles, interest ranging from 10.2% - 16.9% with
maturities through 2004 125,360 164,153
---------- -----------
5,422,031 5,039,421
Less current maturities (4,008,292) (2,945,681)
----------- -----------
1,413,739 2,093,740
=========== ===========
F-7
Scheduled maturities of long-term obligation are as follows:
Year ending October 31, $
2003 4,008,292
2004 35,660
2005 575,000
2006 -
2007 803,079
--------------
5,422,031
==============
1) Convertible debentures
The A and B Convertible Notes 1999-2002 are held by individuals who are minority
shareholders in the Company. They are convertible into common shares at the rate
of one common share for every US$0.65 of outstanding principal Note converted
for the A Notes and one common share for every US$0.50 of outstanding principal
Note converted for the B Notes. Conversion will take place:
i) immediately prior to a Public Offering
ii) at the option of the investors for the B Notes and automatically for
the A Notes, upon new equity capital resulting in proceeds to the
Company of at least $4,000,000
iii) at the option of the investor giving 30 days notice to the Company.
Interest amounting to $247,914 has been accrued to October 31, 2002 (January 31,
2002 $172,383) in respect of the A and B Convertible Notes 1999-2002.
Any outstanding principal not converted or redeemed by the anniversary date,
which was August 16, 2001, will be redeemed at par plus interest after August
23, 2002 upon receipt of 30 days written notice from the Company or the
Investors. At October 31, 2002 the outstanding principal could have been
converted into 1,723,077 common shares.
In consideration of the Investors advancing an aggregate of $1,000,000, the
Company caused Montague Limited the principal shareholder to transfer, and
register in the name of the Investors, 225,000 shares of Common Stock of no par
value.
The convertible debentures are secured by a second charge over the Company's
assets.
F-8
2) Loan notes and convertible loan notes
All of the investors for the loan notes and convertible loan notes
detailed below are a related party of a minority shareholder and
non-executive director of the Company. Each description below
corresponds to the same romanette listed on the first table of Note D.
i) The convertible loan notes are repayable at any time within 2 years
from the date of issue. They are convertible into common stock at the
rate of one share for every US $0.25 of outstanding principal at any
time within the 2 years from the date of issue after 45 days notice has
been given to the Company.
ii) The loan notes are repayable on August 26, 2005. At any time from May
1, 2002 until August 26, 2005, the investor may demand repayment of the
entire loan or any part thereof at any time after three days notice to
the Company. If the Company does not timely repay such amounts after
receiving notice, the investor may convert the repayment amount into
shares of the Company's common stock at a conversion price of $0.2175
per share or convert the repayment amount into shares of the Company's
subsidiaries at the equivalent per share conversion price. The loan is
secured by a second charge over the Company's assets.
iii) The loan notes are repayable by June 17, 2005. At any time from May 1,
2002 until June 17, 2005, the investor may demand repayment of $475,000
or any part thereof at any time after three days notice to the Company.
If the Company does not timely repay such amounts after receiving
notice, the investor may convert the repayment amount into shares of
the Company's common stock at a conversion price of $0.13 per share or
convert the repayment amount into shares of the Company's subsidiaries
at the equivalent per share conversion price. The remaining $25,000 is
repayable on June 17, 2005. The loan is secured by a second charge over
the Company's assets.
iv) $250,000 of the convertible loan notes are repayable by May 25, 2003
and the remaining $50,000 are repayable by July 2, 2003. At any time
from May 1, 2002 until July 2, 2003, the investor may convert any
amount of the principal, at any time after three days notice to the
Company, into shares of the Company's common stock at a conversion
price of $0.25 per share or convert any amount of the principal into
shares of the Company's subsidiaries at the equivalent per share
conversion price. The loan is secured by a second charge over the
Company's assets.
v) The convertible loan notes are repayable by May 1, 2005. At any time
from May 1, 2002 until May 1, 2005, the investor may convert any amount
of the principal at any time, after three days notice to the Company,
into shares of the Company's common stock at a conversion price of
$0.13 per share or convert any amount of the principal into shares of
the Company's subsidiaries at the equivalent per share conversion
price. The loan is secured by a second charge over the Company's
assets.
The investor in the loan notes and convertible loan notes referred to in ii) -
v) above was granted two options in the common stock of the Company. The first
option is for 2,700,000 shares of the Company's common stock that may be
exercised at any time from March 1, 2002 until March 1, 2006 after three days
notice for any amount of shares up to 2,700,000 at an exercise price of $0.25
per share.
F-9
The second option is for 450,000 shares of the Company's common stock that may
be exercised at any time from March 1, 2002 until March 1, 2006 after three days
notice for any amount of shares up to 450,000 at an exercise price of $0.875 per
share.
On the date of issue of all of the convertible loan notes, the conversion rate
was in excess of the market price of the common stock and therefore, no
beneficial conversion feature expense has been recorded in the financial
statements.
3) Capital leases
The Company leases vehicles under noncancellable capitalized leases.
October 31, January 31,
2002 2002
(Unaudited)
$ $
Vehicles 263,747 287,722
Less accumulated depreciation (165,160) (134,410)
------------- ------------
98,587 153,312
============= ============
Scheduled maturities of minimum lease payments are as follows:
Period ending October 31, $
2003 124,096
2004 15,715
--------
139,811
Less amount representing interest 14,451
--------
Present value of net minimum lease payments 125,360
========
The scheduled net minimum lease payments to maturity are included in the
long-term obligation table above.
F-10
NOTE E - ACQUISITIONS
On August 23, 2002, the Group acquired 6,625,000 ordinary shares at a nominal
value per share of $0.44 ((euro)0.45) in Corsham Holding BV representing 100% of
the outstanding common shares of the company. Subsequent to the acquisition,
Corsham Holding BV changed its name to INVU Netherlands BV. Prior to the
acquisition, the trading assets of the company were removed and no continuing
revenues are expected to be generated.
The results of INVU Netherlands BV's operations have been included in the
consolidated financial statements since that date. Management believes that the
acquisition of INVU Netherlands BV will allow the Group to expand into Europe
with the advantage of generating cash and the possibility of creating tax
savings.
The aggregate purchase price was $4,195,778, including $1,271,769 of cash and
the assignment of an intercompany liability from the vendor of $2,924,009.
The following table summarizes the fair values of the assets acquired and
liabilities assumed at the date of acquisition.
At
August 23, 2002
$
Current assets 4,674,117
Total liabilities assumed (1,750,108)
-----------
Net assets acquired 2,924,009
Goodwill 1,271,769
-----------
Total consideration 4,195,778
===========
The Group paid more for the Company than the value of the net assets because
they believe that the current tax liability can be reduced via their expansion
into Europe. Of the total amount of goodwill, $nil is expected to be deductible
for tax purposes.
NOTE F - RELATED PARTY TRANSACTIONS
At October 31, 2002, David Morgan owed $22,790 ((pound)14,567) (January 31, 2002
$19,584 ((pound)13,857)) to the Company. The maximum liability during the period
amounted to $22,790 and the interest charge amounted to $Nil (January 31, 2002
$Nil).
