<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________, 19__ to ____________ 19__.
Commission File Number: 33-35580-D
INSTANT VIDEO TECHNOLOGIES, INC.
--------------------------------------
(Exact Name of Small Business Issuer
as Specified in its Charter)
Delaware 84-1141967
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
500 Sansome Street, Suite 503
San Francisco, California 94111
------------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code
(415) 391-4455
--------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
N/A
------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
X YES NO
----- -----
There were 4,803,553 shares of the Issuer's $.00001 par value common stock
outstanding as of April 15, 1997.
<PAGE> 2
INSTANT VIDEO TECHNOLOGIES, INC.
FORM 10-QSB
INDEX
Part I: Financial Information Page No.
- --------------------------------- --------
Item 1. Financial Information:
Unaudited Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996.......................... 3
Unaudited Consolidated Statements of Operations -
Three and Six Months Ended June 30, 1997 and 1996............ 4
Unaudited Consolidated Statement of Cash Flows -
Three and Six Months ended June 30, 1997 and 1996............ 5
Unaudited Consolidated Statement of Stockholder's -
Deficiency Six Months ending June 30, 1997................... 6
Notes to Unaudited Consolidated Financial
Statements................................................... 7
Item 2. Management's Discussion and Analysis
or Plan of Operation. . . . . . . . ........................ 8-9
Part II: Other Information. . . . . . . ............................. 9
- -----------------------------
Item 1. Legal Proceedings................................... 9
Item 2. Changes in Securities............................... 9
Item 3. Defaults Upon Senior Securities..................... 9
Item 4. Submission of Matters to a Vote
of Security Holders................................ 9
Item 5. Other Information................................... 9-10
Item 6. Exhibits and Reports on Form 8-K.................... 10
Signatures......................................... 11
SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this Report includes forward-looking statements
within the meaning of applicable securities laws that involve substantial risks
and uncertainties including, but not limited to, market acceptance of the
Company's products and new technologies, the sufficiency of financial resources
available to the Company, economic, competitive, governmental and technological
factors affecting the Company's operations, markets, services and prices, and
other factors described in this Report and in prior filings with the Securities
and Exchange Commission. The Company's actual results could differ materially
from those suggested or implied by any forward-looking statements as a result of
such risks.
<PAGE> 3
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Unaudited Condensed Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Current assets:
Cash & cash equivalents $ 198,473 $ 208,613
Accounts receivable 61,421 1,421
Costs & estimated earnings in excess
of billings on uncompleted contracts 141,750 136,400
Prepaid expenses 15,721 8,648
----------- -----------
Total current assets 417,365 355,082
----------- -----------
Property and equipment, net 94,533 72,322
Loan to officer 37,500 --
Patents, net 104,368 121,108
Other 50,025 52,670
----------- -----------
$ 703,791 $ 601,182
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bank line of credit $ 400,000 $ 0
Credit facility, related party 0 90,000
Convertible notes payable 214,210 141,000
Accounts payable 107,720 128,263
Accrued expenses 70,000 152,000
Accrued interest 36,402 29,813
----------- -----------
Total current liabilities 828,332 541,076
----------- -----------
Shareholders' equity (deficit)
Preferred stock
Series E 5 5
Series F 15 15
Common stock 54 50
Additional paid-in capital 7,176,979 6,776,983
Accumulated deficit (7,301,594) (6,716,947)
----------- -----------
Net shareholders' equity (deficit) (124,541) 60,106
----------- -----------
$ 703,791 $ 601,182
=========== ===========
</TABLE>
<PAGE> 4
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Unaudited Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 141,750 $ 19,439 $ 609,629 $ 38,569
