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 JULY 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 September 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.
July 31, 2002
INDEX
Page No.
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PART I. FINANCIAL INFORMATION.........................................................................................F-1
Item 1. Financial Statements.................................................................................F-1
Consolidated Balance Sheets as of July 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
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
i
CONSOLIDATED FINANCIAL STATEMENTS
INVU, INC. AND SUBSIDIARIES
JULY 31, 2002
F-1
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------------------------------------------
July 31, January 31,
2002 2002
(unaudited)
$ $
ASSETS
Current assets
Accounts receivable:
Trade, net 1,063,515 936,442
VAT recoverable and other 22,491 19,582
Inventories 134,056 78,782
Prepaid expenses 96,205 85,796
----------- -----------
Total current assets 1,316,267 1,120,602
----------- -----------
Equipment, furniture and fixtures
Computer equipment 247,716 148,579
Vehicles 318,036 287,722
Office furniture and fixtures 113,488 100,897
----------- -----------
679,240 537,198
Less accumulated depreciation 343,664 244,266
----------- -----------
335,576 292,932
----------- -----------
Intangible assets 104,147 117,775
----------- -----------
1,755,990 1,531,309
=========== ===========
LIABILITIES AND DEFICIT IN STOCKHOLDERS' EQUITY
Current liabilities
Short-term credit facility 692,839 276,203
Current maturities of long-term obligations 3,775,620 2,945,681
Accounts payable 581,307 506,161
Accrued liabilities 877,333 610,290
Deferred revenue 171,316 216,848
----------- -----------
Total current liabilities 6,098,415 4,555,183
----------- -----------
Long-term obligations, less current maturities 1,680,928 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 (7,771,471) (7,086,082)
Accumulated other comprehensive income 1,895 222,245
----------- -----------
(6,023,353) (5,117,614)
----------- -----------
1,755,990 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 six months ended
July 31, July 31, July 31, July 31,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
Revenues 601,255 393,139 1,013,606 695,155
Expenses:
Production cost 49,794 75,073 106,284 100,775
Selling and distribution cost 238,836 154,993 440,745 348,039
Research and development cost 173,865 116,430 351,056 229,889
Administrative costs 327,888 277,079 576,708 479,042
----------- ----------- ----------- -----------
Total operating expenses 790,383 623,575 1,474,793 1,157,745
----------- ----------- ----------- -----------
Operating loss (189,128) (230,436) (461,187) (462,590)
Other income (expense)
Interest, net (118,101) (46,760) (224,202) (97,469)
----------- ----------- ----------- -----------
Total other expense (118,101) (46,760) (224,202) (97,469)
----------- ----------- ----------- -----------
Loss before income taxes (307,229) (277,196) (685,389) (560,059)
Income taxes - - - -
----------- ----------- ----------- -----------
Net loss (307,229) (277,196) (685,389) (560,059)
=========== =========== =========== ===========
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) (0.02) (0.02)
=========== =========== =========== ===========
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) - - - (220,350) (220,350) (220,350)
Net loss for the period (unaudited) - - (685,389) - (685,389) (685,389)
--------------
Total comprehensive income (unaudited) (905,739)
------------ ----------- ------------ ------------ -----------
Balance at July 31, 2002 (unaudited) 30,386,539 1,746,223 (7,771,471) 1,895 (6,023,353)
============ =========== ============ ============ ===========
The accompanying notes are an integral part of these financial statements.
F-4
INVU, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------------------------------------------
For the six months ended
July 31, 2002 July 31, 2001
(unaudited) (unaudited)
$ $
Net cash flows used in operating activities
Net loss during the period (685,389) (560,059)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 93,527 55,504
Loss on disposal of assets - 1,049
Changes in:
Accounts receivable (27,447) (356,478)
Inventories (44,066) (11,060)
Prepaid expenses (1,284) 36,090
Accounts payable 20,469 (175,857)
Accrued liabilities 126,048 59,370
--------- ----------
Net cash used in operating activities (518,142) (951,441)
--------- ----------
Cash flows used in investing activities:
Acquisitions of property and equipment (80,156) (10,607)
Acquisitions of intangible assets - (143,900)
--------- ----------
Net cash used in investing activities (80,156) (154,507)
--------- ----------
Cash flows provided by financing activities:
Short-term credit facility 363,548 (300,216)
Borrowings received from notes payable 277,198 1,459,000
Repayment of borrowings (24,119) (26,383)
Principal payments on capital lease (23,190) (25,742)
--------- ----------
Net cash provided by financing activities 593,437 1,106,659
--------- ----------
Effect of exchange rate changes on cash 4,861 (711)
--------- ----------
Net decrease in cash - -
Cash at beginning of period - -
--------- ----------
Cash at end of period - -
========= ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest 76,000 60,000
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 six month period ended July 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). 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 and 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 $6,023,353 at July 31, 2002 and the Company had negative cash flows from
operations of $518,142 for the six months to July 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 $312,440 ((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 July 31, 2002 was $302,289 ((pound)193,502), (January 31, 2002
$276,203 ((pound)195,431)). The amount drawn is payable on demand at the bank's
discretion. The credit facility is due for review on September 30, 2002.
