UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended September 30, 1995
Commission file Number 0-14411
Instructivision, Inc.
- -------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2386359
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 Regent Street, Livingston, NJ 07039
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(201) 992 9081
Securities registered pursuant to Section 12(b) of the ACT:
Title of each Class: Name of each exchange on which registered:
- -------------------- ------------------------------------------
Common Stock none
Securities registered pursuant to Section 12(b) of the ACT:
Common Stock $0.001 par value
- -----------------------------
(Title of Class)
<PAGE>
Indicate by check mark whether the registrant (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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of regulation S-K is not contained herein, and
will not be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
YES [X] NO [ ]
The aggregate market value of the voting stock held by non-
affiliates of the Company as of December 27, 1995, was $837,500
based on the over-the-counter closing bid price of $.25 per share on
December 27, 1995.
The number of shares of Common Stock, .001 par value, of the
Company, issued and outstanding as of December 27, 1995 was
3,350,000.
<PAGE>
PART I
ITEM 1. BUSINESS
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Introduction
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Instructivision, Inc. (the "Company") develops and produces
educational software and related workbooks, and video tapes. Many of
the Company's programs are designed to assist students in developing
basic skills in mathematics, reading, and writing, and in helping
them prepare for various high school and college level examinations
and college admission tests. Customers of the Company's educational
programs include the National Association of Secondary School
Principals (NASSP), the National Association of Elementary School
Principals (NAESP), Educational Testing Service, and Steck-Vaughn
Company. The Company also develops and publishes under its own name
a number of test preparation and other educational programs available
in three media: workbooks, computer software, and video.
The Company owns a video production studio and post-production
facility in which it creates video programs for corporate training
commercials, and educational use. The Company specializes in creative
services, script writing, on-location and studio production, tele-
conferencing, audio recording, digital and analog editing, graphics,
animation and duplication services. Commercial and corporate clients
during the past fiscal year have included First Fidelity Bank, Syms,
Chanel, Exxon, Telebrands, Resorts USA, General Nabisco, and others.
Background
- ----------
The Company, a New Jersey corporation, was established in
November 1981 to develop for sale educational video and computer
programs, and textbooks. Initially the Company produced mainly
educational material for other publishers. The Company currently
develops workbooks, computer software, and video programs principally
for its own publication. These programs include: STUDY SKILLS FOR
SUCCESS; HSPT SUCCESS IN READING, WRITING AND MATHEMATICS; EWT
SUCCESS IN READING, WRITING AND MATHEMATICS; HSPT EXCELLERATOR; KEY
IT IN I AND II; SAT-1 EXCELLERATOR; SAT EDGE; ESSENTIAL SKILLS FOR
THE ACT; and other programs.
The Company's video production was started in 1986 to produce
video tapes for its own distribution and to serve the corporate and
advertising community in central New Jersey. Corporate video
production sales now account for approximately 45% of the Company's
sales.
<PAGE>
The Company publishes an expanding library of video programs
for teacher training which is being published under the trade
names of INSERVICE VIDEO NETWORK and VIDEO WORKSHOP. The Company
lists 86 educational video tapes in its 1995 sales catalog.
Current Activities
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1. Commercial video production
The Company's video production facility is being marketed to
the business community in the area: local merchants, advertising
agencies, independent producers, telemarketers, and Fortune 500
companies.
The Company's full service video production facility consists
of a studio, two broadcast quality editing suites, two VHS editing
suites, computerized 3-D animation stand, location camera package
and duplicating equipment.
Revenues attributable to the Company's video production
for the fiscal year ended September 30, 1995, were approximately
$644,000.
2. Educational video tapes, software and workbooks:
The principal source of revenues from educational products
during the fiscal year ended September 30, 1995 were as follows:
a) Educational video tapes:
The INSERVICE VIDEO NETWORK, a collection of instructional
tapes for middle and high school educators, is produced under a
collaborative agreement with the NASSP. New tapes are continuously
being produced and added to the Network. The Company's agreement
with the NASSP requires it to pay royalties of 15% on annual net
sales of the product (gross sales less returns and royalties paid
to the authors). The Company has published over 90 video tapes
since 1986. The authors of the individual tapes receive a 5% to
12% royalty from the net sales of their respective tapes.
The VIDEO WORKSHOP is the trade name under which the Company
produces and markets teacher training tapes for elementary school
educators under an agreement with NAESP. The Company has produced
15 tapes in the series since 1992. The NAESP receives a 15%
royalty from the net sales of such tapes. The authors of the
individual tapes receive a 6% to 12% royalty from the sale of
their respective tapes.
<PAGE>
The Company has produced a video tape program entitled THE
FROG: INSIDE-OUT, a two part 90 minute program which is being
marketed by the Company. The Company has a non-exclusive
distributor agreement with United Learning Company to sell the
program. The Company has a non-exclusive distributor agreement
with Optical Data Corp. to publish the product on video disk.
The Company receives a royalty of 10% from the sale of the
program on video disk.
In 1993 the Company produced an eighteen lesson video course
for students entitled SAT EDGE. The cost of production was in part
financed by NASSP and Channel One. The Company received a 25%
royalty from the sale of SAT EDGE. The agreement expired in
November 1995. The program is now jointly owned by NASSP and
Instructivision who will share equally in the revenues from the
program.
b) Educational software and workbooks:
- --------------------------------------
The following software and workbook titles are currently being
published by the Company under its own name:
STUDY SKILLS FOR SUCCESS: A software program available for Apple,
MS-DOS, and Macintosh computers, for students grades 8 through 12.
ESSENTIAL SKILLS FOR THE ACT: A software program for students
preparing for the ACT, available for Apple, MS-DOS, and Macintosh.
HSPT SUCCESS: Three sparate programs for Reading, Writing and
Mathematics to assist students preparing for the New Jersey High
School Proficiency Test. The study material is available as print
material, and software (Apple, Macintosh, MS-DOS, Windows). A new
software program, HSPT EXCELLERATOR, was added to the series in
1994.
EWT SUCCESS: Software and workbooks for students preparing for
the New Jersy Early Warning Test in seventh and eighth grade.
The Company's other workbooks for improving basic math skills
are: SRA IMPLEMENTATION KIT IN MATHEMATICS, KEY IT IN I and KEY
IT IN II.
The Company is obligated to pay royalties to authors of some of
the Company's products. Such royalties payable range from 5% to 10%.
The Company's software is available for Apple, Macintosh,
MS-DOS and Windows formats. Site licenses and networking rights give
a school license to duplicate and network the program. The Company
updates its various software products from time to time to be
compatible with software currently available in the marketplace.
<PAGE>
c) Other Revenues
- -----------------
The Company receives a royalty of 1.5 to 3% from Steck-Vaughn
Company as author of components of TEST BEST, a workbook series
published since 1991.