--------- ----------- ----------- ---------
Costs and expenses
Research and development 49,559 36,000 49,559 72,300
Project costs 239,935 205,000 239,935 440,000
Other general and administrative 443,022 163,690 875,915 192,848
--------- ----------- ----------- ---------
732,516 404,690 1,165,409 705,148
--------- ----------- ----------- ---------
Net loss from operations (590,766) (385,251) (555,780) (666,579)
--------- ----------- ----------- ---------
Other income (expense)
Interest income -- 331 414 595
Interest expense (22,917) (14,259) (29,281) (35,438)
--------- ----------- ----------- ---------
(22,917) (13,928) (28,867) (34,843)
--------- ----------- ----------- ---------
Net loss before income taxes (613,683) (399,179) (584,647) (701,422)
Income taxes -- (400) (400)
--------- ----------- ----------- ---------
Net loss ($613,683) ($ 399,579) ($ 584,647) ($701,822)
========= =========== =========== =========
Net loss per share ($ 0.13) ($ 0.09) ($ 0.12) ($ 0.16)
========= =========== =========== =========
</TABLE>
<PAGE> 5
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Unaudited Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended June 30,
--------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(584,647) $(701,822)
Adjustments to reconcile to net loss
to net cash used in operating activities:
Depreciation and amortization 28,344 23,166
Amortization of deferred revenue -- (38,460)
Collection of license fee -- 285,000
Increase in receivables (60,000) (74,000)
Increase in loans to officer (37,500) 0
Increase in prepaid expenses (7,073) (27,241)
Increase in deferred costs -- (173,978)
Decrease in other assets 1,389 --
Increase in costs in excess of billings (5,350) --
Decrease in accounts payable (20,543) (117,869)
Decrease in accrued expenses (8,790) (128,171)
Increase (decrease) in accrued interest 6,589 (25,089)
--------- ---------
Net cash used in operating activities (687,581) (978,464)
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment (32,559) (11,461)
Patent acquisition -- (8,178)
--------- ---------
Net cash used in investing activities (32,559) (19,639)
--------- ---------
Cash flows from financing activities:
Proceeds from sales of preferred stock -- 1,225,000
Exercise of warrants - Series F 400,000
Increase in bank line of credit 400,000 --
Repayment of debt (90,000) (121,048)
--------- ---------
Net cash provided by financing activities 710,000 1,103,952
--------- ---------
Decrease in cash and cash equivalents (10,140) 105,849
Cash and cash equivalents, beginning 208,613 4,346
--------- ---------
Cash and cash equivalents, ending $ 198,473 $ 110,195
========= =========
</TABLE>
Supplemental schedule of non-cash investing and financing activities:
During 1996, the Company issued a note for $73,210 for accrued payroll
During 1995, debt of $100,000 was converted to common stock.
During 1995, accrued interest of $8,000 was converted to a license fee.
<PAGE> 6
INSTANT VIDEO TECHNOLOGIES, INC AND SUBSIDIARY
Unaudited Consolidated Statement of Stockholders' Deficiency
For Six Months Ending June 30, 1997
<TABLE>
<CAPTION>
Additional
Common Stock Preferred Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
------ ------ ------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 4,803,553 $50 1,975,000 $20 $6,776,983 ($6,716,947) $ 60,106
Exercise of warrants 400,000 4 -- -- 399,996 -- 400,000
Loss for six months ended June 30, 1997 -- -- -- -- -- (584,647) (584,647)
--------- --- --------- --- ---------- ----------- ---------
Balance at June 30, 1997 5,203,553 $54 1,975,000 $20 $7,176,979 ($7,301,594) ($124,541)
========= === ========= === ========== =========== =========
</TABLE>
<PAGE> 7
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 1997
(1) Basis of preparation and presentation
The condensed consolidated financial statements included herein have
been prepared by Instant Video Technologies, Inc., and its Subsidiary
(the Company), without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and include all
adjustments which are, in the opinion of management, necessary for a
fair presentation. The condensed consolidated financial statements
include the accounts of the Company. Certain information and footnote
disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to SEC rules and regulations.