The Company also has a $390,550 ((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 July 31, 2002 was $390,550 ((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
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE D - LONG-TERM OBLIGATIONS
Long-term obligations at July 31, 2002 and January 31, 2002, consist of the
following:
July 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) 801,428 735,818
4% above Libor rate (Libor rate was 4.03% and 4% at July 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 4.03% and 4% at July 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 52,073 56,530
2% above the bank's base rate notes payable to an English bank, monthly payments
aggregating to (pound)50,000, starting in November 2002 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 937,320 847,980
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 156,727 164,153
----------- -----------
5,456,548 5,039,421
Less current maturities (3,775,620) (2,945,681)
----------- -----------
1,680,928 2,093,740
=========== ===========
F-7
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Scheduled maturities of long-term obligation are as follows:
Year ending July 31, $
2003 3,775,620
2004 302,413
2005 577,083
2006 -
2007 801,432
--------------
5,456,548
==============
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 $227,950 has been accrued to July 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 July 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
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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
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.
July 31, January 31,
2002 2002
(Unaudited)
$ $
Vehicles 318,036 287,722
Less accumulated depreciation (188,326) (134,410)
--------- ---------
129,710 153,312
========= =========
Scheduled maturities of minimum lease payments are as follows:
Period ending July 31, $
2003 130,329
2004 45,903
-------------
176,232
Less amount representing interest 19,505
-------------
Present value of net minimum lease payments 156,727
=============
The scheduled net minimum lease payments to maturity are included in the
long-term obligation table above.
F-10
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE E - RELATED PARTY TRANSACTIONS
At July 31, 2002 David Morgan owed $22,491 ((pound)14,397) (January 31, 2002
$19,584 ((pound)13,857)) to the Company. The maximum liability during the period
amounted to $22,491 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 rest 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 $23,814 in the three months to July 31, 2002 (Year to January 31,
2002 $136,340) and the balance owed by the Company at July 31, 2002 was $10,738
(January 31, 2002 $6,477).
NOTE F - 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 will adopt SFAS 141 on February 1, 2002, as permitted by the new
statement. Upon adoption, the Company will no longer amortize goodwill and other
indefinite lived intangible assets. The Company will be required to 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
F-11
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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.
NOTE G - SUBSEQUENT EVENTS
Since July 31, 2002 the Company has entered into an agreement with The Britech
Fund ("Britech") and Smashing Concepts Limited for a software development
project. Britech has 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. 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 six 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 ("Holdings"), a
wholly-owned subsidiary of the Company, entered into an Agreement for the Sale,
Purchase and Transfer of Shares (the "Agreement) pursuant to which 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, 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.
F-12
INVU, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Pursuant to the terms of the Agreement for the Sale, Purchase and Transfer of
Shares dated as of August 23, 2002, by and among Holdings, B.V. Holding and
Corsham (the "Second Agreement"), Holdings and Corsham entered into a Transfer
of Trade Secret and Exclusive License of Know-How Agreement on September 6,
2002, pursuant to which 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 Holdings and
(ii) reduce the debt owed by Holdings to Corsham by (Euro) 1,330,783
(US$1,309,890). Pursuant to the terms of the Second Agreement, Holdings and
Corsham also entered into an Exclusive Copyright and Trademark/Tradename License
Agreement on September 6, 2002 pursuant to which 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 Holdings,
which amount shall be loaned to Corsham by Holdings pursuant to a Loan Agreement
entered into by Holdings and Corsham dated as of September 6, 2002. The value of
the distribution and technology transfer rights licensed to Corsham was based on
two valuations that Holdings received from independent accounting firms.
