SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED APRIL 30, 2003
[ ] 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 June 13, 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
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INVU, INC.
April 30, 2003
INDEX
Page No.
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PART I. FINANCIAL INFORMATION..............................................F-1
Item 1. Financial Statements......................................F-1
Consolidated Balance Sheets as of April 30, 2003.....F-2
Consolidated Statements of Operations.....................F-4
Consolidated Statements of Deficit in
Stockholders' Equity....................................F-5
Consolidated Statements of Cash Flows.....................F-6
Notes to Financial Statements.............................F-7
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........................... 9
SIGNATURES..................................................................S-1
EXHIBIT INDEX...............................................................E-1
CONSOLIDATED FINANCIAL STATEMENTS
INVU, INC. AND SUBSIDIARIES
APRIL 30, 2003
F-1
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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April 30, January 31,
2003 2003
(unaudited)
$ $
ASSETS
Current assets
Cash and cash equivalents 18,409 57,214
Accounts receivable:
Trade, net 1,036,277 1,559,094
VAT recoverable and other 1,103 916
Inventories 180,200 123,596
Prepaid expenses 89,764 67,075
----------- -----------
Total current assets 1,325,753 1,807,895
----------- -----------
Equipment, furniture and fixtures
Computer equipment 267,575 283,430
Vehicles 83,675 277,098
Office furniture and fixtures 119,297 121,037
----------- -----------
470,547 681,565
Less accumulated depreciation 235,680 395,940
----------- -----------
234,867 285,625
----------- -----------
Intangible assets, net 66,583 82,185
Goodwill 1,323,269 1,361,113
----------- -----------
Total assets 2,950,472 3,536,818
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-2
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
April 30, January 31,
2003 2003
(unaudited)
$ $
LIABILITIES AND DEFICIT IN STOCKHOLDERS' EQUITY
Current liabilities
Short-term credit facility 622,398 695,213
Current maturities of long-term obligations 3,704,918 3,643,239
Accounts payable 489,144 496,117
Accrued liabilities 1,002,120 1,187,452
Deferred revenue 455,406 380,009
Taxation liabilities 2,007,102 1,931,560
----------- -----------
Total current liabilities 8,281,088 8,333,590
----------- -----------
Long-term obligations, less current maturities 1,580,398 1,811,922
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 (8,263,957) (8,115,118)
Accumulated other comprehensive income (393,280) (239,799)
----------- -----------
(6,911,014) (6,608,694)
----------- -----------
Total liabilities and deficit in stockholders' equity 2,950,472 3,536,818
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-3
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
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For the three months ended
April 30, April 30,
2003 2002
(unaudited) (unaudited)
$ $
Revenues 616,169 412,351
Expenses:
Production cost 40,165 56,490
Selling and distribution cost 286,719 201,909
Research and development cost 190,489 177,191
Administrative costs 184,327 248,820
----------- -----------
Total operating expenses 701,700 684,410
----------- -----------
Operating loss (85,531) (272,059)
Other income (expense)
Interest, net (119,065) (106,101)
Cumulative adjustment 55,757 -
----------- -----------
Total other expense (63,308) (106,101)
----------- -----------
Loss before income taxes (148,839) (378,160)
Income taxes - -
----------- -----------
Net loss (148,839) (378,160)
=========== ===========
Weighted average shares outstanding:
Basic and Diluted 30,386,539 30,386,539
=========== ===========
Net loss per common share
Basic and Diluted (0.01) (0.01)
=========== ===========
================================================================================
The accompanying notes are an integral part of these financial statements.
