SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 31, 1998
--------------------------------
INVU, INC.
(Exact name of registrant as specified in charter)
COLORADO 000-22661 84-1135638
(State or other jurisdiction (Commission File Number) (IRS Employer
Identification No.) Identification No.)
THE BEREN, BLISWORTH HILL FARM
STOKE ROAD
BLISWORTH, NORTHAMPTONSHIRE NN7 3DB
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (01604) 859893
-----------------------------
SUNBURST ACQUISITIONS I, INC.
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
1
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements of businesses acquired
<TABLE>
<CAPTION>
INDEX
-----
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..............................................................F-1
CONSOLIDATED BALANCE SHEETS.....................................................................................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 CONSOLIDATED FINANCIAL STATEMENTS......................................................................F-6
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
Not Applicable
</TABLE>
2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
INVU, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of INVU,
Inc. (a development stage enterprise) and Subsidiaries as of January 31, 1998
and the related consolidated statements of operations, deficit in stockholders'
equity and cash flows for the period February 18, 1997 (date of inception) to
January 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of INVU,
Inc. and Subsidiaries as of January 31, 1998 and the consolidated results of
their operations and their consolidated cash flows for the period February 18,
1997 (date of inception) to January 31, 1998 in conformity with generally
accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the financial
statements, the Company (a development stage enterprise) has experienced losses,
is not generating cash from operations and has a deficit in stockholders'
equity. These circumstances raise substantial doubt about the Company's ability
to continue as a going concern. The Company's plans with respect to these
matters, including plans to continue funding its development expenses, are
described in Note D. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
GRANT THORNTON
Northampton, England
June 18, 1999
F-1
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
JULY 31, 1998 JANUARY 31,
(UNAUDITED) 1998
$ $
---------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 33,225 44,997
Accounts receivable:
Trade, net 165 307
VAT recoverable and other -- 30,653
Inventories 126,280 --
Prepaid expenses 9,650 10,701
--------- --------
TOTAL CURRENT ASSETS 169,320 86,658
EQUIPMENT, FURNITURE AND FIXTURES
Computer equipment 21,828 21,048
Vehicle 34,706 34,706
Office furniture and fixtures 29,938 29,213
-------- --------
86,472 84,967
Less accumulated depreciation 23,437 12,404
-------- --------
63,035 72,563
232,355 159,221
======== ========
LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term obligations 90,910 19,490
Accounts payable - 9,615
Accrued liabilities 44,659 10,086
-------- --------
TOTAL CURRENT LIABILITIES 135,569 39,191
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 313,294 48,388
DEFICIT IN STOCKHOLDERS' EQUITY
Preferred Stock, no par value
Authorized - 20,000,000; nil share issued and outstanding
Common Stock, no par value
Authorized - 100,000,000; issued and outstanding - 30,206,896 shares 288,355 288,355
Accumulated other comprehensive income 3,363 440
Accumulated deficit during the development stage (508,226) (217,153)
-------- --------
(216,508) 71,642
232,355 159,221
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED
-------------------------------------------------------------------------------
FEB. 18, 1997 FOR THE SIX FEB. 18, 1997 FEB. 18, 1997
(DATE OF MONTHS (DATE OF (DATE OF
INCEPTION) TO ENDED JULY INCEPTION) TO INCEPTION) TO
JULY 31, 1998 31, 1998 JULY 31, 1997 JANUARY 31, 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
$ $ $ $
------------------- ----------------- ------------------ -----------------------
<S> <C> <C> <C> <C>
Revenues 1,972 -- -- 1,972
Expenses:
Production costs 86,234 43,243 3,501 42,991
Distribution costs 67,426 27,248 16,156 40,178
Research and development costs 110,966 63,019 5,956 47,947
Administrative costs 240,337 155,565 32,582 84,772
---------- ---------- ---------- ----------
Total operating expenses 504,963 289,075 58,195 215,888
Operating loss (502,991) (289,075) (58,195) (213,916)
Other income (expense)
Interest, net (6,786) (2,678) (2,982) (4,108)
Other 1,551 680 -- 871
---------- ---------- ---------- ----------
Total other expense (5,235) (1,998) (2,982) (3,237)
---------- ---------- ---------- ----------
Loss before income taxes (508,226) (291,073) (61,177) (217,153)
---------- ---------- ---------- ----------
