UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended September 30, 2000
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: (973) 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(g) of the ACT:
Common Stock $0.001 par value
-----------------------------
(Title of Class)
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 [ ]
Page 1
<PAGE>
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-KSB or any amendment to this Form 10-KSB.
YES [X] NO [ ]
The aggregate market value of the voting stock held by non-
affiliates of the Company as of December 27, 2000, was $670,000
based on the over-the-counter closing bid price of $.20 per share on
December 27, 2000.
The number of shares of Common Stock, .001 par value, of the
Company, issued and outstanding on December 27, 2000 was 3,350,000.
This Form 10-KSB contains forward-looking statements. Such statements
are subject to risk and uncertainties. The Company's future results
could differ materially from those discussed here. Factors that could
cause or contribute to such differences include, but are not specifically
limited to risks detailed in this Form 10-KSB. Readers are cautioned
not to place undue reliance on such forward-looking statements.
Page 2
<PAGE>
PART I
ITEM 1. BUSINESS
----------------
The Company
------------
Instructivision, Inc. (the "Company") develops and markets multi-media
educational and instructional products and related services. The Company's
educational courseware consists of softcover books, software, and video
programs. The products are marketed to elementary, middle and high schools,
and colleges throughout the United States. In addition, the Company produces
proprietary training videos and commercials for businesses in the Central
New Jersey area. Educational products accounted for approximately 56% of
the Company's fiscal year 2000 revenues.
The Company owns a multi-media production facility in Livingston, NJ.
Its corporate clients are large and medium size businesses in Central New
Jersey. The Company's services include design, script writing, in house
and on location video taping, linear and nonlinear post-production editing
audio recording, animation, CD-ROM and DVD authoring, video duplication
and fulfillment.
Background
----------
The Company, a New Jersey corporation, was founded in 1981 by
Jay Comras and Rosemary Comras to develop multimedia test preparation
material for high school students preparing for college admission tests.
The Company's supplemental educational publications now include elementary,
middle, and high school test preparation material, and teacher training
tapes. Since 1998 Queue, Inc. has been the Company's exclusive
distributor for the majority of its products.
The Company's full service video production studio and post-
production facility was established in 1986 to provide an array of industrial
and corporate video services in addition to the educational publications.
In the past the Company's principal commercial video revenues were
derived from producing TV commercials for advertising companies, and
medical videos for pharmaceutical companies, however, since 1998 the
majority of video contracts have consisted of corporate employee training,
event coverage, and website enhancements.
Current activities
------------------
1. Commercial video production
The Company's multi-media production facility is located in central
New Jersey, near corporate headquarters of several Fortune 100 companies.
Recent customers have included Cendant, Siemens, Ticona, Prime Hospitality,
Coldwell Banker, American Health News, Pfizer, Prudential Insurance,
Chordiant and Whitehall Robins. The Company's full service production
facility consists of a studio, a linear and a digital editing suite, audio-
recording booth, animation, graphics, CD-ROM, DVD, Quicktime, Mpeg3,
streaming video, and duplication equipment.
Page 3
<PAGE>
2. Educational video tapes, software and workbooks:
The Company has a current inventory of twelve software programs
assisting students preparing for SAT, GED, ACT, 8th grade and high school
proficiency assessments with simulated practice tests. Most software
programs are compatible with Windows 3.1, 95, 98, 2000, Unix, NT,
Macintosh 7.5 to 8.5, OS operating and networking systems. Programs are
shipped on diskettes, CD-ROMs, and via website download. Software prices
are from $59 for single computer use, to $800 for school network licenses.
The Company publishes a library of over 70 video titles for teachers
on topics such as student discipline, motivation, cultural diversity,
truancy, parent conferences, and suicide prevention. The Company sells its
video tapes for $29 to $150 each.
The Company's present line of 16 supplemental workbooks for the
various assessment tests and accompanying teacher's guides are priced at
$6.95 to $9.50 each.
The principal publications are:
HSPA SUCCESS, GEPA SUCCESS, ESPA SUCCESS, LEAP SUCCESS, CMT SUCCESS,
MASTERING THE GED, SAT EDGE, STUDY SKILLS FOR SUCCESS.
Gross revenues from the Company's principal product lines for the
fiscal year ended September 30, 2000, are as follows: Software products
$38,200; softcover books $275,600; video tapes and CD-ROMs $42,000;
royalties and licenses $120,000.
