UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission File Number: 0-18824
CORPORATE VISION, INC.
(Exact name of registrant as specified in its charter)
Oklahoma
(State or other jurisdiction of incorporation)
73-1380820
(I.R.S. Employer Identification No.)
8908 South Yale Avenue, Suite 360 Tulsa, OK 74137
(Address of principal executive offices, including zip code)
(918) 488-0057
(Registrant's telephone number, including area code)
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.
[ X ] Yes [ ] No
As of September 30, 1996, the Registrant had 12,461,708 shares of
common stock, $0.01 par value, (the "Common Stock") issued and outstanding.
PART I - FINANCIAL INFORMATION
When used in this document, the words "anticipate", "expect", "project" and
similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks, uncertainties and assumptions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those anticipated, expected, estimated or projected.
Item 1. Financial Statements
<TABLE>
CORPORATE VISION, INC.
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
ASSETS
Current Assets
Cash $42,936 $40,335
Accounts receivable 7,559 0
Prepaid expenses (related party) 58,334 66,667
Prepaid expenses 128,969 36,469
Other 20,535 0
------------ -----------
Total Current Assets 258,333 143,471
------------ -----------
Property and Equipment
Property and equipment 624,849 535,811
Less: A/Depreciation (313,480) (245,773)
------------ -----------
Net Property and Equipment 311,369 290,038
------------ -----------
Other Assets
Capitalized software 82,742 101,837
Goodwill 89,805 110,529
Other assets 245,433 109,339
Licensing agreement 48,389 55,052
Consulting agreements 642,285 66,953
Marketing and distribution 36,109 44,445
------------ -----------
Total Other Assets 1,144,763 488,155
------------ -----------
TOTAL ASSETS $1,714,465 $921,664
------------ -----------
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $37,527 $1,000
Accrued liabilities 9,726 40,238
Notes payable 0 160,000
Related party payables 62,853 122,512
Current portion of LTD 16,190 32,966
------------ -----------
Total Current Liabilities 126,296 356,716
------------ -----------
Long Term Liabilities
Long term debt 31,213 38,712
Deferred income taxes 15,600 15,600
------------ -----------
Total Long Term Liabilities 46,813 54,312
------------ -----------
Stockholders' Equity
Preferred Stock, $0.01 par value
1,000,000 shares authorized 0 0
Common Stock, $0.01 par value
20,000,000 shares authorized
12,461,708 and 9,491,175 shares
issued and outstanding at
September 30, 1996 and
December 31, 1995, respectively. 124,617 94,912
Additional paid in capital 2,914,244 1,929,340
Accumulated deficit (1,497,505) (1,513,616)
----------- -----------
Total Stockholders' Equity 1,541,356 510,636
----------- -----------
TOTAL LIABILITIES AND EQUITY $1,714,465 $921,664
----------- -----------
</TABLE>
<PAGE>
<TABLE>
CORPORATE VISION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
3-MOS 3-MOS 9-MOS 9-MOS
ENDED ENDED ENDED ENDED
9/30/96 9/30/95 9/30/96 9/30/95
<S> <C> <C> <C> <C>
Revenue $252,465 $102,792 $737,580 $193,456
Production Expenses
Personnel 91,774 108,773 236,283 225,782
Audio/Visual 8,386 9,315 41,271 16,025
-------- -------- -------- --------
Total Production Exp. 100,160 118,088 277,554 241,807
-------- -------- -------- --------
G&A
Office 32,151 34,273 104,963 57,670
Selling 47,114 31,539 101,198 64,219
Professional Fees 15,409 64,224 93,913 315,757
Depreciation 40,842 20,000 122,525 71,904
-------- -------- -------- --------
Total G&A 135,516 150,036 422,599 509,550
-------- -------- -------- --------
Income from Operations 16,789 (165,332) 37,427 (557,901)
Interest Expense 10,454 92 21,316 4,964
Income before Taxes 6,335 (165,424) 16,111 (562,865)
Provision for Taxes 0 0 0 0
-------- -------- -------- --------
Net Income (Loss) 6,335 (165,424) 16,111 (562,865)
