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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 June 30, 1999
Commission File No. 000-23361
INTERVU INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0680870
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6815 Flanders Drive, San Diego CA 92121
(Address of principal executive offices)
Registrant's telephone number, including area code: (858) 623-8400
Securities Registered Pursuant to Section 12 (b) of the Act: None
Securities Registered Pursuant to Section
12 (g) of the Act:
Common Stock par value $.001 per share
(Title of Class)
Indicate by check mark whether Registrant (1) has filed all reports to be
filed by section 13 or 15(d) of the Securities 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 ( )
The number of shares outstanding of the Registrant's Common Stock on July
30, 1999 was 13,956,574.
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act of
1995 which provides a "safe harbor" for these types of statements. To the extent
statements in this Quarterly Report involve, without limitation, the Company's
expectations for growth, estimates of future revenue, expenses, profit, cash
flow, balance sheet items or any other guidance on future periods, these
statements are forward-looking statements. These risks and uncertainties include
those identified in the Company's Annual Report on Form 10-K in Item 1 -
"Business - Factors That May Affect Future Performance" and other risks
identified for time to time in the Company's filings with the Securities and
Exchange Commission, press releases and other communications. Copies of the
Company's Form 10-K are available from the Company upon request. The Company
assumes no obligation to update forward-looking statements.
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INTERVU INC.
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS PAGE
----
Balance Sheets............................................ 4
Statements of Operations.................................. 5
Statements of Cash Flows.................................. 6
Notes to the Financial Statements......................... 7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS............. 8-12
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 12
PART II - OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS................................................... 13
ITEM 5 OTHER INFORMATION......................................... 13
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K........................... 13
SIGNATURES......................................................... 14
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PART I
ITEM 1. FINANCIAL STATEMENTS
INTERVU INC.
BALANCE SHEETS
(IN THOUSANDS)
ASSETS
JUNE 30, DECEMBER 31,
1999 1998
--------- ---------
(UNAUDITED)
Current assets:
Cash and cash equivalents ............................................... $ 56,736 $ 9,346
Short-term investments .................................................. 58,740 17,700
Accounts receivable, net of $223,000 and $122,000 allowance,
respectively ....................................................... 1,710 729
Prepaid and other current assets ........................................ 137 75
--------- ---------
Total current assets ...................................................... 117,323 27,850
Property and equipment, net ............................................... 5,916 2,469
Other assets .............................................................. 123 45
--------- ---------
Total assets ...................................................... $ 123,362 $ 30,364
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................ $ 2,606 $ 1,334
Accrued liabilities ..................................................... 588 299
Payable to NBC Multimedia ............................................... 750 750
Accrued payroll and related ............................................. 596 661
Current portion, lease commitments ...................................... 363 7
--------- ---------
Total current liabilities ......................................... 4,903 3,051
Lease commitments ......................................................... 701 --
Stockholders' equity:
Preferred stock,$0.001 par value: 5,000,000 shares authorized
1,280,000 shares designated as Series G convertible preferred stock;
1,280,000 shares issued and outstanding at June 30, 1999 and
December 31, 1998, respectively ............................... 1 1
Common stock, $0.001 par value: Authorized -- 20,000,000 shares;
Issued and outstanding -- 13,904,246 shares and 10,894,487 shares at
June 30, 1999 and December 31, 1998, respectively ................... 14 11
Additional paid-in capital .............................................. 149,126 51,346
Deferred compensation ................................................... (1,008) (746)
Accumulated deficit ..................................................... (30,375) (23,299)
--------- ---------
Total stockholders' equity ........................................ 117,759 27,313
--------- ---------
Total liabilities and stockholders' equity ........................ $ 123,362 $ 30,364
========= =========
Note: The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the disclosures
required by generally accepted accounting principles.
See accompanying notes.
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INTERVU INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Revenues ........................ $ 1,734 $ 283 $ 2,966 $ 396
Operating expenses:
Research and development ...... 1,999 846 3,221 1,406
Sales & marketing ............. 2,123 1,080 3,882 2,034
General & administrative ...... 2,300 1,151 3,972 1,825
------------ ------------ ------------ ------------
Total operating expenses ........ 6,422 3,077 11,075 5,265
------------ ------------ ------------ ------------
Loss from operations ............ (4,688) (2,794) (8,109) (4,869)
Charges associated with the NBC
Strategic Alliance Agreement . -- 500 -- 4,373
------------ ------------ ------------ ------------
Interest income ............... 735 231 1,033 427
------------ ------------ ------------ ------------
Net loss ........................ $ (3,953) $ (3,063) $ (7,076) $ (8,815)
============ ============ ============ ============
Basic and diluted net loss per
share ......................... $ (.34) $ (.28) $ (.65) $ (.99)
============ ============ ============ ============
Shares used in calculating basic
and diluted net loss per share 11,734,589 9,022,496 10,965,960 8,923,612
============ ============ ============ ============
See accompanying notes.