During the fiscal year ended September 30, 2000, the Company launched
the following new products for the school market:
- ESPA Success in Mathematics and ESPA Success in Language Arts Literacy
study books for New Jersey fourth grade standards tests,
- CMT Success in Mathematics for Connecticut eighth grade mathematics
tests,
- HSPA Success Mathematics and Language Arts software practice tests,
- Revised LEAP Success Mathematics software for Louisiana 10th grade
test,
- Math Made Easy series of 4 video lessons on VHS/CD-ROM.
The Company produced a series of SAT and ACT test preparation programs
for the National Association of Secondary School Principals (NASSP) for
which the Company received royalties of 15% to 35%. The agreement was
terminated as of June 30, 2000, at which time all copyright and publication
rights of the products reverted to the Company. The publications are
"SAT Excellerator" (software and workbooks) and "Improving College Admission
Scores on the ACT" (software and workbooks) and SAT EDGE video course.
Royalties received by the Company from NASSP were $20,000 in fiscal 2000.
Revenues from the sale of these products in the 4th quarter were approx.
$89,000.
The Company also derives royalties of 1.25% to 3% from authorship of
components of the TEST BEST series published by Harcourt General. In fiscal
2000 those royalties amounted to $99,789.
Page 4
<PAGE>
The Company publishes its teacher training videos and other
instructional video tapes under the trade name "Inservice Video Network."
The Inservice Video Network catalog includes over 70 titles on various
teaching topics. The authors of the individual tapes receive royalties
of 5% to 12% from the sales of their respective tapes.
Approximately 60% of the Company's revenues from educational products
are derived from state test preparation material, 20% from national
SAT/ACT/GED practice material, and 20% from royalties on products created
for other publishers.
New product development:
-----------------------
The Company develops new products over a period of six to twelve
months. In addition, existing publications are frequently updated to
conform to changes in test formats and to replace books with older
copyright dates. Work in progress for the 2001 fiscal year include new
software and supplemental textbooks for Florida's FCAT, Connecticut's
Mastery Test and New Jersey ESPA software.
Future Plans:
------------
In September 2000, the Company signed an agreement with Educational
Options, Inc. to license the use of certain test preparation study material
in Educational Options' internet learning site. The Company intends to
create and publish test preparation courseware for Massachusetts and New
York in addition to the states where the Company's products are currently
being sold.
Marketing:
----------
The Company's products are sold in the highly competitive test
preparation market. The Company sells the majority of its educational
products through its distributor, Queue Inc. The Company's agreement with
Queue Inc. expires in March 2001. The Company participates in the marketing
of its products at trade shows, distribution of sales catalogs, and the
Company's online product catalog.
The Company advertises its commercial video production services via
yellow page ads, the internet, telemarketing, and networking.
Seasonality of the business:
---------------------------
The educational marketplace is subject to seasonal fluctuations in
its business that correlates to the traditional school year. 60% of the
Company's educational product sales are realized during the fourth
quarter of the fiscal year. Revenues from commercial video production
services have in the past not been affected by season, thereby providing
year-round cash flow for the Company.
Employees
---------
The Company had 6 full-time employees at September 30, 2000. The
Company's full time staff includes video engineers, editors, customer
support and administrative personnel. The Company contracts with outside
Page 5
<PAGE>
proofreaders, writers, artists, software programmers and educators to pro-
duce, edit, and field-test the Company's products on an as-needed basis. The
Company does not believe that the departure of any particular employee would
have a long term adverse effect on the Company's operations. The Company
anticipates maintaining this employment approach in the next fiscal year.
Copyrights and Trademarks
-------------------------
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.
A majority of the Company's products is marketed under the Company's
name of Instructivision. The Company has been denied 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 undeterminable.
Some of the Company's video programs are marketed under the trade
name INSERVICE VIDEO NETWORK.
Backlog
-------
The Company's sales backlog at September 30, 2000 consisted of
contractual video production obligations to be filled over the next
90 days of approximately $58,000, compared to a backlog of $75,000 in 1999.