-------- -------- -------- --------
EPS $0.00 $(0.02) $0.00 $(0.07)
-------- -------- -------- --------
WACS 12,296,760 8,446,841 11,191,445 8,212,210
---------- --------- ---------- ---------
</TABLE>
<PAGE>
<TABLE>
CORPORATE VISION, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
9-MOS 9-MOS
ENDED ENDED
9/30/96 9/30/95
<S> <C> <C>
Operating Activities
Net Income $16,111 $(562,865)
Non-cash charges to earnings:
Depreciation 122,525 71,904
Expenses paid with Stock 25,500 119,640
Changes in operating assets
and liabilities:
Accounts receivable (7,559) (1,287)
Accounts payable 36,527 30,569
Prepaid assets (12,500) 0
Other current liabilities (27,868) 0
--------- ---------
Cash Provided By (Used In)
Operating Activities 152,736 (342,039)
--------- ---------
Investing Activities
Investment in other assets (136,094) 0
Purchase of equipment (89,038) (54,850)
--------- ---------
Cash Provided By (Used In)
Investing Activities (225,132) (54,850)
--------- ---------
Financing Activities
Related party loans 23,500 102,862
Payments of related party loans (83,038) 0
Stockholder loans 0 120,000
Payments of stockholder loans (120,000) 0
Payments of long term debt (24,275) (38,599)
Proceeds from issuance of stock 278,931 156,636
--------- ---------
Cash Provided By (Used In)
Financing Activities 74,997 339,899
--------- ---------
Net Change in Cash 2,601 (56,990)
Beginning Cash 40,335 106,769
--------- ---------
Ending Cash $42,936 $49,779
--------- ---------
Supplemental Disclosures
Cash paid for interest 18,672 92
Cash paid for income taxes 0 0
Non-cash investing and financing
activities:
Stock issued to Trident
shareholders 0 5,556
Stock issued for "The Final
Jihad" rights 0 12,195
Stock issued to convert note
payable to stockholder
(non-affiliate) 42,644 0
Stock issued in advance for
services rendered by non-
affiliates 688,535 185,010
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Corporate Vision, Inc. ("CVI" or "the Company") is an interactive
multimedia production company that develops and produces custom
CD-ROM, CD-i, On-line, and Internet products for the corporate and
consumer markets. To date, the Company's business has centered on
developing custom CD-ROM and CD-i applications for Fortune 500
companies to use in their training and marketing activities.
As of September 30, 1996, the Company was principally involved in the
development and production of interactive training programs on CD-ROM
for one corporate customer, the Dowell Division of Schlumberger
Technology Corporation, an international well logging, seismic and
service company, under a production agreement dated January 1, 1995.
Payments to the Company for services rendered under the agreement
commenced during 1995 and continued at regular intervals during
the third quarter of 1996.
Growth Strategy
CVI's objective is to acquire companies in the video production and
multimedia development businesses that enhance the Company's
production capabilities and expand its client base. By acquiring
superior production capabilities, and providing the working capital
necessary to develop marketing and distribution strengths, the Company
anticipates it can expand its scope of products and services to the
corporate market as well as develop CD-ROM and Internet products for
the consumer market and broadcast programming for cable, satellite and
interactive television.
The Company has signed a non-binding letter of intent with Texas Video
& Post discussed below, and subsequent to completing the TVP transaction,
the Company plans to pursue other acquisition opportunities.
Texas Video & Post
On December 7, 1995, CVI entered into a letter of intent to acquire 100%
of the common stock of Texas Video & Post, Inc. (TVP), a privately-held
video and post-production facility, in exchange for $600,000 in cash and
the issuance of a minimum of 2,400,000 shares of restricted common stock
of the Company.
