SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------
FOR QUARTER ENDED OCTOBER 31, 1998 COMMISSION FILE NO. 00-22661
INVU, INC.
(Exact name of registrant as specified in charter)
COLORADO 84-1135638
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
THE BEREN, BLISWORTH HILL FARM
STOKE ROAD
BLISWORTH, NORTHAMPTONSHIRE NN7 3DB
- --------------------------------------------------------------------------------
(Address of principal (Postal Code)
executive offices)
Registrant's telephone number, including area code: (01604) 859893
SUNBURST ACQUISITIONS I, INC.
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
As of August 13, 1999, there were 30,206,896 shares of the common stock, no par
value, of the registrant issued and outstanding.
Transitional Small Business Disclosure Format (check one)
YES NO X
--- ---
INVU, INC.
October 31, 1998
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION.........................................................................F-1
Item 1. Financial Statements..........................................................................F-1
Consolidated Balance Sheets as of October 31, 1998............................................F-1
Consolidated Statements of Operations.........................................................F-2
Consolidated Statements of Deficit in Stockholders' Equity....................................F-3
Consolidated Statements of Cash Flows.........................................................F-4
Notes to Financial Statements.................................................................F-5
Item 2. Management's Discussion and Analysis or Plan of Operation.......................................1
PART II. OTHER INFORMATION...............................................................................4
Item 1. Legal Proceedings...............................................................................4
Item 2. Changes in Securities...........................................................................4
Item 3. Default Upon Senior Securities..................................................................4
Item 4. Submission of Matters to a Vote of Security Holders.............................................4
Item 5. Other Information...............................................................................4
Item 6. Exhibits and Reports on Form 8-K................................................................4
SIGNATURES
i
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, JANUARY 31,
1998 1998
(UNAUDITED) (AUDITED)
$ $
------------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents -- 44,997
Accounts receivable:
Trade, net 363 307
VAT recoverable and other 3,849 30,653
Inventories 116,900 --
Prepaid expenses 12,622 10,701
--------- ---------
TOTAL CURRENT ASSETS 133,734 86,658
EQUIPMENT, FURNITURE AND FIXTURES
Computer equipment 23,888 21,048
Vehicles 35,340 34,706
Office furniture and fixtures 30,486 29,213
--------- ---------
89,714 84,967
Less accumulated depreciation 29,450 12,404
--------- ---------
60,264 72,563
193,998 159,221
======== ========
LIABILITIES
CURRENT LIABILITIES
Short-term credit facility 73,447 --
Current maturities of long-term obligations 89,971 19,490
Accounts payable 7,295 9,615
Accrued liabilities 47,966 10,086
--------- ---------
TOTAL CURRENT LIABILITIES 218,679 39,191
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 319,025 48,388
DEFICIT IN STOCKHOLDERS' EQUITY
Common stock, no par value
Authorized - 100,000,000 - issued and outstanding 30,206,896 shares 288,355 288,355
Accumulated other comprehensive income 488 440
Accumulated deficit during the development stage (632,549) (217,153)
---------- ----------
(343,706) 71,642
193,998 159,221
======== ========
The accompanying notes are an integral part of these statements.
F-1
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the periods ended
FOR THE THREE FOR THE THREE
FEB. 18, 1997 MONTHS MONTHS FEB. 18, 1997
(DATE OF ENDED ENDED FOR THE NINE (DATE OF
INCEPTION) TO OCT. 31, OCT. 31, MONTHS ENDED INCEPTION) TO
OCT. 31, 1998 1998 1997 OCT. 31, 1998 OCT. 31, 1997
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
$ $ $ $ $
------------- ------------- ------------ ------------- -------------
Revenues 1,972 -- 1,972 -- 1,972
Expenses:
Production cost 97,207 10,973 8,118 54,216 11,619
Distribution costs 86,783 19,357 9,522 46,605 25,678
Research and development costs 143,695 32,729 7,787 95,748 13,743
Administrative costs 300,785 60,448 27,729 216,013 60,311
--------- ----------- ---------- ---------- ------------
Total operating expenses 628,470 123,507 53,156 412,582 111,351
Operating loss (626,498) (123,507) (51,184) (412,582) (109,379)
Other (expense)
Interest, net (8,022) (1,236) (992) (3,914) (3,974)
Other 1,971 420 -- 1,100 --
------------ ----------- ------------ ------------ ------------
Total other (expense) (6,051) (816) (992) (2,814) (3,974)
------------ ------------ ------------ ------------ ------------
Loss before income taxes (632,549) (124,323) (52,176) (415,396) (113,353)
------------ ------------ ------------ ------------ ------------
Income taxes -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net loss (632,549) (124,323) (52,176) (415,396) (113,353)
============ ============ ============ ============ ============
Weighted average shares outstanding:
Basic and Diluted 30,206,896 30,206,896 30,206,896 30,206,896 30,206,896
=========== =========== =========== =========== ============
Net loss per common share:
Basic and Diluted (0.02) (0.00) (0.00) (0.01) (0.00)
====== ====== ====== ====== ======
The accompanying notes are an integral part of these statements.
