Corporate Vision, Inc.
December31, 1997 and 1996
CONTENTS
Independent Auditor's Report 1
Financial Statements
Balance Sheets 2
Statements of Operation 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-19
Corporate Vision, Inc.
Financial Statements
December 31,1997 and 1996
and
Independent Auditors Report
The Board of Directors and Stockholders
Corporate Vision, Inc.
Tulsa, Oklahoma
We have audited the balance sheets of Corporate Vision, Inc., an
Oklahoma Corporation. as of December 31, 1997 and 1996, and the related
statements of operation, stockholders' equity and cash flows for the years
then ended. 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 audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 wed and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Corporate Vision, Inc., as of December 31, 1997 and 1996, and its results of
its operations and its cash flows for the years ended in conformity with
generally accepted accounting principles.
CROSS AND ROBINSON
Certified Public Accountants
May 5, 1997
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
<S> <C> <C>
Current Liabilities
Accounts payable $80,163 $75,068
Accrued liabilities 49,523 7,999
Payable to stockholder 43,520
Notes payable - bank 30,292
Total Current Liabilities 129,686 156,879
Long-Term Debt
Debentures payable 540,000 ___
Deferred Income Taxes 15,600
Total Liabilities 669,686 172,479
Stockholders' Equity
Preferred stock, $0.01 par value,
1,000,000 shares authorized,
no shares issued or outstanding.
Common stock, $.01 par value,
100,000,000 shares 573,812 126,206
authorized, 57,381,167 and
12,620,638 shares
issued and outstanding at
December 31,1997
and 1996
Additional paid-in capital 3,983,206 2,992,120
Retained earnings (4,721954) (2,141,143)
Total Stockholders Equity (164,936) 977,183
Total Liabilities and
Stockholders' Equity
$504,749 1,149,662
</TABLE>
Corporate Vision. Inc.
Statements of Operations
For the Years Ended December31, 1997 and 1996
Discontinued Operations (Note 17):
1997 1996
Loss from Discontinued Operations $(l,687,945) $(627,527)
Loss From Disposal of Assets
From Discontinued operations (892,867)
Net (Loss) $(2,580,811) $(627,527)
Net Loss Per Share From Discontinued Operations
Corporate Vision. Inc.
Statements of Stockholders' Equity
For the Year Ended December 31, 1997 and 1996
Additional Loss From
Common Stock Paid-In Discontinued Retained
Shares Amount Capital Operations Earnings
Balance at
December31, 1995 9,491,175 $94,912 1,929,340 -$(1,513,616)
Stock issued for
cash 723,175 7,231 276,699
Stock issued for
debt 85,288 852 41,791
Stock issued for
services 2,321,000 23,211 744,290
net loss for 1996 -(627,527)
Balance at December
31,1996 12,620,638 126,206 (2,992,120)(2,141,143)
Stock issued for
cash 41,282,480 412,826 896,735
Stock issued for
services 3,378,049 33,780 91,551
Stock issued as
Investment
In TL Phipps, net 100,000 1,000 2,800
Net loss for 1997
(2,580,811)(2,580,811)
Balance at
December 31,1997 57,381,167 $573,812$ $3,933,206$$(2,580,811)$(4,72l,954)
Accompanying notes are an integral
part of the financial statements
Page 4 of 19
1997 1996 p-a
1991 1996
Net Increase (Decrease) in Cash 292,687 12,215 292,687 12,215
Cash at Beginning of Period 52,550 40,335 52,550 40,335
Cash at End of Period $345,237 $52,550
Supplemental Disclosure of Cash Flow Information
Cash paid for interest:
Interest $ 405,359 $14,378
Corporate Vision. Inc.
Notes to Financial Statements
December31, 1997 and 1996
Notes I - Summary of Organization and Significant Accounting Policies
Organization
Corporate Vision, Inc. ("CVI" or 'the Company") was
incorporated in Oklahoma on November 20,1990 as a video
production company. In 1992, the Company began developing
custom CD-ROM and CD-i products for corporate clients.
In December, 1994, the Company purchased 90% of the
outstanding common stock of Trident Enterprises, Inc.
(Trident), a publicly traded Nevada corporation. In May,
1995, the shareholders of CVI and Trident approved a merger
of the companies As a result, the minority shareholders of
Trident received 86,694 common shares of CVI in exchange for
their ownership of Trident common stock. Subsequent to the
merger and share exchange, Trident ceased to exist as a
separate entity and CVI remained as the surviving
corporation. In June, 1995, CVI's common stock began trading
on the OTC Bulletin Board under the symbol "CVIA."