Income taxes -- -- -- --
---------- ---------- ---------- ----------
NET LOSS (508,226) (291,073) (61,177) (217,153)
========== ========== ========== ==========
Weighted average shares outstanding
Basic and Diluted 30,206,896 30,206,896 30,206,896 30,206,896
========== ========== ========== ==========
Net loss per common share:
Basic and Diluted (0.02) (0.01) (0.00) (0.01)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF DEFICIT IN STOCKHOLDERS' EQUITY
FOR THE PERIODS ENDED
-------------------------------------------------------------------------------------------------
COMMON STOCK PREFERRED STOCK ACCUMULATED
OTHER
ACCUMULATED COMPREHENSIVE COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT DEFICIT INCOME TOTAL INCOME
$ $ $ $ $ $
------------ ---------- --------- -------- ------------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares issued:
February 1997, 176,000 shares in
exchange for $288,640 176,000 288,640 -- -- -- -- 288,640
Reclassification of $1.64 common
stock (176,000) (288,640) -- -- -- -- (288,640)
Issuance of no par common stock in
connection with reverse
acquisition 28,696,552 288,355 -- -- -- -- 288,355
1,510,344 shares of common stock
issued at estimated value 1,510,344 750,000 -- -- -- -- 750,000
Reverse acquisition transaction costs (750,000) -- -- (750,000)
Comprehensive income:
Foreign currency translation
adjustment -- -- -- -- -- 440 440 440
Net loss during the period -- -- -- -- (217,153) -- (217,153) (217,153)
--------
Total comprehensive income (216,713)
---------- -------- ------- ------- -------- ------- -------- ========
Balance at January 31, 1998 30,206,896 288,355 -- -- (217,153) 440 71,642
Comprehensive income
Foreign currency translation
adjustment (unaudited) -- -- -- -- -- 2,923 2,923 2,923
Net loss during the period
(unaudited) -- -- -- -- (291,073) -- (291,073) (291,073)
--------
Total comprehensive income (288,150)
---------- -------- ------- ------- -------- ------- -------- ========
Balance at July 31, 1998 (unaudited) 30,206,896 288,355 -- -- (508,226) 3,363 (216,508)
========== ======= ======= ======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED
---------------------------------------------------------------------------------
FEB. 18, 1997 FEB. 18, 1997 FEB. 18, 1997
(DATE OF FOR THE SIX (DATE OF (DATE OF
INCEPTION) TO MONTHS ENDED INCEPTION) TO INCEPTION) TO
JULY 31, 1998 JULY 31, 1998 JULY 31, 1997 JANUARY 31, 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
$ $ $ $
------------------ ------------------ ------------------ ------------------------
<S> <C> <C> <C> <C>
Net cash flows used in operating
activities
Net loss during the period (508,226) (291,073) (61,177) (217,153)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation 23,563 11,134 2,020 12,429
Accounts receivable 54 31,077 (35,767) (31,023)
Inventories (127,435) (127,435) -- --
Prepaid expenses (9,663) 1,060 -- (10,723)
Accounts payable 402 (9,369) -- 9,771
Accrued liabilities 44,997 34,890 3,850 10,107
--------- --------- -------- ------
Net cash used in operating activities (576,308) (349,716) (91,074) (226,592)
Net cash flows used in investing
activities--acquisitions of property
and equipment (51,952) (1,518) (28,797) (50,434)
Cash flows used in investing activities:
Borrowings on notes payable--net 386,269 344,631 45,607 41,638
Principal payments on capital lease (13,694) (5,228) -- (8,466)
Proceeds from issuance of stock 288,640 -- 288,640 288,640
------- ----------- ------- -------
Net cash provided by financing activities 661,215 339,403 334,247 321,812
Effect of exchange rate changes on cash 270 59 (110) 211
--------- ---------- ---------- ------------
Net increase/(decrease) in cash 33,225 (11,772) 214,266 44,997
Cash at beginning of period -- 44,997 -- --
-------- -------- --------- ---------
Cash at end of period 33,225 33,225 214,266 44,997
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest 6,700 2,600 2,900 4,100
Income taxes -- -- -- --
</TABLE>
F-5
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of significant accounting policies consistently applied in
the preparation of the accompanying consolidated financial statements follows.
Insofar as the notes refer to the period of February 18, 1997 (date of
inception) to July 31, 1998 and the six months ended July 31, 1998, they are not
audited. In the opinion of management, the unaudited accumulated and interim
financial statements for the period of February 18, 1997 (date of inception) to
July 31, 1998 and the six months ended July 31, 1998 include all adjustments,
consisting of normal recurring accruals, necessary to present fairly the
Company's results of operations and cash flows. Operating results for the
interim period as of July 31, 1998 and for the six months ended July 31, 1998
are not necessarily indicative of the results that may be expected for the full
year.