F-2
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF DEFICIT IN STOCKHOLDERS' EQUITY
FOR THE PERIODS ENDED
--------------------------------------------------------------------------------------------------
COMMON COMMON ACCUMULATED OTHER
STOCK STOCK ACCUMULATED COMPREHENSIVE COMPREHENSIVE
SHARES AMOUNT DEFICIT INCOME TOTAL INCOME
$ $ $ $ $
--------------------------------------------------------------------------------------------------
Shares issued:
February 1997, 176,000 shares in
exchange for $288,640 176,000 288,640 -- -- 288,640
Reclassification of $1.64 common
stock (176,000) (288,640) -- -- (288,640)
Issuance of no par common stock
in connection with reverse
acquisition 28,696,552 288,355 -- -- 288,355
1,510,344 shares of common stock
issued at estimated value 1,510,344 750,000 -- -- 750,000
Reverse acquisition transaction
costs (750,000) (750,000)
Comprehensive income:
Foreign currency translation
adjustment -- -- -- 440 440 440
Net loss during the period -- -- (217,153) -- (217,153) (217,153)
------------
Total comprehensive income (216,713)
---------- --------- --------- --- --------- ============
Balance at January 31, 1998 30,206,896 288,355 (217,153) 440 71,642
Comprehensive income
Foreign currency translation
adjustment (unaudited) -- -- -- 48 48 48
Net loss during the period
(unaudited) -- -- (415,396) -- (415,396) (415,396)
------------
Total comprehensive income (415,348)
---------- --------- --------- --- --------- ============
Balance at October 31, 1998 30,206,896 288,355 (632,549) 488 (343,706)
(unaudited) ========== ========= ========= === =========
The accompanying notes are an integral part of these statements.
F-3
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended
-----------------------------------------------------------
FEB. 18, 1997 FEB. 18, 1997
(DATE OF INCEPTION) (DATE OF FOR THE NINE
TO INCEPTION) TO MONTHS ENDED
OCT. 31, 1998 OCT. 31, 1997 OCT. 31, 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
$ $ $
-----------------------------------------------------------
Net cash flows used in operating activities
Net loss during the period (632,549) (113,353) (415,396)
Adjustments to reconcile net loss to net cash used in opera-
ting activities:
Depreciation 29,182 5,192 16,753
Accounts receivable (3,818) (23,294) 27,205
Inventories (116,431) -- (116,431)
Prepaid expenses (12,441) -- (1,718)
Accounts payable 7,285 -- (2,486)
Accrued liabilities 47,651 14,137 37,544
--------- --------- ---------
Net cash used in operating activities (681,121) (117,318) (454,529)
Net cash flows used in investing activities--acquisitions of
property and equipment (53,614) (36,547) (3,180)
Cash flows used in investing activities:
Short-term credit facility 73,152 -- 73,152
Borrowings on notes payable--net 387,554 42,904 345,916
Principal payments on capital lease (15,189) -- (6,723)
Proceeds from issuance of stock 288,640 288,640 --
--------- --------- ---------
Net cash provided by financing activities 734,157 331,544 412,345
Effect of exchange rate changes on cash 578 4,268 367
--------- --------- ---------
Net increase/(decrease) in cash -- 181,947 (44,997)
Cash at beginning of period -- -- 44,997
--------- --------- ---------
Cash at end of period -- 181,947 --
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest 8,100 3,900 3,900
Income taxes --------- --------- ---------
The accompanying notes are an integral part of these statements.