The distribution and technology transfer rights licensed to Corsham will be
written down on 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. The Company anticipates
that as a result of this transaction the cash holdings of the INVU group will
increase by approximately (pound)360,000 (US$562,000).
Additionally, Holdings has changed the corporate name of Corsham to INVU
Netherlands BV.
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, 2003 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, 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 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 being 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.
1
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. Having now recruited 127 resellers, the
Company continues to monitor all existing resellers to ensure that they meet the
stringent INVU accreditation requirements. The Company continues its aggressive
VAR recruitment campaign, and having recruited 7 new resellers in the quarter
ended July 31, 2002, management expects to recruit a further 15 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, Hansa Capital, Bradford &
Bingley, Kraft, Inland Revenue, Universal Music Group, Millfield Partnership
Limited, Samsung, Brewin Dolphin, 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 INVU enhanced Document Centre is branded "VU Centre." Xerox's
largest European dealer, Printware Limited, is providing a full priced five-user
version of "VU Centre" with every Xerox Docucentre it sells.
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 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
fiscal year ended January 31, 2003 (the "Current Fiscal Year") and beyond.
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, functionality 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 July 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, Series 200 and ViewSafe, 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
2
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. Initial
sales of this product have been encouraging and inquiry levels for Series 250
are increasing.
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 quarter four of
the last fiscal year and quarter one of the Current Fiscal Year. The full
product release, originally scheduled for quarter two of the Current Fiscal Year
has been delayed until quarter three of the Current Fiscal Year. 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 key functionality that is comparable to the world's
most established document and content management solutions, but at a
significantly lower price level.
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, which 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 April 30, 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 and 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 organisations to interrogate multiple data sources and, via an
electronic filtration mechanism, provide highly sophisticated categorisation 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 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.
3
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 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 has been engaged in legal proceedings with GEM Advisors Inc.
(GEM). An agreement has recently been made, whereby Invu will pay $25,000 to GEM
in full and final settlement. SFAS 5, Accounting for Contingencies, requires
that an estimated loss from a loss contingency should be accrued 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 there is at least a reasonable possibility that a
loss has been incurred. The Company does not consider the sum above to have a
material impact on the Company's financial position or its results of
operations.
Results of Operations
The following is a discussion of the results of operations for the six
months ended July 31, 2002, compared with the six months ended July 31, 2001,
with further comparison between the three months ended July 31, 2002 and the
three months ended July 31, 2001, together with changes in financial condition
during the six month period ended July 31, 2002.
Total revenues increased by $208,116, or 53%, from $393,139, for the
three months ended July 31, 2001 to $601,255, for the three months ended July
31, 2002, and by $318,451, or 46%, from $695,155, for the six months ended July
31, 2001 to $1,013,606 for the six months ended July 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.
4
The net loss for the three months ended July 31, 2002 was $307,229,
which is $30,033 or 11% more than the net loss for the corresponding period in
fiscal year 2001 of $277,196, mainly due to increased interest expense of
$71,341. The net loss for the six months ended July 31, 2002 was $685,389, an
increase of $125,330, or 22%, from the corresponding period in fiscal year 2001
of $560,059, again mainly due to an increase in interest expense of $126,733.
Production costs consist of royalty fees associated with third party
software, costs related to reproduction, packaging, and despatch 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 8.3% and
10.5%, respectively, during the three and six months ended July 31, 2002
compared to 19.1% and 14.5%, respectively, during the same periods in fiscal
year 2001. Despite the large increase in sales, production costs decreased
$25,279, or 34%, during the three months ended July 31, 2002 compared to the
same period in fiscal year 2001 and increased only $5,509, or 5.5%, during the
six months ended July 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 $83,843, or 54%, and $92,706, or 27%, respectively,
during the three and six months ended July 31, 2002 compared to the same periods
in fiscal year 2001. Selling and distribution costs as a percentage of total
revenues were 40% and 43%, respectively, during the three and six months ended
July 31, 2002 compared to 39% and 50%, respectively, during the same periods in
fiscal year 2001. The changes over the comparable three and six 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
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 $57,435, or 49%, and $121,167, or 53%, respectively, during the three
and six months ended July 31, 2002 compared to the same periods in fiscal year
2001. Research and development costs as a percentage of total revenues were 29%
and 35%, respectively, during the three and six months ended July 31, 2002
compared to 30% and 33%, respectively, during the same periods in 2001. The
relative stability of research and development expenditure as a percentage of
sales over the comparable three and six month periods reflects the Company's
continued investment in its current and future products. This investment in
research and development has provided the recent launch of Series 250, the
latest version of Series 200 and Advanced CodeFree Integration, and continued
work on i200 and the Britech project.