Located in Houston, Texas, TVP is considered to be one of the premiere
video and post-production facilities in the Southwest, serving an
impressive array of clients throughout the United States. TVP employs
20 people and generates over $3.0 million in annual revenues by producing
corporate communications, original broadcast programming, television
commercials and cable films.
The letter of intent with TVP is non-binding on either party and is subject
to the execution of a definitive agreement. As of September 30, 1996, the
Company had not entered into a definitive agreement with TVP, pending
successful completion of the corporate financing necessary for working
capital and for the cash component of the consideration required under
the terms of the TVP letter of intent. Successful completion of the
corporate financing and the acquisition of TVP may necessarily result
in material expense for CVI and substantial dilution of the interests of
the current CVI shareholders.
InterActive Media
On January 25, 1996, CVI entered into a letter of intent to acquire 100% of
the common stock of InterActive Media, Inc. (IAM), a privately-held
producer of custom CD-ROM programs for the corporate and consumer markets.
As of September 30, 1996, the Company had not entered into a definitive
agreement with IAM pending successful completion of the corporate financing
and the successful completion of the TVP acquisition.
Future Acquisitions
The Company's current growth plan calls for the acquisition of two companies
per year beginning in 1997. The Company believes that it may increase the
profitability of acquired businesses by consolidating administrative
activities, such as purchasing, accounting and finance, which would allow
management of the acquired companies to focus exclusively on production,
sales and marketing activities and by providing the working capital
necessary for the expansion of revenues and earnings.
CVI intends to acquire companies with existing revenues and earnings,
that (i) increase CVI's interactive CD production capabilities,
(ii) expand CVI's corporate client base, or (iii) have high quality
"off the shelf" corporate training or professional education products
that can be converted to interactive CD and distributed through the
acquired company's existing sales channels.
Liquidity and Capital Resources
For the nine months ended September 30, 1996, the Company generated
positive cash flow from its operating activities as a result of the
monthly fees collected from Schlumberger, the Company's only client.
It is anticipated that such monthly fees will extend through December
of 1996. At present, the Company has no other business backlog beyond
December of 1996. In the event the Company is unsuccessful in obtaining
additional business beyond December of 1996, the Company in 1996 may,
by necessity, reduce significantly its operating activities.
As of September 30, 1996, the Company has generated approximately $278,931
in cash from the issuance of Common Stock and the exercise of Common Stock
options and warrants, the proceeds of which were used to finance growth
and capital needs during the first nine months of 1996.
During the third quarter of 1996 and the nine months ended September 30,
1996, the Company incurred capital expenditures of $13,631 and $89,038,
respectively, which were primarily for computers and related CD production
equipment. Such expenditures were consistent with those incurred during
the same periods in 1995.
Looking ahead, management believes that current cash balances and revenues
generated from operating activities will not be sufficient to meet the
Company's short term or long term capital needs. In order to complete its
operating plan for 1996, the Company intends to raise additional funds
through the private placement of additional equity or convertible debt
securities. The sale of additional equity or convertible debt securities
will result in additional dilution to the Company's stockholders.
There can be no assurance that the Company will be able to raise such
capital when needed or on terms favorable to the Company.
In order to carry out its plans for additional corporate financing,
the Company, on March 1, 1996, entered into an agreement with
Institutional Investors Consulting Company ("IICC") to provide
exclusive investment advisory, brokerage participation and other
financial services for the purpose of securing a maximum of $5,000,000
in additional equity and/or debt funding from investors and/or
financial institutions. As of September 30, 1996, the Company had not
completed any financing under the terms of the contract with IICC and
has begun seeking other investment sources. Although the Company is
presently working with other possible investment sources, there can be
no assurance that the Company will be able to capital when needed or
on terms favorable to the Company.