F-4
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The interim financial statements presented herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required for complete
audited financial statements. These statements should be read in conjunction
with the audited financial statements and notes thereto included in the
Company's filing on Form 8-K/A for the period February 18, 1997 (date of
inception) to January 31, 1998. In the opinion of management, the accompanying
unaudited consolidated financial statements of INVU, Inc. and Subsidiaries (the
Company) contain all adjustments (consisting of only normal recurring
adjustments) necessary to fairly present the Company's financial position as of
October 31, 1998, and the results of operations for the period of February 18,
1997 (date of inception) to October 31, 1998 and for the three and nine month
periods ended October 31, 1998 and the period of February 18, 1997 (date of
inception) to October 31, 1997, and cash flows for the nine month period ended
October 31, 1998 and the period of February 18, 1997 (date of inception) to
October 31, 1997. The interim financial statements should be read in conjunction
with the following explanatory notes. The results of operations for the three
and nine month periods ended October 31, 1998 may not be indicative of the
results that may be expected for the fiscal year ending.
NOTE A - COMPANY DESCRIPTION
INVU, Inc. (the Company, previously known as Sunburst Acquisitions I, Inc., see
below) is a holding company which operates one subsidiary INVU Plc, which is a
holding company for two subsidiaries of its own, INVU Services (Services) and
INVU International Holdings Limited (Holdings). The Company was incorporated
under the laws of the State of Colorado, United States of America, in February
1997. INVU Plc, Services and Holdings are companies incorporated under English
Law. The Company operates in one industry segment which includes developing and
selling software for electronic management of many types of information and
documents such as forms, correspondence, literature, faxes, technical drawings
and electronic files. Services is the sales, marketing and trading company and
Holdings holds the intellectual property rights to the INVU software.
The Company is in the development stage as defined by Statement of Financial
Accounting Standard No. 7, "Accounting and Reporting by Development Stage
Enterprises" (SFAS No. 7).
On August 31, 1998, Sunburst Acquisitions I, Inc. (a public development stage
enterprise) acquired all of the outstanding shares of INVU Plc in exchange for
restricted shares of common stock of Sunburst Acquisitions I, Inc. (the
Exchange) pursuant to a Share Exchange Agreement between Sunburst Acquisitions
I, Inc. and the principal shareholder of INVU Plc. Sunburst Acquisitions I, Inc.
exchanged 26,506,552 shares of common stock for all of INVU Plc's issued and
outstanding shares of common stock. For accounting purposes, the Exchange was
treated as a recapitalization of INVU Plc where INVU Plc is the accounting
acquirer. All periods have been restated to give effect to the recapitalization.
The historic statements from inception up to the Exchange are those of INVU Plc.
Proforma information is not presented as this combination is not considered to
be a business combination. In connection with the Exchange, the directors and
officers of INVU Plc became the directors and officers of Sunburst Acquisitions
I, Inc. Also, Sunburst Acquisitions I, Inc. changed its name to INVU, Inc. In
connection with the Exchange, the Company issued 1,510,344 shares of Common
Stock of the Company to a consultant for introducing INVU Plc and Sunburst
Acquisitions I, Inc. The shares were estimated to have a value of $750,000 and
have been treated as a transaction cost in connection therewith. Immediately
after the Exchange, INVU Plc's former shareholders owned approximately 88% of
the outstanding common stock of Sunburst Acquisitions I, Inc.
F-5
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - GOING CONCERN
The Company's liabilities exceed its assets and the Company has incurred losses
from operations primarily as a result of treating virtually all development
expenses since inception as current operating expenses. The Company is not
generating cash from operations. Operations to date have been funded principally
by equity capital. The Company plans to continue to fund its development
expenses through additional capital raising activities, including one or more
offerings of equity and/or debt through private placements and/or public
offerings. The Company's ability to continue to develop its infrastructure
depends on its ability to raise other additional capital. The financial
statements do not include any adjustment that might result from the outcome of
this uncertainty.
The Company is still building its operational infrastructure. Additional capital
raised by the Company, if any, will be used for this purpose and to fund its
planned launch of operations within the United Kingdom.