The Company made purchases during the period under normal commercial terms from
Impakt Software Limited, a company owned by Paul O'Sullivan who is a potential
beneficiary of a discretionary trust, the res of which includes beneficial
ownership of the Company's common stock. The percentage of Mr O'Sullivan's
interest in the assets of the trust has not been determined. Total purchases
amounted to $8,256 in the three months to October 31, 2002 (Year to January 31,
2002 $136,340) and the balance owed by the Company at October 31, 2002 was
$1,195 (January 31, 2002 $6,477).
During the period, the Company paid Peter Fraser, a minority shareholder of the
Company, $62,574 for advisory services relating to the acquisition of Corsham
Holding BV.
F-11
NOTE G - RECENT PRONOUNCEMENT
On July 20, 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 141, Business Combinations
and SFAS 142, Goodwill and Other Intangible Assets. SFAS 141 is effective for
business combinations completed after June 30, 2001. SFAS 142 is effective for
fiscal years beginning after December 15, 2001; however certain provisions of
this Statement apply to goodwill and other intangible assets acquired between
July 1, 2001 and the effective date of SFAS 142.
These statements address how intangible assets that are acquired individually,
with a group of other assets or in connection with a business combination should
be accounted for in financial statements upon and subsequent to their
acquisition. The new statements require that all business combinations initiated
after June 30, 2001 be accounted for using the purchase method and establish
specific criteria for the recognition of intangible assets separately from
goodwill.
The Company adopted SFAS 141 on February 1, 2002, as permitted by the new
statement. The Company now no longer amortizes goodwill and other indefinite
lived intangible assets. The Company will test its goodwill and intangible
assets that are determined to have an indefinite life for impairment at least
annually. Other than in those periods in which the Company may record an asset
impairment, the Company expects that the adoption of SFAS 142 will not impact
its financial position or its results of operations.
The FASB issued SFAS 143, Accounting for Asset Retirement Obligations in June
2001. SFAS 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. SFAS 143 is effective for fiscal years beginning after
June 15, 2002. While the Company is currently evaluating the impact the adoption
of SFAS 143 will have on its financial position and results of operations, it
does not expect such impact to be material.
The FASB issued SFAS 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, in August 2001. SFAS 144, which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, supercedes SFAS 121 and is effective for
fiscal years beginning after December 15, 2001. While the Company is currently
evaluating the impact the adoption of SFAS 144 will have on its financial
position and results of operations, it does not expect such impact to be
material.
In June, 2002, the FASB issued Statement 146, "Accounting for Costs Associated
with Exit or Disposal Activities". SFAS 146 replaces previous accounting
guidance provided by EITF 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)", and requires companies to recognize costs
associated with Exit or disposal activities only when a liability for these
costs are incurred (subsequent to a commitment to a plan) rather than at the
date of a commitment to an exit or disposal plan. Examples of costs covered by
the Statement include lease termination costs and certain employee severance
costs that are associated with a restructuring, discontinued operations, plant
closings, or other initiated after December 31, 2002. Although management
believes the adoption of SFAS 146 will not have a material impact on the
Company's financial statements, adoption of the Statement will result in timing
differences in the recognition and measurement of expenses relating to exit and
disposal activities.
F-12
NOTE H - CONTINGENT LIABILITY
During the period there was a transfer of intellectual property between group
companies at a value of $38,754,351. This transfer eliminates on consolidation.
The Company has received independent tax advice that the transfers referred to
above will not result in a tax liability but no assurance can be given that the
applicable tax authorities will reach the same conclusion in the event of an
audit or other regulatory inquiry relating to the transaction.
F-13
Item 2. Management's Discussion and Analysis or Plan of Operation
The following description of "Management's Plan of Operation"
constitutes forward-looking statements for purposes of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and as such involves known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of INVU, Inc., a Colorado corporation (the
"Company"), to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. The words
"expect", "estimate", "anticipate", "predict", "believe", "forecast," "plan",
"seek", "objective", and similar expressions are intended to identify
forward-looking statements. Important factors that could cause the actual
results, performance or achievement of the Company to differ materially from the
Company's expectations include the following: (1) one or more of the assumptions
or other cautionary factors discussed in connection with particular
forward-looking statements or elsewhere in the Company's Form 10-KSB for the
fiscal year ending January 31, 2002 or in this Form 10-QSB prove not to be
accurate; (2) the Company is unsuccessful in increasing sales through its
anticipated marketing efforts; (3) mistakes in cost estimates and cost overruns;
(4) the Company's inability to obtain financing for general operations including
the marketing of the Company's products; (5) non-acceptance of one or more
products of the Company in the marketplace for whatever reason; (6) the
Company's inability to supply any product to meet market demand; (7) generally
unfavorable economic conditions which would adversely effect purchasing
decisions by distributors, resellers or consumers; (8) development of a similar
competing product at a similar price point; (9) the inability to successfully
integrate one or more acquisitions, joint ventures or new subsidiaries with the
Company's operations (including the inability to successfully integrate
businesses which may be diverse as to type, geographic area, or customer base
and the diversion of management's attention among several acquired businesses)
without substantial costs, delays, or other problems; (10) if the Company
experiences labor and or employment problems such as the loss of key personnel,
inability to hire and/or retain competent personnel, etc.; and (11) if the
Company experiences unanticipated problems and/or force majeure events
(including but not limited to accidents, fires, acts of God etc.), or is
adversely affected by problems of its suppliers, shippers, customers or others.
All written or oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by such factors. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Notwithstanding the foregoing, the Company is not entitled to rely on the safe
harbor for forward looking statements under 27A of the Securities Act or 21E of
the Exchange Act as long as the Company's stock is classified as a penny stock
within the meaning of Rule 3a51-1 of the Exchange Act. A penny stock is
generally defined to be any equity security that has a market price (as defined
in Rule 3a51-1) of less than $5.00 per share, subject to certain exceptions.
The following discussion should be read in conjunction with the
Consolidated Financial Statements, including the notes thereto.
The Company develops, markets and sells fully scalable software (under
the brand name of INVU) for the electronic management of all types of
information and documents, such as forms, correspondence, literature, faxes,
e-mail, technical drawings, electronic files and web pages. Management believes
that the INVU software strongly adheres to the Company's brand values of ease of
use, quality and price performance.
The Company's objective is to establish itself as a leading global
supplier of information and document management software and services.
Management believes that, as the market matures, the purchase of document
management systems will become increasingly routine as buyers become acquainted
with both the technology and applications. In order to deal with the increased
demand, the Company continues to increase its number of third party value added
resellers. Management considers both branding and product positioning
fundamental to attaining the market share required to profitably achieve its
objective of becoming a leading supplier of information and document management
software.
For its professional range of products, which include INVU Series 100,
Series 200, Series 250, i200 and CodeFree Integration, the Company continues to
target its sales and marketing efforts on several easily identifiable mature
market channels. These channels include software distributors and resellers who
market to small and medium size enterprises as well as departmental users in
major organizations, strategic alliances with hardware manufacturers and
distributors, and direct sales to major institutions and organizations. All of
the Company's development and marketing resources are now directed at these fast
growing and higher margin markets.
In November 1999, management decided to adopt a value added reseller
(VAR) model for sales of its professional range in the UK. The Company is also
pursuing non-exclusive distributors for its products in other territories.