F-4
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF DEFICIT IN STOCKHOLDERS' EQUITY
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Accumulated
other
Common stock Accumulated comprehensive Comprehensive
Shares Amount deficit income Total loss
$ $ $ $ $
Balance at January 31, 2003 30,386,539 1,746,223 (8,115,118) (239,799) (6,608,694)
Comprehensive income (unaudited):
Foreign currency translation
adjustment (unaudited) - - - (153,481) (153,481) (153,481)
Net loss for the period (unaudited) - - (148,839) - (148,839) (148,839)
---------------
Total comprehensive income (unaudited) (302,320)
===============
------------ ---------- ------------ ----------- -----------
Balance at April 30, 2003 (unaudited) 30,386,539 1,746,223 (8,263,957) (393,280) (6,911,014)
============ ========== ============ =========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the three months ended
April 30, 2003 April 30, 2002
(unaudited) (unaudited)
$ $
Net cash flows used in operating activities
Net loss during the period (148,839) (378,160)
Adjustments to reconcile net loss to net cash from/(used in)
operating activities:
Depreciation and amortization 41,631 43,701
Loss on disposal of assets (10,603) -
Changes in:
Accounts receivable 522,630 197,707
Inventories (56,604) (51,755)
Prepaid expenses (22,689) (9,667)
Accounts payable (6,973) 115,342
Accrued liabilities (109,935) (71,142)
---------- ----------
Net cash from/(used in) operating activities 208,618 (153,974)
---------- ----------
Cash flows from/(used in) investing activities:
Acquisitions of property and equipment (30,193) (72,393)
Proceeds from sale of property and equipment 54,507 -
---------- ----------
Net cash from/(used in) investing activities 24,314 (72,393)
---------- ----------
Cash flows (used in)/provided by financing activities:
Short-term credit facility (53,034) (21,602)
Borrowings received from notes payable - 275,000
Repayment of borrowings (55,272) (4,759)
Principal payments on capital lease (79,874) (10,900)
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Net cash (used in)/provided by financing activities (188,180) 237,739
---------- ----------
Effect of exchange rate changes on cash (83,557) (11,372)
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Net decrease in cash (38,805) -
Cash at beginning of period 57,214 -
---------- ----------
Cash at end of period 18,409 -
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest 51,000 35,000
The accompanying notes are an integral part of these financial statements.
F-6
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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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 three month period ended April 30, 2003 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 $6,911,014 at April 30, 2003. 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.
F-7
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE C - SHORT-TERM CREDIT FACILITY
At April 30, 2003 the Company had a $319,600 (or (pound)200,000) (at January 31,
2003 the amount was $328,470 (or (pound)200,000), 5.75% short-term credit
facility with an English bank. The credit facility is collateralised by all
assets of the Company, and a corporate guarantee given by Vertical Investments
Limited and a guarantee of $159,800 (or (pound) 100,000) given by David Morgan.
The amount drawn against the facility at April 30, 2003 was $222,898
((pound)139,486) (January 31, 2003 $284,288 ((pound)172,956)). The amount drawn
is repayable on demand at the bank's discretion. The credit facility is due for
renewal on February 10, 2004.
The Company also has a $399,500 ((pound)250,000) (January 31, 2003 $410,925
((pound)250,000)), 6.75% short-term credit facility with an English bank. The
credit facility is collateralised by all assets of the Company and a corporate
guarantee given by Vertical Investments Limited. The amount drawn against the
facility at April 30, 2003 was $399,500 ((pound)250,000) (January 31, 2003
$410,925 ((pound)250,000)). The amount drawn is payable on demand at the bank's
discretion. Negotiations for the renewal of this facility are ongoing.