Prior to 1997 Corporate Vision, Inc. was an interactive
multimedia production company that developed and produced
custom CD-ROM, CD-i, On-line, and Internet products for the
corporate and consumer markets.
Financial Condition
The Company's financial statements for the year ended December
31,1997 and 1996 have been prepared on a liquidation basis of accounting
which contemplates the realization of assets and the settlement of
liabilities and commitments at their net realizable value. The Company
incurred a loss of $1,687,945 from discontinued operations during 1997 and a
combined net loss of $2,580,811 and $627,527 for the years ended December
31, 1997 and 1996. As of December 31, 1997 the Company had an accumulated
deficit of $4,721,954. The Company had working capital of $218,877 as of
December31, 1997.
At December 31, 1996, the Company completed its
contract with Dowell Schlumberger, which accounted for all of
the Company's primary revenue for 1996. As of December31,
1997, the Company had completed all contracts for services
and terminated all employees.
Cash and Cash Equivalents
The Company considers all highly liquid assets with
maturities of three months or less to be cash equivalents.
Page 6 of 19
Corporate Vision, Inc
Notes to Financial Statements
December31. 1997 and 1996
Notes I - Summary of Organization and Significant Accounting Policies
(continued)
Fiscal Year End
The Company's fiscal year ends on December31.
Property and Equipment
Property and equipment is recorded at cost. All
material property and equipment additions are capitalized and
depreciated on a straight-line basis over the estimated
useful life of the asset.
Software Development Costs
Software development costs were capitalized in
accordance with Financial Accounting Standards Board Statement No.86,
"Accounting for the Cost of Computer Software to be Sold, Leased, or
Otherwise Marketed" for the year ended December31, 1996 and prior.
Accordingly, costs incurred during the initial design phase were expensed.
Once the software was clearly defined and technological feasibility was
established, software development costs were capitalized and amortized on a
straight-line basis over an estimated useful life of five (5) years.
Software development costs are carried at their net realizable value and, as
such, an annual review of software development costs is conducted and the
costs of obsolete software are written off. CVI did not have software
development costs at December31, 1997.
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 at the date of the financial
statements and the reported revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Income Taxes
Effective January 1, 1991, the Company adopted
Statement of Financial Accounting Standards No.109,
"Accounting for Income Taxes," which requires the measurement
of deferred tax assets for deductible temporary differences
and operating loss carry forwards, and of deferred tax
Page 7 of 19
Notes 1 -
Corporate Vision, Inc.
Notes to Financial Statements
December31, 1997 and 1996
Summary of Organization and Significant Accounting Policies
(continued)
liabilities for taxable temporary differences. Measurement of
current and deferred tax liabilities and assets is based on
provisions of enacted tax law. The effects of future changes
in tax laws or rates are not included in the measurement.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
Income tax expense is the tax payable for the period and the
change during the period in deferred tax assets and
liabilities.
Earnings per Share
Earnings per share are computed based on the weighted
average number of common shares outstanding during the
periods presented, including, if dilutive, shares issuable
under the stock option plans and warrants.
Revenue Recognition
Revenue is recognized monthly based upon the terms of
the contract.
Reclassifications
Certain reclassifications were made to the 1996
financial statements to conform to the 1997 financial
statement format.
Major Customer
Prior to 1997 The Company developed and produced custom
CDROM, CD-i, On-line, and Internet products for customers
primarily in the continental United States. For the year
ended December 31, 1996, substantially all of the revenue
received was from one customer. CVI's contract obligation
with that customer was completed in December of 1996.
Note 2 - Property and Equipment
Estimated
Useful Life 1997 1996
Computers and equipment 5-7 years $6,512 $486,776
Furniture 5-7 years 49,863
Leasehold improvements 31.5-39 years ________ 55,930
6,512 592,569
Accumulated depreciation (326) (320,703)
Property and equipment (net) $6,186 $271,866
Page 8 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December31, 1997 and 1996
Note 3 - Intangibles
1997 1996
Capitalized Software Net
Employee expenses $100,354
Contract labor 14,984
Audio/visual expenses 11,958
127,296
Accumulated amortization (50,918)
Net capitalized software $76378
Goodwill, Net
1997 1996
Transaction consulting fees
(related party) $ 80,500
Accounting and legal fees 57,661
138,161
(55,264)
Accumulated amortization $-- $ 82,897
In connection with the purchase of and subsequent merger with Trident
(See Note 7), the Company incurred various costs in excess of the book value
of Trident's assets. These costs were recorded as goodwill during 1995 and
amortized during 1996. For the year ended December 31, 1997, The Company
wrote-off all amounts associated with goodwill (See Note 20).