(2) Bank line of credit
In May, 1997, the Company obtained a $1,000,000 revolving line of
credit with Imperial Bank in California. However, the line is limited
to $500,000 until the Company obtains at least $4,000,000 in new equity
financing. The line bears interest at prime plus 1.5% and expires on
September 15, 1997, unless the company obtains $4,000,000 in equity. In
that case, the line shall be automatically extended until a date one
year from the original loan date. The line is secured by substantially
all assets of the Company and contains various restrictive covenants.
In conjunction with the line, the Company will grant the lender
warrants to purchase 31,250 shares of common stock at an exercise price
of $1.60 per share.
<PAGE> 8
Item 2. Management's Discussion and Analysis or Plan of Operation.
Results of Operations
During the three month period ending June 30, 1997, the Company
recorded revenue in the amount of $141,750, as compared to revenue in the amount
of $19,439 for the period ended June 30, 1996.
Costs and expenses during the three month period ending June 30, 1997,
totaled $732,516 as compared to $404,690 during the three month period ending
June 30, 1996. The increase was primarily due to increased development and
marketing costs associated with Burstware(TM) products and applications. During
the six month period ending June 30, 1997, costs and expenses totaled $1,165,409
as compared to $705,148 during the six month period ending June 30, 1996. The
increase in expenses during the six month period ending June 30, 1996 was the
result of increased development, marketing and administrative costs associated
with Burstware(TM) products and applications.
The Company realized a net loss of ($613,683) during the three month
period ending June 30, 1997, as compared to a net loss of ($399,579) during the
three month period ending June 30, 1996. The increased loss was primarily due to
increased general and administrative expenses related to the development and
marketing of Burstware(TM) products and applications. For the six month period
ending June 30, 1997 the net loss was ($584,647), as compared to a net loss of
($701,822) during the six month period ending June 30, 1996. The decreased net
loss was primarily due to increased revenue for the period.
Liquidity and Capital Resources
As of June 30, 1997, the Company had a working capital deficit of
($410,967) as compared to a working capital deficit of ($1,022,678) at the same
time in the previous year. The working capital deficit as of December 31, 1996
totaled ($185,994), as compared to ($1,166,057) for December 31, 1995. The
decreased deficit was primarily due to funds realized through financing.
Net cash used in operating activities totaled ($687,581) during the six
month period ending June 30, 1997, as compared to net cash used in operating
activities in the amount of ($978,464) during the six month period ending June
30, 1996. The decreased net cash was primarily the result of increased revenue
for the period.
<PAGE> 9
Cash flow provided by financing activities during the six month period
ending June 30, 1997 totaled $710,000, as compared to $1,103,952 during the six
month period ending June 30, 1996.
During the six month period ending June 30, 1997, the Company received
funding in the amount of $400,000 from the exercise of certain warrants to
purchase common stock of the Company. The Company believes that this funding,
combined with revenue resulting from licensed Burstware(TM) products and
applications will provide the working capital necessary for the next twelve to
eighteen month period.
The Company presently has no commitments for material capital
expenditures.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
The expiration date of certain Warrants to purchase Common Stock of the
Company that were issued in conjunction with the Company's Series F Preferred
Stock Financing in February 1996 was extended until February 26, 1998 at the
exercise price of one $1.00 per share; and for a second expiring February 26,
1999 at the exercise price of $1.50 per share.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
On June 12, 1997, the Company received a Line of Credit from Imperial
Bank ("Bank"). The $500,000 Line of Credit has a maturity date of September 15,
1997 and an interest rate of prime plus 1.5%. However, upon the Company's
receipt of a minimum of $4.0 million of new capital financing, the Line of
Credit increases to $1.0 million and, at the discretion of the Bank, the
maturity date may be extended to June 11, 1998. This Line of Credit is secured
by a security interest in all assets. In consideration for issuing this Line of
Credit, the Company issued to the Bank a Warrant to purchase 31,250 shares of
Common Stock of the Company at the exercise price of $1.60 per share.