Management is extremely encouraged by the number and quality of the resellers
that have been recruited to date to sell the product. Each VAR is currently
engaged, as an accredited reseller, at an initial fee of approximately $3000,
with a recurring annual fee thereafter. The Company continues to monitor its
resellers to ensure that they meet the stringent INVU accreditation
requirements, and consequently has cut a third of its former resellers that no
longer meet these requirements. The Company continues its aggressive VAR
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recruitment campaign, and having recruited nine new resellers during the quarter
ended October 31, 2002, management expects to recruit a further eight VARs by
January 31, 2003.
Typically in a VAR based route to market, sales success can be
inconsistent. However, the INVU sales management team has implemented an
intensive marketing and sales support program with its resellers, including
sales and technical training, joint seminars, direct mail and joint telephone
marketing campaigns. The success of this ongoing program has provided many of
the recruited resellers with a pipeline of end-user opportunities, which they
are actively pursuing with the involvement of Company sales personnel. Many
newly recruited resellers are taking sales orders within two weeks of
accreditation. The level of end user inquiries continues to grow and these
inquiries are now being converted into sales at a rapidly increasing rate. Even
more satisfying is the increase in average number of users per sale and the
significant reduction in time between first contact and order placement by end
users. Management believes that this reflects the Company's brand values of ease
of use, high quality and price performance.
Together with the steady increase in adoption of the INVU range of
products by companies in the small/medium enterprise market, management is
encouraged by the continuing level of interest from large organizations with new
and repeat orders being received from, among others, Centrica, Persimmon Homes,
Maersk Group, Universal Music Group, Millfield Partnership Limited, Rothschild
Bank Switzerland, Deloitte & Touche, MAN Financial and Mysis Financial
Solutions.
The Company has made significant progress with regard to an Original
Equipment Manufacture (OEM) opportunity with Xerox. As an Independent Software
Vendor, INVU has been designated as a Xerox Business Partner. Utilizing Xerox
SDK (software development kits), the Company has now developed software that
provides seamless integration with the Xerox Document Centre Range, of which
55,000 machines are currently in use in the UK. INVU has undertaken sales
training of key Xerox sales personnel and joint sales initiatives are
continuing.
The significant expansion of the sales team in the fiscal year ended
January 31, 2002, under the guidance of Jon Halestrap (VP of Sales and
Marketing), has given INVU an experienced and dedicated team with which to
recruit a reseller base and explore other sales opportunities. Management
believes that the increased experience in the document management sector of its
sales team and resellers together with their proven ability to develop and grow
sales revenue continues to be the key factors in the development of the Company.
Most current resellers have now attended the INVU bespoke sales training course,
which has proved extremely successful in terms of lead generation and
conversion. Management expects continued sales growth during the fiscal year
ended January 31, 2003 (the "Current Fiscal Year") and beyond.
Following the successful acquisition of Corsham Holding B.V, whose name
has now been changed to INVU Netherlands B.V., the Company now has
representation in Amsterdam, Holland. A country manager has been recruited, who
is directed by and responsible to the UK board. Sales opportunities have already
been identified and the first Dutch reseller has been appointed.
INVU has also appointed representatives in the Middle East, who have
attended trade shows and have generated a number of potential sales leads. The
Company is supporting these efforts wherever possible, but not incurring
unnecessary overheads.
Both the Dutch and Middle East ventures reflect INVU's global
aspirations, whilst ensuring that tight fiscal controls are exercised over the
business during this period of growth and change.
The Company believes its current products, together with planned future
developments, are well matched to its target market, and that its brand values
of ease of use, quality and price performance have already and will continue to
differentiate its products from its competitors. The international market for
document technologies is forecast to grow from $17.5 billion in 1999 to $41.6
billion in 2003 according to the AIIM Report: State of the Document Technologies
Market 1997-2003 prepared by IDC for the Gartner Group, and management believes
that it has the ability to be a major provider of information management to
businesses world-wide. Management believes that the INVU brand awareness is
increasing. Unsolicited inquiries from prospective end users and resellers are
increasing significantly, as are visitor numbers at exhibitions, trade fair and
shows.
Throughout the three months ended October 31, 2002, the Company has
continued to develop its software products.
Version 5.2 of the Company's professional range of products, INVU
Series 100 and Series 200, contains the newly developed OCR (Optical Character
Recognition) functionality, which works with all Microsoft OfficeTM and AdobeTM
file types and scanned images. This functionality automatically allows a user to
2
keyword search all existing documents in the system. This release also contains
a Microsoft Office Add-In, which allows integration with Microsoft OfficeTM
2000. This gives INVU the ability to send items from Microsoft Outlook to a
user-selectable in-tray. It also allows users to save documents from Microsoft
WORD, EXCEL and PowerPoint as an INVU filing, even if these files are created
outside of INVU. A separate "Sequential Workflow Module" has also been released
alongside Version 5.2. The "Sequential Workflow Module" allows documents, forms
and files to be "intelligently" routed electronically to specific departments
and individuals in a pre-determined sequence. Individuals who receive the file
may review and revise it, and the file will then be sent to the next individual
in the pre-determined order. The new module is a generic adaptation of the
bespoke program, which is already in use with customers such as Universal Music
Group. The workflow module is designed to be customer friendly and easy to use.
This is a separate 5.2 Module, which, when integrated with Version 5.2, is sold
as INVU Series 250, and charged accordingly. Sales and inquiry levels of this
product both continue to rise. Management believes that the functionality of
Series 250 has given the INVU range a much broader appeal to all its potential
customer base.
The Company has successfully developed a highly sophisticated code free
integration tool for use with the INVU professional range of products. This
allows INVU products to be linked to any other Windows(TM) or Windows(TM)
emulation-based applications. For instance, an INVU scanned image of a supplier
invoice can be retrieved directly from an accounts software application, or an
image of an x-ray can be retrieved directly from a patient records application.
This is achieved without the need for further software development and gives
INVU resellers the ability to add considerable value to the INVU product
offering without the difficulty and cost of hiring and managing development
programmers. Management believes the use of this product for Universal Music
Group and other projects has significantly reduced cost and installation
timescales. The Company believes that this product provides a significant
competitive advantage when compared to other information and document management
technologies. Sales of the "codefree" module have increased significantly, with
one in three INVU installations employing this technology. Management expects
this trend to continue particularly now that the new enhanced version of
"codefree" has been released into the market.
INVU i200 (formerly codenamed Series 2000 or INVU WEBFAST) allows
global access to retrieve, view, edit, and file information via the web. This
product was also released in beta format to several end users in the fourth
quarter of the last fiscal year and the first quarter of the Current Fiscal
Year. The full product release, originally scheduled for quarter two of the
Current Fiscal Year, has now been successfully launched. Management believes
that this product forms the basis of future developments for many of its
existing and future end users. In the opinion of management, with this
technology, INVU now offers a key functionality that is comparable to the
world's most established document and content management solutions, but at a
significantly lower price.
Development of a highly sophisticated content addressable indexing and
retrieval system reached the prototype stage during the second quarter of the
fiscal year ended January 31, 2002 and further development has taken place
during the Current Fiscal Year. Full text retrieval technology is already
available within the latest release of Series 200 and Series 250, but INVU is
developing technology that allows access to data and documents through
intelligent frequency of word and phrase recognition and semantic networking.