In the event the Company is unsuccessful in raising a minimum of
$2,500,000 in additional funds during 1996 upon acceptable terms,
the business acquisition planned by the Company in 1996 may,
by necessity, be delayed or abandoned and operations of the Company
reduced significantly.
The Company's liquidity will be reduced as amounts are expended for
continuing product development, expansion of sales and marketing activities
and development of its administrative function. While not currently
anticipated, the Company's liquidity could also be reduced if significant
amounts were expended for additional facilities and equipment or to
license or acquire proprietary technology owned by others. Additionally,
depending on market conditions or future business opportunities, the
Company may decide to issue additional equity or debt securities for cash
or to acquire assets or technology of others as discussed above. The working
capital of the Company may also be used to acquire such assets or
technology, reducing the funds available for alternative use.
Results of Operations
Revenue for the third quarter of 1996 was $252,465, an increase of 145%,
from the third quarter of 1995 primarily from the Company's contract to
produce interactive safety training on CD-ROM for the Dowell Division of
Schlumberger Technology Corporation. For the nine months ended
September 30, 1996, revenue was $737,580, an increase of 281% from the
nine months ended September 30, 1995. The increase in revenue resulted
primarily from the successful conclusion of the initial interactive program
and the beginning of production on the remaining training programs.
Production expenses for nine months ended September 30, 1996 were 15%
greater than the same period of 1995 as a result of an increased number
of employees.
Office expense during the third quarter of 1996 were consistent with
office expense for the third quarter of 1995. For the nine month ended
September 30, 1996, office expenses were nearly 50% greater than the
same period in 1995 primarily because of an increased in the number of
employees.
Selling expenses during the third quarter of 1996 and the nine months
ended September 30, 1996 increased as a result of commissions paid on
higher revenues generated by the Schlumberger contract and increased
marketing costs designed to generate additional business during 1997.
Professional fees during the third quarter of 1996 and the nine months
ended September 30, 1996 decreased primarily as a result of capitalized
costs related to the Company's acquisition efforts and related to
developing the Company's presence in the public financial market.
During the fourth quarter of 1996, Management expects significant
write-offs associated with consulting contracts paid for by issuing
Common Stock of the Company.
Depreciation and amortization expenses during the third quarter of 1996
and the nine months ended September 30, 1996 increased as a result of
equipment purchases and increases in other assets.
The Company has incurred losses since inception and, therefore, has not
been subject to federal income taxes. As of December 31, 1995, the
Company has generated net operating loss carryforwards for financial
reporting purposes of approximately $1.5 million available to reduce
future federal income taxes. These carryforwards will begin to expire
in 2007. The Company's ability to utilize the carryforwards could be
limited by a "change in ownership," as such term is defined by federal
income tax laws and regulations.
As a result of the Company's limited operating history, the Company does
not have historical financial data for a significant number of periods on
which to base planned operating expenses. Accordingly, the Company's
expense levels are based in part on its expectations as to future revenues.
However, the Company is currently operating with no backlog of orders or
contracts to develop additional CD-ROM titles. As a result, quarterly
operating results generally depend on the payments received under
pre-existing or new contracts withing the quarter, which are difficult to
forecast. The Company may be unable to adjust spending in a timely manner
to compensate for any unexpected revenues shortfall. Accordingly, any
significant shortfall of demand for the Company's services in relation to
the Company's expectations would have an immediate adverse impact on the
Company's business, operating results and financial condition.
In addition, the Company plans to increase its operating expenses to fund
greater levels of development and increase its sales and marketing operations.
To the extent that such expenses precede or are not subsequently followed by
increased revenues or financing, the Company's business, operating results
and financial condition will be materially adversely affected.
The Company expects to experience significant fluctuations in future
quarterly operating results that may be caused by many factors, including
demand for the Company's services, introduction or enhancement of products
by the Company and its competitors, market acceptance of new products,
mix of distribution channels through which products are sold, mix of
products and services sold, and general economic conditions. As a result,
the Company believes that period-to-period comparisons of its results of
operations are not necessarily meaningful and should not be relied upon as
any indication of future performance. Due to all of the foregoing factors,
it is likely that in some future quarter the Company's operating results
will be below the expectations of public market analysts and investors.