F-8
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE D - LONG-TERM OBLIGATIONS
Long-term obligations at April 30, 2003 and January 31, 2003, consist of the
following:
April 30, January 31,
2003 2003
(unaudited)
$ $
Unsecured loan from an individual, no stated maturity date; bearing interest
of $4,794 per month ((pound)3,000) 744,724 795,637
4% above Libor rate (Libor rate was 3.66% and 3.97% at April 30, 2003 and
January 31, 2003 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 34,090 41,640
2% above base rate (base rate was 3.75% and 3.75% at April 30, 2003 and January
31, 2003 respectively) notes payable to an English bank, 4 monthly payments of
(pound)25,000 each starting in June 2003 and 10 monthly payments of
(pound)50,000 each starting in October 2003, collateralised by all assets of the
Company, unlimited multilateral guarantees between subsidiary undertakings
a corporate guarantee given by Vertical Investments Limited and a guarantee
of $159,800 (or (pound) 100,000) given by David Morgan 958,800 986,220
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% 550,000 550,000
Capital leases for vehicles, interest ranging from 10.2% - 16.9% with
maturities through 2004 38,702 122,664
--------- ---------
5,285,316 5,455,161
Less current maturities 3,704,918 3,643,239
--------- ---------
1,580,398 1,811,922
========= =========
F-9
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Scheduled maturities of long-term obligation are as follows:
Year ending April 30, $
2004 3,704,918
2005 260,674
2006 575,000
2007 -
2008 -
Thereafter 744,724
--------------
5,285,316
==============
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 $273,611 has been accrued to April 30, 2003 (January 31,
2003 $281,086) 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 in August 2002
upon receipt of 30 days written notice from the Company or the Investors. At
April 30, 2003 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-10
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
2) Loan notes and convertible loan notes
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-11
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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.
April 30, January 31,
2003 2003
(unaudited)
$ $
Vehicles 83,675 277,098
Less accumulated depreciation (50,714) (190,840)
------------- ------------
32,961 86,258
============= ============
Scheduled maturities of minimum lease payments are as follows:
Period ending April 30, $
2004 29,270
2005 13,365
-------
42,635
Less amount representing interest 3,933
-------
Present value of net minimum lease payments 38,702
=======
The scheduled net minimum lease payments to maturity are included in the
long-term obligation table above.
F-12
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE E - RELATED PARTY TRANSACTIONS
The Company made purchases during the three months ended April 30, 2003 under
normal commercial terms from Impakt Software Limited, a company owned by Paul
O'Sulivan 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 $nil (January 31, 2003 $75,001) and the
balance owed by the Company at April 30, 2003 was $1,220 (January 31, 2003
$1,256).
During the three months ended April 30, 2003, the company paid Peter Fraser, a
minority shareholder of the company, $nil (January 31, 2003 $63,998) for
advisory services relating to the acquisition of Corsham Holding BV.
The Company made purchases during the three months ended April 30, 2003 under
normal commercial terms from Vertical Investments Limited, a company in which
Daniel Goldman had an interest until December, 2002. Mr Goldman is a minority
shareholder and non-executive of the Company. A related party of Mr Goldman is a
beneficiary of a trust that indirectly owns Vertical Investments Limited. Total
purchases amounted to $nil (2003: $13,692) and the balance owed by the company
at April 30, 2003 was $14,316 (2003: $14,726).
NOTE F - RECENT PRONOUNCEMENT
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 and was adopted by the Company on February 1, 2003. The adoption
of SFAS 143 did have an impact on the Company's financial position and results
of operations.
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-13
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure an amendment of FASB Statement No. 123"
("SFAS 148"). SFAS 148 amends FASB Statement No. 123, "Accounting for
Stock-Based Compensation", to provide alternative methods of transition for an
entity that voluntarily changes to the fair value based method of accounting for
stock-based employee compensation and to require prominent disclosures about the
effects on reported net income of an entity's accounting policy decisions with
respect to stock-based employee compensation. SFAS 148 also amends APB Opinion
No. 28, "Interim Financial Reporting", to require disclosures about those
effects in interim financial information.
The Company currently intends to continue to account for its stock-based
compensation awards to employees and directors under the accounting prescribed
by Accounting Principles Board Opinion No. 25 and will adopt the additional
disclosure provisions of SFAS 148 during the first quarter of its year ending
January 31, 2004.