Scanned images can be converted into text using standard Optical Character
Recognition technology, and even poor quality scanned images can yield words and
phrases that INVU's technology will retrieve. The Company expects this product
to further enhance filing and retrieval speeds for organizations with large
multiple data storage requirements across networks, intranets, extranets and the
internet.
As stated in the Form 10QSB for the quarter ended July 31, 2002,
management decided not to integrate this technology within the latest release of
INVU products and has instead considered the further wide-ranging applications
for which this advanced technology can be utilized. An agreement was signed on
August 1, 2002 between The Britech Foundation Limited, Smashing Concepts Ltd (an
Israeli company) and INVU Inc. Britech is an Anglo-Israeli Government funding
initiative concerning bilateral co-operation in private sector industrial
research and development. INVU and Smashing Concepts put forward a joint
proposal to develop a web based application that will enable financial services
organizations to interrogate multiple data sources and, via an electronic
filtration mechanism, provide highly sophisticated categorization of information
within pre-determined parameters. This will allow faster and more accurate
retrieval of relevant data from which reliable decisions can be made. The
combination of INVU's proven technology and that provided by Smashing Concepts
has convinced Britech to invest nearly $500,000 into the project. INVU and
Smashing Concepts will invest, in new employees dedicated to this project and
other development expenses, a similar amount between them, and the project
should provide an end user solution within 18 months. Due to the cutting edge
technology being developed, management expects further spin-off benefits to
accrue which will complement the Company's current product portfolio.
Encouraging progress has been made on this project, which is currently on budget
and within original timescales.
Critical Accounting Policies
Invu's financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles in the United States.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
3
application of accounting policies. Critical accounting policies for Invu
include revenue recognition, accounting for research and development costs,
accounting for the impairment of long-lived assets, accounting for business
combinations and goodwill and accounting for contingencies.
Invu recognizes revenue in accordance with American Institute of
Certified Public Accountants (AICPA) Statement of Position (SOP) 97-2, Software
Revenue Recognition as amended by Statement of Position (SOP) 98-9, Modification
of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions,
(SOP 98-9). Fees for services and maintenance are generally charged to customers
separately from the license of software. Service revenue is recognized when
services are performed. Maintenance revenue is deferred and recognized ratably
over the term of the contract, normally twelve months. Revenues from license
fees are recognized upon product shipment when fees are fixed, collectability is
probable and the Company has no significant obligations remaining under the
licensing agreement. In instances where a significant vendor obligation exists,
revenue recognition is delayed until such obligation has been satisfied.
Invu accounts for research and development costs in accordance with
several accounting pronouncements, including SFAS 2, Accounting for Research and
Development Costs, and SFAS 86, Accounting for the Costs of Computer Software to
be Sold, Leased, or Otherwise Marketed. SFAS 86 specifies that costs incurred
internally in creating a computer software product should be charged to expense
when incurred as research and development until technological feasibility has
been established for the product. Once technological feasibility is established,
all software costs should be capitalized until the product is available for
general release to customers. Judgment is required in determining when the
technological feasibility of a product is established. Invu believes that
technological feasibility for its products is reached shortly before the
products are released to manufacturing. Costs incurred after technological
feasibility is established have been insignificant, and accordingly, the Company
has not capitalized any software development costs.
Invu follows the provisions of Statement of Accounting Standards (SFAS
No. 121), Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of. SFAS No. 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and items
related to those assets. The Company reviews long-lived assets to be held and
used for impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable. If the sum of the
undiscounted expected future cash flows is less than the carrying amount of the
assets, the Company recognizes an impairment loss. Impairment losses are
measured as the amount by which the carrying amount of the assets exceeds the
fair value of the assets. When fair values are not available, the Company
estimates fair value using the expected future cash flows discounted at a rate
commensurate with the risks associated with the recovery of the assets.
Invu follows the provisions of SFAS No. 14, Business Combinations and
SFAS No. 142, Goodwill and other Intangible assets. The Company capitalizes
goodwill arsing as a result of the acquisition of a subsidiary and does not
amortize this goodwill. The goodwill is subject to an impairment review at least
annually with any impairment provision being charged to the Statement of
Operations in the relevant period.
Invu follows the provisions of SFAS No. 5, Accounting for
Contingencies. SFAS No. 5 requires that an estimated loss from a loss
contingency should be accrued for by a charge to income if it is probable that
an asset has been impaired or a liability has been incurred and the amount of
the loss can be reasonably estimated. Disclosure of a contingency is required if
these is a possibility that a loss has been incurred.
Results of Operations
The following is a discussion of the results of operations for the nine
months ended October 31, 2002, compared with the nine months ended October 31,
2001, with further comparison between the three months ended October 31, 2002
and the three months ended October 31, 2001, together with changes in financial
condition during the nine month period ended October 31, 2002.
Total revenues increased by $315,557 or 87%, from $361,672 for the
three months ended October 31, 2001 to $677,229 for the three months ended
October 31, 2002, and increased by $634,008 or 60%, from $1,056,827 for the nine
months ended October 31, 2001 to $1,690,835 for the nine months ended October
31, 2002. This increase in revenues reflects the Company's continued expansion
of its customer base and the increasing awareness of the Company's software
products in the market place. Management believes this further reflects the
Company's understanding of the requirements of its end users.
The net loss for the three months ended October 31, 2002 was $212,941,
which is $200,246 or 48% less than the net loss for the corresponding period in
fiscal year 2001 of $413,187, mainly due to increased revenues. The net loss for
the nine months ended October 31, 2002 was $898,333, a decrease of $74,913, or
8%, from the corresponding period in fiscal year 2001 of $973,246, again mainly
due to the continued increase in revenues.
4
Production costs consist of royalty fees associated with third party
software, costs related to reproduction, packaging, and distribution of
software, direct costs associated with the implementation of software solutions,
consulting and training services and other costs related to product upgrades for
existing users. Production costs as a percentage of total revenues were 10% for
both the three and nine months ended October 31, 2002 compared to 16% and 15%,
respectively, during the same periods in fiscal year 2001. Despite the large
increase in sales, production costs only increased by $10,138, or 17%, during
the three months ended October 31, 2002 compared to the same period in fiscal
year 2001 and increased only $15,647, or 10%, during the nine months ended
October 31, 2002 compared to the same period in fiscal year 2001. These changes
reflect the continued fall in production costs per unit due to economies of
scale, mass production techniques and improved supply terms.
Selling and distribution costs consist primarily of personnel costs,
commissions, marketing literature, travel and promotional activities such as
trade shows, seminars, advertising and public relations programs. Selling and
distribution costs increased $54,272 or 29%, and $146,978 or 27%, respectively,
during the three and nine months ended October 31, 2002 compared to the same
periods in fiscal year 2001. Selling and distribution costs as a percentage of
total revenues were 35% and 40%, respectively, during the three and nine months
ended October 31, 2002 compared to 51% and 50%, respectively, during the same
periods in fiscal year 2001. The changes over the comparable three and nine
month periods were due to the Company's re-focussed marketing to the SME sector
in both 2001 and 2002, and costly trade shows and seminars to launch INVU Series
250 and the latest version of INVU Series 200. Again, the increased revenues had
a strong positive effect on selling and distribution costs as a percentage of
total revenues.
