SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2000
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 1-14827
`
EDUCATIONAL VIDEO CONFERENCING, INC.
(Exact name of small business as
specified in its charter)
Delaware 061488212
(State of other jurisdiction (IRS Employer Identification Number)
of incorporation of organization)
35 East Grassy Sprain Road, Suite 200, Yonkers, NY 10710
(Address of principal executive offices)
(914) 787-3500
(Issuer's telephone number, including area code)
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___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 4,347,243 shares of Common
Stock as of May 1, 2000.
<PAGE>
Table of Contents
Part I
Financial Information
Item 1. Financial Statements Page
----
Accountant's Review Report.....................................................3
Consolidated Balance Sheet as of March 31, 2000 (unaudited) and as of
December 31, 1999 (audited)....................................................4
Consolidated Statement of Operations for the three month periods
ended March 31, 2000 (unaudited) and March 31, 1999 (unaudited)..............5
Consolidated Statement of Cash Flows for the three month periods ended
March 31, 2000 (unaudited) and March 31, 1999 (unaudited)....................6
Notes to Consolidated Financial Statements.....................................7
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations
First Quarter Developments....................................................10
Comparison of the Three Month Periods Ended
March 31, 2000 and March 31, 1999............................................11
Liquidity and Capital Resources...............................................12
Forward-Looking Statements and Risk Factors...................................12
Part II
Other Information
Item 3. Changes in Securities and Use of Proceeds.............................13
Item 6. Exhibits and Reports on form 8-K......................................14
Signatures....................................................................16
Exhibit Index.................................................................17
2
<PAGE>
ACCOUNTANT'S REVIEW REPORT
To the Board of Directors
Educational Video Conferencing, Inc.
We have reviewed the accompanying consolidated balance sheet of Educational
Video Conferencing, Inc. and subsidiaries as of March 31, 2000, and the related
consolidated statements of operations, and cash flows for the three-month period
then ended. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less is scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ Goldstein Golub Kessler LLP
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
April 20, 2000
3
<PAGE>
EDUCATIONAL VIDEO CONFERENCING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
(unaudited) (audited)
Assets -------------- -----------------
Current Assets:
<S> <C> <C>
Cash and cash equivalents............................................................ $ 5,725,110 $ 6,925,823
Accounts receivable, net of allowance for doubtful
accounts of $130,000 and $75,000 respectively........................................ 1,662,437 461,234
Inventory............................................................................ 88,996 -
Prepaid expenses and other current assets............................................ 187,883 138,583
-------------- ---------------
Total current assets...................................................................... 7,664,426 7,525,640
-------------- ---------------
Property and equipment, net............................................................... 3,999,871 2,916,091
-------------- ---------------
Deferred income tax asset, net of valuation allowance..................................... - -
License agreement......................................................................... 250,000 200,000
Equity and other investments.............................................................. 170,283 240,533
Goodwill.................................................................................. 906,430 -
Other assets.............................................................................. 15,246 15,246
-------------- ---------------
Total assets.............................................................................. $ 13,006,256 $ 10,897,510
============== ===============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses................................................ $ 545,590 $ 524,539
Current maturities of capitalized lease obligations.................................. 15,717 15,717
-------------- ---------------
Total current liabilities................................................................. 561,307 540,256
Capitalized lease obligations, net of current maturities.................................. 41,607 46,034
-------------- ---------------
Total Liabilities......................................................................... 602,914 586,290
-------------- ---------------
Stockholders' Equity:
Preferred stock - authorized 1,000,000 shares, issued and
outstanding 400,000 shares and none, respectively 3,112,722 -
Common stock - $.0001 par value; authorized 20,000,000 shares, issued
and outstanding 4,347,243
shares ........................................................................... 435 435
Additional paid-in capital........................................................... 20,682,973 19,889,224
Accumulated deficit.................................................................. (11,392,788) ( 9,578,439)
-------------- ---------------
Stockholders' equity...................................................................... 12,403,342 10,311,220
-------------- ---------------
Total liabilities and stockholders' equity................................................ $ 13,006,256 $ 10,897,510
============== ===============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
EDUCATIONAL VIDEO CONFERENCING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended
-------------------
<S> <C> <C>
March 31, 2000 March 31, 1999
(unaudited) (unaudited)
----------- -----------
Net Revenue............................................................................... $ 2,215,614 $ 147,521
Other Income.............................................................................. 25,277 -
Interest Income........................................................................... 84,274 56,851
-------------- ---------------
Total Revenue............................................................................. 2,325,138 204,372
Operating expenses:
Cost of sales............................................................................. 529,131 58,458
Selling, general and administrative....................................................... 3,433,885 1,123,341
-------------- ---------------
Operating expenses........................................................................ 3,963,016 1,181,799
-------------- ---------------
Net loss.................................................................................. (1,637,878) (977,427)
-------------- ---------------
Beneficial conversion features of preferred stock......................................... (176,471)
Accreted value of warrants................................................................ (21,051)
Accreted dividends on preferred stock..................................................... (50,000) -
-------------- ---------------
Net loss available to common stockholders................................................. $ (1,885,400) $ (977,427)
============== ===============
Basic loss per common share............................................................... $ (0.43) $ (0.28)
Weighted average number of common shares outstanding...................................... 4,347,243 3,537,594
============== ===============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
EDUCATIONAL VIDEO CONFERENCING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended
-------------------
March 31, 2000 March 31, 1999
(unaudited) (unaudited)
----------- -----------
Cash flows from operating activities:
<S> <C> <C>
Net loss.................................................................................. $ (1,637,878) $ (977,427)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of goodwill............................................................. 30,000 -
Depreciation......................................................................... 220,170 83,845
Allowance for doubtful accounts...................................................... 5,000 5,000
Loss from equity method investment................................................... 25,250 -
Changes in operating assets and liabilities, net of effects in the acquisition of Interboro
Institute, Inc
Increase in accounts receivable...................................................... (737,676) (96,557)
(Increase)/decrease in prepaid expense............................................... 139,443 (33,218)
Decrease in inventory................................................................ 8,156 -
Decrease in other assets............................................................. - 1,200
Decrease in accounts payable and accrued expenses................................... (1,857,889) (662,580)
--------------- ------------------
Net cash used in operating activities..................................................... (3,805,424) (1,679,737)
Cash flows used in investing activities:
Purchase of Interboro Institute, Inc. net of cash acquired........................... 39,535 -
Net payments for other investments.................................................. (50,000) -
Purchase of equipment.............................................................. (1,110,397) (277,253)
--------------- ------------------
Net cash used in investing activities.................................................... (1,120,862) (227,253)
Cash flows from financing activities:
Net proceeds from issuance of common stock........................................... - 13,398,905
Decrease in deferred offering costs.................................................. - 900,000
Principal payments under capital lease obligations................................... (4,427) -
Net proceeds from issuance of preferred stock....................................... 3,730,000 -
-------------- ------------------
Net cash provided by financing activities................................................. 3,725,573 14,298,905
Net increase/(decrease) in cash and cash equivalents...................................... (1,200,713) 12,341,915
Cash and cash equivalents at beginning of period.......................................... 6,925,823 914,700
-------------- -----------------
Cash and cash equivalents at end of period................................................ $ 5,725,110 13,256,615
============== =================
See Notes to Consolidated Financial Statements
</TABLE>
6
<PAGE>
Notes to Consolidated Financial Statements
Note 1 - Business and Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Educational Video Conferencing, Inc. ("EVCI") and its wholly owned subsidiaries,
Interboro Institute, Inc. ("Interboro") and Interboro Holding, Inc. All
significant intercompany balances and transactions have been eliminated.