In 1996, the Company entered into a Marketing Alliance Agreement with
Vyvx, Inc. This one-year Agreement provided for quarterly payments to the
Company in the amount of $250,000. The Agreement was in effect for two of said
quarters during which time the Company received $500,000 in revenue. The
Agreement was terminated by Vyvx prior to the third quarter and prior to the
receipt of the third and fourth payments. The Company continues to develop
products and applications, on an on-going basis, for Vyvx pursuant to a
Technology Development and License Agreement executed on July 3, 1996.
<PAGE> 10
During the quarter ended June 30, 1997, the Company increased its
office space by adding 1,140 square feet to the 2,328 square feet that it
occupies at 500 Sansome Street in San Francisco, California. The new lease
provides for monthly rent in the amount of $7,514 for the first six months of
the lease with an option to extend the lease for a three year term with monthly
rent in the amount of $6,936. The increase in rent is due to the cost of
additional office space as well as a rate increase to the prevailing market
rates in San Francisco, which increased approximately 60% per square foot over
the prior lease.
Item 6. Exhibits and Reports on Form 8-K.
The Company has not filed a Report on Form 8-K during the quarter ended
June 30, 1997.
<PAGE> 11
SIGNATURES
In accordance with the Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
INSTANT VIDEO TECHNOLOGIES, INC.
Date: August 12, 1997 By: /s/ Gary R. Familian
-------------------------------------
Gary R. Familian, President and
Chief Executive Officer
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description Location Page No.
------- ----------- -------- ----------
<S> <C> <C> <C>
3.1 Articles of Incorporation and Incorporated by reference to Exhibit Nos. --
Bylaws 3.1 and 3.2 to Registrant's Form S-18
Registration Statement (No. 33-35580-D)
3.2 Bylaws, as amended Incorporated by reference to Exhibit No. --
3.2 to Registrant's Form SB-2 Registration
Statement (No. 33-69914)
3.3 Certificate of Amendment to Incorporated by reference to Exhibit No. --
Certificate of Incorporation 3.3 to Registrant's Form SB-2 Registration
filed August 19, 1992 Statement (No. 33-69914)
3.4 Statement Establishing Series D Incorporated by reference to Exhibit No. --
Preferred Stock 3.4 to Registrant's Form SB-2 Registration
Statement (No. 33-69914)
3.5 Statement Establishing Series E Incorporated by reference to Exhibit No. --
Preferred Stock 3.5 to Registrants Form 10-KSB for year
ended December 31, 1994
3.6 Statement Establishing Series F Incorporated by reference to Exhibit No. --
Preferred Stock 3.6 to Registrants Form 10-KSB for year
ended December 31, 1994
10.1 Amended Plan of Agreement and Incorporated by reference to Exhibit No. --
Reorganization Among Catalina 10 to Registrant's Current Report on Form
Capital Corp., Explore 8-K dated August 17, 1992.
Technology, Inc. and certain
officers, directors and
shareholders of Catalina Capital
Corp. and Explore Technology, Inc.
10.2 Employment Agreement with Wayne Incorporated by reference to Exhibit No. --
Van Dyck 10.2 to Registrant's Report on Form 10-KSB
for the period ended December 31, 1992.
</TABLE>
<PAGE> 13
<TABLE>
<S> <C> <C> <C>
10.3 Employment Agreement with Richard Incorporated by reference to Exhibit No. --
Lang 10.3 to Registrant's Report on Form 10-KSB
for the period ended December 31, 1992.
10.4 Repurchase Option Agreement with Incorporated by reference to Exhibit No. --
Richard Lang 10.4 to Registrant's Report on Form 10-KSB
for the period ended December 31, 1992.
10.5 Repurchase Option Agreement with Incorporated by reference to Exhibit No. --
Lisa Walters 10.5 to Registrant's Report on Form 10-KSB
for the period ended December 31, 1992.