Research and development costs consist of continued software
development and further enhancements to existing software products. These costs
are expensed as incurred until technical feasibility has been established. To
date, the establishment of technical feasibility, and the subsequent general
release to customers, have been almost simultaneous, and, therefore, the Company
has not capitalized software development costs. Research and development costs
increased $26,377, or 18%, and $147,544, or 39%, respectively, during the three
and nine months ended October 31, 2002 compared to the same periods in fiscal
year 2001. Research and development costs as a percentage of total revenues were
25% and 31%, respectively, during the three and nine months ended October 31,
2002 compared to 40% and 35%, respectively, during the same periods in 2001. As
net revenues rise, research and development expenditures as a percentage of
sales over the comparable three and nine month periods have fallen in line with
managements forecasts. The Company's continued commitment to research and
development is reflected in the absolute increase in the research and
development expenditures during both the three and nine month periods of the
Current Fiscal Year when compared to the previous fiscal year. This continued
investment in research and development has provided the recent launch of Series
250, i200, the latest version of Series 200 and Advanced CodeFree Integration,
and continued work on the Britech project. Further functional enhancements to
the entire product range are also ongoing in order to provide end users with a
product that management believes has the best combination of value and
performance in its market sector.
Administrative costs include the personnel and other costs of the
administration, human resources and finance departments, together with property
expenses, amortization of intangibles and depreciation of tangible assets. These
costs increased $43,437, or 18%, during the three months ended October 31, 2002
and increased $141,106, or 20%, during the nine months ended October 31, 2002,
compared to the same periods in fiscal year 2001. Administrative costs as a
percentage of total revenues were reduced to 42% and 51%, respectively, during
the three and nine months ended October 31, 2002 compared to 67% and 68%,
respectively, during the same periods in fiscal year 2001. The dollar increases
in administrative costs over the comparable three and nine month periods was due
to the Company's additional legal fees relating to the now settled dispute with
GEM Advisors, Inc., amortization of intangible assets acquired in July 2001, and
an increase in general administrative costs.
During the three and nine months ended October 31, 2002, the Company
incurred net interest expense of $125,097 and $349,299, respectively, compared
to net interest expense of $144,010 and $241,479, respectively, during the
corresponding periods in fiscal year 2001. These movements are entirely due to
increased bank and loan facilities and the timing thereof. Management expects
these costs to fall when additional investment funding is secured.
The tax rates for the periods in question are zero due to a net loss in
each period.
The total current assets of the Company were $1,766,517 at October 31,
2002, an increase of $645,915 compared to $1,120,602 at January 31, 2002.
Working capital was negative $6,525,126 as of October 31, 2002, compared with
negative $3,434,581 as of January 31, 2002. These changes are mainly due to
increases in cash, accounts receivable, inventories, short term credit
facilities, accounts payable, accrued liabilities, deferred revenue and current
maturities of long term obligations. The cash relates to bank balances held by
the Dutch subsidiary. The Dutch subsidiary acquired in August 2002 has a tax
liability of $1,781,931 which is also responsible for the large increase in the
negative working capital. However, based on professional advice, management
believes that this liability will be expunged at January 31, 2003.
5
The Company has obtained a short term facility in the principal amount
of $391,125 from Bank Leumi and convertible loans from Vertical Investments, an
entity in which Daniel Goldman (a non-executive director) has an interest, in
the aggregate principal amount of $275,000 during the nine month period ended
October 31, 2002. Management believes these facilities and loans will be repaid
from the proceeds of future financings or, for the convertible loans, converted
into common stock of the Company.
Total assets of the Company were $3,469,482 at October 31, 2002, an
increase of $1,938,173 compared to $1,531,309 at January 31, 2002. This increase
in total assets is attributable to increases in fixed assets of $10,544, current
assets of $645,915, and intangible assets and goodwill of $1,281,714. The
goodwill of $1,308,227 at October 31, 2002 is in respect of the acquisition of
the Dutch subsidiary in August 2002 which is subject to an impairment review at
least annually.
The total current liabilities of the Company increased by $3,736,460
from $4,555,183 at January 31, 2002 to $8,291,643 at October 31, 2002. This
increase in current liabilities is due to an increase in short term credit
facilities of $417,024, mainly as a result of the Bank Leumi advance, and
increases in current maturities of long-term obligations of $1,062,611, accounts
payable of $51,945, accrued liabilities of $348,949, deferred revenue of $74,000
and taxation of $1,781,93. These changes continue to reflect the Company's
current reliance on short term credit facilities and loan finance, together with
the taxation liability of the recently acquired subsidiary, which management
believes will be cleared by tax credits at the end of the Current Fiscal Year.
Long-term obligations less current maturities were $1,413,739 at October 31,
2002 compared to $2,093,740 at January 31, 2002 due to the movement of previous
long term obligations that now fall due within twelve months.
Total stockholders' equity decreased by $1,118,286 during the nine
month period ended October 31, 2002 from a deficit of $5,117,614 at January 31,
2002 to a deficit of $6,235,900 at October 31, 2002. The Company continues to
evaluate various financing options, including issuing debt and equity to finance
future development and marketing of products as the Company has now moved to an
operational stage.
Financing Management's Plan of Operation
As a result of the increase in sales revenues, the Company is
approaching a position whereby it will be able to meet operating expenses out of
current assets. If revenues continue to grow as predicted and assuming that cash
collections are in line with management's forecasts, management believes that
the Company will be in a position to finance the Company's day to day operations
from internally generated working capital; however the Company is seeking
additional financing in order to pay down its outstanding indebtedness and to
enable the Company to further accelerate its growth both organically and through
acquisition.
The Company has a $312,900 short-term credit facility with an annual
interest rate currently of 6% with an English bank. The amount drawn against the
facility at October 31, 2002 was $302,102. This facility is currently under
review by the bank and a decision is expected before December 31, 2002. The
Company believes that the facility will be extended. The Company's bank also
provided a further credit facility of $938,700 in October 2001 by way of notes
payable with monthly repayments of $78,225 commencing in November 2002 until
October 2003. The November 2002 payment has not been made and the commencement
date and monthly repayment values are currently being negotiated as part of the
facility review mentioned above. This facility currently bears interest at the
rate of 6% per annum. All bank credit facilities and notes payable are
collateralized by all assets of the Company and a corporate guarantee given by
Vertical Investments Limited, a company in which Daniel Goldman, a non-executive
director of this Company, has an interest.
In August 1999, the Company received a loan in the aggregate principal
amount of $600,000 and a second loan in the principal amount of $400,000
(together "Loan Stock Instruments") from Alan David Goldman (the father of
Daniel Goldman), Vertical Investments Limited and Tom Maxfield (a non-executive
director of the Company). The Loan Stock Instruments currently bear interest at
the rate of 6% and 10% per annum, respectively, and may be converted into 1
share of common stock for each $0.65 and $0.50, respectively, of outstanding
principal and accrued but unpaid interest. If the Loan Stock Instruments are not
converted, they may be redeemed upon 30 days notice by the Company or the
investors on or after August 2002.