NOTE A -- COMPANY DESCRIPTION
INVU, Inc. (the Company, previously known as Sunburst Acquisitions I, Inc., see
note B) 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 develops and sells 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 -- RECAPITALIZATION OF SHARES; SUBSEQUENT EVENT
On August 31, 1998, Sunburst Acquisitions I, Inc. (a public development stage
enterprise) acquired all of the outstanding shares of INVU Plc in exchange for
restricted shares of common stock of Sunburst Acquisitions I, Inc. (the
Exchange) pursuant to a Share Exchange Agreement between Sunburst Acquisitions
I, Inc. and the principal shareholder of INVU Plc. Sunburst Acquisitions I, Inc.
exchanged 26,506,552 shares of common stock for all of INVU Plc's issued and
outstanding shares of common stock. For accounting purposes, the Exchange was
treated as a recapitalization of INVU Plc where INVU Plc is the accounting
acquirer. All periods have been restated to give effect to the recapitalization.
The historic statements from inception up to the Exchange are those of INVU Plc.
Proforma information is not presented as this combination is not considered to
be a business combination. In connection with the Exchange, the directors and
officers of INVU Plc became the directors and officer of Sunburst Acquisitions
I, Inc. Also, Sunburst Acquisitions I, Inc. changed its name to INVU, Inc. In
connection with the Exchange, the Company issued 1,510,344 shares of Common
Stock of the Company to a consultant pursuant to a consulting agreement for
introducing INVU Plc and Sunburst Acquisitions I, Inc. The shares were estimated
to have a value of $750,000 and have been treated as a transaction cost in
connection with the Exchange. Immediately after the Exchange, INVU Plc's former
shareholders owned approximately 88% of the outstanding common stock of Sunburst
Acquisitions I, Inc.
NOTE C -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1 DEVELOPMENT STAGE COMPANY
The Company is in the development stage as defined by Statement of
Financial Accounting Standard No. 7, "Accounting and Reporting by
Development Stage Enterprises" (SFAS No. 7).
2 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries INVU Plc, Services and Holdings. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
F-6
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3 REVENUE RECOGNITION
The Company recognizes revenue in accordance with the provisions of
Statement of Position 97-2 "Software Revenue Recognition" (SOP 97-2)
issued by the American Institution of Certified Public Accountants
("ACIPA"). Fees for services and maintenance are generally charged to
customers separately from the license of software. 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.
For those licence agreements which provide the customers the right to
multiple copies in exchange for guaranteed amounts (including non
refundable advance royalties), license revenues are recognized at
delivery of the product master or the first copy. Per copy royalties on
sales which exceed the guarantee are recognized as earned.
Services revenue consists of training and consulting for which revenue
is recognized when the services are performed. Maintenance revenue
consists of ongoing support and maintenance and product updates for
which revenue is deferred and recognized ratably over the term of the
contract, normally twelve months.
In December 1998, the AICPA issued Statement of Position 98-9
"Modification of SOP 97-2, Software Revenue Recognition, With Respect
to Certain Transactions." (SOP 98-9) amends SOP 97-2 to require
recognition of revenue using the residual method for certain
multiple-element arrangement transactions entered into in fiscal years
beginning after March 15, 1999.
The Company is currently assessing the effects of complying with SOP
98-9, and has not yet made a determination of the impact, if any, on
its financial position or results of operations.
4 SOFTWARE DEVELOPMENT COSTS
Software development costs are included in research and development and
are expensed as incurred. Statement of Financial Accounting Standard
No. 86 "Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed" (SFAS No. 86) requires the
capitalization of certain software development costs once technological
feasibility is established, which the Company defines as establishment
of a working model. The working model criteria is used because the
Company's process of creating software (including enhancements) does
not include a detailed program design. The capitalized cost is then
amortized on a straight-line basis over the estimated product life, or
on the ratio of current revenues to total projected product revenues,
whichever is greater. To date, the period between achieving
technological feasibility and the general availability of such software
has been short and software development costs qualifying for
capitalization have been insignificant. Accordingly, the Company has
not capitalized any software development costs.
5 EQUIPMENT, FURNITURE AND FIXTURES
Equipment, furniture and fixtures are stated at cost. Depreciation is
provided in amounts sufficient to relate the cost of depreciable assets
to operations over their estimated services lives. The straight line
method of depreciation is followed for financial reporting purposes.