10.6 Repurchase Option Agreement with Incorporated by reference to Exhibit No. --
Peter Spiess 10.6 to Registrant's Report on Form 10-KSB
for the period ended December 31, 1992.
10.7 License Agreement with Incorporated by reference to Exhibit No. --
Singularity Corporation 10.6 to Registrant's Report on Form 10-KSB
for the period ended December 31, 1992.
10.8 Amended 1992 Stock Incentive Plan Incorporated by reference to Exhibit 10.8 --
to Registrant's Report on Form 10-KSB for
the year ended December 31, 1993
10.9 Office Lease for 500 Sansome Incorporated by reference to Exhibit No. --
Street 10.6 to Registrant's Report on Form 10-KSB
for the period ended December 31, 1992.
10.10 Settlement Agreement with Wayne Incorporated by reference to Exhibit 10.10 --
Van Dyck and Promissory Note to to Registrant's Report on Form 10-KSB for
Wayne Van Dyck, as amended the year ended December 31, 1993
10.11 Master License Agreement with Incorporated by reference to Exhibit 10.11 --
Burst Communications Pty Ltd. to Registrant's Report on Form 10-KSB for
the year ended December 31, 1993
10.12 License Agreement with VI-FACTS, Incorporated by reference to Exhibit 10.12 --
Inc. to Registrant's Report on Form 10-KSB for
the year ended December 31, 1993
</TABLE>
<PAGE> 14
<TABLE>
<S> <C> <C> <C>
10.13 Consulting Agreement with Gary R. Incorporated by reference to Exhibit 10.13 --
Familian to Registrant's Report on Form 10-KSB for
the year ended December 31, 1993
10.14 Memorandum of Understanding with Incorporated by reference to Exhibit 10.14 --
525 Post Production Company to Registrant's Report on Form 10-KSB for
the year ended December 31, 1993
10.15 Third Amendment to Lease for 500 Incorporated by reference to Exhibit 10.15 --
Sansome Street to Registrant's Report on Form 10-KSB for
the year ended December 31, 1993
10.16 Credit Facility with Draysec Incorporated by reference to Exhibit 10.16 --
Finance Limited to Registrant's Report on Form 10-KSB for
the year ended December 31, 1993
10.17 Promissory Note to Draysec Incorporated by reference to Exhibit 10.17 --
Finance Limited to Registrant's Report on Form 10-KSB for
the year ended December 31, 1993
10.18 Amendment to Master License Incorporated by reference to Exhibit 10.18 --
Agreement with Burst to Registrant's Report on Form 10-KSB for
Communications Pty Ltd. the year ended December 31, 1994
10.19 Amendment No. 1 to Credit Incorporated by reference to Exhibit 10.19 --
Facility with Draysec Finance to Registrant's Report on Form 10-KSB for
Limited the year ended December 31, 1994
10.20 Second Promissory Note to Draysec Incorporated by reference to Exhibit 10.20 --
Finance Limited to Registrant's Report on Form 10-KSB for
the year ended December 31, 1994
10.21 Fourth Amendment to Lease for 500 Incorporate by reference to Exhibit 10.21 --
Sansome Street to Registrant's Report on Form 10-KSB for
the quarter ended March 31, 1995
10.22 Employment Agreement with Gary R. Incorporate by reference to Exhibit 10.22 --
Familian to Registrant's Report on Form 10-QSB for
the year ended December 31, 1995
</TABLE>
<PAGE> 15
<TABLE>
<S> <C> <C> <C>
10.23 Employment Agreement with Richard Incorporate by reference to Exhibit 10.23 --
A. Lang to Registrant's Report on Form 10-QSB for
the year ended December 31, 1995
10.24 Employment Agreement with Therese Incorporate by reference to Exhibit 10.24 --
A. Webb Stacy to Registrant's Report on Form 10-QSB for