In February 2001, Vertical Investments Limited, a company in which
Daniel Goldman, a non-executive director of the Company, has an interest, lent
the Company $1,000,000. Vertical Investments Limited made further advances of
$250,000 in May 2001, $50,000 in July 2001, $500,000 in September 2001, $275,000
in December 2001 and $275,000 in February 2002 (collectively, the "Vertical
Loans"). Effective as of December 2001, the Vertical Loans were restructured to
6
apply conversion features to enable the loans to be converted into shares of the
Company's common stock at conversion prices ranging from $0.13 to $0.25 per
shares at various times.
In May 2001, the Company received $50,000 from Paysage Investments
Limited and in June 2001, the Company received $84,000 from Pershing Nominees
and $25,000 from Guernroy Limited. Each of these advances referenced in this
paragraph were made by way of convertible loans at an interest rate per annum of
1.5% above the UK bank base rate. Each of the convertible loans has maturity
date 24 months from date of issue, but principal and interest may be repaid at
any time without penalty. The loans are convertible at the rate of $0.25 per
share of common stock, and the investor may convert, having given 45 days
notice, at any time during the 24 month period.
In June 2002, the Company secured a short term credit facility of
$391,125 from Bank Leumi at an interest rate of 3% above the UK bank base rate.
The credit facility is collateralized by all assets of the Company and a
corporate guarantee given by Vertical Investments Limited, a company in which
Daniel Goldman, a non-executive director of this Company has an interest. The
amount drawn against the facility at October 31, 2002 was $391,125. The amount
drawn is payable on demand at the bank's discretion. The facility is due for
review on December 31, 2002.
On May 24, 1999, the Government of the United Kingdom of Great Britain
and Northern Ireland and the Government of the State of Israel signed an
agreement concerning the bilateral co-operation of the two countries in private
sector industrial research and development and establishing a United
Kingdom-Israel Industrial Research and Development Fund, also known as The
Britech Fund. As a result, the Company entered into a Co-operation and Project
Funding Agreement on August 1, 2002 with Smashing Concepts Ltd., a software
development company based in Israel ("Smashing Concepts"), and The Britech
Foundation Limited, the non-profit administrator of The Britech Fund
("Britech"), pursuant to which Britech approved a proposal submitted jointly by
the Company and Smashing Concepts for the financial support of a software
development project between the two companies (the "Project").
Britech agreed to provide funds by conditional grant for the
implementation of the Project in an amount equal to the lesser of (pound)310,000
(US$484,282) or 50% of the actual expenditures on the Project (as contemplated
in the approved budget of the Project). Such amount will be divided equally
between the Company and Smashing Concepts. On August 22, 2002, the Company
received an initial payment of (pound)71,000 (US$110,916) from Britech. Britech
is required to make an additional payment of (pound)66,000 (US$103,105) to the
Company after nine months subject to completion of the "integration phase" of
the Project, and Britech will make a final payment of (pound)18,000 (US$28,120)
to the Company upon the completion of the Project. The Company and Smashing
Concepts are required to make certain repayments to Britech of the grant amounts
based on the gross sales derived from the sale, leasing or marketing of
innovations developed during the course of the Project, as well as make certain
royalty payments to Britech based on sales of a patented products developed
during the course of the Project. Additionally, the Company and Smashing
Concepts are required to pay to Britech a percentage of all licensing revenues
achieved from products developed during the course of the Project.
On August 23, 2002, INVU International Holdings Limited, a wholly-owned
subsidiary of the Company ("INVU Holdings"), entered into an Agreement for the
Sale, Purchase and Transfer of Shares (the "Agreement) pursuant to which INVU
Holdings agreed to purchase all of the issued and outstanding stock (the
"Corsham Stock") of Corsham Holding B.V., a company incorporated under Dutch law
("Corsham"), from B.V. Holding Maatschappij "De Hondsrug," a company
incorporated under Dutch law ("B.V. Holding"). In consideration for the Corsham
Stock, INVU Holdings agreed to (i) assume an aggregate of (Euro) 3,006,294
(US$2,923,928) of debt owed by B.V. Holding to Corsham and (ii) make a cash
payment equal to (Euro) 965,544 (US$939,090) to B.V. Holding. The Agreement
provides that the acquisition of the Corsham Stock would be effective as of
August 23, 2002. The purchase price for the Corsham Stock was based on the net
asset value of Corsham on August 23, 2002, as set forth in Corsham's balance
sheet, plus an amount equal to 18.5% of Corsham's net profits before taxes for
the financial year 2002 through August 23, 2002.
Pursuant to the terms of the Agreement for the Sale, Purchase and
Transfer of Shares dated as of August 23, 2002, by and among INVU Holdings, B.V.
Holding and Corsham (the "Second Agreement"), INVU Holdings and Corsham entered
into a Transfer of Trade Secret and Exclusive License of Know-How Agreement on
September 6, 2002, pursuant to which INVU Holdings agreed, under certain
conditions, to transfer confidential information, an exclusive license to use
its technology and its business plan to Corsham. In exchange for such transfer,
Corsham has agreed to (i) make a cash payment equal to (Euro) 965,544
(US$950,385) to INVU Holdings and (ii) reduce the debt owed by INVU Holdings to
Corsham by (Euro) 1,330,783 (US$1,309,890). Pursuant to the terms of the Second
Agreement, INVU Holdings and Corsham also entered into an Exclusive Copyright
and Trademark/Tradename License Agreement on September 6, 2002 pursuant to which
INVU Holdings agreed, inter alia, to grant exclusive software and copyright
licenses of certain of its products to Corsham for an initial term of four (4)
years. In consideration for such exclusive licenses, Corsham has agreed to (i)
reduce the debt owed by INVU Holdings to Corsham by an additional (Euro)
1,675,511 (US$1,649,205) and (ii) pay an aggregate amount equal to (Euro)
35,400,661 (US$34,844,871) to INVU Holdings, which amount shall be loaned to
Corsham by INVU Holdings pursuant to a Loan Agreement entered into by INVU
7
Holdings and Corsham dated as of September 6, 2002. These transactions have been
eliminated in the consolidated financial statements. The value of the
distribution and technology transfer rights licensed to Corsham was based on two
valuations that INVU Holdings received from independent accounting firms. The
Company has received independent tax advice that the transfers referred to above
will not result in a tax liability but no assurance can be given that the
applicable tax authorities will reach the same conclusion in the event of an
audit or other regulatory inquiry relating to the transaction.
The distribution and technology transfer rights licensed to Corsham
will be written down in the financial statements of Corsham over a period
commensurate with standard accounting practices in the Netherlands to reflect
depreciation. It is, therefore, anticipated that this transaction will result in
a substantial reduction in Corsham's tax liability in the Netherlands. As a
result of this transaction the cash holdings of the INVU group increased by
approximately (pound)314,510 (US$478,338).
Additionally, INVU Holdings changed the corporate name of Corsham to
INVU Netherlands BV.
As noted above, the Company has continued to raise significant funding
during difficult market conditions. The Company is in the process of seeking
further financing from a number of sources in order to pay down its outstanding
indebtedness and to enable the Company to further accelerate its growth both
organically and through acquisition. There can, however, be no assurance that
additional debt or equity financing will be available, if and when needed, or
that, if available, such financing could be completed on commercially favorable
terms. Failure to obtain additional financing if and when needed, could have a
material adverse affect on the Company's business, results of operations and
financial condition. Please refer to Note B of the Consolidated Financial
Statements in conjunction with this paragraph regarding the Company's ability to
continue as a going concern.