NOTE C - INVENTORIES
Inventories consist of the following:
OCTOBER 31, JANUARY 31,
1998 1998
(UNAUDITED) (AUDITED)
$ $
-------------------------------------
Licensed goods 116,900 --
Licensed goods represent software licences purchased by the Company which allow
the Company to manufacture and distribute a separate company's proprietary
software products in conjunction with and as an embedded component of the
Company's proprietary software.
NOTE D - SHORT-TERM CREDIT FACILITY
The Company has a (pound)40,000, 14.2% short-term credit facility with an
English bank. The credit facility is collateralized by all assets of the Company
and a limited personal guarantee by a director of the Company. The amount drawn
against the facility was $73,447 ((pound)43,980) at October 31, 1998 which
excess over (pound)40,000 was authorized by the bank. The amount drawn is
payable on demand at the bank's discretion.
F-6
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE E - LONG-TERM OBLIGATIONS
Long-term obligations at October 31, 1998 and January 31, 1998, consist of the
following:
JANUARY
OCTOBER 31, 31,
1998 1998
(UNAUDITED) (AUDITED)
$ $
--------------- ----------
Non-interest bearing, unsecured loan from an individual, no
stated maturity date 287,240 --
8% note payable to corporate investors and individuals, payable
in six monthly installments commencing August 1999,
installments determined by balance due at August 1999 66,458 --
4% above Libor rate (Libor rate was 7.25% at October 31,
1998 and January 31, 1998, respectively) notes payable to an
English bank, monthly payment aggregating to (pound) 500,
maturing in March 2002, collateralized by all assets of the
Company and a limited personal guarantee by a director 35,328 41,638
Capital lease for a vehicle, bearing interest at 16.9% maturing
in 2001 19,970 26,240
------- ------
408,996 67,878
Less current maturities 89,971 19,490
------- ------
319,025 48,388
======= ======
Scheduled maturities of long-term obligations are as follows:
YEAR ENDING JANUARY 31, $
1999 19,490
2000 18,586
2001 18,586
2002 9,840
2003 1,376
Thereafter --
---------
67,878
=========
F-7
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company leases a vehicle under a noncancellable capitalized lease.
OCTOBER 31, JANUARY 31,
1998 1998
(UNAUDITED) (AUDITED)
$ $
------------------------------
Motor vehicle 34,706 34,706
Less accumulated depreciation 5,206 361
---------- -----------
29,500 34,345
========== ===========
The following is a schedule by years of future minimum lease payments under the
capital lease together with the present value of the net minimum lease payments
as of January 31, 1998.
YEAR ENDING JANUARY 31, $
1999 10,304
2000 10,304
2001 10,304
Thereafter --
--------
Total minimum lease payments 30,912
Less amount representing interest 4,672
--------
Present value of net minimum lease payments 26,240
========
The scheduled net minimum lease payments to maturity are included in the
long-term obligation table above.
F-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following description of "Management's Plan of Operation"
constitutes forward-looking statements for purposes of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended, and as such involves known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of INVU, Inc., a Colorado corporation (the "Company"), to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements. The words "expect", "estimate",
"anticipate", "predict", "believe", "plan", "seek", "objective", and similar
expressions are intended to identify forward-looking statements. Important
factors that could cause the actual results, performance or achievement of the
Company to differ materially from the Company's expectations include the
following: 1) one or more of the assumptions or other factors discussed in
connection with particular forward-looking statements prove not to be accurate;
2) the Company is unsuccessful in increasing sales through its anticipated
marketing efforts; 3) mistakes in cost estimates and cost overruns; 4) the
Company's inability to obtain financing for general operations including the
marketing of the Company's products; 5) non-acceptance of one or more products
of the Company in the marketplace for whatever reason; 6) the Company's
inability to supply any product to meet market demand; 7) generally unfavorable
economic conditions which would adversely effect purchasing decisions by
distributors, resellers or consumers; 8) development of a similar competing
product at a similar price point; 9) the inability to successfully integrate one
or more acquisitions, joint ventures or new subsidiaries with the Company's
operations (including the inability to successfully integrate businesses which
may be diverse as to type, geographic area, or customer base and the diversion
of management's attention among several acquired businesses) without substantial
costs, delays, or other problems; 10) if the Company experiences labor and/or
employment problems such as the loss of key personnel, inability to hire and/or
retain competent personnel, etc.; and 11) if the Company experiences
unanticipated problems and/or force majeure events (including but not limited to
accidents, fires, acts of God etc.), or is adversely affected by problems of its
suppliers, shippers, customers or others. All written or oral forward-looking
statements attributable to the Company are expressly qualified in their entirety
by such factors. The Company undertakes no obligation to publicly release the
result of any revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
The following discussion should be read in conjunction with the
Consolidated Financial Statements, including the notes thereto.