Competition
-----------
The market for test preparation material is highly competitive,
characterized by continual change in technology, and dominated by certain
large corporations. Some of the Company's competitors are AMSCO, Kaplan,
Harcourt General, Curriculum Associates, Educational Design, ACT, The
College Board, and ETS. These competitors have more industry experience,
Page 6
<PAGE>
and larger manufacturing, marketing, and servicing capabilities than the
Company. There already are a large number of textbooks, software, video
and CD-ROM programs directed at preparing students for the SAT, ACT, and
high school proficiency tests on the market. The proliferation of Internet
learning sites that teach elementary through college courses online without
the necessity for purchasing textbooks and software, may impact on the
Company's future business.
The Company competes with other video production companies
producing commercials and instructional video programs in the central
New Jersey area. Many large corporations have their own inhouse production
capabilities. Corporations, in seeking to reduce operating costs, exert
pressure on suppliers and vendors for price reductions and lower bids on
video productions.
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 its ability to integrate video, audio and
software production into new media formats, CD-ROM, DVD, and the internet.
ITEM 2. Property
----------------
The Company's offices, teleproduction studio and software production
facilities are housed in approximately 7,300 sq.ft. of leased office space
at 3 Regent Street, near a major highway in Livingston, New Jersey. The
minimum monthly rent as of September 30, 2000 was $9,133.75. Under the lease
terms, the Company is responsible for insurance, maintenance, property taxes
and other costs of occupancy. The lease will expire on June 30, 2001 unless
renewed. The Company intends to relocate to a facility that is more
suitable for its current space requirements.
ITEM 3. Legal Proceedings
-------------------------
none
ITEM 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
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
sporadic basis in the over-the-counter market since its initial public
offering in 1985. 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.
Page 7
<PAGE>
Fiscal year ended Common Stock
High Low
------------------------------ ---- ---
1999
<TABLE>
<S> <C> <C>
First Quarter .25 .15
Second Quarter .25 .18
Third Quarter .25 .18
Fourth Quarter .33 .18
2000
First Quarter .40 .20
Second Quarter .35 .20
Third Quarter .35 .20
Fourth Quarter .35 .20
</TABLE>
At December 27, 2000 management believes that the approximate number
of beneficial holders of the Company's Common Stock was 240. This
number is based upon the Company's stockholder mailing list and information
provided to the Company by investors. At December 27, 2000 the Company's
transfer agent advised that there were 198 holders of record of the Company's
Common Stock. The Company has not paid any dividends on its Common Stock and
does not anticipate paying dividends in the foreseeable future.
ITEM 6. Management's Discussion and Analysis of Financial Condition
and Results of Operation
-------------------------------------------------------------------
Instructivision Inc. is a developer and marketer of multi-media study
material for elementary through high schools and a producer of video
production services for commercial customers.
The Company had a net profit of $54,629 after taxes, for the fiscal year
ended September 30, 2000, compared to a loss of $269,013 in fiscal 1999
and a loss of $159,276 in 1998.
In each of the last two fiscal years, revenues from educational products
increased by 19% over the previous year due to the introduction of new
products. Many states have mandated new or revised tests for assessing
progress in public elementary and high school students. Total educational
product sales were $499,000 in fiscal 2000, $416,000 in 1999 and $350,000
in 1998. The Company's supplementary educational products are sold mainly in
New Jersey, Florida, Louisiana and Connecticut. Materials for college
admissions tests, such as the SAT, ACT and GED software, are sold nationwide.
The business for video production services has continued to decline
over the past two fiscal years. The Company is dependent on a limited number
of video customers. If one of these customers delays purchases, establishes
its own inhouse AV department, or is unable to meet its payment obligations
the Company's business will be negatively affected. In fiscal 2000 the
largest video customers by sales volume - Cendant, Coldwell Banker,
Chordiant Software, Prime Hospitality, - accounted for $45% of the Company's
video revenues.
Page 8
<PAGE>
Sales from video production were 13% lower than in the previous year.
Management attributes the decline in part to the availability of low cost
PC based production equipment making video editing affordable to small
independent producers. Revenues from video production were $384,658 in fiscal
year 2000, down from $444,526 in 1999 and $906,377 in 1998.
Selling, general and administrative expenses for 2000 decreased by 22%
over the previous year. The Company uses a distributor for most of its school
products. General and administrative expenses were $348,154 in fiscal year
ended September 30, 2000, compared to $446,852 in 1999 and $448,262 in 1998.