References below to EVCI include its subsidiaries unless the context requires
otherwise.
EVCI is a leading aggregator and distributor, via live interactive video
conferencing systems, of accredited college courses and degree programs, as well
as corporate training, professional development and continuing education
programs. The instructor can see and hear the students as the students see and
hear the instructor and communicate with the instructor and other students at
multiple locations. Educational content is currently being delivered by EVCI
over high speed point-to-point or multi-point digital data lines (T-1 or ISDN).
EVCI is deploying its proprietary broadband network design which, using Internet
Protocol infrastructure technology, permits EVCI to continue to provide two-way
multi-point, multi-media voice, video and data transmissions, including over the
Internet, but with controlled bandwidth and throughput. Using its broadband
network design, EVCI can deliver educational content at 30 frames per second
(broadcast quality) through DSL, ATM, T-1 lines, cable modems or satellite.
EVCI can deliver content to conference and training rooms and desktop computers
equipped with video conferencing capability. EVCI believes that its distance
learning technology and content delivery services comes closest to replicating
the classroom experience. EVCI also provides the consultative, marketing and
administrative services necessary to recruit and enroll students and deliver
courses and programs to them. EVCI receives a fee based on tuition payments
received by the education provider, typically after completion of courses.
Since January 14, 2000, EVCI has, through Interboro, owned and operated
Interboro Institute, a two year college in New York City. Interboro Institute
offers degree programs leading to the Associate of Occupational Studies Degree
in Business Administration (accounting and business management), ophthalmic
dispensing, paralegal studies, administrative secretarial arts (executive,
legal, correspondence or medical secretary) and security services and
management. Interboro Institute continues to operate as a campus college and
will also provide content for remote delivery by EVCI after requisite regulatory
approvals are obtained.
Interboro Institute presently has approximately 725 on-campus full-time
students. Most of its student body consists of non-traditional students who pay
their tuition using Federal (Pell) and New York State (TAP) tuition grants.
The accompanying unaudited interim financial statements, which have been
reviewed by Goldstein Golub Kessler LLP, have been prepared in accordance with
generally accepted accounting principles for interim financial information and
the requirements of item 310(b) of Regulation S -B. Accordingly, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. The financial statements reflect all adjustments
(consisting of normal recurring adjustments) which, in the opinion of
management, are necessary for a fair presentation of the results for the periods
shown. There have been no significant changes of accounting policy since
December 31, 1999.
7
<PAGE>
EVCI acquired the outstanding stock of Interboro on January 14, 2000 for (i)
$672,500, payable out of Interboro's earnings before interest, taxes, debt and
amortization ("EDITDA"), plus (ii) 50% of EBITDA for the three years ending June
30, 2001, 2002 and 2003.
EVCI's results of operations for the interim periods are not necessarily
indicative of the results expected for the full fiscal year or for any future
period and should be read in conjunction with the audited financial statements
of EVCI as of December 31, 1999 and for the year then ended and the notes
thereto in EVCI's 10-KSB for the year ended December 31, 1999.
The information in this report gives effect to a one-for-two reverse split of
the common stock effective February 23, 1999.
Note 2 - Earnings Per Share
Statement of Financial Accounting Standards ("SFAS") No 128, Earnings per Share,
requires dual presentation of basic earnings per share ("EPS") and diluted EPS
on the face of all statements for all entities with complex capital structures.
Basic EPS is computed as net earnings available to common stockholders divided
by the weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur from common shares
issuable through stock based compensation including stock options, restricted
stock awards, warrants and convertible securities. Diluted EPS is not presented
since the effect would be antidilutive.
Note 3 - Revenue Recognition
EVCI recognizes income ratably over the semester in which courses are given and
as services are performed. Unearned revenue from advance student billings is
netted against accounts receivable for financial statement reporting. For the
most recent semester beginning in January thru March 2000, advance billings
amounted to $727,114, which amounts are expected to be recognized as revenue
over the 2nd quarter.
Note 4 - Income Taxes
No provision for income taxes has been made for all periods presented since EVCI
has net operating losses. These net operating losses have resulted in a deferred
tax asset at March 31, 2000. Due to the uncertainty regarding the ultimate
amount of income tax benefits to be derived from EVCI's net operating losses,
EVCI has recorded a full valuation allowance.
Note 5 - Preferred Stock
On February 3, 2000, EVCI received gross proceeds of $4,000,000 for the issuance
of 400,000 shares of 7.5% convertible preferred stock and warrants to purchase
40,000 shares of common stock at 120% of the market price of EVCI's common stock
at the date of closing, as defined. The warrants are exercisable for three
years, commencing after one year after the date of closing. The transaction
costs incurred in connection with this private placement were approximately
$260,000. A value of $378,918 was assigned to the warrants. The preferred stock
is convertible into shares of common stock at a discount from the market price,
as defined in the agreement. This beneficial conversion feature, calculated as
the difference between the conversion price and the fair market value of EVCI's
common stock at the date of issuance, is being recognized as a non-cash dividend
to the preferred stockholder over the period from the date of issuance through
the date of earliest conversion, as defined. Accordingly, EVCI recorded a
$176,471 dividend for the three month period ended
8
<PAGE>
March 31, 2000 and will record dividends of $264,705 in each of the next two
fiscal quarters. On the third anniversary of the closing date, all outstanding
preferred stock automatically converts into common stock at the conversion terms
described above. EVCI may redeem any portion of the preferred stock, at any time
prior to its conversion, at 110% - 120% of its $10 per share stated value.
Note 6 - Segment Reporting
EVCI follows SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information." As a result of the acquisition of Interboro, EVCI has two
operating segments: (1) aggregator and distributor, via live interactive video
conferencing systems, of accredited college courses and degree programs, as well
as corporate training, professional development and continuing education
programs and (2) operator of a post secondary two-year degree-granting college.
Reportable segment data were as follows: For the three month ended March 31,
2000:
<TABLE>
<CAPTION>
<S> <C>
Net revenue and other income:
EVCI student course registrations $ 300,522
Interboro 1,915,092
----------------
Total net revenue $ 2,215,614
================
Operating companies net income (loss):
EVCI student course registrations $ (2,160,370)
Interboro 522,492
----------------
Total operating companies net loss $ (1,637,878)
================
Assets:
EVCI $ 12,037,004
Interboro 969,252
----------------
Total assets $ 13,006,256
================
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following information should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements and notes thereto for the year ended December 31, 1999
included in EVCI's 10-KSB for the year ended December 31, 1999 and in
conjunction with the financial statements and notes thereto for the three months
ended March 31, 2000 and 1999 included in Item 1 of this report.