In December 2002, the FASB issued Interpretation 45 (FIN 45), Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. For a guarantee subject to FASB
Interpretation 45, a guarantor is required to:
- measure and recognize the fair value of the guarantee at inception
(for many guarantees, fair value will be determined using a present
value method); and
- provide new disclosures regarding the nature of any guarantees, the
maximum potential amount of future guarantee payments, the current
carrying amount of the guarantee liability, and the nature of any
recourse provisions or assets held as collateral that could be
liquidated and allow the guarantor to recover all or a portion of its
payments in the event guarantee payments are required.
The disclosure requirement of this Interpretation is effective for financial
statements for fiscal years ending after December 15, 2002 and did not have a
material effect on the Company's financial statements.
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements" and
provides guidance on the identification of entities for which control is
achieved through means other than through voting rights ("variable interest
entities" or "VIE's") and how to determine when and which business enterprise
should consolidate the VIE. This new model for consolidation applies to an
entity which either (1) the equity investors (if any) do not have a controlling
financial interest or (2) the equity investment at risk is insufficient to
finance that entity's activities without receiving additional subordinated
financial support from other parties. The provisions of this interpretation are
immediately effective for VIE's formed after January 31, 2003. For VIE's formed
prior to January 31, 2003, the provision of this interpretation apply to the
first fiscal year or interim period beginning after June 15, 2003. Management is
currently reviewing the application of FIN 46 and is unable to determine the
impact on the Company's results of operations or financial condition.
F-14
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends SFAS 133 to
provide clarification on the financial accounting and reporting of derivative
instruments and hedging activities and requires contracts with similar
characteristics to be accounted for on a comparable basis. INVU is in the
process of assessing the effect of SFAS 149 and does not expect the adoption of
it, which will be effective for contracts entered into or modified after June
30, 2003, to have a material effect on its financial condition or results of
operations.
In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS 150
establishes standards on the classification and measurement of financial
instruments with characteristics of both liabilities and equity. SFAS 150 will
become effective for financial instruments entered into or modified after May
31, 2003. INVU is in the process of assessing the effect of SFAS 150 and does
not expect the implementation of the pronouncement to have a material effect on
its financial condition or results of operations.
NOTE G - CONTINGENT LIABILITY
During the year ended January 31, 2002, there was a transfer of intellectual
property between group companies at a value of $38,754,351. This transfer
eliminated 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.
NOTE H - CUMULATIVE ADJUSTMENT
During the current quarter, management ascertained that the interest accrued on
certain loans were calculated incorrectly. The interest rate was applied to the
carrying sterling amounts recorded in the Company's books instead on the actual
dollar loan value. This resulted in an overaccrual on interest payable. The
cumulative adjustment in this quarter to correct the interest accrual was
$55,757. This overaccrual built up over the past 12 months as the exchange rate
between the US dollar and the British Pound moved significantly. The impact on
the interest expense in each of the prior quarters is not significant.
F-15
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 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.; (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; and (12) foreign
currency exchange rate fluctuations. 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, functionality 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 improve the quality of its 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 being a leading supplier of information and document management
software.
The Company is fully focussed on its professional range of products,
which include INVU Series 100, Series 200, Series 250, i200 and CodeFree
Integration, where 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.
Management has adopted a value added reseller (VAR) model for sales of
its products in the UK and Holland. 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 $3,820 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
half of its former resellers that no longer meet these requirements. The Company
1
continues its aggressive VAR recruitment campaign, and having recruited 33
(including four in Holland) new resellers during the year ended January 31,
2003. Management has set an ambitious target to recruit further VARs by January
31, 2004. A new sales manager, specifically tasked with this objective, joined
the Company in February 2003. Ten new VARs were recruited in the quarter ended
April 30, 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 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, amongst others, Samsung, Kraft, Centrica, Persimmon Homes,
Maersk Group, Universal Music Group, Millfield Partnership Limited, and Misys
Financial Solutions. In some cases these are multiple repeat orders.