Licensing Agreement, Net
On June 28,1995, the Company purchased the CD-ROM rights and a six
month option on the motion picture rights to "The Final Jihad", a novel
about terrorism in the United States. The rights were acquired for future
development of an interactive CD for the consumer market. The rights, which
extend through June 28, 2000, were acquired for 15,000 shares of CVI common
stock. The cost related to these rights was written-off in the year ended
December31, 1997 (See Note 20- Discontinued Operations).
On November 30, 1994, the Company entered into a licensing agreement with
Interactive Video Systems, Inc., a British Columbia corporation, ("IVS") to
use certain copyrighted and non- copyrighted original animations, drawing
and other artworks developed and owned by IVS. The
Page 9 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December31, 1997 and 1996
Note 3. Intangibles (continued)
term of the agreement was for a minimum of five (5) years,
and thereafter so long as CVI was actively developing,
marketing and distributing productions utilizing the
animations and artworks. The $50,000 cost was being
amortized over the life of the agreement. The unamortized
cost of this licensing agreement was written-off in the
year ended December 31, 1997 (See Note 20- Discontinued
Operations).
1997 1996
Licensing agreement
"The Final Jihad" $12,195
Licensing agreement:
animations and artworks $50,000
$62,195
Accumulated amortization (16,028)
$46,167
Marketing and Distribution Rights, Net
The assets of Trident (see Note 8) consisted of a
marketing and distribution agreement with interactive
Video systems, Inc. ("IVs") to market an interactive kiosk
developed by WS. The Company amortized the asset during
1995 and 1996. The unamortized balance was written-off
during the year ended December31, 1997 (See Note2
Discontinued Operations).
1997 1996
Marketing and distribution
Rights: interactive kiosk $ -- 55,556
Accumulated amortization (22,222)
33,334
Total Intangibles (Net) $0 $238,776
Note 4. Consulting Contracts
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
its common stock. Under the terms of the agreement, RDG
received 550,000 shares of
Page 10 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December31, 1997 and 1996
Note 4 - Consulting Contracts (continued)
restricted common stock of the Company, valued at $300,000
or $0.55 per share, and 400,000 stock options at an
exercise price of $0.10 per share. 'The contract was valued
at $340,000 and was recorded as a prepaid consulting
contract. During 1996, the Company expensed $165,000 as
services were rendered. The balance of $208,334 at December
31, 1996 was written-off during 1997 (See note 20 -
Discontinued Operations).
Note 5.
Other Assets, Net
During 1995, the Company incurred certain costs
related to the acquisition and financing of Texas Video &
Post, a privately held video production company in
Houston, Texas. The acquisition was pending as of December
31, 1996. During 1997, the required additional capital was
not obtained which resulted in the write-off of
acquisition costs relating to this merger.
2
CCL Amortization
Period 1997 1996
Acquisition costs 2 years $ -- $ 47,322
Acquisition and financing
consulting fees (related
party) 2 years 139,650
Deposits 2,518
$-- $189.490
Note B - Purchase of and Merger with Trident Enterprises, Inc.
Effective December 8, 1994, the Company purchased
from IVS Holdings, Inc. (~VS") 18,000,000 shares of common
stock ($0.0o1 par value) of Trident Enterprises, Inc.
('Trident"), a publicly traded Nevada corporation, for
$50,000. As a result, the Company owned 90% of Trident's
20,000,000 issued and outstanding common stock at December
31, 1994.
On May 15,1995, the shareholders of CVI and Trident
approved a merger of the companies and a reincorporation
to the state of Oklahoma. In connection with the merger,
the minority shareholders of Trident exchanged theft
2,000,000 outstanding common stock of Trident for newly
issued stock of CVI at an exchange ratio of 33 to 1. As a
result, the Trident shareholders received a total of
86,694 shares (including 28,800 shares to cover fractional
Page 11 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December3l, 1997 and 1996
Note 6 - Purchase of and Merger with Trident Enterprises, Inc.