SAT-1 EXCELLERATOR, ACT TEST EXCELLERATOR, and IMPROVING COLLEGE
ADMISSION SCORES ON THE ACT: The Company produced for the NASSP
a series of software and workbooks to prepare students for SAT and
ACT tests. The Company receives a royalty of 15% on workbooks and
20% on software sold by the NASSP. The Company also has a license
to sell the programs. The NASSP receives a royalty of 15% to 20%
from the sale of the programs by the Company.
WORKLINK. The Company developed a software program for Educational
Testing Service which provides a database of students' records for
prospective employers. The Company receives a 5% royalty from the
sale of the program and related material.
New Product Development
- -----------------------
The Company does not separately account for research and de-
velopment costs but estimates that on average such costs are not a
material portion of cost of sales.
The Company's new projects under development are:
HSCT SUCCESS. The Company's program includes workbooks and soft-
ware for the Florida High School Competency Test in mathematics and
communication. The material was completed in October 1995 and will
be marketed to Florida schools through independent sales
representatives.
MASTERING THE GED. A new software program to prepare students for
the high school equivalency test is being developed by the Company.
The program is scheduled for completion by January 1996.
SAT-II. The Company has commenced development of software programs
to assist students taking the SAT-II college placement tests in
mathematics, writing, and science.
Future Plans
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The Company intends to continue expanding its product lines,
and to make existing software compatible with new technology.
The Company is planing to offer consulting services to schools.
Under the trade name KNOWLEDGE NAVIGATORS, the Company will offer
management services, specialized teacher training seminars, and a
variety of educational services to school districts.
<PAGE>
The Company's video production facility offers competitive
rates and is easily accessible to the central New Jersey business
community. During fiscal year 1994 and 1995, the Company made major
capital improvements in the amount of approximately $350,000 in its
video department to meet the demand for special effects and digital
editing. In 1996, the Company will place a major emphasis on
expanding the market for its video production services.
Marketing
- ---------
The Company has collaborated with the NASSP in the development
of various programs and, as a result, has transferred several of the
programs it has created, to the NASSP for direct marketing to
schools throughout the country. The NASSP, of which Dr. Thomas
Koerner, a director of the Company, is Associate Executive Director,
accounted for approximately 10% of the Company's sales during the
fiscal year ended September 30, 1995 (see Item 13 hereof).
The Company has also produced educational software under
contract to other commercial publishers for fixed fees and/or
advances against royalties, and royalties. It is also marketing
under its own name a number of software and video products. The
Company has retained the broadcast and cable television rights to
the video tapes it has produced.
The Company is marketing its educational and cultural video
programs to educational institutions and publishers. The Company
has granted Southern Media Systems exclusive marketing rights to
the sale of HSCT, SAT, and ACT programs in the State of Florida.
The Company has agreements with the NASSP to share in the
marketing of several of its educational programs. The Company
receives a royalty of 15% to 50% from the sale of the programs.
The NASSP receives a royalty of 15% to 50% from the Company's
sale of those programs.
The Company has a full-time commission salesperson for the New
Jersey school market, and a part-time sales representative for its
video production services. The Company has agreements with
independent sales representatives in Pennsylvania, Delaware, Mary-
land and the District of Columbia on sales of its education products
in those territories. The Company also markets its products to
mail-order distributors throughout the United States. The Company
pays commissions of 5% to 50% to sales representatives and
distributors on the sale of the Company's products.
While a significant portion of the Company's sales is made to
schools, the Company does not generally enter into long-term
contracts with such customers, but instead sells pursuant to specific
<PAGE>
orders with a short delivery schedule, or under a price quotation
valid for no more than one year. Therefore, a material portion of the
Company's business is not subject to renegotiation of profits or
termination of contracts at the election of the government.
Seasonality of the Business
- ---------------------------
The bulk of the Company's educational product sales are
realized during the fourth quarter of its fiscal year, when school
districts make their purchasing decision for the following academic
year. Approximately 40% of the Company's sales are made to schools.
However, revenues from video production services have in the past not
been significantly affected by season, thereby providing year-round
cash flow for the Company.
Employees
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The Company had 10 full-time employees at September 30, 1995.
The Company employs writers, freelance production crews and other
support personnel as needed to assist in development of educational
programs and its video production services. Contracts for services
of outside contractors are normally on a fee basis; however, some
may receive a percentage of revenues as royalty from the Company for
their program participation. This practice has allowed the Company
to draw on part-time technical personnel and writers, while main-
taining low overhead and employment costs. The Company anticipates
maintaining this employment approach in the next fiscal year.
Copyrights and Trademarks
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The Company has applied for copyrights for certain of its
programs and software documentation related to these programs.
However the granting of copyright protection cannot prevent the
unauthorized copying of the Company's products. Where applicable,
the Company utilizes non-disclosure and confidentiality agreements
and other contractual arrangements with customers, consultants,
employees and others. While the enforceability of such agreements
cannot be assured, the Company believes that they provide a
deterrent to the use of information which may be proprietary to the
Company, and in the event of any breach of such agreements, the
Company intends to take appropriate legal action. There can be no
assurance that competitors with substantially greater financial
resources will not develop similar products outside the protection
of any copyright that may be granted to the Company. Management
believes that the competitive position of the Company depends
primarily on the creative ability and technical competence of its
personnel and that its business will not be materially dependent
on copyright protection.
The Company markets a portion of its products under the
Company's name of Instructivision. The Company has been denied
<PAGE>
trademark protection by the U.S. Patent and Trademark Office for this
name because, in the view of the examiners, the Company's name is not
easily distinguishable from a registered trademark belonging to a
Canadian firm. The Company does not believe that the absence of
trademark protection for its name will cause any marketing
difficulties for its products. Nevertheless, the Company cannot rule
out the possibility of having the use of its name challenged and/or
having to change its name. The Company may not have the resources to
successfully defend an infringement action. Should the Company be
required to change its name or adopt another name for marketing
purposes, the cost of such change or adoption is presently un-
determinable.
The Company markets some of its video programs under the trade
names INSERVICE VIDEO NETWORK and VIDEO WORKSHOP.
Backlog
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The Company's sales backlog at September 30, 1995 consisted of
contractual video production obligations to be filled over the next
30 days of approximately $30,000. Orders for existing computer
software and books are currently processed and shipped within 3 to
15 days.
Competition
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Several of the Company's competitors have greater financial
resources, more extensive business experience and greater software
and video program production development, manufacturing, marketing,
and servicing capabilities than the Company. There already is a large
number of software programs directed at preparing students for test
taking on the market.
The Company also competes with other video production companies
producing commercials and instructional video programs. The Company
plans to continue competing in the multimedia educational market on
the basis of its previous experience in developing test preparation
software and video tapes and on its management's experience as
professional educators, attuned to the needs of the education sector.