The Company invests its cash in equity mutual funds. At September 30,
2000 the portfolio had a market value of approximately $760,000. Cash
provided by the Company's operating activities and income from its
securities portfolio were sufficient to fund working capital and expenditures
during the fiscal year. Cost of improving or revising existing products
are expensed during the period incurred; new product development cost is
capitalized and depreciated over its useful life. During fiscal 2000 the
Company spent approximately $120,000 creating new school products.
The principal factors that could negatively affect our future operating
results are the loss of a major video customer and major changes or dis-
continuation of public school testing requirements.
Management intends to continue to create and market supplemental
teaching material for educational institutions nationwide, and to produce
instructional video and software programs for businesses in the local tri-
state area. The Company believes that its cash on hand, cash generated
from operations and its securities portfolio will be sufficient to fund
operating requirements and planned capital growth in the foreseeable
future.
ITEM 7. Financial Statements and Supplementary Data
----------------------------------------------------
See attached Financial Statements.
ITEM 8. Disagreements on Accounting and Financial Disclosure
------------------------------------------------------------
None
PART III
--------
ITEM 9. Directors and Executive Officers of Registrant
-------------------------------------------------------
The executive officer and directors of the Company, and further
information concerning them, are as follows:
Rosemary Comras 60 President, Secretary/Treasurer and Director
Marcus Ruger 69 Director
Dale Spaulding 61 Director
David Sousa 62 Director
Rosemary Comras, co-founder of the Company, was elected President
of the Company on March 12, 1996 and Chairman and Chief Executive Officer
Page 9
<PAGE>
on September 4, 1996 following the death of Jay Comras. Ms. Comras
previously was Vice President, Secretary/Treasurer and a director of the
Company since its inception in 1981. Ms. Comras, a graduate from Fairleigh
Dickinson University, was employed as Accounting Manager at Telesciences
Computer Systems Inc. prior to starting the Company.
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 until his retirement in 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 was employed as Superintendent for the New Providence New
Jersey School district from 1991 till July 1994. Dr. Sousa conducts
training seminars and provides consulting services to schools, and is
the author of "How the Brain Learns" and other publications. 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.
Dr. Dale Spaulding was elected as director on April 23, 1998. Dr.
Spaulding was previously employed as principal of the Lampeter-Strasburg
PA High School District from July 1973 till September 1997. Dr Spaulding
served as President of the NASSP from 1993 to 1994 and as member of the
Board of Directors of the International Confederation of Principals from
1993 to 1996. Dr. Spaulding will 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 2000 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 10. Executive Compensation
--------------------------------
The following table sets forth information concerning the compensation
paid to Rosemary Comras, the Company's Chairman, President, and Chief
Executive Officer, during the previous two fiscal years. There are no exe-
cutive officers of the Company for whom the total annual salary and bonus
exceeds $100,000.
<TABLE>
Fiscal Salary Other
year Compensation(1)
------------- ------ --------- ---------------
<S> <C> <C> <C>
Rosemary Comras, 1999 $83,005 $ 3,900
Chairman, 2000 83,400 4,104
President and CEO
</TABLE>
(1) Compensation consists of reimbursement of health insurance premiums.
Page 10
<PAGE>
The Company has a three year employment agreement commencing
September 1,2000, with Rosemary Comras, President and Secretary/Treasurer
of the Company, at a current salary of $85,000/yr. and a cash bonus of 2.5%
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
receive Company paid health insurance. 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.