9
<PAGE>
First Quarter Developments
EVCI continued to implement its business strategy during the first quarter by
activities that include:
o placing significantly greater emphasis on the marketing of training and
professional development content to corporations because they have significantly
larger budgets and demand for this kind of content than higher education content
and payments to EVCI for delivering training and professional development
content are more predictable and timely.
o deploying EVCI's proprietary broadband network design with the
expectation that, in the second quarter, EVCI will have the ability to begin
delivering content over this network.
o recruiting, hiring or retaining, training and redeploying management,
marketing, sales, technical and administrative personnel.
o allocating more time, personnel and other resources to accelerate the
implementation of agreements with corporate customers.
o acquiring Interboro, the owner and operator of Interboro Institute.
o entering into a multi-year co-marketing and education provider agreement
with Computer Generated Solutions Inc., a provider of information technology
corporate training programs. As a premier IBM business partner, and Microsoft
solutions provider, CGS offers over 250 instructor led courses, web-based
training, multi-media computer based training and custom-developed application
courses.
o entering into a multi-year education provider agreement with South
Carolina-based Clemson University that gives EVCI access to the Clemson's
continuing education and corporate training courses that include management,
engineering, manufacturing, textiles, professional development for women and
managing for diversity.
o entering into a multi-year education provider agreement with San
Francisco-based Golden Gate University that gives EVCI access to all of the
university's undergraduate, graduate and doctoral degrees, academic courses, and
continuing education programs.
o launching with Bell Atlantic Remote Learning Solutions, a marketing
campaign that bundles the offering of Bell Atlantic's DSL services with EVCI's
content, video conferencing and other services. EVCI has been advised by Bell
Atlantic that the Remote Learning Solution campaign has been selected as one of
Bell Atlantic's most significant marketing initiatives for the year 2000.
Approximately 900 Bell Atlantic account executives will be trained to sell the
Bell Atlantic/EVCI Remote Learning Solutions.
o entering into a co-marketing agreement with the National Football League
Players Association to offer Association members accredited college courses,
degree programs and professional development courses.
o entering into a multi-year agreement with the California State Baptist
Association to market educational programs to the Association's members.
10
<PAGE>
o entering into a multi-year agreement with edcor Data Services, a leading
third party administrator of corporate educational and training programs and
corporate tuition assistance programs. edcor services approximately 70 Fortune
500 clients that include Apple Computer, AT&T, Daimler-Chrysler, General Motors,
Hewlett-Packard, Lucent Technologies, Microsoft and United Parcel Service. EVCI
is outsourcing to edcor administrative services that EVCI was previously
providing to its customers and is also marketing edcor's services directly to
new customers. edcor, in turn, is marketing EVCI's services to its customers.
Comparison of the Three Month Periods Ended March 31, 2000 and March 31, 1999
Net revenues for the first quarter of 2000 increased to $2,215,614 from $147,521
in 1999 due primarily to a 104% increase in EVCI student course enrollment and
the addition of Interboro's net revenue of $1,917,964. EVCI course registrations
increased to approximately 3,900 in 2000 from approximately 794 in 1999. To
increase the rate and amount of student course registrations, EVCI has been (i)
increasing the number of student recruiters from 12 in the quarter ended March
1999 to 17 in the quarter ended March 2000, (ii) working more closely with
education providers and customers to implement and administer their agreements
with EVCI, (iii) focusing on obtaining education providers with national and
international reputations or regional appeal outside of the Northeast, (iv)
focusing on increasing corporate training programs, and (v) providing training
to EVCI's co-marketing partners regarding student recruitment.
Interboro Institute has approximately 725 on-campus full-time students and plans
to begin offering courses remotely through EVCI after obtaining requisite
regulatory approvals.
Other income of $25,277 includes miscellaneous income from Interboro tuition
applications fees and book sales, net of the cost of such books.
Interest income increased to $84,247 in 2000 from $56,851 in 1999 due to the
investment of the proceeds from EVCI's initial public offering.
Cost of sales increased to $529,131 in 2000 from $58,458 in 1999 primarily due
to an increase of $443,456 relating mostly to the direct cost of wages for
Interboro Institute's professors and adjunct professors.
Salaries and benefits increased by 227% to $1,744,886 in 2000 from $533,909 in
1999 primarily due to the increase in EVCI and Interboro Institute staff during
the quarter by 104 to 133 as compared to 29 in 1999. Of this increase $608,036
or 114%, relates to Interboro Institute's administrative staff. The 104
additional employees are engaged as follows: 69 in administration (including
full-time instructors) at Interboro Institute, and, at EVCI, 17 in sales, 5 in
recruiting, 5 in operations, 1 in business development, 2 in artwork and design,
2 in development and training and 3 in administration.
Marketing, brochures and student registrations costs increased to $370,611 in
2000 from $244,627 in 1999 due primarily to costs required to market EVCI's
services to an increasing number of potential students.
Professional fees increased to $191,774 in 2000 from $31,090 in 1999 due to
legal and accounting fees, resulting primarily from compliance with SEC
disclosure requirements, outside directors' fees and consulting fees relating to
enrollment services administration.
11
<PAGE>
Depreciation increased to $240,171 in 2000 from $83,845 in 1999 as a result of
purchases of videoconferencing equipment and equipment to test the delivery of
classes using EVCI's proprietary broadband network design.
Other expenses increased to $861,443 in 2000 from $229,870 in 1999 primarily due
to increases in rent, communications, postage, insurance, computer expenses,
travel and entertainment costs, office expenses and investor relations costs
that were incurred to support EVCI's growth. $169,828 of the increase relates to
rent, telephone and other expenses of Interboro Institute.
Liquidity and Capital Resources
EVCI's initial public offering was completed in the first quarter of 1999,
resulting in gross proceeds to EVCI of $16,060,000 and net proceeds to EVCI of
approximately $13,399,000.
During the first quarter of 2000, EVCI infused $1,800,000 into Interboro for
working capital and to satisfy certain net worth and other financial
requirements. EVCI does not currently anticipate that Interboro will require
additional significant cash infusions from EVCI for the foreseeable future.
On February 3, 2000, EVCI received gross proceeds of $4,000,000 and net proceeds
of approximately $3,740,000 for the issuance of 400,000 shares of its 7.5%
convertible preferred stock to The Shaar Fund Ltd.
Capital expenditures for the three months ended March 31, 2000 increased to
$1,110,397 compared to $277,253 for the three months ended March 31, 1999. This
increase was primarily attributable to purchases of video conferencing equipment
required at EVCI's education providers' and corporate customers' sites where
EVCI's video conferenced programs are offered and for the purchase of equipment
to test and deploy EVCI's proprietary broadband network design.
EVCI anticipates, based on current plans and assumptions relating to its
operations, that the proceeds from its IPO and preferred stock private placement
and cash flow from its operations will be sufficient to satisfy its cash
requirements for at least the next 9 months. However, EVCI expects to require
additional funding in order to operate and grow and is considering various
available financing options. If, however, EVCI is underestimating its cash
requirements, EVCI will require additional debt or equity financing sooner.