The Company is developing software (under the brand name INVU) for the
electronic management of many types of information and documents such as forms,
correspondence, literature, faxes, technical drawings and electronic files.
Management believes that the INVU software is simple, intuitive to use, and cost
effective, yet powerful.
The Company's objective is to establish itself as a leading supplier of
information and document management software in the world. In order to achieve
this, the Company expects to target its marketing efforts initially in the
United Kingdom and the United States on departmental users in organizations for
INVU PRO, retailers for INVU SOLO, and distributors and resellers for INVU PRO.
Throughout the quarter ended October 31, 1998, the Company continued to
develop its software products. The Company's first product, INVU SOLO, was
released to distributors in December 1998 and sales to the SOHO (small
office/home office) market in January 1999. All other INVU products were
released to distributors in August 1999 and sales to end users are anticipated
in September 1999, except INVU WEBFAST, which management estimates will be
released in early 2000.
Results of Operations
The following is a discussion of the results of operations for the
period ended October 31, 1998, compared with the year ended January 31, 1998,
and changes in financial condition during the period ended October 31, 1998.
The Company (formerly Sunburst Acquisitions I, Inc.) engaged in no
significant operations prior to the Share Exchange Agreement with INVU PLC on
August 31, 1999.
1
Net sales for period ended October 31, 1998 were $0, which compares to
$1,972 sales for the period ended October 31, 1997. The absence of sales
reflects the development stage of the business and relates to sales of hardware
and initial sales of software to distributors. The net loss for period ended
October 31, 1998 was ($415,396) which significantly exceeds the net loss for the
corresponding period in 1997 of ($113,353) due to increased production,
distribution, development and administrative costs of $412,582, which reflected
the Company's investment in product development and administrative
infrastructure, together with the transaction costs associated with the Share
Exchange and preparation for the launch of the INVU SOLO product.
In the nine month period to October 31, 1998, the Company incurred net
interest expense of $3,914 compared with net interest expense of $3,974 for the
period from February 18, 1997 (date of inception) to October 31, 1997.
During both these periods bank borrowings remained relatively static.
The tax rates for the periods in question are zero due to a net loss in
each period.
The total current assets of the Company were $133,734 at October 31,
1998, an increase of $47,076 compared to $86,658 at January 31, 1998. Working
capital was negative $272,080 as of October 31, 1998, compared with positive
$47,467 as of January 31, 1998. These changes are due to the addition of
short-term credit facilities and an increase of current maturities of long-term
obligations, following the procurement of substantial additional loan funding.
Total assets of the Company were $193,998 at October 31, 1998, an
increase of $34,777 compared to $159,221 at January 31, 1998. The increase is
mainly attributable to inventory of pre-purchased software licenses prior to the
launch of the INVU SOLO product.
The total current liabilities of the Company increased by $179,488 from
$39,191 at January 31, 1998 to $218,679 at October 31, 1998. Long term
liabilities were $319,025 at October 31, 1998 compared to $48,388 at January 31,
1998. The current and long term liabilities increases are attributable to debt
incurred in order to finance the development of the Company's products and the
administrative infrastructure of the business.
Total stockholders' equity decreased by $415,348 during the nine month
period ended October 31, 1998 from positive $71,642 at January 31, 1998 to a
deficit of $343,706 at October 31, 1998. The Company is evaluating various
financing options, including issuing debt and equity to finance future
development and marketing of products during the transitional period between
development and operational stages. Management believes that funding will be
available to continue the development and launch of its products to distributors
and resellers.
Financing Management's Plan of Operation
As at October 31, 1998, management was considering further funding
opportunities for the business to finance ongoing operations and working
capital. The Company is seeking to conduct a public offering of Common Stock of
the Company ("I.P.O.") during 2000. Pursuant to the Securities Act, the I.P.O.
will be made only by means of a prospectus. The Company has plans to raise
$5,000,000 as a private placement with the I.P.O. to be made later in 1999 or
early in 2000. The Company has retained an investment banker in the United
Kingdom that has agreed to use its best efforts to raise the $5,000,000 in the
private placement and to act as brokers and corporate advisors with respect to
the I.P.O. Management estimates that the proceeds from such a private placement
would fulfill the Company's capital requirements for a period of up to
twenty-four (24) months. There can, however, be no assurance that additional
debt or equity financing will be available, if and when needed, or that, if
available, such financing could be completed on commercially favorable terms.