Item 3. Controls and Procedures
Within 90 days prior to the date of this quarterly report, an
evaluation was performed under the supervision and with the participation of the
Company's management, including the CEO and CFO, 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 CEO and CFO,
concluded that the Company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company (including
its consolidated subsidiaries) required to be included in the Company's periodic
SEC reports. There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of their evaluation.
8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
There have been no changes in securities during the period.
Item 3. Default Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
On August 23, 2002, INVU International Holdings Limited, a wholly-owned
subsidiary of the Company ("INVU Holdings"), entered into an Agreement for the
Sale, Purchase and Transfer of Shares (the "Agreement) pursuant to which INVU
Holdings agreed to purchase all of the issued and outstanding stock (the
"Corsham Stock") of Corsham Holding B.V., a company incorporated under Dutch law
("Corsham"), from B.V. Holding Maatschappij "De Hondsrug," a company
incorporated under Dutch law ("B.V. Holding"). In consideration for the Corsham
Stock, INVU Holdings agreed to (i) assume an aggregate of (Euro) 3,006,294
(US$2,923,928) of debt owed by B.V. Holding to Corsham and (ii) make a cash
payment equal to (Euro) 965,544 (US$939,090) to B.V. Holding. The Agreement
provides that the acquisition of the Corsham Stock would be effective as of
August 23, 2002. The purchase price for the Corsham Stock was based on the net
asset value of Corsham on August 23, 2002, as set forth in Corsham's balance
sheet, plus an amount equal to 18.5% of Corsham's net profits before taxes for
the financial year 2002 through August 23, 2002.
Pursuant to the terms of the Agreement for the Sale, Purchase and
Transfer of Shares dated as of August 23, 2002, by and among INVU Holdings, B.V.
Holding and Corsham (the "Second Agreement"), INVU Holdings and Corsham entered
into a Transfer of Trade Secret and Exclusive License of Know-How Agreement on
September 6, 2002, pursuant to which INVU Holdings agreed, under certain
conditions, to transfer confidential information, an exclusive license to use
its technology and its business plan to Corsham. In exchange for such transfer,
Corsham has agreed to (i) make a cash payment equal to (Euro) 965,544
(US$950,385) to INVU Holdings and (ii) reduce the debt owed by INVU Holdings to
Corsham by (Euro) 1,330,783 (US$1,309,890). Pursuant to the terms of the Second
Agreement, INVU Holdings and Corsham also entered into an Exclusive Copyright
and Trademark/Tradename License Agreement on September 6, 2002 pursuant to which
INVU Holdings agreed, inter alia, to grant exclusive software and copyright
licenses of certain of its products to Corsham for an initial term of four (4)
years. In consideration for such exclusive licenses, Corsham has agreed to (i)
reduce the debt owed by INVU Holdings to Corsham by an additional (Euro)
1,675,511 (US$1,649,205) and (ii) pay an aggregate amount equal to (Euro)
35,400,661 (US$34,844,871) to INVU Holdings, which amount shall be loaned to
Corsham by INVU Holdings pursuant to a Loan Agreement entered into by INVU
Holdings and Corsham dated as of September 6, 2002. . These transactions have
been eliminated in the consolidated financial statements. The value of the
distribution and technology transfer rights licensed to Corsham was based on two
valuations that INVU Holdings received from independent accounting firms. The
Company has received independent tax advice that the transfers referred to above
will not result in a tax liability but no assurance can be given that the
applicable tax authorities will reach the same conclusion in the event of an
audit or other regulatory inquiry relating to the transaction..
The distribution and technology transfer rights licensed to Corsham
will be written down in the financial statements of Corsham over a period
commensurate with standard accounting practices in the Netherlands to reflect
depreciation. It is, therefore, anticipated that this transaction will result in
a substantial reduction in Corsham's tax liability in the Netherlands. As a
result of this transaction, the cash holdings of the INVU group increased by
approximately (pound)314,510 (US$478,338).
Additionally, INVU Holdings changed the corporate name of Corsham to
INVU Netherlands BV.
9
The Company previously disclosed that it would file a Form 8-K with the
required Corsham financial statements and pro-forma information; however, it has
determined that such filing is not required.
Item 6. Exhibits and Reports on Form 8-K.
None
EXHIBITS
(a) Exhibits
Exhibit
Number Description of Exhibit
-------- ----------------------
10.1 Overdraft Facility, dated July 19, 2000, by and between the Company and
the Bank of Scotland (incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-QSB filed September 19, 2000).
10.2 Corporate Guarantee, dated July 18, 2000, by and among the Company,
Invu Plc, Invu Services Limited, Invu International Holdings Limited
and the Bank of Scotland (incorporated by reference to Exhibit 10.2 of
the Company's Quarterly Report on Form 10-QSB filed September 19,
2000).
10.3 Debenture, dated July 13, 2000, by and between Invu International
Holdings Limited and the Bank of Scotland (incorporated by reference to
Exhibit 10.3 of the Company's Quarterly Report on Form 10-QSB filed
September 19, 2000).
10.4 Overdraft Facility, dated October 29, 2001, by and between the Company
and the Bank of Scotland (incorporated by reference to Exhibit 10.4 of
the Company's Quarterly Report on Form 10-QSB filed December 14, 2001).
10.5 Investment Agreement, dated August 23, 1999, among the Company, David
Morgan, John Agostini, Paul O'Sullivan, Alan David Goldman, and
Vertical Investments Limited (incorporated by reference from Exhibit
10.12 of the Company's Annual Report on Form 10-KSB filed October 15,
1999).
10.6 Loan Stock Instrument, dated as of August 23, 1999, by the Company in
favor of Alan David Goldman and Vertical Investments Limited
(incorporated by reference from Exhibit 10.13 of the Company's Annual
Report on Form 10-KSB filed October 15, 1999).
10.7 Loan Stock Instrument, dated as of August 23, 1999, by the Company in
favor of Alan David Goldman and Vertical Investments Limited
(incorporated by reference from Exhibit 10.14 of the Company's Annual
Report on Form 10-KSB filed October 15, 1999).
10.8 Supplemental Agreement, dated as of August 23, 1999, among the
Company, Vertical Investments Limited, Alan David Goldman, David
Morgan, John Agostini, Paul O'Sullivan, INVU Services Limited and Tom
Maxfield (incorporated by reference from Exhibit 10.15 of the
Company's Annual Report on Form 10-KSB filed October 15, 1999).
10.9 Financing Arrangement, effective as of December 27, 2001, between
Vertical Investments Limited, the Company, Invu Services Limited, Invu
International Holdings Limited and Invu PLC (incorporated by reference
from Exhibit 10.21 of the Company's Annual Report on Form 10-KSB filed
May 1, 2002).
10.10+ Co-operation and Project Funding Agreement, dated as of August 1, 2002,
by and between The Britech Foundation Limited and Smashing Concepts Ltd
and INVU Inc. (incorporated by reference from Exhibit 10.10 of the
Company's Quarterly Report on Form 10-QSB filed September 16, 2002).