Compensation of Directors
-------------------------
Outside directors receive a compensation of $500 for each board
meeting attended and $100/hr. for participation in committees or as
consultants to the Company, and are reimbursed for the reasonable out-of-
pocket expenses incurred 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
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
------------------------ -------------------- -------------
<S> <C> <C>
Rosemary Comras 1,120,250 33%
Rosemary Comras 975,000 29%
ITF Kevin Comras and
JoAnn Doniloski
Marcus Ruger -- --
Dale Spaulding -- --
David Sousa 6,000 less than 1%
----------------------------------------------------------------------
All officers and directors
as a group (4 persons) 2,101,250 62%
</TABLE>
ITEM 12. Certain Relationships and Related Transactions
-------------------------------------------------------
none
Page 11
<PAGE>
PART IV
-------
ITEM 13. 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 Selling Agreement (B)
1.4 Form of Agreement among Underwriters (B)
1.5. Form of Representative'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)
10.2 Contract of Employment with Rosemary Comras (A)
10.2a Renewal of Employment Contract with Rosemary Comras (O)
10.2b Renewal of Employment Contract with Rosemary Comras (P)
10.2c Renewal of Employment Contract with Rosemary Comras (R)
10.3 Memorandum of Agreement with the NASSP (A)
10.4 Memorandum of Agreement with the NASSP and CBS Software (A)
10.5 Memorandum of Agreement with the NASSP (Achievement Tests) (A)
10.6 Agreement with Research for Better Schools (A)
10.7 Memorandum of Agreement with the NASSP (ACT) 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)
Page 12
<PAGE>
10.17 Release from Hayden Software Company (F)
10.18 intentionally omitted
10.19 Agreement with Randy Tinfow (J)
10.20 Loan Agreement with Jay and Rosemary Comras (J)
10.21 Agreement with NASSP for Inservice Video Network (K)
10.22 Agreement with NASSP (ACT preparation Programs (M)
10.23 Distribution Agreement with Queue, Inc. (Q)
(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, on 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 on 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 Jan. 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 Form 10-K on December 28, 1994
(P) Filed with From 10-K on December 30, 1996
(Q) Filed with Form 10-KSB on December 30, 1998
(R) Filed herewith
Page 13
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Instructivision, Inc.
We have audited the accompanying balance sheet of Instructivision,
Inc. as of September 30, 2000, and the related statements of operations,
and cash flows for the years ended September 30, 2000 and 1999, and
stockholders' equity for the year ended September 30, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our 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, 2000, and the results of its
operations and its cash flows for the years ended September 30, 2000,
and 1999 in conformity with generally accepted accounting principles.
STANLEY J. MORIN AND ASSOCIATES, P.C.
Cedar Knolls, New Jersey
December 20, 2000
Page 14
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
BALANCE SHEET
September 30, 2000
2000
-----------
<S> <C>
Current assets
Cash $ 4,864
Accounts receivable 228,794
Investments 760,185
Inventory 311,905
Prepaid expenses 12,943
-----------
Total current assets 1,318,691
Property and equipment at cost, less
accumulated depreciation 86,946
Other assets
Capitalized software - net of amortization 189,023
Deposits 13,125
Deferred income taxes 58,500
-----------
Total other assets 260,648
-----------
Total assets $ 1,666,285
===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current liabilities
Accounts payable $ 121,534
Accrued expenses 21,775
Deferred income taxes 58,500
-----------
Total current liabilities 201,809
Total liabilities 201,809
-----------
Stockholders' equity
Common Stock, $.001 par value, 10,000,000
shares authorized, 3,350,000 shares issued
and outstanding 3,350
Additional paid-in capital 1,425,218
Accumulated earnings (deficit) (51,648)
Unrealized gain on investment -net of income tax 87,556
-----------
Total stockholders' equity $ 1,464,476
-----------
Total liabilities and stockholders' equity $ 1,666,285
===========
</TABLE>
[FN]
See accompanying notes to financial statements
Page 15
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
STATEMENT OF OPERATIONS
For the years ended September 30, 2000 and 1999
2000 1999
---------- ----------
Revenues
<S> <C> <C>
Net sales: Products $ 499,347 $ 416,650
Services 384,658 444,526
_________ _________
Total revenues 884,005 861,176
Costs and expenses
Cost of sales
Products 324,741 232,460
Services 306,185 494,851
----------- -----------
Total cost of sales 630,926 727,311
General and administrative expenses 348,154 446,852
Interest expense 271 1,190
Investment income (122,665) (71,364)
----------- -----------
Income (loss) before income taxes 27,319 (242,813)
Provision for income taxes (27,310) 26,200
----------- -----------
Net income (loss) $ 54,629 (269,013)
=========== ===========
Income (loss) per share $ .02 $ (.08)
=========== ===========
</TABLE>
[FN]
See accompanying notes to financial statements
Page 16
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Year Ended September 30, 2000
Common Additional Accum. Cum.other Total
Stock paid-in (Deficit) Comprehens.
Capital Earnings Income
------ ---------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Balance
Sept.30,1999 $3,350 $1,425,218 $106,277 $ 46,294 $1,368,585
Net income -- -- 54,629 -- 54,629
Net unrealized
gain on investment
available for sale 41,262 41,262
------ ---------- -------- -------- ----------
Balance
Sept.30, 2000 $3,350 $1,425,218 $ (51,648) $ 87,556 $1,464,476
====== ========== ========== ======== ==========
</TABLE>
[FN]
See accompanying notes to financial statements
Page 17
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIVISION, INC.