ITEM 2. Property
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The Company's executive facilities, teleproduction studio and
software production facilities are housed in approximately
7,300 sq.ft. of leased office space at 3 Regent Street, Livingston,
New Jersey. The monthly rental as of September 30, 1995 was
$9,133.75. The lease will expire on June 30, 2001. Under the lease,
<PAGE>
the Company is responsible for insurance, maintenance, taxes and
other costs of occupancy. The Company believes that the space will
meet its needs for the foreseeable future and would accommodate a
significant increase in production of educational products and video
services.
ITEM 3. Legal Proceedings
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none
ITEM 4. Submission of Matters to a Vote of Security Holders
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none
PART II
-------
ITEM 5. Market for the Company's Common Equity and Related
Shareholder Matters.
- -----------------------------------------------------------
The Company's Common Stock has been traded on a limited and
sporadic basis in the over-the-counter market. The following table
sets forth for the Company's fiscal periods indicated the high and
low bid quotation in the over-the-counter market for the Company's
Common Stock. Quotations represent inter-dealer quotations without
adjustment for retail mark-ups, mark-downs or commissions and may
not necessarily represent actual transactions.
Period Common Stock
High Low
- ------- ---- ---
<TABLE>
<S> <C> <C>
10/1/93 - 12/31/93 1/8 1/16
1/1/94 - 3/31/94 1/8 1/16
4/1/94 - 6/30/94 1/4 1/8
7/1/94 - 9/30/94 1/4 1/8
10/1/94 - 12/31/94 1/4 1/8
1/1/95 - 3/31/95 3/8 1/4
4/1/95 - 6/30/95 3/8 1/4
7/1/95 - 9/30/95 3/8 1/4
10/1/95 - 12/27/95 3/8 1/4
</TABLE>
At December 26, 1995 management believes that the approximate
number of holders of the Company's Common Stock was 280. This number
is based upon the Company's stockholder mailing list and information
provided to the Company by investors. At December 26, 1995, the
Company's transfer agent advised that there were 178 holders of
record of the Company's Common Stock. The Company has not paid any
cash dividends on its Common Stock and does not anticipate paying
dividends in the foreseeable future. As of March 1, 1992 the
Company's stock is no longer traded on the NASDQ system.
<PAGE>
ITEM 6. Selected Financial Data
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The selected financial data presented below are derived from the
Company's financial statements. The financial statements as of and for
the five years ended September 30, 1995 have been examined by Martin
& Martin, independent certified public accountants. Their audit report
on such financial statements as of September 30, 1995 and 1994 and for
the three years ended September 30, 1995 is included elsewhere in this
Form 10-K. This data should be read in conjunction with the financial
statements and notes thereto appearing elsewhere herein. The Company
has never paid cash dividends.
Summary of Balance Sheets
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<TABLE>
<CAPTION>
September 30,
1995 1994 1993 1992 1991
---------- --------- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Current assets $ 762,489 $ 808,172 $668,016 $606,986 $431,968
Current liabilities 271,598 247,732 199,220 194,790 161,876
Working capital 490,891 560,440 468,796 412,196 270,092
Total Assets 1,411,159 1,285,242 962,112 935,014 818,362
Total liabilities 358,080 251,065 199,220 225,979 209,513
Stockholder's
equity 1,053,079 1,034,177 762,892 709,035 608,849
Net tangible book
value per share .23 .24 .20 .18 .13
Shares used in per
share calculation 3,350,000 3,350,000 3,350,000 3,350,000 3,350,000
<CAPTION>
Summary Statement of Operations
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1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Revenues $1,224,282 $1,253,011 $1,197,806 $1,263,773 $933,228
Cost of sales 698,958 648,822 690,440 700,177 564,931
Gen.admin.expenses 485,324 456,983 449,954 458,320 412,520
Income (loss) before
cum.effect of
accounting change 18,902 83,285 53,857 100,186 (53,329)
Cum.effect of
accounting change -- 188,000 -- -- --
Net income (loss) 18,902 271,285 53,857 100,186 (53,329)
Earnings (loss) per
share before extra-
ord.items & cumulative
effect of acctg.change .01 .02 .01 .02 (.02)
Earnings (loss)
per share .01 .08 .02 .03 (.02)
Shares used in per
share calculations 3,350,000 3,350,000 3,350,000 3,350,000 3,350,000
</TABLE>
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation.
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For the fiscal year ended September 30, 1995, the Company's net
sales were $1,224,282 compared to $1,253,011 for 1994 and $1,197,806
in 1993. While revenues from video production services have increased
over the past 4 years from 32% of total sales in 1992 to 52% of total
sales in the fiscal year ended September 30, 1995, the sales of
educational products have declined over the same period of time from
61% of sales in 1992 to 37% in fiscal 1995. Management attributes the
decline in educational sales to the intense competition from other
publishers and a reduction in public funding of education.
The Company's total assets increased by 10% in fiscal 1995 from
1994 and 34% in the previous period, principally as a result of
capital improvements made during the past two years. The Company
invested $215,000 in fiscal 1995 and $138,000 in fiscal 1994 to
expand the video production facility. The Company added a second
post production edit suite and upgraded its equipment to digital
production. The expansion was completed in July 1995. Management
believes that these improvements are sufficient for the Company to
meet a projected 50% increase for video production business over
the next two years.
The Company reported a net income of 1.5% for the year ended
September 30, 1995, compared to 22% in 1994 and 4% in 1993. Factors
which contributed to the increase in cost of goods were sharp in-
creases in cost of paper, payroll, insurance, and maintenance. Cost
of sales were 57% of revenues in the fiscal year ended September 30,
1995, compared to 52% in 1994, and 57% in 1993.
Accounts payable at September 30, 1995 were 27% lower than at
fiscal year ending September 30, 1994.
At September 30, 1995, the Company had working capital in the
amount of $490,891, a decrease of $69,549 from the previous year.
Working capital and proceeds from notes payable were utilized to
purchase video production equipment.
Accounts receivable were $316,759, $338,8892, and $327,288 at
fiscal year ending September 30, 1995, 1994, and 1993, respectively.
Management believes that its cash availability is sufficient to meet
its future short and long term needs.
In September 1995 Company completed its 10th year as a public
company. Management concentrated on its long term plan to create a
technologically advanced video production facility which is expected
to provide revenue growth as the demand increases for this service.
<PAGE>
ITEM 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
See attached Financial Statements.