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), provided INVU with an experienced and dedicated team with which to
recruit a reseller base and explore other sales opportunities during the year
ended January 31, 2003. The subsequent UK recruitment of a "Dealer Sign-Up
Manager", and a further "Business Development Manager" signals the Company's
intent to expand sales even further in fiscal year ended January 31, 2004 (the
"Current Fiscal Year").
Following the successful acquisition of Corsham Holding B.V., in August
2002, 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 Company's board of directors. Sales
opportunities have already been identified and realized. The initial success of
this venture has led to the recent expansion of the Dutch sales team and a
further three VARs have been recruited in Holland.
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 continues to support these efforts wherever possible without 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.
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 continue to be the key factors in the
rapid 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 Current Fiscal Year and beyond.
Management believes that the international market for document
technologies is growing at a rapid rate, and Management believes that it has the
ability to be a major provider of information management to businesses
world-wide. Management considers 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. The
Company believes that its current products, together with planned future
developments, are well matched to its target market, and that its brand values
of ease of use, functionality and price performance have already and will
continue to differentiate its products from its competitors.
The international market for document technologies was 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.
2
Throughout the three months ended April 30, 2003, 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
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. When the "Sequential Workflow Module" is integrated with
Version 5.2, they are sold as INVU Series 250, and charged accordingly. 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 a bespoke
program already in use with customers such as Universal Music Group. The
workflow module is designed to be customer friendly and easy to use. 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 of 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. 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. This product has successfully been used to
"document enable" many different applications, including accountancy, patient
record, financial back office and contact management systems, whereby a
"mouse-click" on a specified screen within the native application will
automatically link to INVU and provide a copy of the relevant image stored in
INVU. The displayed image could for example be an invoice, medical chart, tax
return or marketing literature. 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 and testing of a highly sophisticated content addressable
indexing and retrieval system has continued throughout the period. Full text
retrieval technology is already available within the latest release of Series
200 and Series 250, and INVU has developed technology, which is currently being
tested, that is designed to allow access to data and documents through
intelligent frequency of word and phrase recognition and semantic networking.
The technology is further designed to convert scanned images into text using
standard Optical Character Recognition technology, and even poor quality scanned
images may 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. Beta versions of this technology have
been incorporated into the Britech and other development projects.
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
3
from which reliable decisions can be made. The combination of INVU's proven
technology and that provided by Smashing Concepts have convinced Britech to
invest nearly $500,000 into the project. INVU and Smashing Concepts will invest
a similar amount between them in new employees dedicated to this project and
other development expenses, and the project should provide an end user solution
within 18 months of the contract date. Due to the cutting edge technology being
developed, Management expects further spin-off benefits to accrue that 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
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. 141, Business Combinations and
SFAS No. 142, Goodwill and other Intangible assets. The Company capitalizes
goodwill arising 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.
4
Results of Operations
The following is a discussion of the results of operations for the
three months ended April 30, 2003, compared with the three months ended April
30, 2002, together with changes in financial condition during the three month
period ended April 30, 2003.
Total revenues increased by $203,818, or 49%, from $412,351 for the
three months ended April 30, 2002 to $616,169 for the three months ended April
30, 2003. 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 April 30, 2003 was $148,839,
which is $229,321, or 61% lower than the net loss for the corresponding period
in fiscal year 2002 of $378,160 mainly due to increased revenues and decreases
in expenses and net interest expense
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 have decreased by $16,325 from $56,490 for the
three months ended April 30, 2002 to $40,165 for the three months ended April
30, 2003. Production costs as a percentage of total revenues were 6.5% for the
three months ended April 30, 2003 compared to 13.7% during the same period in
fiscal year 2002. The decrease was mainly due to hardware costs incurred in the
corresponding period in 2002, which did not recur this year. However, there has
been an underlying fall in production costs as a proportion of revenues due to
economies of scale, 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 by $84,810 from $201,909 in the three months to
April 30, 2002 to $286,719 in the three months ended April 30, 2003. Selling and
distribution costs as a percentage of total revenues decreased to 46.5% in the
three months ended April 30, 2003 compared to 49% in the same period in fiscal
year 2002. The decrease in the percentage over the comparable three month
periods was due to the Company's new VAR-focused marketing initiatives to
further increase sales during the Current Fiscal Year.