STATEMENT OF CASH FLOWS
For the years ended September 30, 2000 and 1999
2000 1999
----------- -----------
<S> <C> <C>
Operating activities:
Net income (loss) $ 54,629 $ (269,013)
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 66,883 83,127
Amortization of capitalized software 59,971 69,444
Loss on sale of depreciated assets 12,580
Deferred income taxes (27,500) 26,000
Loss (Gain) on sale of investments (97,789) 4,408
Changes in operating assets and liabilities:
(In)decrease in accounts receivable (25,152) 172,043
(In)decrease in inventory & prepaid expenses (138,737) (8,790)
(In)decrease in accounts payable and
accrued expenses 63,465 (61,437)
----------- ----------
Net cash provided (utilized) by operating
activities (31,650) 15,782
Investing Activities:
Additions to capitalized software (55,553) (87,045)
Purchases of property, plant and equipment ( 3,620) (15,946)
Purchases of investments (344,576) (508,006)
Sale of investments 445,063 592,790
---------- ----------
Net cash provided (utilized) in
investing activities 41,314 (18,207)
Financing activities:
Principal payment on notes payable (6,041) (7,944)
---------- ----------
Net cash utilized by financing activities (6,041) (7,944)
(De)increase in cash 3,623 (10,369)
Cash at beginning of year 1,241 11,610
---------- ----------
Cash at end of year $ 4,864 $ 1,241
========== ==========
<CAPTION>
Supplemental disclosure of cash flow information:
2000 1999
------- --------
Cash paid during the year for
<S> <C> <C>
Interest $ 271 $ 1,190
Income taxes 200 200
</TABLE>
[FN]
See accompanying notes to financial statements
Page 18
<PAGE>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
NOTE 1. Formation and Nature of Business
Instructivision, Inc. operates in the educational service industry
and produces educational software, workbooks, and video programs for
students, teachers, and educators. The Company also provides video
production services to local businesses for training and advertising
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
---------------
The Company uses the asset/liability method of accounting for
deferred income taxes. Deferred income taxes are recognized for the
effect of temporary differences between financial and tax reporting.
d. Capitalized Software Costs
-----------------------------
Product development includes all expenses related to future releases
and enhancements of the products, including research, development, porting
of software to new operating systems and platforms, documentation, develop-
ment of training programs, less allowable capitalized software development
costs.
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 costs incurred were insignifi-
cent for the years ended September 2000, and 1999 and have been expensed.
Page 19
<PAGE>
INSTRUCTIVISION INC.
NOTES TO FINANCIAL STATEMENT--(Continued)
September 30, 2000
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 earnings per share was
3,350,000 for each of the years ended September 30, 2000 and 1999. There
were no common equivalent shares outstanding for any of those years.
f. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
NOTE 3. Investments
At September 30, 2000, investments consisted of securities classified
as available for sale.
Following are the market values as determined by quoted market prices
and original cost of marketable securities available for sale as of
September 30, 2000:
<TABLE>
Market Cost Unrealized
Value Gain
---------- --------- ----------
<S> <C> <C> <C>
Various investments $ 760,185 $ 614,129 $ 146,056
</TABLE>
Included in shareholders' equity at September 30, 2000 is $87,556
of unrealized gains on marketable securities available for sale, net of
income tax of $58,500. The cost basis of securities sold is determined
by using specific identification.
Subsequent to the balance sheet date, there has been a decline of
approximately $160,000 in the portfolio valuation. However, management
intends to hold its position in its investments until such time as the
valuation recovers and anticipates no significant loss on the result of
this decline. Management believes this to be a temporary situation.