ITEM 9. Disagreements on Accounting and Financial Disclosure
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None
PART III
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ITEM 10. Directors and Executive Officers of Registrant
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The executive officers and directors of the Company, and further
information concerning them, are as follows:
Jay Comras 61 President, Chief Executive Officer and
Chairman of the Board of Directors
Rosemary Comrs 55 Vice President, Secretary/Treasurer and
Director
Thomas Koerner 64 Director
Marcus Ruger 64 Director
David Sousa 56 Director
Jay Comras has been President and Chairman of the Board of
Directors of the Company since its inception. Mr. Comras obtained a
degree of Bachelor of Education from the University of Florida in
1956, a Masters of Arts in Education Administration and Supervision
from Seton Hall University in 1963 and a Master of Arts in English
and Curriculum Development from Teachers College, Columbia University
in 1973. He has authored several books, publications and articles
relating to teacher training and test preparation skills, and he is
a consultant to the NASSP. Mr. Comras devotes his full time to the
affairs of the Company, with the exception of time devoted to the
NASSP.
Rosemary Comras has been Vice President, Secretary/Treasurer and
a director of the Company since its inception. Ms. Comras is the wife
of Jay Comras, Chairman of the Board, President and Chief Executive
Officer of the Company. Ms. Comras devotes her full time to the
affairs of the Company.
Dr. Thomas F. Koerner has been a director of the Company since
March 1985. Dr. Koerner has been Associate Executive Director for
the NASSP since 1971. Dr. Koerner will continue to devote only as
much time to the affairs of the Company as is necessary to carry out
his duties as a director, which is estimated to be a minimal amount
of his time.
<PAGE>
Dr. Marcus Ruger has been a director of the Company since March
1986. Dr. Ruger was employed as Director of Assessment Services for
the Mountain Plains Regional Office of American College Testing (ACT)
from 1983 to September 1995. Dr. Ruger will continue to devote only
as much time to the affairs of the Company as is necessary to carry
out his duties as a director, which is estimated to be a minimal
amount of time.
Dr. David Sousa has been a director of the Company since April
1994. Dr Sousa wss employed as Supervisor of Instruction and
Assistant to the Superintendent at West Orange Public Schools from
1972 to June 1991. Dr. Sousa was employed as Superintendent for the
New Providence School district from 1991 till July 1994. Dr. Sousa
will continue to devote only as much time to the affairs of the
Company as is necessary to carry out his duties as a director, which
is estimated to be a minimal amount of his time.
All of the directors of the Company were elected in 1995 to serve
until the next annual meeting of the stockholders and until their
successors have been elected and have qualified. Officers are appointed
to serve until the meeting of the Board of Directors following the next
annual meeting of stockholders and until their successors have been
elected and have qualified.
ITEM 11. Executive Compensation
- --------------------------------
The following table sets forth information concerning the com-
pensation paid to Jay Comras, the Company's Chairman of the Board,
President, and Chief Executive Officer, during each of the last three
fiscal years. There are no excecutive officers of the Company for whom
total annual salary and bonus exceeds $100,000.
<TABLE>
<CAPTION>
Annual Compensation
Name Fiscal Salary Bonus Other All Other
year Compensation(1) Compensation(2)
- ------------- ------ ----------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Jay Comras, 1993 $73,621 --- $ 900 $ 10,140
Chairman of the 1994 73,533 --- 500 10,880
Board, President 1995 77,825 --- 500 11,700
and CEO
</TABLE>
(1) Compensation consists of personal use of a Company-owned automobile
(2) Compensation consists of premiums paid on a life insurance policy
covering Mr. Comras, the proceeds of which are payable to beneficiaries
designated by him.
The Company has a three year employment agreement with Jay Comras,
its Chairman of the Board, President and Chief Executive Officer,
commencing March 1, 1994, providing for a salary of $80,000, with annual
increases of $2,500, and a cash bonus of 3% of the Company's net profit
before taxes. The agreement also provides for the payment of the premium
on a life insurance policy covering Mr. Comras, the proceeds of which are
payable to beneficiaries designated by him. Mr. Comras has exclusive use
of a Company-owned automobile.
<PAGE>
The Company has a three year employment agreement with Rosemary
Comras, Vice President and Secretary/Treasurer of the Company, which
commenced September 1, 1993, for an annual salary of $60,000 and a cash
bonus of 3% of the Company's net profit before taxes.
The Company may, in the future, offer disability insurance,
reimbursement of medical expenses and such other benefits as may be
authorized by the Board of Directors. Presently, all full-time employees
are eligible to receive Company paid health and dental insurance
premiums. No retirement, pension, profit sharing, or other similar
program has been adopted by the Company. No surviving warrants or stock
options have been granted to any officer, director or other employee of
the Company. However, such benefits may be adopted or options granted in
the future, if they are authorized by the Board of Directors.
Key Man Insurance
- -----------------
The Company obtained a "key man" term life insurance policy on the
life of Jay Comras, Chairman of the Board, President and Chief
Executive Officer of the Company, in the amount of $1,000,000, the
proceeds of which are payable to the Company. The current annual premium
to maintain such "key man" term life insurance is approximately $21,000.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
As directors of the Company, Jay Comras and Rosemary Comras
participate in deliberations of the Board of Directors concerning
executive officer compensation. The Board of Directors has no
compensation committee or other committee performing equivalent
functions.
Dr. Thomas Koerner is a director of the Company. Dr. Koerner is
also Associate Executive Director of the NASSP, a customer of the
Company. During the fiscal years ended September 30, 1995 and 1994, the
Company derived revenues of approximately $120,000 and $169,000,
respectively, from sales and consulting services to the NASSP.
Compensation of Directors
- -------------------------
Outside directors receive $250 for each board meeting attended
and are reimbursed for the reasonable out-of-pocket expenses incurred
by them in connection with the performance of their services as
directors.
ITEM 12. Security ownership of certain beneficial owners and Management
- ------------------------------------------------------------------------
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of the date hereof
<PAGE>
by (i) each person who is known by the Company to own beneficially more
than 5% of the Company's outstanding Common Stock; (ii) each of the
Company's officers and directors; and (iii) officers and directors of the
Company as a group:
<TABLE>
Name and address of Amount and Nature of Percentage of
Beneficial Owner Beneficial Ownership Ownership (1)
- ------------------- -------------------- -------------
<S> <C> <C>
Jay Comras (1) 1,075,000 32.0%
14 Tilden Drive
East Hanover NJ
Rosemary Comras 1,000,000 29.9%
14 Tilden Drive
East Hanover NJ
Thomas F. Koerner --- --
Tumbletree Way
Reston VA
Marcus C. Ruger --- --
3131 South Vaughn Way
Aurora CO
David Sousa 6,000 .002
729 Belvidere Avenue
Plainfield NJ
- --------------------------------------------------------------
All officers and directors
as a group (5 persons) 2,081,000 62%
</TABLE>
(1) Jay Comras, President, Chief Executive Officer and Chairman of the
Board of Directors, and Ms. Rosemary Comrs, Vice President, Secretary/
Treasurer and a director of the Company, are husband and wife, and may
act in concert with respect to the voting of their shares.
