UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended December 31, 1998
Commission File Number 0-14411
Instructivision, Inc.
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(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:
(973) 992 9081
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 [ ]
As of December 31, 1998 there were 3,350,000 shares of Common
Stock, par value less than $.001 per share, outstanding.
Page 1
<PAGE>
INDEX
Page
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Part I: Financial Statement
Balance Sheets at December 31, 1998 4
Statement of Operations for the three 5
months ended December 31, 1998 and 1997
Statement of Cash Flows for the three 6
months ended December 31, 1998 and 1997
Notes to Interim Financial Statements 7
Part II: Management's Discussions and Analysis 8
of Financial Condition and Results of
Operations.
Signature 9
Page 2
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Part I. - FINANCIAL INFORMATION
Note: The following unaudited financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to
Form 10-QSB and Regulation S-B. Accordingly, they do
not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments necessary
for a fair presentation have been included. Operating results for
the three months ended December 31, 1998 are not necessarily
indicative of the results that may be expected for the year ended
September 30, 1999. For further information refer to the financial
statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended September 30, 1998.
Page 3
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<TABLE>
<CAPTION>
INSTRUCTIVISION, INC
BALANCE SHEETS
December 31, 1998
(unaudited)
December 31,
ASSETS 1998
------------
<S> <C>
Current assets
Cash $ 112,132
Investments 832,532
Accounts receivables 185,716
Inventory 178,008
Prepaid expenses 29,166
Deferred income taxes --
-----------
Total current assets 1,337,554
Property and equipment at cost, less
accumulated depreciation 204,024
Other assets
Capitalized software - net of amortization 179,035
Deposits 13,125
Deferred income taxes 57,000
-----------
Total other assets 249,160
-----------
Total assets $1,790,738
===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current liabilities
Accounts payable $ 102,463
Accrued expenses 22,154
Notes payable - current portion 8,038
-----------
Total current liabilities 132,655
Notes payable, less current portion 4,078
-----------
Total liabilities 136,733
-----------
Stockholder's equity
Common Stock, $.001 par value, 10,000,000 shares
authorized, 3,350,000 shares, issued & outstanding 3,350
Additional paid-in capital 1,425,218
Accumulated surplus 110,037
Unrealized gain on Investments 115,400
-----------
Total stockholder's equity 1,654,005
-----------
Total liabilities and stockholders equity $1,790,738
===========
<FN>
See accompanying notes to financial statements
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</TABLE>
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<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
STATEMENT OF OPERATIONS
For the Three Months Ended December 31, 1998 and 1997
(unaudited)
December 31, December 31,
1998 1997
------------ ------------
Revenues
<S> <C> <C>
Net sales
Products $ 120,840 $ 92,656
Services 145,200 210,854
----------- ------------
Total sales 266,040 303,510
Investment Income 28,612 44,157
----------- ------------
Total Revenues 294,652 347,667
Costs and expenses
Cost of sales
Products 63,478 55,991
Services 152,571 127,724
----------- ------------
Total cost of sales 216,049 183,715
General and administrative expenses 131,061 119,372
Interest expenses 241 2,045
----------- ------------
Total costs and expenses 347,351 305,132
----------- ------------
Income (loss) before income taxes (52,699) 42,535
Provision for income taxes -- 18,750
----------- ------------
Net income (loss) $ (52,699) $ 23,785
=========== ============
Earnings (loss) per share $ ( .02) $ .01
=========== ============
<FN>
See accompanying notes to financial statements
Page 5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
STATEMENT OF CASH FLOWS
For the Three Months Ended December 31, 1998 and 1997
(Unaudited)
December 31, December 31,
1998 1997
----------- ------------
<S> <C> <C>
Operating activities
Net (loss) income $ (52,699) $ 23,785
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 29,482 28,268
Amortization of capitalized software 6,004 13,976
Changes in operatg.assets and liabilities:
(In)decrease in accounts receivable 189,969 58,499
De(In)crease in inventory & prepaid expenses (29,853) 5,994
In(De)crease in accounts payable and accrued
expenses (24,164) (40,761)
---------- -----------