There can be no assurance that any such required debt or equity financing will
be available on acceptable terms.
Forward-Looking Statements and Risk Factors
This Form 10-QSB contains forward-looking statements that involve assumptions,
risks and uncertainties. The words "anticipates," "estimates," "expects,"
"will," "could," "may," "plans," and similar words are intended to identify
forward-looking statements. EVCI's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including (i) insufficient demand for EVCI's content and broadband
services, (ii) delays in rolling out co-marketing programs or in implementing
existing customer agreements, (iii) delays in deploying EVCI's broadband
network, (iv) an inability to satisfy demand for EVCI's content or broadband
services, (v) the need for additional capital to operate and grow, (vi)
competition, (vii) dependence on EVCI's chairman, president and other
management, and (viii) the other specific risk factors included in EVCI's
filings with the SEC, including its Form S-3 registration statement filed April
6, 2000 (file No. 333-34190). Should any of these or other risks and
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated by forward-looking
statements. EVCI undertakes no obligation to update forward-looking statements.
12
<PAGE>
PART II
OTHER INFORMATION
Item 3. Changes in Securities and Use of Proceeds
Through March 31, 2000, the net proceeds of the IPO has been used as follows:
<TABLE>
<S> <C>
Cash and investment grade obligations $ 1,985,000*
Purchasing and installing video conferencing equipment 3,256,000
Marketing 1,580,000
Hiring and training additional personnel 1,680,000
Investment in Visiocom USA Incorporated 250,000
Interboro working capital 1,800,000
Other working capital and operating expenses 2,848,000
-------------
$ 13,399,000
=============
- ------------------------
* At March 31, 2000.
</TABLE>
13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as a part of, or incorporated by reference
into, this report:
Exhibit No.* Description of Exhibit
4.7[1] -- Warrant Agreement, dated as of January 14, 2000, between the
Registrant and Bruce R. Kalisch.
4.8[2] -- Common Stock Purchase Warrant, dated as of
February 3, 2000, issued to The Shaar Fund Ltd.
10.43[1] -- Stock Purchase Agreement, dated as of January 14, 2000,
among Bruce R. Kalisch, Interboro Holding, Inc. and
Interboro Institute, Inc.
10.45[2] -- Securities Purchase Agreement, dated as of February 3,
2000, between the Registrant and The Shaar Fund Ltd.
10.46[2] -- Registration Rights Agreement, dated as of February 3,
2000, between the Registrant and The Shaar Fund Ltd.
10.50[3] -- Agreement between the Registrant and Golden Gate
University for the Offering of Interactive Video Conferenced
Courses, dated March 3, 2000.
10.52[3] -- Educational Provider/Co-Marketing Agreement between the
Registrant and Computer Generated Solutions, Inc. dated as
of January 13, 2000.
10.53[3] -- Stock Subscription and Stockholders' Agreement, dated as
of November 29, 1999 among the Registrant, Visiocom
Worldwide, S.A., the individuals set forth in Exhibit A to
such agreement, and Visiocom USA Incorporated, including
Exhibits.
10.54 -- Summary of Transaction Terms between edcor and the
Registrant, dated January 3, 2000.
10.55 -- Agreement, dated January 25, 2000, between the Registrant
and Clemson University for the Offering of Non-Credit
Interactive Video Conferenced Courses.
10.56 -- Agreement, dated March 13, 2000, between the Registrant and
California State Baptist Association for the Offering of
Interactive Televideo Courses.
27 -- Financial Data Schedule.
99.1[1] -- Press Release of the Registrant dated January 20, 2000.
- ---------------------
*Numbers inside brackets refer to the document listed below:
[1] Incorporated by reference to Registrant's Form 8-K dated January 14, 2000.
[2] Incorporated by reference to Registrant's Form 8-K dated February 3, 2000.
[3] Incorporated by reference to Registrant's Form 10-KSB for the year ended
December 31, 1999.
14
<PAGE>
(b) Information regarding reports on Form 8-K that were filed by EVCI during
the quarter ended March 31, 2000, and the Items reported on, follows:
(i) Form 8-K, dated January 14, 2000, covering Items 2 and 7 (without
financial statements) as amended by amendment dated March 27, 2000,
covering Items 2 and 7 and including the following financial
statements:
o Educational Video Conferencing, Inc. Pro Forma Balance Sheet for
the year ended December 31, 1999 (Unaudited) o Educational Video
Conferencing, Inc. Pro Forma Statement of Operations for the year
ended December 31, 1999 (Unaudited)
o Interboro Institute, Inc. Financial Statements for the Six Months
ended December 31, 1999 and 1998 (Unaudited)
o Interboro Institute, Inc. Financial Statements for the year ended
June 30, 1999
o Interboro Institute, Inc. Financial Statements for the Six Months
ended June 30, 1998
o Interboro Institute, Inc. Financial Statements for the year ended
December 31, 1997
(ii) Form 8-K, dated February 13, 2000, covering Items 2 and 7, as amended
by amendment dated March 7, 2000 covering Item 7.
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the issuer caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
EDUCATIONAL VIDEO CONFERENCING, INC.
Dated: May 11, 2000 By: /s/ Richard Goldenberg
-------------------------------------
Richard Goldenberg
Chief Financial Officer
(Principal Financial and Accounting Officer)
16
<PAGE>
EXHIBIT INDEX
Exhibit No.* Description of Exhibit
- ------------ ----------------------
4.7[1] -- Warrant Agreement, dated as of January 14, 2000, between the
Registrant and Bruce R. Kalisch. 4.8[2] -- Common Stock
Purchase Warrant, dated as of February 3, 2000, issued to
The Shaar Fund Ltd.
10.43[1] -- Stock Purchase Agreement, dated as of January 14, 2000,
among Bruce R. Kalisch, Interboro Holding, Inc. and
Interboro Institute, Inc.
10.45[2] -- Securities Purchase Agreement, dated as of February 3, 2000,
between the Registrant and The Shaar Fund Ltd.
10.46[2] -- Registration Rights Agreement, dated as of February 3, 2000,
between the Registrant and The Shaar Fund Ltd.
10.50[3] -- Agreement between thbe Registrant and Golden Gate University
for the Offering of Interactive video conference courses,
dated March 3, 2000.
10.52[3] -- Educational Provider/Co-Marketing Agreement between the
Registrant and Computer Generated Solutions, Inc. dated as
of January 13, 2000.
10.53[3] -- Stock Subscription and Stockholders' Agreement, dated as of
November 29, 1999 among the Registrant, Visiocom Worldwide,
S.A., the individuals set forth in Exhibit A to such
agreement, and Visiocom USA Incorporated, including
Exhibits.
10.54 -- Summary of Transaction Terms between edcor and the
Registrant, dated January 3, 2000.
10.55 -- Agreement, dated January 25, 2000, between the Registrant
and Clemson University for the Offering of Non-Credit
Interactive Video Conferenced Courses.
10.56 -- Agreement, dated March 13, 2000, between the Registrant and
California State Baptist Association for the Offering of
Interactive Televideo Courses.
27 -- Financial Data Schedule.
99.1[1] -- Press Release of the Registrant dated January 20, 2000.