ITEM 13. Certain relationships and related transactions
- -------------------------------------------------------
Dr. Thomas Koerner is a director of the Company. Dor Koerner is
also Associate Executive Director of the NASSP, a customer of the
Company. During the fiscal years ended September 30, 1995 and 1994 the
Company derived revenues of approximately $120,000 and $169,000,
respectively, from sales and consulting services to the NASSP.
Possible conflict of interest
- -----------------------------
Any conflict of interest between the Company and the personal
interests of its officers and directors will be resolved to the best
<PAGE>
ability and in the best judgment of the officers and directors of the
Company, in a manner which protects the interest of the Company. The
officers and directors of the Company have agreed to present any
opportunities to the Company first, when possible, for review and
evaluation by the other directors of the Company.
If the Company enters into transactions in the future with any of
its officers and/or directors or companies affiliated with them, the
terms of such transactions will be as favorable to the Company as those
which could be obtained from an unrelated party in the arms-length
transaction.
ITEM 14. Exhibits, Financial Statements, Schedules and Reports on
Form 10-K
- -----------------------------------------------------------------
(a) 1. Financial Statements
2. Schedules
(b) Reports on Form 8-K
none
(c) Exhibits required by Item 601(b) of Regulation 5-K:
1.1 Form of Common Stock(A)
1.2 Form of Warrant Agreement (B)
1.2A Amendment No. 1 to Warrant Agreement with Amended Warrant
annexed. (D)
1.2B Amendment No. 2 to Warrant Agreement with Amended Warrant
annexed (H)
1.2C Amendment No. 3 to Warrant Agreement with Amended Warrant
annexed (J)
1.2D Amendment No. 4 to Warrant Agreement with Amended Warrant
annexed (K)
1.2E Amendment No. 5 to Warrant Agreement with Amended Warrant
annexed (L)
1.3 Form of Sellling Agreement (B)
1.4 Form of Agreement among Underwriters (B)
1.5. Form of Represantive's Stock Purchase Options (B)
1.6 Selling Security Holder's Options (H)
3.1 Certificate of Incorporation of the Registrant (A)
3.2 Certificate of Amendment to the Certificate of Incorporation (A)
3.3 Certificate of change to the Certificate of Incorporation (A)
3.4 By-Laws of the Registrant (A)
10.1 Contract of Employment with Jay Comras (A)
10.1a Renewal of Employment Contract with Jay Comras (D)
10.2 Contract of Employment with Rosemary Comras (A)
10.2a Renewal of Employment Contract with Rosemary Comras (O)
10.3 Memorandum of Agreement with the NASSP (A)
10.4 Memorandum of Agreement with the NASSP and CBS Software (A)
<PAGE>
10.5 Memorandum of Agrement with the NASSP (Achievment Tests (A)
10.6 Agreement with Research for Better Schools (A)
10.7 Memorandum of Agreement with the NASSP (ACT Preparation
Program (A)
10.8 Agreement with Peterson's Guides Inc. (A)
10.9 Agreement with Hayden Software (A)
10.10 Assignment of income from Jay Comras to Instructivision (B)
10.11 intentionally omitted
10.12 intentionally omitted
10.13 Loan Document with Howard Savings Bank (D)
10.14 Letter Agreement (April 2, 1986 with NASSP (D)
10.15 Agreement with Research for Better Schools dated April 1986 (D)
10.16 Lease for 3 Regent Street, Livingston NJ (F)
10.16a Amendment to Lease (G)
10.16b Amendment No. 2 to Lease (O)
10.17 Release from Hayden Software Company (F)
10.18 intentionally omitted
10.19 intentionally omitted
10.20 Loan Agreement with Jay Comras (J)
10.21 Agreement with NASSP for Inservice Video Network (K)
10.22 Agreement with NASSP (ACT preparation Programs (M)
(A) Incorporated by reference, filed with the initial filing of
the Company's Registration Statements, File No. 2-98176-NY on
or about June 4, 1985
(B) Incorporated by reference, filed with Pre-Effective Amendment
No. 2 of the Company's Registration Statement, File No.
2-98176-NY on or about July 18 1985
(C) Incorporated by Reference, filed with form 8-K, dated
August 12, 1986
(D) Filed with Post-Effective Amendment No. 1 to the Company's
Registration Statement, File No. 2-98176-NY on October 1, 1986
(E) Incorporated by Reference, filed with Form 8-K, dated August
12, 1986
(F) Filed with Post-Effective Amendment No. 1 on October 1, 1986
(G) Incorporated by Reference, filed with Form 10-K on January 13,
1987
(H) Filed with Post-Effective Amendment No. 3 on March 9, 1987
(I) Filed with Post-Effective Amendment No. 4 on July 13, 1987
(J) Filed with 10-K on January 8, 1988
(K) Filed with Post-Effective Amendment No. 6 on April 1, 1988
(L) Filed with Post-Effective amendment No. 7 on July 12, 1988
(M) Filed with Form 10-K on December 29, 1988
(N) Filed with Form 10-K on December 29, 1990
(o) Filed with Fomr 10-K on December 28, 1994
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Instructivision, Inc.
We have audited the accompanying balance sheets of
Instructivision, Inc. as of September 30, 1995 and 1994, and the
related statements of operations, stockholders' equity and cash
flows for the years ended September 30, 1995, 1994, and 1993. These
financial statements are the responsibility of the Company's
management. Or responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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 our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Instructivision, Inc. as of September 30, 1995 and 1994, and the
results of its operations and its cash flows for the years ended
September 30, 1995, 1994, and 1993 in conformity with generally
accepted accounting principles.
As discussed in Note 8 to the financial statements, the
Company changed its method of accounting for income taxes in 1994.