The useful lives are as follows:
F-7
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
-----
Computer equipment 4
Vehicles 4
Office furniture and fixtures 4
Expenditures for repairs and maintenance are charged to expense as
incurred and additions and improvements that significantly extend the
lives of assets are capitalized. Upon sale or retirement of depreciable
property, the cost and accumulated depreciation are removed from the
related accounts and any gain or loss is reflected in the results of
operations.
6 CASH
For the purpose of the consolidated statements of cash flows, the
Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
7 INVENTORIES
Inventories consist of licensed goods and goods for sale and are stated
at the lower of FIFO (first-in, first-out) cost or market.
8 ADVERTISING COSTS
Advertising costs are charged to expense as incurred. Advertising costs
incurred during the six months ended July 31, 1998 and for the period
February 18, 1997 (date of inception) to January 31, 1998 were
insignificant.
9 INCOME TAXES
The Company utilizes the liability method of accounting for income
taxes. Under the liability method, deferred tax assets and liabilities
are determined based on differences between financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected
to reverse. An allowance against deferred tax assets is recorded when
it is more likely than not that such tax benefits will not be realized.
10 USE OF ESTIMATES IN FINANCIAL STATEMENTS
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
11 NET LOSS PER SHARE
The Company has adopted Statement of Financial Accounting Standard No.
128, "Earnings Per Share" (SFAS No. 128).
The Company's basic net loss per share amount has been computed by
dividing net loss by the weighted average number of outstanding common
shares. For the periods of July 31, 1998 and February 18, 1997
F-8
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(date of inception) to January 31, 1998 respectively, no common stock
equivalents were included in the computation of diluted net earnings
per share.
12 FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consists of cash, trade
receivables, borrowings, trade payables and accrued liabilities. The
carrying amount of these instruments approximate the fair values
because of their short maturity. The fair value of non-current
financial assets and liabilities are estimated to approximate carrying
value based on considerations of risk, current interest rates and
remaining maturities.
13 FOREIGN CURRENCY TRANSLATION
The functional currency of the Company and its Subsidiaries is the
British pound sterling. The financial statements are presented in US
dollars using the principles set out in Statement of Financial
Accounting Standard No. 52 "Foreign Currency Translation" (SFAS No.
52). Assets and liabilities are translated at the rate of exchange in
effect at the close of the period. Revenues and expenses are translated
at the weighted average of exchange rates in effect during the period.
The effects of exchange rate fluctuations on translating foreign
currency assets and liabilities into US dollars are included as part of
the accumulated other comprehensive income component of stockholders'
equity.
14 COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income" (SFAS No. 130). SFAS No. 130
establishes standards for the reporting of comprehensive income in a
company's equity during the period that results from transactions and
other economic events other than transactions with its stockholders.
The Company's other comprehensive income results from foreign currency
translation adjustments.
15 SEGMENT REPORTING
The Company has adopted Statement of Financial Accounting Standard No.
131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS No. 131). A reportable segment, referred to as an
operating segment, is a component of an entity about which separate
financial information is produced internally, that is evaluated by the
chief operating decision-maker to assess performance and allocate
resources. The Company currently operates in one main industry segment
which includes the development and sales of software for electronic
management of many types of information and documents such as forms,
correspondence, literature, faxes, technical drawings, and electronic
files.
F-9
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16 NEW ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement of Financial Accounting
Standard No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133). This statement established accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. It requires
that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. The Company is currently assessing the
effects of adopting SFAS No.133, and has not yet made a determination
of the impact on its financial position or results of operations. SFAS
No. 133 will be effective for the Company's first quarter of fiscal
year 2001.
NOTE D - GOING CONCERN
The Company's liabilities exceed its assets and the Company has incurred losses
from operations primarily as a result of treating virtually all development
expenses since inception as current operating expenses. The Company is not
generating cash from operations. Operations to date have been funded principally
by equity capital and borrowings. The Company plans to continue to fund its
development expenses through additional capital raising activities, including
one or more offerings of equity and/or debt through private placements and/or
public offerings. The Company's ability to continue to develop its
infrastructure depends on its ability to raise other additional capital. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty. The Company is still building its operational
infrastructure. Additional capital raised by the Company, if any, will be used
for this purpose and to fund its planned launch of operations within the United
Kingdom.