- ---------------------
*Numbers inside brackets refer to the document listed below:
[1] Incorporated by reference to Registrant's Form 8-K dated January 14, 2000.
[2] Incorporated by reference to Registrant's Form 8-K dated February 3, 2000.
[3] Incorporated by reference to Registrant's Form 10-KSB for the year ended
December 31, 1999.
17
EXHIBIT 10.54
Summary of Transaction Terms Between edcor and EVC
January 31, 2000
Transaction Joint marketing of products and services
to their respective client bases.
Scope of Services edcor will allow EVC to market its
Training Administration (TAS) and
Tuition Assistance Processing (TAP)
services to EVC's current and potential
clients. edcor will maintain control of
this process from the standpoint that
EVC can not bind edcor to a transaction
without the approval of edcor.
Additionally, edcor will maintain
ownership of all of its proprietary
software and nothing in this document is
intended to convey any such rights to
EVC. As part of edcor's TAS offering, an
employee assessment service is available
to EVC to market. It is also intended
that EVC will retain edcor's TAS
offering for its own internal training
administration needs for its own
employees.
EVC will allow edcor to market its
distance learning technology and content
package to its current and potential
clients. EVC will maintain control of
this process from the standpoint that
edcor can not bind EVC to a transaction
without the approval of EVC.
Additionally, EVC will maintain
ownership of all of its proprietary
software and nothing in this document is
intended to convey any such rights to
edcor.
<PAGE>
Fees and Commissions The intention of both parties is to
establish long term, ongoing
relationships between EVC, edcor and the
corporate client. The fee structure for
each transaction will be agreed to on a
case by case basis and nothing in this
document is intended to bind the other
party in terms of its fees and
commissions.
edcor will submit to EVC, or vice versa
as the case may be, on a client by
client basis, a fee structure for the
services based upon a "scope of
services" outlined by EVC. EVC will be
permitted to add an additional fee on
top of the service fee proposed by edcor
and present the aggregated amount as the
total fee for services rendered to the
client. All fee structures and detailed
service requirements will be
incorporated in writing in a "deal
sheet" and agreed to by both parties
prior to either party making a
commitment to a client.
Projects Each individual project involving both
EVC and edcor will require a separate
"Project Memo" detailing the scope of
services, detailed direct costs,
individual responsibilities, objective
of the project and any other aspects
that would identify the direction and
intention of the project.
Payments All fees and commissions will be paid by
the collecting party within 30 days of
receipt of payment. If advance
retainers, or early funding for capital
outlays are involved, the collecting
party shall make payment to the other
party within seven working days.
Invoices Invoices between each firm will be
monthly, unless an advance retainer is
involved as described above. Each
company agrees that they will make
available all books and records to the
other company during regular business
hours for the purposes of auditing,
reconciling or verification of the
activity between both companies. Notice
of financial review will be given at
least seven days in advance of the
actual review.
<PAGE>
Term Five years with automatic renewal in
absence of written notice to terminate.
Either party may terminate this
agreement with ninety days written
notice to the other party. It is
understood that outstanding obligations
as outlined in a "deal sheet" may extend
beyond the ninety-day termination
period.
Agreed this 31 day of January, 2000
Chairman and CEO Educational
/s/ Dr. Arol I. Buntzman Video Conferencing, Inc.
- ---------------------------- -------------------------------------
Dr. Arol I. Buntzman CEO, EVC
/s/ Daniel H. Rose CEO
- ----------------------------- ---------------------------------------_
Daniel H. Rose CEO, edcor Data Services
EXHIBIT 10.55
AGREEMENT BETWEEN EDUCATIONAL VIDEO CONFERENCING, INC.
AND CLEMSON UNIVERSITY FOR THE OFFERING OF NON-CREDIT,
INTERACTIVE VIDEO CONFERENCED COURSES
WITNESSETH
AGREEMENT made this 25th day of January, 2000 between CLEMSON UNIVERSITY
with offices located in 343 Sirrnic Hall, Clemson University Campus, Clemson,
South Carolina 29634 (hereinafter referred to as "CLEMSON"), and Educational
Video Conferencing Inc., with offices located at 35 East Grassy Sprain Road,
Yonkers, New York 10710 (hereinafter referred to as "EVC") for the purpose of
offering non-credit seminars and workshops.
1. a.) EVC and CLEMSON University will collaborate to offer mutually agreed
upon non-credit seminars and workshops via distance learning technology (DL),
commencing with the spring 2000 semester.
b.) For the purposes of this agreement, DL shall be defined as live,
two-way video conferencing, either over desktop computers equipped for video
conferencing or video conferencing room systems, as the case may be, in which
the student can see and hear the professor/instructor and the
professor/instructor can see and hear the individual student. DL also shall
include one-way video and two-way audio distance learning and asynchronous
delivery systems.
2. EVC will provide all hardware (except personal computers, modems,
keyboards and monitors), software, and video conferencing equipment
(collectively referred to as "equipment") necessary to provide access for
CLEMSON courses to DL students. Students taking DL courses on desktop computers
must have modern computers capable of being video enabled and function as a DL
desktop system. In any event, CLEMSON shall not be responsible for the cost of
any equipment whatsoever at Institutional Employer locations and/or students'
homes.
3. EVC is responsible for costs of marketing, advertising, and promotion
regarding EVC's offering of access to CLEMSON courses. Unless otherwise agreed,
CLEMSON will provide existing brochures, catalogues, course schedules, program
and course descriptions, posters, etc., to EVC for distribution to employees of
EVC's corporate, governmental and institutional clients promoting the CLEMSON
programs and courses offered through EVC.
4. CLEMSON shall provide rooms capable of becoming teacher stations. EVC
will cover the cost of installing and maintaining adequate telecommunication
lines (for example ISDN, DSL, cable modem, ATM, etc.), regular telephone lines
and electrical outlets. EVC will also be responsible for the cost of the
telecommunication signal transport for video conferenced courses from teacher
stations to the MCU Bridge. EVC assumes responsibility or cost for obtaining,
providing, or paying for telecommunication signal transport for video
conferenced courses from the MCU Bridge to corporate locations and/or students'
homes. These costs will be reimbursed to EVC through the agreed-upon charges for
the delivery of courses.
<PAGE>
5. Subject to enrollment as determined by EVC, EVC will be responsible for
installing and maintaining up to ten (10) teaching stations in the rooms
provided by CLEMSON to videoconference DL courses offered through EVC. All
teaching stations installed and paid for by EVC shall remain the exclusive
property of EVC. Subject to enrollment demand, EVC will begin with the
installation of three teaching stations for spring 2000 semester and will add
additional teaching stations. The rooms provided by CLEMSON need not be
dedicated EVC rooms. However, all equipment must be properly secured to
circumvent theft or vandalism. Clemson is responsible for theft or vandalism of
EVC equipment while in CLEMSON's custody or care.
6. All equipment supplied by EVC is the sole and exclusive property of EVC,
including but not limited to any and all patents, copyrights and trademarks, if
any, associated therewith. All classroom, course and program materials or other
information supplied by CLEMSON, and all rights and interests in said materials
will remain the sole and exclusive property of CLEMSON.