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 by $13,298, or 7.5%, from $177,191 in the three months ended April 30,
2002 to $190,489 during the three months ended April 30, 2003. Research and
development costs as a percentage of total revenues fell to 31% in the three
months ended April 30, 2003 compared to 43% in the same period in fiscal year
2002. The decreases in the percentage over the comparable three month period
reflected the Company's reduced reliance on costly sub-contract labor. Instead,
the Company now has an established in-house development team capable of meeting
all of the Company's planned development requirements. This continued investment
in research and development has provided the recent launch of the latest
versions of Series 200, Series 250, i200 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, exchange gains, debt provisions, amortization of intangibles and
depreciation of tangible assets. These costs decreased by $64,493, or 26%, from
$248,820 in the three months ended April 30, 2002 to $184,327 during the three
months ended April 30, 2003. Administrative costs as a percentage of total
revenues fell to 30% in the three months ended April 30, 2003 compared to 60% in
the same period in fiscal year 2002. The decrease in administrative costs over
the comparable three month period is entirely due to foreign currency exchange
gains of $110,555 for which the corresponding figure in the period to April 30,
2002 was $nil. Without this exchange gain, administrative costs would have
increased by $46,062 as compared to the corresponding period in the previous
fiscal year, but as a percentage of total revenues would still have fallen to
48%.
During the three months ended April 30, 2003, the Company incurred net
interest expense of $119,065 compared to net interest expense of $106,101 during
the corresponding period in fiscal year 2002. This increase is mainly due to an
increase in exchange rates. During the current quarter, a cumulative adjustment
of $55,757 was processed to correct an overaccrual on loan interest payable that
had been calculated using the sterling carrying amounts instead of the actual
dollar loan value. Management expects interest costs to fall if and when
additional investment funding is secured at favorable rates. Interest costs will
also decrease if and when net revenues are adequate to consistently generate net
cash inflows.
5
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 $1,307,344 at April 30,
2003, a decrease of $500,551 compared to $1,807,895 at January 31, 2003. Working
capital was negative $6,973,744 as of April 30, 2003, compared with negative
$6,525,695 as of January 31, 2003. These changes are mainly due to increases in
inventories, prepaid expenses, current maturities of long term obligations,
deferred revenue and taxation liabilities and decreases in accounts receivable,
cash, short term credit facilities, and accrued liabilities. The decrease in
accounts receivables of $522,817 from $1,559,094 at January 31,2003 to
$1,036,277 at April 30,2003, was due to reduced business in the first quarter of
the Current Fiscal Year compared to the fourth quarter of the previous fiscal
year in line with the Company's historic operating patterns. The cash relates to
bank balances held by the Dutch subsidiary. The Dutch subsidiary acquired in
August 2002 has a tax liability of $2,007,102. However, based on professional
advice, management believes that this liability will be expunged once agreement
of the tax computations and returns for the period ending January 31, 2003 has
been reached with the Dutch tax authorities, although 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. Management believes that a significant
part of the current maturities of long term obligations, together with accrued
interest included in accrued liabilities, will ultimately be converted into
equity and not become repayable.
Total assets of the Company were $2,950,472 at April 30, 2003, a
decrease of $586,346 compared to $3,536,818 at January 31, 2003. This is
attributable to decreases in fixed assets of $50,758, intangible assets and
goodwill of $53,446 and current assets of $500,551. The goodwill of $1,323,269
at April 30, 2003 is in respect of the acquisition of the Dutch subsidiary in
August 2002 for consideration of $4,195,778, including professional fees.