10.11 Agreement for the Sale, Purchase and Transfer of Shares, dated as of
August 23, 2002, between and among B.V. Holding Maatschappij "De
Hondsrug," INVU International Holdings Limited, and Corsham Holding
B.V. (incorporated by reference from Exhibit 10.11 of the Company's
Quarterly Report on Form 10-QSB filed September 16, 2002).
10.12 Agreement for the Sale, Purchase and Transfer of Shares, dated as of
August 23, 2002, between and among B. V. Holding Maatschappij "De
Hondsrug," and INVU International Holdings Limited (incorporated by
reference from Exhibit 10.12 of the Company's Quarterly Report on Form
10-QSB filed September 16, 2002).
10
10.13 Exclusive Copyright and Trademark/Tradename License, dated as of
September 6, 2002, between INVU International Holdings Ltd. and Corsham
Holding B.V. (incorporated by reference from Exhibit 10.13 of the
Company's Quarterly Report on Form 10-QSB filed September 16, 2002).
10.14 Transfer of Trade Secret and Exclusive License of Know-How Agreement,
dated as of September 6, 2002, between INVU International Holdings Ltd.
and Corsham Holding B.V. (incorporated by reference from Exhibit 10.14
of the Company's Quarterly Report on Form 10-QSB filed September 16,
2002).
10.15 Loan Agreement, dated as of September 6, 2002, between INVU
International Holdings Ltd. and Corsham Holding B.V. (incorporated by
reference from Exhibit 10.15 of the Company's Quarterly Report on Form
10-QSB filed September 16, 2002).
10.16* Loan Agreement, dated as of June 13, 2002, between INVU Services
Limited and Bank Leumi (UK) plc.
99.1* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
_______________________
*Filed herewith
+Confidential materials deleted and filed separately with the Securities and
Exchange Commission
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Quarterly Report to be signed on
its behalf by the undersigned thereunto duly authorized.
INVU, INC.
(Issuer)
Date: December 16, 2002 By: /s/ David Morgan
----------------------------------------
David Morgan, President & Chief Executive
Officer
(Principal Executive Officer)
Date: December 16, 2002 By: /s/ John Agostini
----------------------------------------
John Agostini, Vice President-Chief
Financial Officer & Secretary
(Principal Financial Officer)
S-1
Certification Pursuant to Rules 13a-14 and 15d-14 of the
Securities Exchange Act of 1934, as amended
I, David Morgan, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of INVU, 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 we 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 function):
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.
Date: December 16, 2002
By: /s/ David Morgan
---------------------------------
David Morgan
President & Chief Executive Officer
I, John Agostini, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of INVU, 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 we 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 function):
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.
Date: December 16, 2002
By: /s/ John Agostini
----------------------------------
John Agostini
Vice President & Chief Financial
Officer
INDEX TO EXHIBITS
(a) Exhibits
Exhibit
Number Description of Exhibit
------- ----------------------
10.1 Overdraft Facility, dated July 19, 2000, by and between the Company and
the Bank of Scotland (incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-QSB filed September 19, 2000).
10.2 Corporate Guarantee, dated July 18, 2000, by and among the Company,
Invu Plc, Invu Services Limited, Invu International Holdings Limited
and the Bank of Scotland (incorporated by reference to Exhibit 10.2 of
the Company's Quarterly Report on Form 10-QSB filed September 19,
2000).
10.3 Debenture, dated July 13, 2000, by and between Invu International
Holdings Limited and the Bank of Scotland (incorporated by reference to
Exhibit 10.3 of the Company's Quarterly Report on Form 10-QSB filed
September 19, 2000).
10.4 Overdraft Facility, dated October 29, 2001, by and between the Company
and the Bank of Scotland (incorporated by reference to Exhibit 10.4 of
the Company's Quarterly Report on Form 10-QSB filed December 14, 2001).
10.5 Investment Agreement, dated August 23, 1999, among the Company, David
Morgan, John Agostini, Paul O'Sullivan, Alan David Goldman, and
Vertical Investments Limited (incorporated by reference from Exhibit
10.12 of the Company's Annual Report on Form 10-KSB filed October 15,
1999).
10.6 Loan Stock Instrument, dated as of August 23, 1999, by the Company in
favor of Alan David Goldman and Vertical Investments Limited
(incorporated by reference from Exhibit 10.13 of the Company's Annual
Report on Form 10-KSB filed October 15, 1999).
10.7 Loan Stock Instrument, dated as of August 23, 1999, by the Company in
favor of Alan David Goldman and Vertical Investments Limited
(incorporated by reference from Exhibit 10.14 of the Company's Annual
Report on Form 10-KSB filed October 15, 1999).
10.8 Supplemental Agreement, dated as of August 23, 1999, among the
Company, Vertical Investments Limited, Alan David Goldman, David
Morgan, John Agostini, Paul O'Sullivan, INVU Services Limited and Tom
Maxfield (incorporated by reference from Exhibit 10.15 of the
Company's Annual Report on Form 10-KSB filed October 15, 1999).
10.9 Financing Arrangement, effective as of December 27, 2001, between
Vertical Investments Limited, the Company, Invu Services Limited, Invu
International Holdings Limited and Invu PLC (incorporated by reference
from Exhibit 10.21 of the Company's Annual Report on Form 10-KSB filed
May 1, 2002).
10.10+ Co-operation and Project Funding Agreement, dated as of August 1, 2002,
by and between The Britech Foundation Limited and Smashing Concepts Ltd
and INVU Inc. (incorporated by reference from Exhibit 10.10 of the
Company's Quarterly Report on Form 10-QSB filed September 16, 2002).
10.11 Agreement for the Sale, Purchase and Transfer of Shares, dated as of
August 23, 2002, between and among B.V. Holding Maatschappij "De
Hondsrug," INVU International Holdings Limited, and Corsham Holding
B.V. (incorporated by reference from Exhibit 10.11 of the Company's
Quarterly Report on Form 10-QSB filed September 16, 2002).
10.12 Agreement for the Sale, Purchase and Transfer of Shares, dated as of
August 23, 2002, between and among B. V. Holding Maatschappij "De
Hondsrug," and INVU International Holdings Limited (incorporated by
reference from Exhibit 10.12 of the Company's Quarterly Report on Form
10-QSB filed September 16, 2002).
E-1
10.13 Exclusive Copyright and Trademark/Tradename License, dated as of
September 6, 2002, between INVU International Holdings Ltd. and Corsham
Holding B.V. (incorporated by reference from Exhibit 10.13 of the
Company's Quarterly Report on Form 10-QSB filed September 16, 2002).
10.14 Transfer of Trade Secret and Exclusive License of Know-How Agreement,
dated as of September 6, 2002, between INVU International Holdings Ltd.
and Corsham Holding B.V. (incorporated by reference from Exhibit 10.14
of the Company's Quarterly Report on Form 10-QSB filed September 16,
2002).
10.15 Loan Agreement, dated as of September 6, 2002, between INVU
International Holdings Ltd. and Corsham Holding B.V. (incorporated by
reference from Exhibit 10.15 of the Company's Quarterly Report on Form
10-QSB filed September 16, 2002).
10.16* Loan Agreement, dated as of June 13, 2002, between INVU Services
Limited and Bank Leumi (UK) plc.
99.1* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
_______________________
*Filed herewith
+Confidential materials deleted and filed separately with the Securities and
Exchange Commission.
E-2