7. a.) EVC is responsible for the necessary maintenance, repair and/or
replacement of video conferencing equipment supplied to CLEMSON for DL courses.
b.) EVC will provide reasonably prompt service for repair or
replacement of defective interactive video conferencing equipment and software
as necessary. EVC has service repair contracts, which provide 48-hour service
after notification of a videoconferencing problem.
c.) CLEMSON will be responsible for the prompt repair and/or
replacement of interactive video conferencing equipment located at CLEMSON,
which may be damaged through improper or unauthorized use.
d.) CLEMSON is responsible for the repayment to EVC of the cost of
replacement of any EVC equipment, which is lost or stolen while in CLEMSON's
custody and control.
8. Neither party shall utilize the other's name or any associated names,
trademarks, copyrights, etc., without prior written consent. Such permission
shall not be unreasonably denied.
9. a.) EVC will provide faculty development to CLEMSON faculty reasonably
required for the offering of CLEMSON courses through EVC. Faculty will be
trained to maximize the effectiveness of their teaching styles and their
presentation of materials using interactive video conferencing systems. Such
training includes showing faculty how to utilize charts, graphs, pictures,
videotapes, and presentation software using scanners, document cameras, and
other equipment provided by EVC. Typical EVC faculty training consists for 16
hours.
b.) CLEMSON shall be responsible for obtaining the services of all
faculty participating in courses offered through EVC, including but not limited
to said faculty's salary, benefits (if any) and verification of qualifications.
EVC assumes no responsibility for any costs associated therewith.
2
<PAGE>
10. EVC is solely responsible to provide site locations for DL students to
participate in CLEMSON courses. CLEMSON assumes no responsibility for obtaining
or maintaining said sites, nor for any rent or other costs associated therewith.
11. a.) EVC is not responsible for curriculum, course content, faculty
qualifications, course materials or any other aspects of the academic content of
any non-credit seminar/workshop offered hereunder. However, CLEMSON agrees to be
receptive to and consider EVC input as to course content presentation and
delivery of DL courses consistent with required academic standards.
b.) Any synchronous courses originating from CLEMSON, which are
recorded, will remain the intellectual property of CLEMSON.
12. EVC agrees to make every reasonable effort to maintain its equipment in
good working order. However, EVC is not responsible for service or repair delays
or interruption of service caused by strikes, labor actions, power outages
(other than those limited to site locations alone), acts of God or other matters
beyond EVC's control.
13. CLEMSON hereby acknowledges that the DL non-credit programs marketed by
EVC are targeted toward the non-traditional working adult student market and
therefore agrees to offer DL courses at dates and times appropriate to the
target market, including the hours of 8:00 a.m. to 11:00 p.m., seven days per
week Eastern Standard Time and at such other times reasonably requested by EVC's
Institutional Employers and their employees, subject to enrollment. And,
including but not limited to the three academic semesters offered each year by
CLEMSON, i.e., fall, spring and summer.
14. Administrative Function
a.) CLEMSON shall be responsible for all of its own administrative
functions associated with the offering of courses through EVC.
b.) CLEMSON will provide to EVC all necessary administrative forms,
applications, written instructions, catalogues, etc. in advance of marketing
courses to any organization. It is understood by the parties that EVC is merely
a conduit and assumes no liability whatever for the accuracy or correctness of
the information in said forms provided by CLEMSON nor for return of any of the
aforesaid documents to CLEMSON.
15. Fees
a.) CLEMSON shall pay to EVC a percentage of the registration fee
charged for any courses delivered by EVC. Such amount shall be agreed upon prior
to the implementation of a specific course or program offering and may differ
depending upon the particular offering. EVC's percentage shall also include
appropriate reimbursement for amount expended including the cost of amortizing
any installed equipment or telecommunication services.
3
<PAGE>
b.) EVC shall have the right, on a semi-annual basis, to examine the
books and records of CLEMSON, pertaining to all students taking courses through
EVC, in order to audit any accounts due and owing the respective parties.
CLEMSON shall have the right to audit EVC accounts for students taking CLEMSON
courses on the same basis.
c.) Commencing on February 14, 2000, and continuing on the 10th day of
each month therefore, CLEMSON will supply EVC with a list of all students taking
non-credit courses. Information provided will include the student's name, job
title, organizational affiliation, address, telephone number, fax number and
payment status.
d.) Within THIRTY (30) DAYS of the completion of each course, CLEMSON
shall present to EVC, in writing, any requests for adjustments or credits on
monies already paid to EVC.
e.) Non-credit courses offered by CLEMSON through EVC will be done
primarily on a contractual basis with designated employers. In other words, the
employer will provide a lump-sum payment to CLEMSON/EVC for the purpose of
providing instruction to employees.
f.) In instances where a student registers for a CLEMSON non-credit
course through EVC, that student would be responsible for his/her registration
fee. In some instances, CLEMSON/EVC may allow students to take courses without
payment of the registration fee up front. In those instances, the student would
sign a registration payment guarantee indicating that he/she is responsible for
100% of the registration fee in the event he/she is not reimbursed by his/her
employer.
g.) Students taking CLEMSON non-credit courses through EVC, who are not
employed by an Institutional Employer who is a customer of EVC providing
registration fee reimbursement to their employees, shall be required to pay the
registration fee up front when registering.
16. a.) CLEMSON will provide a minimum of ten (10) teaching station
locations, subject to enrollment determined by EVC in order to facilitate DL
courses marketed by EVC emanating from its campus and will grant EVC, its agents
and subcontractors, reasonable access to said facilities as is required for
proper installation, operation, maintenance and repair of all equipment
contemplated herein, including but not limited to DL equipment. Said room shall
be a minimum of 10 feet by 16 feet with adequate electrical, air conditioning,
lighting, etc., and be otherwise suitable for use as a video conferencing
teacher station. Said rooms will be provided one at a time subject to
registration demand.
b.) Rooms at CLEMSON equipped by EVC for DL may be used by the college
with prior written permission by EVC.
17. CLEMSON's Public Relations Department will provide reasonable
cooperation with EVC in promoting EVC/CLEMSON non-credit courses and the DL
courses offered through EVC.
4
<PAGE>
18. CLEMSON and EVC will, whenever possible cooperate in applying for and
obtaining any grants, awards, stipends, fellowships, etc., which are mutually
beneficial to the parties.
19. CLEMSON shall maintain academic control over all courses and will be
receptive to EVC input as to IVC/DL presentation.
20. CLEMSON will assign at least one person who at all times will act as
liaison between CLEMSON and EVC.
21. Term of Agreement
a.) The basic term of this agreement shall be FIVE (5) YEARS.
b.) The parties hereby acknowledge the necessity for allowing DL
students continuity and ongoing access to courses and programs, so long as there
is adequate registration.
c.) In light of the foregoing, the parties agree that commencing
September 1, 2000 and every September 1st thereafter, this agreement shall
automatically be extended for an additional period of ONE (1) YEAR, subject to
the conditions hereinafter contained.
d.) In the event that either party should desire not to automatically
extend this agreement, then and in that event, such party shall so notify the
other in writing, by Certified Mail, Return Receipt Requested, no later than
June 1 of any given year, after which the agreement will not be extended for an
additional ONE (1) YEAR, but will have only the Four (4) YEARS of the existing
term remaining.