The total current liabilities of the Company increased by $10,253 from
$8,333,590 at January 31, 2003 to $8,281,088 at April 30, 2003. The change in
current liabilities is mainly due to increases in current maturities of
long-term obligations of $61,679, deferred revenue of $75,397 and taxation
liabilities of $75,542 together with decreases in accounts payable of $6,973,
short-term credit facility of $72,815 and accrued liabilities of $175,986. This
reflects the Company's growing financial stability as revenues rise and losses
fall.
Total stockholders' equity decreased by $302,320 during the three month
period ended April 30, 2003 from a deficit of $6,608,694 at January 31, 2003 to
a deficit of $6,911,014 at April 30, 2003. The Company is evaluating various
financing options, including issuing debt and equity to finance future
development, marketing of products, and strategic acquisitions.
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 current operating expense
payments out of current revenue receipts. 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 $319,600 short-term credit facility with an annual
interest rate currently of 5.75% with an English bank. The amount drawn against
the facility at April 30, 2003 was $222,898, which is repayable on demand at the
bank's discretion. This facility has been renewed and the next review date has
been set for February 10, 2004. The Company's bank also provided a further
credit facility of $958,800 in October 2001 by way of notes payable with
re-negotiated monthly repayments of $39,950 for June through September 2003 and
$79,900 from October 2003 through July 2004. This facility currently bears
interest at the rate of 5.75% per annum. All bank credit facilities and notes
payable are collateralized by all assets of the Company, a corporate guarantee
given by Vertical Investments Limited and a guarantee of $159,800 given by David
Morgan.
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 by the
investors into one 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
investors. The Loan Stock Instruments will also be automatically converted upon
the occurence of certain events. See "Note D-Long Term Obligations."
6
In February 2001, Vertical Investments Limited 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 then outstanding were
restructured to apply conversion features to enable the loans to be converted by
the Company into shares of the Company's common stock at conversion prices
ranging from $0.13 to $0.25 per shares at various times. The May and July loans
were due for repayment on May 25, 2003. Management has entered into discussions
with Vertical Investments regarding the re-structuring of these loans, and does
not believe that demands for repayment will be forthcoming.
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. These loans were due for
repayment in May and June, 2003. No formal demand for repayment has been made,
and Management also expects to restructure these loans.
In June 2002, the Company secured a short term credit facility of
$399,500 from Bank Leumi at an annual interest rate currently at 6.75%. The
credit facility is collateralized by all assets of the Company and a corporate
guarantee given by Vertical Investments Limited. The amount drawn against the
facility at April 30, 2003 was $399,500, which is repayable on demand at the
bank's discretion. The amount drawn is payable on demand at the bank's
discretion. Negotiations for the renewal of this facility are currently ongoing.
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$495,380) 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$113,458) from Britech, which
has been included in deferred revenue. Following the satisfactory completion of
the "integration phase" of the Project, Britech made an additional payment of
(pound)66,000 (US$105,468) to the Company on February 18, 2003. Britech will
make a final payment of (pound)18,000 (US$28,764) 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 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
7
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, although 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)322,627 (US$490,684).
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. As mentioned previously a number of loans
are now due for repayment, although demands for repayment have not yet been
made. Management has commenced negotiations regarding the repayment of these
loans and believes that demands for repayment will not be made until the Company
is in a position to meet those demands. 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.
None
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).
9
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).
10.13 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. (incorporated by reference from
Exhibit 10.16 of the Company's Quarterly Report on Form 10-QSB filed
December 16, 2002).
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
10
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: June 16, 2003 By: /s/ David Morgan
-------------------------------
David Morgan, President &
Chief Executive Officer
(Principal Executive Officer)
Date: June 16, 2003 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: June 16, 2003
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: June 16, 2003
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).
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).
E-1
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. (incorporated by reference from
Exhibit 10.16 of the Company's Quarterly Report on Form 10-QSB filed
December 16, 2002).
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