(continued)
and other interests) of CVI's common stock. The exchange
ratio was based on the minority ownership of Trident as
compared to the combined net worth of CVI and Trident at
December 31, 1994. Subsequent to the merger and share
exchange, Trident ceased to exist as a separate entity and
Corporate Vision, Inc. remained as the surviving corporation.
CATY is governed by Oklahoma law and by a new certificate of
incorporation and bylaws effected by the reincorporation.
Note 7 - Payable to Stockholders
1997 1996
Note dated December 29,1995 $-- $ 5,213
Note dated December 31, 1996
$-- $43,520
During 1996 Sheryl Mabie, President and CEO loaned the
Company funds to cover certain operating expenses. The notes
accrue interest at a rate of 10% per year and are payable on
demand. During 1997 payments were made to Sheryl Mabie to pay
off this note. As of June 30,1997 the balance was $0.
Note B - Notes Payable
On July 24, 1995, the Company obtained a total of
$160,000 in unsecured loans from three individuals, one of which was a 5%
beneficial stockholder of the Company and two of which were non-affiliates
of the Company. The notes were in the amounts of $80,000, $40,000 and
$40,000, respectively. The promissory notes carried an annual interest rate
of 10% and were due December 31, 1995. Because the Company was unable to
repay the notes by their due dates, effective January 1, 1996, the annual
interest rate on the notes increased to 15%. In addition, on January 1,1996,
the Company issued warrants to the note holders to purchase 80,000, 40,000
and 40,000 shares of common stock, respectively, at $1.00 per share at any
time prior to January 1,1998.
On February 22, 1996, one of the non-affiliates of the
Company convened the $40,000 note payable plus accrued
interest of $2,644 to 85,288 shares of common stock at $0.50
per share In addition to the common stock, the Company issued
85,288 warrants, which allow the purchase of
additional
Page 12 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December31 1997 and 1996
Note 8 - Notes Payable (continued)
shares of common stock at $0.50 per share at any time prior to
February 21, 1998.
During 1996, the Company paid the remaining outstanding
notes, which consisted of $120,000 in principal and $12,272 in
accrued interest.
Note 9 - Note Payable - Bank
First National Bank of Broken Arrow, Oklahoma
Variable interest (prime plus 2.58,) 11.25% at December
31,1996), due February 15, 1998 in monthly installments of
$3,280 in principal and interest. Note is secured by
equipment and furniture of the Company and by personal
guarantee of Sheryl Mabie, an officer of the Company.
Note 10 - Income Taxes
The Company has incurred net operating losses since
inception and has a loss carry forward of approximately
$4,700,767 at December31, 1997, expiring in years beginning in
2006. Deferred tax assets have not been recorded for future
reduction in income taxes that may result from the net operating
loss carry forward.
Page 13 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December31, 1997 and 1996
Note 10 - Income Taxes (continued)
The deferred tax assets and liabilities are as
follows at December31:
1997 1996
Net operating loss carry forward $1,880,307 $458,700
Depreciation
Total $1,880,307 $443,100
Less valuation allowance $1,880,307 $458,700
Net Deferred Tax Liability $-- $15,600
Deferred taxes reflect a combined federal and state tax rate of
approximately 40%.
For financial reporting purposes, a valuation allowance of $l,880,307 has
been established in accordance with the provisions of FASB Statement
No.109,Accounting for Income Taxest1. The Company continually reviews the
adequacy of the valuation allowance and is recognizing these benefits only
as assessment indicates that it is more likely than not that the benefits
will be realized.
Note 11-Note 12 -
Commitments and Contingencies
Litigation
The Company is a defendant in a lawsuit arising from normal business
activities. Management has reviewed pending litigation with legal counsel
and believes that the action is without merit or that the ultimate
liability, if any, resulting from it will not materially affect the
Company's financial position. (See notes 16 and 20.) We have not received
legal letter.)
Common Stock and Additional Paid-In-Capital
In February, 1996, the Company issued 85,288 shares of common stock to
a non-affiliated note holder in exchange for the cancellation of
indebtedness. In addition, the note holder was granted 85,288 warrants to
purchase common stock at $0.50 per share on or before February 21, 1998
In March, 1996, the Company issued 550,000 shares at $0.50 per share for
certain consulting services rendered to the Company by a non-related party
with an objective of expanding investor and brokerage firm awareness and
interest in the Company
.