the year ended December 31, 1995
10.25 Consulting Agreement with Lisa Incorporate by reference to Exhibit 10.25 --
Walters to Registrant's Report on Form 10-QSB for
the year ended December 31, 1995
10.26 Letter Agreement with The Mill Incorporate by reference to Exhibit 10.26 --
(Facility) Limited to Registrant's Report on Form 10-QSB for
the year ended December 31, 1995
10.27 Memorandum of Understanding with Incorporate by reference to Exhibit 10.27 --
Vyvx, Inc. to Registrant's Report on Form 10-QSB for
the year ended December 31, 1995
10.28 Unit Purchase Agreement Incorporate by reference to Exhibit 10.28 --
pertaining to Series F to Registrant's Report on Form 10-QSB for
Convertible Preferred Stock the year ended December 31, 1995
10.29 Fifth Amendment to Lease for 500 Incorporate by reference to Exhibit 10.29 --
Sansome Street to Registrant's Report on Form 10-QSB for
the quarter ended March 31, 1996
10.30 Sixth Amendment to Lease for 500 Incorporate by reference to Exhibit 10.30 --
Sansome Street to Registrant's Report on Form 10-QSB for
the quarter ended September 30, 1996
10.31 Development and License Agreement Incorporate by reference to Exhibit 10.31 --
with Vyvx, Inc. dated July 3, 1996 to Registrant's Report on Form 10-QSB for
the quarter ended September 30, 1996
10.32 Marketing Alliance Agreement with Incorporate by reference to Exhibit 10.32 --
Vyvx, Inc. dated July 3, 1996 to Registrant's Report on Form 10-QSB for
the quarter ended September 30, 1996
10.33 Settlement Agreement with Bennett Incorporate by reference to Exhibit 10.33 --
Johnston to Registrant's Report on Form 10-QSB for
the quarter ended September 30, 1996
</TABLE>
<PAGE> 16
<TABLE>
<S> <C> <C> <C>
10.34 Agreement with Intertainer Inc. Incoporate by reference to Exhibit 10.34 --
dated August 1, 1996 to Registrant's Report of Form 10-KSB for
the year ended December 31, 1996
10.35 Addendum to Marketing Alliance Incoporate by reference to Exhibit 10.35 --
Agreement with Vyvx, Inc. dated to Registrant's Report of Form 10-KSB for
November 8, 1996 the year ended December 31, 1996
10.36 Summary of New Office Lease for Attached
500 Sansome Street
21 Subsidiaries of the Registrant Incorporated by reference to Exhibit No. --
22 to Registrant's Report on Form 10-KSB
for the period ended December 31, 1992.
27 Financial Data Schedule Attached
</TABLE>
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the
quarter ended December 31, 1996.
<PAGE> 1
EXHIBIT 10.36
[CB COMMERCIAL LETTERHEAD]
April 28, 1997
Mr. Gary R. Familian
Instant Video Technologies
500 Sansome Street, Suite 503
San Francisco, CA 94111
RE: 500 SANSOME STREET/INSTANT VIDEO TECHNOLOGIES
Mr. Familian:
Your verbal counter-proposal of today is acceptable. What follows below
summarizes the business terms that will be incorporated into a Lease Amendment:
PREMISES: Approximately 3,468 rentable square feet. The premises
consist of that space which you are now occupying in
Suite 503 (2,328 rentable square feet) plus the addition
of Suite 505 which is approximately 1,140 rentable
square feet.
TERM: A six (6) month lease.
RENTAL RATE: $26.00 per square foot on an annual basis.
COMMENCEMENT DATE: May 1, 1997.
OPTION TO EXTEND: Tenant shall have an option to extend for three (3)
years at $24.00 per square foot.
NOTIFICATION: Tenant must notify Landlord of their exercise of the
option sixty (60) days prior to the expiration of the
six (6) month Lease.