In such event, the price of the Company's Common Stock would likely be
materially adversely affected.
Other
The Company has retained the services of Investor Relations Corporation
(IRC) of Tulsa, Oklahoma, under the terms of a services agreement dated
December 1, 1994, to provide certain investor relations functions for
the Company and to serve as liaison to the current and potential
shareholders of the Company. The principal owners of IRC are Rhonda R.
Vincent, an officer and director of the Company and Gifford M. Mabie,
the spouse of the founder, President and CEO of the Company. Under the
terms of the three year contract, the Company issued 500,000 shares of
its Common Stock to IRC at a deemed value of $0.20 per share.
IRC is expected to continue to assist the Company through the initial term
of the contract in all aspects of the Company's communication with its
securities holders and potential investors of the Company, including the
preparation of annual and quarterly reports and the coordination of
compliance with state and federal securities disclosure and reporting
requirements.
During the quarter ended September 30, 1996, the Company paid $33,500 to
IRC for services rendered in assisting the Company with the pending
acquisitions and proposed funding.
In February, 1996, the Company entered into a three year agreement with RDG
Investments ("RDG") of Vancouver, British Columbia, to provide certain
consulting services to the Company with an objective of expanding investor
and brokerage firm awareness and interest in the Company and the Common
Stock. Under the terms of the three year agreement, RDG received
550,000 shares of restricted Common Stock of the Company, which was
valued at $300,000, or $0.55 per share, and was recorded as a prepaid
consulting agreement. In addition, RDG received 400,000 stock options at
an exercise price of $0.10 per share, which have since been exercised.
The $40,000 was recorded as a prepaid consulting agreement.
In July, 1996, the Company entered into an agreement with RMJ & Associates
("RMJ") of Houston, TX to provide certain financial public relations
services to the Company with an objective of expanding investor and
brokerage firm awareness and interest in the Company and the Common Stock.
Under the terms of the agreement, RMJ received 600,000 stock options at an
exercise price of $0.30 per share, which have since been exercised.
The $180,000 was recorded as a prepaid consulting agreement.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
During the third quarter of 1996, the Company issued 50,000 shares of its
Common Stock without registration under the Securities Act of 1933, as
amended (the "Securities Act") paramount to claim of exemption under
Section 4(2) of the Act and the regulations thereunder. The 50,000
shares of Common Stock were issued at a price of $0.50 per share in
connection with
During the third quarter of 1996, the Company issued 600,000 shares of its
Common Stock through the exercise of stock options pursuant to the
Company's Stock Option Plan and 10,000 shares of its Common Stock through
the exercise of stock options pursuant to the Company's Employee Stock
Option Plan (collectively known as the "Plans"). Shares issued pursuant
to the Plans are covered by an effective Registration Statement under the
Securities Act of 1993, as amended (the "Securities Act").
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the third quarter of 1996.
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.
CORPORATE VISION, INC.
(Registrant)
/s/ Rhonda R. Vincent
Rhonda R. Vincent, Vice President
November 19, 1996
Date
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000868074
<NAME> CORPORATE VISION, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 42,936
<SECURITIES> 0
<RECEIVABLES> 7,559
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 258,333
<PP&E> 624,849
<DEPRECIATION> 313,480
<TOTAL-ASSETS> 1,714,465
<CURRENT-LIABILITIES> 126,296
<BONDS> 0
0
0
<COMMON> 124,617
<OTHER-SE> 1,416,739
<TOTAL-LIABILITY-AND-EQUITY> 1,714,465
<SALES> 737,580
<TOTAL-REVENUES> 737,580
<CGS> 277,554
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 422,599
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,316
<INCOME-PRETAX> 16,111
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,111
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