22. CLEMSON shall have the right to offer courses via DL on its own to
Institutional Employer and/or the employees of any Institutional Employer not
under contract with EVC. In such event, EVC shall not have any obligation to
market, provide any services or equipment, permit the use of EVC's equipment, or
incur any costs in connection with such offerings.
23. CLEMSON agrees that, for the duration of this agreement and any
extensions hereof, as well as for a period of ONE (1) YEAR following any
termination of expiration of the agreement, CLEMSON will not video conference or
DL its non-credit courses to organizations under contract with EVC or to EVC
students.
24. The parties agree that disclosure of the terms of this agreement to
others will cause EVC irreparable damage to its business. However, it is
understood that CLEMSON is a State Agency and is therefore governed by law to
disclose, when requested, any contract that it may enter into. EVC requests that
it be notified of any requests made for disclosure of its contract with CLEMSON.
25. It is expressly agreed and understood that neither party shall be
liable for incidental, special or consequential damages for any breach or
violation of this agreement.
5
<PAGE>
26. The foregoing constitutes the entire agreement between the parties, and
any other agreements or representations, whether verbal or written, if not
contained herein, are void, of no effect, and are not binding upon the parties.
27. No valid modification, amendment, or deletion may be made to this
agreement except in writing and executed by the parties in substantially the
same manner as this agreement.
28. Any and all notices required hereunder shall be by Certified Mail,
Return Receipt Requested, to each party's last known address and shall be deemed
given at the time of mailing.
29. If any portion of this agreement shall be found to be void, voidable or
unenforceable, it shall not effect the validity of the remainder of the
agreement.
30. his agreement shall be binding on the respective parties' heirs,
successors, and assigns.
31. The parties agree that any disputes or disagreements arising hereunder
or in connection herewith shall be settled by binding arbitration before the
American Arbitration Association at their offices located in Greenville, South
Carolina, and that any judgment awarded thereunder may be entered in any court
of appropriate jurisdiction, and will have full force and effect therein.
32. This agreement shall be construed in accordance with, and governed by,
the laws of the State of South Carolina.
In witness whereof the parties have hereunto set their hands and seal the
date first appearing above.
CLEMSON UNIVERSITY EDUCATIONAL VIDEO CONFERENCING, INC.
By: /s/ Steffen Rogers By: /s/ John J. McGrath
-------------------------- ---------------------------------
Dr. Steffen Rogers Dr. John McGrath
President
By: /s/ Ralph Elliot
--------------------------
Dr. Ralph Elliott
Vice Provost
6
EXHIBIT 10.56
AGREEMENT BETWEEN EDUCATIONAL VIDEO CONFERENCING, INC.
AND CALIFORNIA STATE BAPTIST ASSOCIATION
FOR THE OFFERING OF INTERACTIVE TELEVIDEO COURSES
W I T N E S S E T H
AGREEMENT made this 13 day of March 2000, between the, "CALIFORNIA STATE
BAPTIST ASSOCIATION" (hereinafter referred to as "CALIFORNIA STATE BAPTIST
ASSOCIATION", located 825 Newhall Avenue, San Francisco CA 94124 and Educational
Video Conferencing, Inc., (hereinafter referred to as "EVC"), with offices
located at 35 East Grassy Sprain Road, Yonkers, New York 10710.
WHEREAS, CALIFORNIA STATE BAPTIST ASSOCIATION is an institution
interested in providing opportunities to higher learning for its community, and,
WHEREAS, EVC is a domestic corporation engaged in the business of
Interactive Televideo, and other forms of distance learning,
WHEREAS, CALIFORNIA STATE BAPTIST ASSOCIATION, its congregations listed
below and EVC wish to enter into a mutually beneficial agreement whereby EVC
will provide access to EVC transmitted courses from accredited colleges,
universities and training organizations to each community,
NOW, THEREFORE in consideration of $10.00 in good funds, as well as the
mutual covenants contained herein, the parties hereby agree as follows:
1. EVC shall have the right, for the duration of this agreement and any
renewal hereof to transmit all accredited college courses, non-degree courses,
and other programs offered by accredited colleges, universities and learning
organizations through EVC via Interactive Televideo/Distance Learning
(hereinafter referred to as "ITV/DL"), transmitted to CALIFORNIA STATE BAPTIST
ASSOCIATION and its congregations, commencing with the Summer Semester, 2000.
2. EVC will provide all telecommunications equipment necessary to provide
access for EVC courses to ITV/DL students at CALIFORNIA STATE BAPTIST
ASSOCIATION site(s).
3. Rooms and Equipment
a.) CALIFORNIA STATE BAPTIST ASSOCIATION will provide a minimum of one
(1) room in no fewer than ten (10) and no more than twenty (20) mutually agreed
upon affiliated churches starting with the Summer, 2000 academic semester. EVC
and CALIFORNIA STATE BAPTIST ASSOCIATION will thereafter mutually agree on the
number of additional member congregations this contract will cover for future
semesters for the remaining term of this agreement.
<PAGE>
b.) Each classroom shall be capable of accommodating the video
conferencing equipment and necessary accessories (hereinafter referred to as
"equipment"), along with accomadating the students enrolled in EVC sponsored
classes. Said room does not have to be dedicated space, and may be used by each
CALIFORNIA STATE BAPTIST ASSOCIATION congregation for its own use when EVC
courses are not running so long as said use does not infringe on the rights of
EVC hereunder, or tend to impact negatively on the success of the program
contemplated by this agreement.
4. Advertising/Publicity
a.) CALIFORNIA STATE BAPTIST ASSOCIATION shall use its best efforts in
marketing, advertising, and promoting EVC's offering of access to video
conferenced courses at CALIFORNIA STATE BAPTIST ASSOCIATION site(s) in live
church service announcements, advertisements, promotions, marketing plans, etc.,
which are directed at community target markets.
5. EVC will be responsible for installing and maintaining appropriate
telecommunication lines for its video conferencing equipment at CALIFORNIA STATE
BAPTIST ASSOCIATION site(s). Said video conferencing equipment will be installed
and paid for by EVC. All such video conferencing equipment and associated
accessories shall remain the exclusive property of EVC. EVC is under no
obligation to continue to maintain either telecommunication lines or equipment
at any CALIFORNIA STATE BAPTIST ASSOCIATION site(s) if, during any academic
semester, the total enrollment at EVC sponsored courses falls below the
thresholds cited herein, as set forth in paragraph 11 of this agreement. EVC
may, at its sole discretion, remove part or all of its equipment which is
located at CALIFORNIA STATE BAPTIST ASSOCIATION site(s) should enrollment fall
below the thresholds cited herein.
6. All equipment supplied by EVC is the sole and exclusive property of EVC,
including but not limited to any and all patents, copyrights and trademarks, if
any, associated therewith.