Our audits were conducted for the purpose of forming an
opinion on the basic financial statements taken as a whole. The
accompanying schedules V, VI and X are presented for purposes of
additional analysis and are not a required part of the basic
financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
MARTIN & MARTIN
Cedar Knolls, New Jersey
December 21, 1995
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC
BALANCE SHEETS
September 30,1995 and 1994
1995 1994
----------- -----------
<S> <C> <C>
Current assets
Cash $ 1,246 $ 19,999
Accounts receivable - unaffiliated 263,577 218,312
Accounts receivable - affiliated 53,182 120,580
Inventory 411,918 390,537
Prepaid expenses 9,566 7,744
Deferred income taxes 23,000 51,000
----------- -----------
Total current assets 762,489 808,172
Property and equipment at cost, less
accumulated depreciation 425,741 277,084
Other assets
Capitalized software - net of amortization 114,804 110,861
Deposits 13,125 13,125
Deferred income taxes 95,000 76,000
----------- -----------
Total other assets 222,929 199,986
----------- -----------
Total assets $1,411,159 $1,285,242
========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Accounts payable $ 83,241 $ 115,574
Accrued expenses 94,174 80,658
Notes payable - current portion 43,633 10,000
Notes payable - shareholder 50,550 14,500
Deferred income -- 27,000
----------- -----------
Total current liabilities 271,598 247,732
Notes payable, less current portion 86,482 3,333
----------- -----------
Total liabilities 358,080 251,065
----------- -----------
Stockholder's equity
Common Stock, $.001 par value, 10,000,000
shares authorized, 3,350,000 shares
issued and outstanding 3,350 3,350
Additional paid-in capital 1,425,218 1,425,218
Accumulated deficit (375,489) (394,391)
----------- -----------
Total stockholder's equity 1,053,079 1,034,177
----------- -----------
Total liabilities and stockholders equity $1,411,159 $1,285,242
=========== ===========
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
STATEMENT OF OPERATIONS
For each of the Three Years ended September 30, 1995
1995 1994 1993
--------- --------- ---------
Revenues
<S> <C> <C> <C>
Net sales: Products $ 459,639 $ 521,938 $ 603,677
Services - unaffiliated 644,765 562,073 484,129
Services - affiliated 119,878 169,000 110,000
--------- --------- ---------
Total revenues 1,224,282 1,253,011 1,197,806
Costs and expenses
Cost of sales
Products 235,263 176,163 260,571
Services - unaffiliated 389,504 363,396 350,281
Services - affiliated 74,191 109,263 79,588
--------- --------- ---------
Total cost of sales 698,958 648,822 690,440
General and administrative expenses 485,324 456,983 449,954
Interest expenses 12,098 2,921 3,555
--------- --------- ---------
Total costs and expenses 1,196,380 1,108,726 1,143,949
--------- --------- ---------
Income before income taxes, extra-
ordinary items & cumulative effect
of change in accounting principle 27,902 144,285 53,857
Provision for income taxes 9,000 61,000 21,000
--------- --------- ---------
Income before extraordinary item &
cum.effect of change in accounting 18,902 83,285 32,857
Extraordinary item - carryforward
loss benefit -- -- 21,000
--------- --------- --------
Income before cumulative effect of
change in accounting principle 18,902 83,285 53,857
Cum.effect of change in accounting -- 188,000 --
--------- --------- --------
Net income $ 18,902 $ 271,285 $ 53,857
========= ========= ========
Earnings per share -income before
extraordinary item and cumulative
effect of change in accounting .01 .02 .01
Earnings per share - extraord.item -- -- .01
Earnings per share - cumulative
effect of change in accounting -- .06 --
--------- --------- ---------
Earnings per share $ .01 $ .08 $ .02
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Years Ended September 30, 1995
Common Stock Additional Accumulated Total
Shares Amount paid-in Deficit
Capital
--------- ------- ----------- ----------- ---------
Balance,
<S> <C> <C> <C> <C> <C>
Sept.30,1992 3,350,000 $3,350 $1,425,218 $(719,533) $ 709,035
Net income
for year -- -- -- 53,857 53,857
--------- ------ ---------- ---------- --------
Balance,
Sept.30,1993 3,350,000 3,350 1,425,218 (665,676) 762,892
Net income
for year -- -- -- 271,285 271,285
--------- ------ ---------- --------- ---------
Balance,
Sept.30,1994 3,350,000 3,350 1,425,218 (394,391) 1,034,177
Net income
for year -- -- -- 18,902 18,902
--------- ------ ---------- ---------- ----------
Balance,
Sept.30,1995 3,350,000 $3,350 $1,425,218 $(375,489) $1,053,079
========= ====== ========== ========== ==========
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
STATEMENT OF CASH FLOWS
For each of the Three Years Ended September 30, 1995
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Operating activities
Net income $ 18,902 $ 271,285 $ 53,857
Adjustments to reconcile net income to
net cash provided by operatg.activities
Depreciation 112,353 76,070 94,941
Amortization of capitalized software 38,556 28,225 56,658
Deferred income taxes 9,000 61,000 --
Cum.effect of change in accounting princ. -- (188,000) --
Changes in operatg.assets and liabilities:
(In)decrease in accounts receivable
- unaffiliated (45,265) 43,733 37,481
- affiliated 67,398 (55,337) (8,750)
Increase in inventory & prepaid expenses (23,203) (75,380) (78,650)
(De)increase in accounts payable and
accrued expenses (18,817) 43,227 (25,226)
Increase in deferred income (27,000) 27,000 --
--------- --------- --------
Net cash provided by operatg.activities 131,924 231,823 130,311
Investing Activities
Additions to capitalized software (42,499) (60,126) (14,881)
Purchases of property, plant & equipment (261,010) (151,143) (102,786)
--------- -------- ---------
Net cash utilized in investg. activities (303,509) (211,269) (117,667)
Financing activities
Proceeds from new borrowings 144,055 -- --
Proceeds from shareholder advances 36,050 -- 15,880
Principal payment on credit lines,notes
payable and capital lease obligations (27,273) (18,382) (17,413)
--------- --------- ---------
Net cash (utilized) provided by
financing activities 152,832 (18,382) ( 1,533)
(De)increase in cash (18,753) 2,172 11,111
Cash at beginning of year 19,999 17,827 6,716
--------- --------- ---------
Cash at end of year $ 1,246 $ 19,999 $ 17,827
========= ========= =========
<CAPTION>
Supplemental disclosure of cash flow information:
1995 1994 1993
------- -------- -------
Cash paid during the year for
<S> <C> <C> <C>
Interest $12,098 $ 2,921 $ 3,555
Income taxes 25 25 25
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
NOTE 1. Formation and Nature of Business
Instructivision, Inc. operates in the educational service industry
and produces educational software, workbooks, and video programs, and
provides video production services, primarily directed at students,
teachers, administrators and local businesses for in-house training
purposes.
NOTE 2. Summary of Significant Accounting Policies
a. Inventory
- ------------
Inventory is valued at the lower of cost, determined on a first-
in, first-out basis, or market value.
b. Property and Equipment
- -------------------------
Property and equipment is stated at cost. Expenditures for maint-
enance and repairs are charged to expenses as incurred and major
renewals and betterments are capitalized. Depreciation is provided
on the straight-line basis over the estimated useful lives of the
related assets.
c. Income Taxes
- ---------------
Effective October 1, 1993, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for
Income Taxes" which requires the liability method of accounting for
deferred income taxes. Deferred income taxes are recognized for the
effect of temporary differences between financial and tax reporting.
In addition, SFAS No. 109 requires the recognition of future tax
benefits, such as net operating loss carryforwards to the extent that
realization of such benefits are more likely than not. (See Note 8 -
Income Taxes)
d. Capitalized Software Costs
- -----------------------------
Product development includes all expenses related to future re-
leases and enhancements of the products, including research, develop-
ment, porting of software to new operating systems and platforms,
documentation, development of training programs, less allowable
capitalized software development costs.