Failure to obtain additional financing, if and when needed, could have a
material adverse affect on the Company's business, results of operations and
financial condition. Please refer to Note B of the Consolidated Financial
Statements in conjunction with this paragraph regarding the Company's ability to
continue as a going concern.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from
2
20th century dates. As a result, many companies' computer systems and/or
software may need to be upgraded or replaced to comply with such "Year 2000"
requirements. Significant uncertainty exists in the software industry concerning
the potential effects associated with such compliance.
The Company has reviewed its own software products and believes that
there will be no adverse impact with the Year 2000 date change. All INVU
products are designed to record, store, and process calendar dates occurring
before and after January 1, 2000 with the same full year accuracy (i.e. four
numeric characters instead of two).
An impact analysis has been completed that has identified no major risk
of failure within the Company's in-house computer systems, which include the
following:
-- The accounting and management information systems
-- The document management systems
This risk to the Company's business relates not only to the Company's
computer systems, but also to some degree to those of the Company's suppliers
and customers. The Company has developed a policy designed to ensure that all
key customers, suppliers and strategic partners operate and provide Year 2000
compliant systems and software. The returns of information from third parties
relating to Year 2000 compliance should be complete by Fall 1999. Also, there is
a risk that existing or potential customers may not purchase the Company's
products in the future if the computer systems of such existing or potential
customers are adversely impacted by the Year 2000 date change.
Based on the information to date, the Company anticipates that it will
be able to complete its Year 2000 compliance review and make necessary
modifications prior to the end of 1999. However, the issue is complex, and no
business can guarantee that there will be no Year 2000 problems. Some
commentators have stated that a significant amount of litigation will arise out
of Year 2000 compliance issues, and the Company is aware of a growing number of
lawsuits against other software vendors. Because of the unprecedented nature of
such litigation, it is uncertain to what extent the Company may be affected by
it. In addition, management believes that future purchasing patterns of
customers and potential customers have been affected by Year 2000 issues, with
many companies expending significant resources to correct their software systems
for Year 2000 compliance. These expenditures have reduced funds available to
purchase software products such as those offer by the Company.
To date, the Company has not created a separate budget for
investigating and remedying issues related to Year 2000 compliance, whether
involving the Company's own software products or the software or systems used in
its internal operations. There can be no assurances that Company resources spent
on investigating and remedying Year 2000 compliance issues will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
3
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
(a) None
(b) None
(c) On August 31, 1998, Sunburst Acquisitions I, Inc., a Colorado
corporation now known as the Company, consummated the acquisition of all of the
issued and outstanding capital stock of Invu PLC, a company incorporated under
English law, in exchange for 26,506,552 shares of common stock, no par value, of
the Company (the "Share Exchange") pursuant to a Share Exchange Agreement, dated
as of May 19, 1998, by and between the Company and Montague Limited, an Isle of
Man company, and amended by that certain First Amendment to Share Exchange
Agreement, dated as of July 23, 1998. This transaction was exempt from the
registration requirements of the Securities Act, pursuant to Section 4(2) of the
Securities Act and Regulation D promulgated thereunder.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
Please reference Item 2(c) above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
The following exhibits are furnished in accordance with Item 601 of Regulation
S-B.
27* Financial Data Schedule (Exhibit 27).
*Filed herewith
Form 8-K: A Current Report on Form 8-K dated August 31, 1998 was filed
on September 15, 1998 by the Company regarding the Share
Exchange.
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Quarterly Report to be signed on
its behalf by the undersigned thereunto duly authorized.
INVU, INC.
(Registrant)
Date: September 24, 1999 By: /s/ David Morgan
---------------------------------------------
David Morgan, President and Chief Executive
Officer (Principal Executive Officer)
Date: September 24, 1999 By: /s/ John Agostini
---------------------------------------------
John Agostini, Vice President-Chief Financial
Officer (Principal Financial Officer)