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 $50,809, or 18%, during the three months ended July 31, 2002 and
increased $97,666, or 20%, during the six months ended July 31, 2002, compared
to the same periods in fiscal year 2001. Administrative costs as a percentage of
total revenues had reduced to 54% and 57%, respectively, during the three and
six months ended July 31, 2002 compared to 70% and 69%, respectively, during the
same periods in fiscal year 2001. The dollar increases in administrative costs
over the comparable three and six 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 six months ended July 31, 2002, the Company
incurred net interest expense of $118,101 and $224,202, respectively, compared
to net interest expense of $46,760 and $97,469, respectively, during the
corresponding periods in fiscal year 2001. These increases are entirely due to
increased bank and loan facilities. 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.
5
The total current assets of the Company were $1,316,267 at July 31,
2002, an increase of $195,665 compared to $1,120,602 at January 31, 2002.
Working capital was negative $4,782,148 as of July 31, 2002, compared with
negative $3,434,581 as of January 31, 2002. These changes are mainly due to
increases in accounts receivable, inventories, short term credit facilities,
accounts payable, accrued liabilities and current maturities of long term
obligations.
The Company has obtained a short term facility in the principal amount
of $390,550 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 six month period ended
July 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 $1,755,990 at July 31, 2002, an
increase of $224,681 compared to $1,531,309 at January 31, 2002. This increase
in total assets is attributable to increases in fixed assets of $42,644 and
current assets of $195,665, and a decrease in intangible assets of $13,628.
The total current liabilities of the Company increased by $1,543,232
from $4,555,183 at January 31, 2002 to $6,098,415 at July 31, 2002. This
increase in current liabilities is due to an increase in short term credit
facilities of $416,636 mainly as a result of the Bank Leumi advance, and
increases in current maturities of long-term obligations of $829,939, accounts
payable of $75,146 and accrued liabilities of $267,043. Deferred revenue has
decreased by $45,532. These changes continue to reflect the Company's current
reliance on short term credit facilities and loan finance. Long-term obligations
less current maturities were $1,680,928 at July 31, 2002 compared to $2,093,740
at January 31, 2002.
Total stockholders' equity decreased by $905,739 during the six month
period ended July 31, 2002 from a deficit of $5,117,614 at January 31, 2002 to a
deficit of $6,023,353 at July 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
The Company remains committed to raising the necessary funds to enable
the business to fulfill its potential and is engaged in or presently pursuing
the following financing transactions.
The Company has a $312,440 short-term credit facility with an annual
interest rate currently of 6% with an English bank. The amount drawn against the
facility at July 31, 2002 was $302,289. This facility is due for review on
September 30, 2002. The Company believes that at such maturity date the facility
will be extended. The Company's bank also provided a further credit facility of
$937,320 in October 2001 by way of notes payable with monthly repayments of
$78,110 commencing in November 2002 until October 2003. 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
$390,550 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 July 31, 2002 was $390,550 . The amount
drawn is payable on demand at the bank's discretion. The facility is due for
review in December 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 six 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 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
7
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. 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 distribution and technology transfer rights licensed to Corsham
will be written down on 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. The
Company anticipates that as a result of this transaction the cash holdings of
the INVU group will increase by approximately (pound)360,000 (US$562,000).
Additionally, INVU Holdings has changed the corporate name of Corsham
to INVU Netherlands BV.
This transaction, which was fully consummated on September 6, 2002,
constituted the acquisition of a significant amount of assets otherwise in the
ordinary course of business within the meaning of Item 2 of Form 8-K. The
financial statements of Corsham and the pro-forma information required by Item 7
of Form 8-K are not yet available. The Company expects that such financial
statements will be completed and filed pursuant to a Current Report on Form 8-K
within sixty (60) days after the filing of this Form 10-QSB.
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. Management estimates the financing
it is seeking, if consummated, would fulfill the Company's working capital
requirements (not including the repayment of the Company's outstanding loans)
for a period up to the point at which net sales revenues could sustain the
Company's day to day operations and also enable the Company to further
accelerate its growth both organically and through acquisition. There can,
however, be no assurance that the above transaction will be consummated or 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.