In accordance with Statement of Financial Accounting Standards
No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed," the Company capitalizes the direct
costs and allocated overhead associated with the development of
software products. Initial costs are charged to operations as
research prior to the development of a detailed program design or a
working model. Costs incurred subsequent to the product release, and
research and development performed under contract are charged to
operations.
Capitalized costs are amortized over periods not exceeding five
years on the straight line basis. Unamortized costs are carried at the
lower of book value or net realizable value. Research and development
costs incurred were insignificant for the years ending September 30,
1995, 1994 and 1993 and have been expensed.
<PAGE>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
September 30, 1995
e. Earnings per share
- ---------------------
Earnings per share are based on the weighted average number of
common shares and common equivalent shares, if any, outstanding. The
weighted average number of common shares used in computing earings per
share was 3,350,000 for each of the years ended September 30, 1995,
1994, and 1993. There were no common equivalent shares outstanding
for any of these years.
NOTE 3. Inventory
<TABLE>
The components of inventory are as follows:
1995 1994
-------- ---------
<S> <C> <C>
Work in Process (video production cost) $ 81,433 $ 39,905
Finished Goods (video) 241,787 275,017
Finished Goods (workbooks) 88,698 75,615
-------- --------
$411,918 $390,537
======== ========
</TABLE>
NOTE 4. Property and Equipment
At September 30, 1995 and 1994 property and equipment is comprised
of the following:
<TABLE>
Life (yrs) 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Furniture and fixtures 3 - 8 $ 36,401 $ 33,725
Video equipment and computers 3 - 10 1,345,827 1,129,443
Automobile 3 45,927 17,246
Leasehold improvements 5 - 10 109,520 100,251
---------- ----------
1,541,675 1,280,665
Less accumulated depreciation 1,115,934 1,003,581
---------- ----------
Net $ 425,741 $ 277,084
========== ==========
</TABLE>
NOTE 5. Capitalized Software
For the years ended September 30, 1995 and 1994, accumulated
amortization of costs related to computer software products held for
sale was $261,034 and $222,478, respectively.
NOTE 6. Notes Payable
Notes payable at September 30, 1995 and 1994 consist of the
following:
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENTS --(Continued)
September 30, 1995
1995 1994
---------- ---------
<S> <C> <C>
Installment loan with Sony Electronics Inc.
maturing March 1998, payable monthly with
interest at 11 1/2%. The loan is collater-
alized by equipment of the Company $ 95,363 $ --
Installment loan with First Fidelity Bank
maturing June 2000, payable monthly, with
interest of approximately 10.5%. This loan
is collateralized by an automobile of the
Company 31,419 --
Installment loan with National Westminster
Bank commencing January 1994, payable in
24 monthly installments with interest of
approximately 9.5% 3,333 13,333
-------- -------
130,115 13,333
Less current portion 43,633 10,000
-------- -------
Amount due after one year $ 86,482 $ 3,333
======== =======
<CAPTION>
The following are the maturities of long term debt outstanding at
September 30, 1995:
<S> <C>
1996 $43,633
1997 45,123
1998 27,953
1999 7,364
2000 6,042
</TABLE>
NOTE 7. Related Party Transactions
a. Pursuant to a promissory note dated June 1, 1987, the principal
stockholder has agreed to make short term cash advances to the Company.
The advances are to be repaid upon demand with interest payable monthly
at 4% above the First Fidelity Bank's floating base commercial lending
rate. The note is collateralized by specific equipment owned by the
Company. The maximum advance amount is $75,000. The balance owed at
September 30, 1995 and 1994 was $50,550 and $14,500, respectively.
b. The Company is affiliated with a major customer of the Company,
whose Associate Executive Director is a Director of the Company.
<PAGE>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENTS --(Continued)
September 30, 1995
c. The Company has a three year employment agreement with Mr.Jay
Comras, President, principal stockholder and founder of the Company, to
employ Mr. Comras at the rate of $80,000 per year which commenced on
March 1, 1994, with rate increases to $82,500 on March 1, 1995 and
$85,000 on March 1, 1996. Mr. Comras receives a 3% bonus of the Company's
net profit before taxes, commencing March 1, 1994. Included in Mr.
Comras's employment agreement is the payment of a life insurance policy
for Mr. Comras with an annual premium of approximately $11,700. The
Company has a three year employment contracct with Ms. Rosemary Comras,
Secretary/Treasurer of the Company at the rate of $60,000 per year
base salary, plus a bonus of 3% of the Company's net profit before
taxes, commencing September 3, 1993.
NOTE 8. Income Taxes
Effective October 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes." The cumulative effect of adopting SFAS No. 109 was
to increase the net income by $188,000 or $.06 per share for the year
ended September 30, 1994. Financial statements for the year ended
September 30, 1993 have not been restated to apply the provisions of
SFAS No. 109.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax
liabilities and assets as of September 30, 1995 and 1994 are as
follows:
1995 1994
----------- ------------
Deferred tax liabilities :
Depreciation $ 28,000 $ 3,000
Deferred tax assets:
Net operating loss carryforwards 151,000 121,000
Tax credit carryforwards 35,000 35,000
Deferred income -- 11,000
Valuation allowance (40,000) (37,000)
--------- ---------
146,000 130,000
--------- ---------
Net deferred tax assets $118,000 $127,000
========= =========
<PAGE>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENTS --(Continued)
September 30, 1995
The valuation allowance for deferred tax assets was reduced after
the initial adoption in 1994 by $20,000 due to expiration of State net
operating loss carryforwards in 1994. The valuation allowance was
increased by $3,000 for the year ended September 30, 1995 due to the
expectation of State net operating loss carryforwards expiring unused.