NOTE E - INVENTORIES
Inventories consist of the following:
JULY 31, JANUARY 31,
1998 1998
(UNAUDITED)
$ $
---------------- -----------------
Licensed goods 118,080 --
Goods for resale 8,200 --
------- -----
126,280 --
======= =====
Licensed goods represent software licenses purchased by the Company which allow
the Company to manufacture and distribute a separate company's proprietary
software products in conjunction with and as an embedded component of the
Company's proprietary software. Goods for resale represent the finished
consolidated product to be sold to the end user.
F-10
<PAGE>
<TABLE>
<CAPTION>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE F - LONG-TERM OBLIGATIONS
Long-term obligations at July 31, 1998 and January 31, 1998 consist of the
following:
JANUARY
JULY 31, 31,
1998 1998
(UNAUDITED)
$ $
----------------- ---------------------
<S> <C> <C>
Non-interest bearing, unsecured loan from an individual, no
stated maturity date 282,080 --
8% note payable to corporate investors and individuals, payable
in six monthly installments commencing August 1999,
installments determined by balance due at August 1999 65,264 --
4% above Libor rate (Libor rate was 7.5% and 7.25% at
July 31, 1998 and January 31, 1998, respectively) notes
payable to an English bank, monthly payment aggregating to
(pound)500 ($820), maturing in March 2002, collateralized by all
assets of the Company and a limited personal guarantee by a
director 35,801 41,638
Capital lease for a vehicle, bearing interest at 16.9% maturing
in 2001 21,059 26,240
------ ------
404,204 67,878
Less current maturities 90,910 19,490
------ ------
313,294 48,388
======= ======
</TABLE>
Scheduled maturities of long-term obligations are as follows:
YEAR ENDING JANUARY 31, $
1999 19,490
2000 18,586
2001 18,586
2002 9,840
2003 1,376
Thereafter --
-------
67,878
=======
F-11
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company leases a vehicle under a noncancellable capitalized lease.
JULY 31, JANUARY 31,
1998 1998
(UNAUDITED)
$ $
-------------------------------------
Vehicle 34,706 34,706
Less accumulated depreciation 4,700 361
------- -------
30,006 34,345
======= =======
`
The following is a schedule by years of future minimum lease payments under the
capital lease together with the present value of the net minimum lease payments
as of January 31, 1998.
YEAR ENDING JANUARY 31, $
1999 10,304
2000 10,304
2001 10,304
Thereafter --
-----------
Total minimum lease payments 30,912
Less amount representing interest 4,672
-----------
Present value of net minimum lease payments 26,240
===========
The scheduled net minimum lease payments to maturity are included in the
long-term obligation table above.
NOTE G -- LEASE COMMITMENTS
The Company leases office space which expires in 2002. Rent expense totaled
approximately $8,600 and $13,000 at July 31, 1998 and January 31, 1998,
respectively.
The future minimum rental commitments as of January 31, 1998 are as follows:
YEAR ENDING JANUARY 31, $
1999 28,185
2000 28,185
2001 28,185
2002 28,185
Thereafter ----------
112,740
==========
NOTE H - INCOME TAXES
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes". Accordingly, a deferred tax
liability or deferred tax asset (benefit) is computed by applying the current
statutory tax rates to net taxable or deductible temporary differences between
pre-tax financial and taxable income.
F-12
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax benefits are recorded only to the extent that the amount of net
deductible temporary differences or carry forward attributes may be utilized
against current period earnings, offset against taxable temporary differences
reversing in future periods, or utilized to the extent of management's estimate
of future taxable income. Deferred tax liabilities are provided for on
differences between amounts reported for financial and tax basis accounting.
At July 31, 1998 and January 31, 1998, due to the Company's cumulative losses
since inception, a loss carry forward of approximately $472,000 and $201,000
respectively, may be utilized in the future for an indefinite period.
Net deferred tax assets resulting from the loss carry forward have been offset
by a valuation allowance of equal amounts at July 31, 1998 and January 31, 1998
due to the uncertainty of realizing the net deferred tax asset through future
operations. The valuation allowances were approximately $94,000 and $40,200 at
July 31, 1998 and January 31, 1998, respectively. The effective tax rate differs
from the statutory rate as a result of the valuation allowance. Gross deferred
tax liabilities were immaterial for all periods.
F-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INVU, INC.
(Registrant)
Date: August 23, 1999 By: /s/ David Morgan
----------------------------------------
David Morgan
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 23, 1999 By: /s/ John Agostini
----------------------------------------
John Agostini
Vice President - Chief Financial Officer
(Principal Financial Officer)
F-14