8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
As reflected in the Company's 10-KSB for the fiscal year ended January 31,
2002, a complaint was filed against the Company on February 23, 2001, in the
United States District Court for the Southern District of New York on behalf of
GEM Advisors, Inc. ("GEM") seeking money damages in the amount of $100,000
together with interest from September 21, 2000, costs, disbursement and
attorneys' fees. The complaint related to a $100,000 demand promissory note (the
"Note") dated May 1, 2000 and payable to the order of GEM. The Note bore
interest at a rate of 3% per annum and if payment was not made upon demand, the
rate increased to 15% per annum from the date of demand through and including
the date of payment. GEM was entitled to convert the unpaid balance and interest
into shares of the Company's Common Stock if payment was not made on demand.
Demand on the Note was made by GEM on September 21, 2000 and GEM sent the
Company a conversion notice on December 18, 2000 electing to convert the Note
into 179,643 shares of the Company's Common Stock. The Note was subsequently
converted and a share certificate was delivered to GEM, which GEM returned to
the Company contending that the timeliness of the delivery of the share
certificate violated the terms of related Note agreements.
In response, the Company filed an answer on or about April 16, 2001,
denying that any amounts were owing under the Note, and denying liability under
GEM's remaining causes of action. It was the Company's position that GEM made a
binding election to convert unpaid amounts due under the Note into shares of the
Company's Common Stock, and that the Company's tender of the share certificate
to GEM, and GEM's acceptance and retention of the share certificate, fully
satisfied the Company's obligations under the Note and discharged the Company
from any further liability under the Note.
The parties entered into a Settlement Agreement in May 2002 that obligated
the Company to pay GEM an aggregate of $50,000 in four equal installments during
2002. GEM in turn has agreed to return the 179,643 shares of the Company's
Common Stock (the "GEM Shares") to the Company or its assigns. The Company has
assigned its right to acquire the GEM Shares to an unaffiliated third party who
acquired the GEM Shares directly from GEM for $25,000. Such $25,000 reduced the
Company's settlement obligation to $25,000 from $50,000. On May 23, 2002, the
Judge signed an Order that discontinued GEM's action with prejudice. The Company
has met all the requirements of the Settlement Agreement, and all obligations
with regard to this matter have been discharged.
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. 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 distribution and technology transfer rights licensed to Corsham
will be written down on 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. The
9
Company anticipates that as a result of this transaction the cash holdings of
the INVU group will increase by approximately (pound)360,000 (US$562,000).
Additionally, INVU Holdings has changed the corporate name of Corsham
to INVU Netherlands BV.
This transaction, which was fully consummated on September 6, 2002,
constituted the acquisition of a significant amount of assets otherwise in the
ordinary course of business within the meaning of Item 2 of Form 8-K. The
financial statements of Corsham and the pro-forma information required by Item 7
of Form 8-K are not yet available. The Company expects that such financial
statements will be completed and filed pursuant to a Current Report on Form 8-K
within sixty (60) days after the filing of this Form 10-QSB.
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, between and among The Britech Foundation Limited and Smashing
Concepts Ltd and INVU Inc.
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.
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.
10
10.13* Exclusive Copyright and Trademark/Tradename License, dated as of
September 6, 2002, between and among INVU International Holdings Ltd.
and Corsham Holding B.V.
10.14* Transfer of Trade Secret and Exclusive License of Know-How Agreement,
dated as of September 6, 2002, between and among INVU International
Holdings Ltd. and Corsham Holding B.V.
10.15* Loan Agreement, dated as of September 6, 2002, between and among INVU
International Holdings Ltd. and Corsham Holding B.V.
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: September 16, 2002 By: /s/ David Morgan
-------------------------------
David Morgan, President &
Chief Executive Officer
(Principal Executive Officer)
Date: September 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;
Date: September 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;
Date: September 16, 2002
By: /s/ John Agostini
-----------------------------------
John Agostini
Vice President & Chief Financial
Officer
S-2
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, between and among The Britech Foundation Limited and Smashing
Concepts Ltd and INVU Inc.
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.
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.
10.13* Exclusive Copyright and Trademark/Tradename License, dated as of
September 6, 2002, between and among INVU International Holdings Ltd.
and Corsham Holding B.V.
10.14* Transfer of Trade Secret and Exclusive License of Know-How Agreement,
dated as of September 6, 2002, between and among INVU International
Holdings Ltd. and Corsham Holding B.V.
E-1
10.15* Loan Agreement, dated as of September 6, 2002, between and among INVU
International Holdings Ltd. and Corsham Holding B.V.
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