Significant components of the provision for income taxes are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ----------
<S> <C> <C> <C>
Current:
Federal $ -- $ -- $ 21,000
State -- -- --
-------- ------- --------
Total current -- -- 21,000
Deferred:
Federal 3,000 52,000 --
State 6,000 9,000 --
-------- -------- -------
Total deferred 9,000 61,000 --
------- -------- -------
Total income tax expense $ 9,000 $ 61,000 $21,000
======= ======== =======
<CAPTION>
The reconciliation of income tax computed at statutory rates to
income tax expense is as follows:
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Statutory rate 30% 30% 30%
State income tax 9 9 9
Non-deductible expenses 35 37 --
Net operating loss (53) (20) --
Changes in valuation allowances 11 (14) --
---- ---- ----
Total 32% 42% 39%
==== ==== ====
</TABLE>
The Company has available for Federal and State income tax
purposes operating loss caryforwards and unused investment tax credits
which may provide future tax benefits in the approximate amounts
expiring as follows:
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENTS --(Continued)
September 30, 1995
Federal State
---------------------------------- --------------
Year of Operating Loss Investment Tax Operating Loss
Expiration Carryforward Credit Carryforward Carryforward
- --------------- -------------- ------------------- --------------
<S> <C> <C> <C>
1996 $ -- $ -- $ 123,000
1998 -- -- 9,000
2000 -- 1,000 --
2001 -- 34,000 --
2002 248,000 -- 38,000
2004 144,000 -- --
2006 15,000 -- --
2007 38,000 -- --
--------- ---------- ---------
$ 445,000 $ 35,000 $ 170,000
========= ========== =========
</TABLE>
NOTE 9. Commitment and Contingencies
a. Leases
- ---------
The Company currently leases space at 3 Regent Street, Livingston,
New Jersey, to June 2001. Rent expense, including escalation on
certain contingent expenses, was $154,287 in 1995, $162,595 in 1994,
and $159,000 in 1993, respectively. Future minimum rental commitments,
not including escalation on certain contingent expenses, for the years
ended September 30th, are as follows:
1996 $109,605
1997 109,605
1998 109,605
1999 109,605
to 2001 191,809
b. Royalties
- ------------
The Company has entered into royalty agreements with certain
individuals who have participated in developing certain Company
products. In general, the royalties are only due after all costs,
per each contract, are recovered by the Company. The amount of future
royalties due is directly dependent on the Company's revenue on each
particular contract.
c. Concentration of Credit Risk
- -------------------------------
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of trade receivables.
Concentration of credit risk with respect to trade receivables is
limited due to the large number of customers comprising the Company's
customer base. As of September 30, 1995 the Company had no significant
concentration of credit risk.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE V
INSTRUCTIVISION, INC.
PROPERTY, PLANT AND EQUIPMENT
For the Three Years Ended September 30, 1995
Balance at Additions at Balance at
Classification beginning cost purchased Retire- end of
of period by Company ments period
- --------------- ---------- -------------- ------- -----------
<S> <C> <C> <C> <C>
Year ended
September 30, 1993
Furniture & fixtures $ 32,957 $ 768 $ -- $ 33,725
Video equip.& computers 881,036 102,018 -- 983,054
Automobile 17,246 -- -- 17,246
Leasehold improvements 95,497 -- -- 95,497
--------- --------- ------ ----------
Total $1,026,736 $ 102,786 $ -- $1,129,522
========== ========= ====== ==========
Year ended
September 30, 1994
Furniture & fixtures $ 33,725 $ -- $ -- $ 33,725
Video equip.& computers 983,054 146,389 -- 1,129,443
Automobile 17,246 --- -- 17,246
Leasehold improvements 95,497 4,754 -- 100,251
---------- --------- ------ -----------
Total $1,129,522 $151,143 $ -- $1,280,665
========== ========= ====== ==========
Year ended
September 30,1995
Furniture & fixtures $ 33,725 $ 2,676 $ -- $ 36,401
Video equip.& computers 1,129,443 $216,384 -- 1,345,827
Automobile 17,246 32,681 -- 49,927
Leasehold improvements 100,251 9,269 -- 109,520
---------- -------- ----- ----------
Total $1,280,665 $261,010 $ -- $1,541,675
========== ======== ===== ========== p
</TABLE>
[FN]
See accountant's report on supplemental schedules
<PAGE>
<TABLE>
<CAPTION> SCHEDULE VI
INSTRUCTIVISION, INC.
ACCUMULATED DPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For the Three Years Ended September 30, 1995
Balance at Additions Balance at
Classification beginning charged to Retire- end of
of period cost & exp. ments period
- --------------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C>
Year ended
September 30, 1993
Furniture & fixtures $ 27,334 $ 2,662 $ -- $ 29,996
Video equip.& computers 729,392 78,189 -- 807,581
Automobile 12,456 4,790 -- 17,246
Leasehold improvements 63,388 9,300 -- 72,688
---------- --------- ----- ----------
Total $ 832,570 $ 94,941 $ -- $ 927,511
========== ========= ===== ==========
Year ended
September 30,1994
Furniture & fixtures $ 29,996 $ 1,688 $ -- $ 31,684
Video equip.& computers 807,581 64,846 -- 872,427
Automobile 17,246 -- -- 17,246
Leasehold improvements 72,688 9,536 -- 82,224
---------- --------- ----- ----------
Total $ 927,511 $ 76,070 $ -- $1,003,581
========== ========= ===== ==========
Year ended
September 30,1995
Furniture & fixtures $ 31,684 $ 905 $ -- $ 32,589
Video equip.& computers 872,427 99,365 -- 971,792
Automobile 17,246 906 -- 18,152
Leasehold improvements 82,224 11,177 -- 93,401
---------- --------- ----- ----------
Total $1,003,581 $ 112,353 $ -- $1,115,934
========== ========= ===== ==========
</TABLE>
[FN]
See accountant's report on supplemental schedules
<TABLE>
<CAPTION> SCHEDULE x
INSTRUCTIVISION, INC.
SUPPLIEMENTAL INCOME STATEMENT INFORMATION
For each of the Three Years Ended September 30, 1995
<S> <C>
For the year ended September 30, 1993
Amortization $ 56,658
Maintenance and repairs 10,450
Royalties 52,056
Advertising 14,500
For the year ended September 30, 1994
Amortization 28,225
Maintenance and repairs 9,883
Royalties 47,318
Advertising 16,438
For the year ended September 30, 1995
Amortization 38,556
Maintenance and repairs 3,095
Royalties 28,297
Advertising 20,725
</TABLE>
[FN]
See accountants report on supplemental schedules.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly cause this report to be signed on its
behalf by the undersigned thereunto duly authorized.
INSTRUCTIVISION, INC.
Registrant
December 29, 1995 Jay Comras
President, CEO
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant in the capacities and on the dates indicated:
Signature Title and Capacity Date
- ---------------- ------------------ --------
Jay Comras President, Principal Executive 12/29/95
Officer and Director
Rosemary Comras Vice President, Secretary/Treasurer 12/30/95
Thomas F.Koerner Director 12/29/95
Marcus Ruger Director 12/29/95
David Sousa Director 12/29/95
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Sep-30-1995
<PERIOD-START> Oct-01-1994
<PERIOD-END> Jun-30-1995
<CASH> 1246
<SECURITIES> 0
<RECEIVABLES> 316759
<ALLOWANCES> 0
<INVENTORY> 411918
<CURRENT-ASSETS> 762489
<PP&E> 1541675
<DEPRECIATION> 1115934
<TOTAL-ASSETS> 1411159
<CURRENT-LIABILITIES> 271598
<BONDS> 0
<COMMON> 3350
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1411159
<SALES> 1224282
<TOTAL-REVENUES> 1224282
<CGS> 698958
<TOTAL-COSTS> 1196380
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12098
<INCOME-PRETAX> 27902
<INCOME-TAX> 9000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18902
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