SUBLEASE & ASSIGNMENT: Tenant shall have the right to sublease or assign the
space with Landlord's written consent, which shall not
be unreasonably withheld or delayed. Profits accrue 50%
to Landlord and 50% to Tenant. Tenant will remain
primarily liable to Landlord.
IMPROVEMENTS: Within thirty (30) days of the commencement of the six
(6) month Lease term, Tenant shall at Tenant's sole cost
and expense install new building standard carpeting in
both the
<PAGE> 2
Mr. Gary R. Familian
April 28, 1997
Page 2
expansion suite (Suite 505), and the existing suite
(Suite 503) and repaint the expansion suite. Landlord
shall at Landlord's cost provide either an opening or an
opening and a door between the two suites subject to
mutually agreeable specifications.
SECURITY DEPOSIT: A security deposit equivalent to three (3) months rent
will be required for the expansion space.
REPRESENTATION: Andrew D. Bogdan of CB Commercial Real Estate Group,
Inc. represents only the Landlord in this transaction.
Mr. Familian, I am hopeful that we can reach an agreement by Tuesday, April 29,
1997.
The terms of this offer, and any further negotiations concerning this property
are subject to the terms of the attached Disclosures and Acknowledgment
incorporated herein by this reference. Please review the Disclosure and confirm
that the information provided herein is accurate and correct, and advise
immediately if any such information is incorrect.
This letter is merely a preliminary statement of Landlord's general intentions.
It should be understood that Landlord and Tenant mutually intend that neither
shall have any binding contractual obligation to the other regarding this matter
unless and until a formal lease agreement has been prepared (and reviewed by
both parties' attorneys) and has been fully executed and delivered by the
parties.
In any real estate transaction, it is recommended that Landlord and Tenant
consult with a professional, such as a civil engineer, industrial hygienist or
other person, with experience in evaluating the condition of the property,
including the possible presence of asbestos, hazardous materials and
underground storage tanks. Also, any agreement reached pursuant to these
negotiations shall be subject to all applicable federal, state and local laws,
regulations, codes,
<PAGE> 3
Mr. Gary R. Familian
April 28, 1997
Page 3
ordinances and administrative orders having jurisdiction over the parties,
property or the subject matter of this Agreement, including, but not limited
to, the 1964 Civil Rights Act and all amendments thereto, the Foreign
Investment in Realty Property Tax Act, the Comprehensive Environmental Response
Compensation and Liability Act, and the Americans With Disabilities Act.
Sincerely,
CB COMMERCIAL
REAL ESTATE GROUP, INC.
/s/ ANDREW D. BOGDAN
- --------------------
Andrew D. Bogdan
Senior Associate
(415)772-0256
cc: Kathy Hannon, L&B Group
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
Landlord, 500 Sansome Street Tenant
By: L&B Institutional Property Co.
Manager of CA, Inc.
By: /s/ KATHY M. HANNON By: /s/ GARY R. FAMILIAN
-------------------- ----------------------
Kathy M. Hannon Gary R. Familian
Title: Sr. Vice President Title: Chairman/CEO
------------------ -------------------
Date: 4-30-97 Date: 28 Apr. 97
------------------ --------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 198,473
<SECURITIES> 0
<RECEIVABLES> 61,421
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 417,365
<PP&E> 141,484
<DEPRECIATION> 46,951
<TOTAL-ASSETS> 703,791
<CURRENT-LIABILITIES> 828,332
<BONDS> 0
0
20
<COMMON> 54
<OTHER-SE> (124,615)
<TOTAL-LIABILITY-AND-EQUITY> 703,791
<SALES> 0
<TOTAL-REVENUES> 609,629
<CGS> 0
<TOTAL-COSTS> 239,935
<OTHER-EXPENSES> 925,474
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,281
<INCOME-PRETAX> (584,647)
<INCOME-TAX> 0
<INCOME-CONTINUING> (584,647)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (584,647)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