Net cash provided by operating activities 118,739 89,761
Investing Activities
Additions to Investments (3,613) (44,157)
Additions to capitalized software ( 9,199) (8,925)
Purchases of property, plant & equipment ( 3,536) (4,480)
---------- -----------
Net cash utilized in investg. activities (16,348) (57,562)
Financing activities
Proceeds from shareholder advances -- (2,000)
Principal payment on credit lines,notes
payable and capital lease obligations ( 1,869) (12,088)
---------- ----------
Net cash (utilized) provided by
financing activities (1,869) (14,088)
Increase in cash 100,522 18,111
Cash at beginning of period 11,610 1,637
----------- ----------
Cash at end of period $ 112,132 $ 19,748
=========== ==========
<CAPTION>
Supplemental disclosure of cash flow information:
December 31, December 31,
1998 1997
----------- ------------
Cash paid during the year for
<S> <C> <C>
Interest $ 241 $ 2,045
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</TABLE>
<PAGE>
INSTRUCTIVISION, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
December 31, 1998
(unaudited)
Note 1. Basis of Presentation
The financial statements included herein are unaudited.
However, such information reflects all adjustments consisting of
normal recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of the statements
for the interim periods.
The results of operations for the nine months ended
December 31, 1998 are not necessarily indicative of the results
to be expected for the full year.
Note 2. Earnings Per Share
Earnings per share is based on the weighted average number
of common shares outstanding. The weighted average number of
common shares was 3,350,000 for the period ended December 31, 1998
and 1997.
Page 7
<PAGE>
Item II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
- --------------------------------------------------------------------
For the three months ended December 31, 1998, the Company had net
sales of $266,840, down 31% from the same period in 1997. Sales for
the December 1997 quarter were $303,510 compared to $217,266 in 1996.
Revenues from video production were lower than expected due to the
completion of a major contract. Sales from commercial video services
were $145,200, or 31% lower than the December 1997 sales of $210,854,
up from $99,435 in 1996.
Introduction of the new GEPA Success product series in October
1998 helped boost school sales during a quarter which, historically,
is not a significant purchasing period for schools. Sales from
school products were $120,840 for the quarter ended December 31, 1998
compared to net sales of $92,656 in the December 1997 quarter,
reflecting an increase of 30% over the same period in the previous
fiscal year.
The Company recorded a net loss of $52,699, or $.02 per share
for the three months ended December 31, 1998 compared to a gain of
$23,785 or $.01/share in the prior year.
The Company's increase in cash flow from operating activities
of $100,522 was provided by a reduction of accounts receivable during
the quarter just ended. The current ratio on December 31,1998 was 10:1.
Cost of sales increased during the quarter ended Decembe 31, 1998
by 13%, or 73% of sales up from 60% in the quarter ended December 31,
1997. The completion of a major contract with a corporate customer has
contributed to lower revenues for the quarter and will impact the second
quarter results of the current fiscal year. The Company's shift toward
multimedia production services for CD ROMs and DVD application
effectively integrates video, software, and text development in both
educational and business use. While cost of sales are stated here
separately for products and services by prorating direct labor costs
and allocating certain fixed costs to video production, the total cost
of sales should be viewed in comparing costs with revenues.
On October 1, 1998 the Company entered into an agreement with Queue,
Inc., a distributor of educational products to the school market. Under
the agreement Queue is the excluse distributor of Instructivision's
educational products. Sales for the quarter ended December 31, 1998
reflect net cash receipts from Queue, after sales commissions and
shipping costs. The Company expects to eliminate staff positions and
expenses relating to warehousing, advertising, order fulfillment and
customer support as a result of the agreement.
Management reports that the Company's educational software products
as well as its administrative and production software are Y2K compliant.
Page 8
<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.
February 16, 1999 Rosemary Comras
President and Chief
Accounting Officer
Page 9
<PAGE>
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