7. a.) EVC is responsible for the necessary maintenance, repair, and/or
replacement of televideo equipment supplied to CALIFORNIA STATE BAPTIST
ASSOCIATION site(s) for the transmission of ITV/DL courses by EVC.
b.) EVC will provide reasonably prompt service for repair or replacement
of defective interactive televideo equipment and software as necessary.
8. EVC agrees to make every reasonable effort to maintain its equipment in
good working order. However, EVC is not responsible for service or repair delays
or interruption of service caused by strikes, labor actions, power outages
(other than those limited to site locations alone), acts of God or other matters
beyond EVC's control.
9. CALIFORNIA STATE BAPTIST ASSOCIATION hereby acknowledges that the ITV/DL
programs are targeted toward the non-traditional student market and therefore
agrees to offer access sites to ITV/DL courses at dates and times appropriate to
target markets, generally between the hours of 5:00 p.m. and 10:00 p.m., Mondays
through Fridays and between 8:00 a.m. and 5:00 p.m. on Saturdays.
10. Each CALIFORNIA STATE BAPTIST ASSOCIATION congregation must provide a
minimum of one (1) classroom at each church suitable for video conferencing.
Each CALIFORNIA STATE BAPTIST ASSOCIATION congregation is responsible for all of
its own room costs, including lighting, appropriate student desks (or tables)
and chairs, electricity, and security associated with the offering of ITV/DL
courses through EVC at CALIFORNIA STATE BAPTIST ASSOCIATION site(s). Each
CALIFORNIA STATE BAPTIST ASSOCIATION congregation will use its best efforts to
make additional classrooms available should enrollment demands require such.
2
<PAGE>
11. CALIFORNIA STATE BAPTIST ASSOCIATION agrees to designate one person as
the single point of contact for CALIFORNIA STATE BAPTIST ASSOCIATION in
connection with this contract. It further agrees that each church involved as a
classroom site shall designate one person as the primary point of contact.
12. Enrollment Requirements and Rental Fees
a.) EVC and CALIFORNIA STATE BAPTIST ASSOCIATION agree that this
agreement requires that a minimum of eighty (80) student course registrations
(SCRs) to be enrolled at CALIFORNIA STATE BAPTIST ASSOCIATION site(s) each
semester at least one (1) month prior to the start of each semester before EVC
will provide video conferencing equipment.
b.) Examples of SCRs are:
(1) twenty (20) students enrolled in four (4) courses each; or,
(2) eighty (80) students enrolled in one course each; or,
(3) any combination thereof of students enrolled in EVC offered
courses, in which a minimum total of eighty (80) SCRs is reached
in one or more courses.
c.) Subject to the minimum enrollments specified in (a) above, EVC shall
pay to appropriate congregations of the CALIFORNIA STATE BAPTIST ASSOCIATION the
sum of $1,000 (one thousand dollars) per semester for each classroom in which
the minimum number of (80) SCRs are registered with all students attending EVC
sponsored courses. Additionally, EVC will compensate one site coordinator at
each church the sum of $500.00 (five hundred dollars) per year to help secure
registrations and administer the Telecommute to College Program.
13. Term of Agreement
a.) The basic term of this agreement shall be FIVE (5) YEARS.
b.) The parties hereby acknowledge the necessity for allowing ITV/DL
students continuity and ongoing access to CALIFORNIA STATE BAPTIST ASSOCIATION
site(s) for EVC offered courses and programs.
c.) In light of the foregoing, the parties agree that commencing July 1,
2000 and every July 1st thereafter, this agreement shall automatically be
extended for an additional period of ONE (1) YEAR, subject to the conditions
hereinafter contained.
d.) In the event that either party should desire not to automatically
extend this agreement, then and in that event, such party shall so notify the
other in writing, by Certified Mail, Return Receipt Requested, no later than
April 1 of any given year, after which the agreement will not be extended for an
additional ONE (1) YEAR, but will have only the Four (4) YEARS of the existing
term remaining.
14. EVC agrees to use its best efforts to negotiate and execute a
reasonable agreement with Concordia College for the offering of undergraduate
and graduate courses through EVC via ITV/DL.
15. The foregoing constitutes the entire agreement between the parties, and
any other agreements or representations, whether verbal or written, if not
contained herein, are void, of no effect, and are not binding upon the parties.
3
<PAGE>
16. No valid modification, amendment, or deletion may be made to this
agreement except in writing and executed by the parties in substantially the
same manner as this agreement.
17. Any and all notices required hereunder shall be by Certified Mail,
Return Receipt Requested, to each party's last known address and shall be deemed
given at the time of mailing.
18. If any portion of this agreement shall be found to be void, voidable,
or unenforceable, it shall not effect the validity of the remainder of the
agreement.
19. EVC may, at its sole option, remove its equipment terminate if any
church site registers less than the stated minimum requirement of eighty (80)
SCRs every academic semester.
20. The parties agree that any disputes or disagreements arising hereunder
or in connection herewith shall be settled by binding arbitration before the
American Arbitration Association at their offices located in White Plains, New
York, and that any judgment awarded thereunder may be entered in any court of
appropriate jurisdiction, and will have full force and effect therein.
21. This agreement shall be construed in accordance with, and governed by,
the laws of the State of New York.
In witness whereof the parties have hereunto set their hands and seal the
date first appearing above.
EDUCATIONAL VIDEO CONFERENCING, INC.
By: /s/ Dr. John J. Mc Grath
-------------------------
Dr. John J. McGrath
President
CALIFORNIA STATE BAPTIST ASSOCIATION
By: /s/ Rubin Tate
------------------------
Rubin Tate
4
<PAGE>
Congregation Address Authorized Signature Title
1. _____________________________________________________________________________
2. _____________________________________________________________________________
3.______________________________________________________________________________
Congregation Address Authorized Signature Title
4.______________________________________________________________________________
5.______________________________________________________________________________
6.______________________________________________________________________________
7.______________________________________________________________________________
8.______________________________________________________________________________
9.______________________________________________________________________________
10._____________________________________________________________________________
11._____________________________________________________________________________
12._____________________________________________________________________________
13._____________________________________________________________________________
14._____________________________________________________________________________
15._____________________________________________________________________________
16._____________________________________________________________________________
17._____________________________________________________________________________
18._____________________________________________________________________________
19._____________________________________________________________________________
20._____________________________________________________________________________
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND THE BLANCE
SHEET AT MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,725,110
<SECURITIES> 0
<RECEIVABLES> 1,792,437
<ALLOWANCES> (130,000)
<INVENTORY> 88,996
<CURRENT-ASSETS> 7,664,426
<PP&E> 4,913,345
<DEPRECIATION> (913,474)
<TOTAL-ASSETS> 13,006,256
<CURRENT-LIABILITIES> 561,307
<BONDS> 0
0
3,112,722
<COMMON> 435
<OTHER-SE> 9,290,185
<TOTAL-LIABILITY-AND-EQUITY> 13,006,256
<SALES> 2,240,891
<TOTAL-REVENUES> 2,325,138
<CGS> 529,131
<TOTAL-COSTS> 3,963,016
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,637,878)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,637,878)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,637,878)
<EPS-BASIC> (0.43)
<EPS-DILUTED> (0.43)
</TABLE>