NOTE 4. Inventory
The components of inventory at September 30, 2000 are as follows:
<TABLE>
2000
---------
<S> <C>
Finished goods (video) 65,582
Finished goods (workbooks) 246,323
---------
$ 311,905
=========
</TABLE>
Page 20
<PAGE>
INSTRUCTIVISION, INC
NOTES TO FINANCIAL STATEMENTS --(Continued)
September 30, 2000
NOTE 5. Property and Equipment
At September 30, 2000 property and equipment is comprised of the
following:
<TABLE>
Life (yrs) 2000
----------- ----------
<S> <C> <C>
Furniture and fixtures 3 - 8 $ 65,834
Video equipment and computers 3 - 10 1,179,293
Automobile 3 32,681
Leasehold improvements 5 - 10 109,520
-----------
1,387,328
Less accumulated depreciation 1,300,382
-----------
Net $ 86,946
===========
</TABLE>
NOTE 6. Capitalized Software
For the year ended September 30, 2000 accumulated amortization
of costs related to computer software products held for sale was
$268,169.
NOTE 7. Fair Value of Financial Instruments
The Company has a number of financial instruments, none of which are
held for trading purposes. The Company estimates that the fair value of all
financial instruments at September 30, 2000 does not differ materially from
the aggregate carrying values of its financial instruments recorded in the
accompanying balance sheet. The estimated fair value amounts have been de-
termined by the Company using available market information and appropriate
valuation methodologies. Considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value and, accord-
ingly, the estimates are not necessarily indicative of the amounts that the
Company could realize in a current market exchange.
NOTE 8. Income Taxes
Significant components of the Company's deferred income tax
liabilities and assets as of September 30, 2000 are as follows:
Page 21
<PAGE>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENT --Continued
September 30, 2000
<TABLE>
2000
----------
<S> <C>
Deferred tax liabilities :
Depreciation $ 20,000
Unrealized gain on investments 58,500
---------
Total 78,500
Deferred tax assets:
Net operating loss carryforwards 459,700
Tax credit carryforwards 34,000
Alternate minimum tax paid credit 40,000
Valuation allowance (455,200)
---------
Total 78,500
---------
Net deferred tax $ 0
=========
</TABLE>
Significant components of the provision for income taxes are as follows:
<TABLE>
2000
---------
<S> <C>
Current:
Federal $ --
State 190
--------
Total current 190
Deferred:
Federal 20,000
State 7,000
--------
Total deferred 27,500
--------
Total income tax benefit $ 27,310
========
The net change in the valuation allowance for the year ended
September 30, 2000 amounted to an increase of $86,100.
The reconciliation of income tax from continuing operations
computed at statutory rates to the Company's effective tax rate is
as follows:
</TABLE>
<TABLE>
2000
------
<S> <C>
Statutory rate (30)%
State income tax ( 7)
Net operating loss 40
Changes in valuation allowance 5
-----
Total 8 %
=====
</TABLE>
Page 22
<PAGE>
INSTRUCTIVISION, INC.
NOTES TO FINANCIAL STATEMENTS --Continued
September 30, 2000
The Company has available for Federal and State income tax purposes
operating loss carryforwards and unused investment tax credits which may
provide future tax benefits in the approximate amounts expiring as follows:
<TABLE>
Federal State
----------------------------------- --------------
Year of Operating Loss Investment Tax Operating Loss
Expiration Carryforward Credit Carryforward Carryforward
--------------- -------------- ------------------- --------------
<S> <C> <C> <C>
2001 -- 34,000 --
2002 240,000 -- --
2003 -- -- 78,000
2004 144,000 -- 395,000
2005 -- -- 154,000
2006 15,000 -- 265,000
2008 65,000 -- --
2009 383,000 -- --
2010 135,000 -- --
2011 253,000 -- --
--------- ---------- ---------
1,235,000 $ 34,000 $ 892,000
========= ========== =========
</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 $147,418 in 2000 and $146,675 in 1999,
respectively. Future minimum rental commitments, not including escalation
on certain contingent expenses, for the year ended September 30th, 2001
are $82,203.
b. Royalties
------------
The Company has entered into royalty agreements with certain indi-
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 con-
centration of credit risk consist principally of trade receivables. Concen-
tration of credit risk with respect to trade receivables is limited due to
the large number of customers comprising the Company's customer base.
Page 23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
INSTRUCTIVISION, INC.
Registrant
December 27, 2000 /s/Rosemary Comras
----------------- -----------------
Date Principal Executive, Financial and
Accounting Officer
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
------------------- ------------------ ----------
[S] [C] [C]
Rosemary Comras President, Secretary/Treasurer 12/27/00
Marcus Ruger Director 12/27/00
Dale Spaulding Director 12/27/00
David Sousa Director 12/27/00
Page 24
<PAGE>