Page 14 of 19
Note 12 -
Corporate Vision, Inc.
Notes to Financial Statements
December31, 1997 and 1996
Common Stock and Additional Paid-In-Capital (continued)
In May, 1996, the Company issued 398,175 shares at an
average price of $0.38 per share as a result of the exercise of
warrants by non-affiliated shareholders. The consideration
consisted of $101,431.08 in cash and $50,000 in printing
services.
During 1996, the Company issued 131,000 shares at $0.50
per share for certain financial consulting services rendered to
the Company by nonrelated parties.
During 1996, the Company completed a private offering of.
455,000 units, each unit consisting of one share common stock at
$0.50 per share and one warrant to purchase an additional share
of common stock at $0.50 per share. The warrants expire at
various times ranging from March 1, 1998 to October 8, 1998.
The consideration consisted of $127,500 in cash and $100,000 in
video production services to be rendered by a non-related party.
The Company has two stock option plans available to
management and the Company 5 employees. During 1996, the Company
issued 1,400,000 shares through the exercise of stock options
pursuant to the Company's Stock Option Plan. During 1996, the
Company issued 110,000 shares of its common stock through the
exercise of stock options pursuant to the Company's Employee
Stock Option Plan. No activity occurred during 1997 related to
these two plans.
In November, 1997, the Company issued 1,307,190 shares of
its common stock at a price of $.0255 per share for cash to a
non-affiliated shareholder.
Note 13 - Warrants
At December 31, 1997 and 1996, the Company had warrants
outstanding to acquire 590,288 shares of common stock at $0.50
per share, which expire at various times ranging from February
21, 1998 to October 8, 1998 and warrants to acquire 160,000
shares of common stock at $1.00 per share which expire January
1, 1998.
Page 15 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December31, 1997 and 1996
Note 14 - Related Party Transactions
During the year ended December 31, 1996, Sheryl Mabie,
President and CEO, loaned the Company $38,307 to cover certain
operating expenses. During 1996, the Company repaid a total of
$110,693 which included $72,386 loaned in previous years in
notes payable to Ms. Mabie. The Company also reduced the notes
payable by the exchange of a vehicle, which had a net book value
of $6,606. The 1996 notes payable balance of $43,520 accrued
interest at a rate of 10% per year and was paid in full in 1997.
During 1997 and 1996, the Company paid Investor Relations
Corporation (IRC") for services related to the stockholder
relations and acquisitions. Rhonda Vincent, Treasurer and CEO
and Gifford Mabie, spouse of Sheryl Mabie, President and CEO,
own IRC. During 1997 and 1996, the Company paid $280,253 and
$94,800, respectively to IRC for such consulting services.
Earnings Per Share
The following table reconciles the number of common shares
outstanding as shown on the Balance Sheets with the weighted
average common shares outstanding as shown on the Statements of
Operations for the years ended December 31,1997 and 1996.
Note 15 -
1997 1996
Common shares outstanding 57,381,167 12,661,708
Effect of using weighted average common 29,956,728 (1,264,711)
and Common equivalent shares outstanding
Effect of shares issuable under stock
option plans Based on the treasury
stock method 128,676 128,676
Weighted average common shares
outstanding 27,424,439 11,525,673
Page 16 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December31, 1997 and 1996
Note 16 - Investment in T.L. Phipps
On May 12, 1997, the Company signed an agreement with
Terry L. Phipps and Nancy C. Phipps as shareholders (Phipps
Stockholders") of T.L. Phipps and Company, Inc., ('THPC"). THPC,
an Oklahoma corporation, was engaged in the business of audio
and video communications. This agreement was to be accounted for
as a purchase.
In accordance with the term of the agreements, the Company
was to acquire 100% of the common stock outstanding of TLCP and
325 of the outstanding shares of stock in ProMar, Inc. in
exchange for $25,000 at closing and the issuance of 750,000
shares of common stock of Corporate Vision Inc. to Terry L.
Phipps and Nancy C. Fhipps. CVI was to further acquire all the
assets and liabilities of TLPC. The liabilities at that date
included a note to the Bank of Oklahoma in the amount of
$452,000, a mortgage for $477,641 on the TLPC building, and a
promissory note payable to a non-affiliated party in the amount
of $85,000. CVI was further obligated to pay an outstanding
loan obligation owed to Amer US Bank in the amount of $49,450.
CVI was also made responsible for certain credit card
obligations amounting to $66,330.
On October 7, 1997, an agreement for mutual release was
entered into by TLCP and the Company. Upon completion of the
agreement CVI owned 25% of TLCP and ProMar, Inc. The agreement
did not release CVI from its obligation on the principal balance
due to Hank of Oklahoma or the Mortgage on the building which is
n-PC headquarters. Subsequent to year end a legal action was
brought against Corporate Vision in regards to the above
mentioned debts (see Notes 11 and 20).
Discontinued Operations
On August 11, 1997, Sheryl Mabie and Rhonda Vincent,
President and CFO, respectively, resigned their positions,
leaving control to the three remaining board members. By October
31, 1997, CVI had essentially ceased operations. At December 31,
1997, there are no contracts for revenue. Two of the remaining
board members resigned in 1997 and 1998. Jack Arnold, Interim
President and CEO, has liquidated the Company's remaining assets
and is attempting to find a suitable operating entity to merge
into the Company.
Note 17 - Discontinued Operations (continued)
In December 1997, CVI announced the signing of a letter of
intent to merge with a western United States oil and tire
distribution corporation. The letter of intent, which is non-
binding, is subject to the negotiation of a definitive agreement
and financial conditions. No assurance can be given that the
acquisition will be completed.
Note 18 -
Concentration of Risk
A portion of the Company's cash funds is located in a
single financial institution. The amounts on deposit at December
31, 1997 are in excess of the $100,000 federally insured limit.
Note 19 - Convertible Debentures
On December 15, 1997, the company issued 8% convertible
subordinated notes due at various times during 1998. The notes
are convertible at the option of the holder into shares of the
Company's common stock at a price equal to the lower of 65% of
the closing bid price of the common stock for the day
immediately preceding the receipt by the Company of Notice of
Conversion ("conversion shares") as reported by the National
Association of Securities Dealers Electronic Bulletin Board. The
provisions are subject to adjustment under certain conditions.
Note 20 -
Subsequent Events
Subsequent to year-end, a judgement was entered regarding
a contingent liability related to activities in 1996. The amount
awarded was 50,000 shares of Corporate Vision stock. In
addition, $43,000 was awarded for damages. Management intends to
appeal the judgment. The judgment has been accrued as a
liability in the December 1997 financial statements and included
in accounts payable.
On March 3, 1998, the company signed a promissory note with a
western United States oil and tire distributor, by which such
corporation borrowed from and
agreed to pay to Corporate Vision, Inc. at maturity on March3,2003,
$461,122, plus accrued interest at the rate of8% per annum.
Page 17 of 19
Corporate Vision, Inc.
Notes to Financial Statements
December 31,1997 and 1996
Note 17 - Discontinued Operations (continued)
In December 1997, CVI announced the signing of a letter of
intent to merge with a western United States oil and tire
distribution corporation. The letter of intent, which is non-
binding, is subject to the negotiation of a definitive agreement
and financial conditions. No assurance can be given that the
acquisition will be completed.
Note 18 -
Concentration of Risk
A portion of the Company's cash ffinds is located in a
single financial institution. The amounts on deposit at December
31, 1997 are in excess of the $100,000 federally insured limit.
Note 19 - Convertible Debentures
On December 15, 1997, the company issued 8% convertible
subordinated notes due at various times during 1998. The notes
are convertible at the option of the holder into shares of the
Company S common stock at a price equal to the lower of 65% of
the closing bid price of the common stock for the day
immediately preceding the receipt by the Company of Notice of
Conversion ("conversion shares") as reported by the National
Association of Securities Dealers Electronic Bulletin Board. The
provisions are subject to adjustment under certain conditions.
Note 20 -
Subsequent Events
Subsequent to year-end, a judgment was entered regarding a
contingent liability related to activities in 1996. The amount
awarded was 50,000 shares of Corporate Vision stock. In
addition, $43,000 was awarded for damages. Management intends to
appeal the judgment. The judgment has been accrued as a
liability in the December 1997 financial statements and included
in accounts payable.
On March 3, 1998, the company signed a promissory note
with a western United States oil and tire distributor, by which
such corporation borrowed from and agreed to pay to Corporate
Vision, Inc. at maturity on March 3, 2003, $461,122, plus
accrued interest at the rate of 8% per annum.