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INTERVU INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
----------------------
1999 1998
--------- ---------
(UNAUDITED) (UNAUDITED)
OPERATING ACTIVITIES
Net loss .............................................. $ (7,076) $ (8,815)
Adjustments to reconcile net loss to net cash used in
operating activities:
Recognition of lapse of NBC's obligation to return
680,000 shares of Series G convertible preferred
stock issued under the NBC Strategic Alliance
Agreement ........................................ -- 3,373
Issuance of common stock for services ............... 62 22
Amortization of deferred compensation ............... 131 90
Depreciation and amortization ....................... 763 171
Changes in operating assets and liabilities:
Accounts receivable .............................. (981) (261)
Prepaid and other current assets ................. (62) (59)
Accounts payable ................................. 1,272 695
Accrued liabilities .............................. 289 3
Payable to NBC Multimedia ........................ -- 500
Accrued payroll and related ...................... (65) 64
--------- ---------
Net cash used in operating activities ................. (5,667) (4,217)
INVESTING ACTIVITIES
Purchase of short-term investments .................... (104,240) (33,318)
Proceeds from sale of short-term investments .......... 63,200 7,800
Purchases of property and equipment ................... (3,063) (478)
Other assets .......................................... (78) (76)
--------- ---------
Net cash used in investing activities ................. (44,181) (26,072)
FINANCING ACTIVITIES
Payments on capital leases ............................ (91) (6)
Issuance of common stock .............................. 97,331 18,060
Repurchase of common stock ............................ (2) --
Repayment of stockholder notes receivable ............. -- 1
--------- ---------
Net cash provided by (used in) financing activities ... 97,238 18,055
Net decrease in cash and cash equivalents ............. 47,390 (12,234)
Cash and cash equivalents at beginning of period ...... 9,346 21,380
--------- ---------
Cash and cash equivalents at end of period ............ $ 56,736 $ 9,146
========= =========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligations entered into for equipment .. $ 1,147 $ --
========= =========
Recognition of lapse of NBC's obligation to return
680,000 shares of Series G convertible preferred
stock issued under the NBC Strategic Alliance
Agreement ........................................... $ -- $ 3,373
========= =========
Expense related to issuance of common stock ........... $ 62 $ 22
========= =========
See accompanying notes.
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INTERVU INC
NOTES TO FINANCIAL STATEMENT
1. THE COMPANY AND BASIS OF PRESENTATION
InterVU Inc. (the "Company" or "INTERVU") was incorporated in Delaware on
August 2, 1995 to provide services for the delivery or "streaming" of live and
on-demand video and audio content over the Internet. The Company utilizes a
distributed network to accelerate the speed and improve the quality of video and
audio delivery. In 1998, the Company emerged from the development stage.
The interim unaudited condensed financial statements of the Company
contained herein have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission. In management's
opinion, the unaudited information includes all adjustments (consisting only of
normal recurring adjustments) necessary for fair presentation of the financial
position, results of operations and cash flows for the periods presented.
Interim results are not necessarily indicative of results to be expected for the
full year.
2. NEW ACCOUNTING STANDARDS
In 1998, the Company adopted SFAS No. 130, Reporting Comprehensive Income,
and SFAS No. 131, Segment Information. SFAS No. 130 requires that all components
of comprehensive income, including net income, be reported in the financial
statements in the period in which they are recognized. Comprehensive income is
defined as the change in equity during the period from transactions and other
events and circumstances from non-owner sources. Net income and other
comprehensive income, including foreign currency translation adjustments, and
unrealized gains and losses on investments shall be reported, net of their
related tax effect, to arrive at comprehensive income. Comprehensive loss was
not materially different than net loss. SFAS No. 131 amends the requirements for
public enterprises to report financial and descriptive information about their
reportable operating segments. Operating segments, as defined in SFAS No. 131,
are components of an enterprise for which separate financial information is
available and is evaluated regularly by a company in deciding how to allocate
resources and in assessing performance. The financial information is required to
be reported on the basis that is used internally for evaluating the segment
performance. The Company believes it operates in one business and operating
segment and adoption of this standard did not have a material impact on the
Company's financial statements.
3. CONTINGENCIES
The Company is a party to certain claims and legal actions arising in the
normal course of business. Although the ultimate outcome of these matters is not
presently determinable, management believes that the resolution of all such
pending matters will not have a material adverse affect on the Company's
financial position or liquidity; however, there can be no assurance that the
ultimate resolution of these matters will not have a material impact on the
Company's results of operations in any period.
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ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion contains forward-looking statements regarding the
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause the Company's actual business, prospects and results of operations to
differ materially from those that may be expressed or implied by such
forward-looking statements. Such risks, uncertainties and other factors include,
but are not limited to, the risks detailed under the caption "Item 1. Business
- -- Factors that May Affect Future Performance" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998.
OVERVIEW
INTERVU provides Web site owners and content publishers with services for
the delivery or "streaming" of live and on-demand video and audio content over
the Internet. INTERVU's customers use its video and audio distribution services
to transmit entertainment, sports, news, business to business, advertising and
distance learning content. INTERVU's services automate the publishing,
distribution and programming of video and audio content.
Revenues
INTERVU derives revenues from delivering live and on-demand video and audio
content over the Internet and providing related services, including production,
encoding, uplinking, Web site integration, distribution, audience building,
reporting and archiving. INTERVU typically charges its customers fees with fixed
and variable components. The fixed component consists of a monthly fee based on
the particular bundle of services provided and an agreed upon amount of content
to be stored and streams to be delivered. To the extent that a customer exceeds
agreed upon storage and delivery amounts, INTERVU typically charges variable
fees based on the amount by which content delivered exceeds the agreed upon
amount. For customers for which INTERVU performs specific projects, it charges a
combination of fixed and variable fees depending on the project. INTERVU also
derives revenues from consulting services relating to streaming media
technologies, although this is not expected to constitute a material portion of
INTERVU's revenues in the future.
Expenses
INTERVU's expenses consist of research and development and selling, general
and administrative expenses. Research and development expenses consist primarily
of salaries and related expenses for personnel, fees to outside contractors and
consultants, allocated costs of facilities and depreciation and amortization of
capital equipment. Research and development expenses to date have been focused
in three areas: (1) development of software to improve the INTERVU Network's
ability to deliver video and audio content, (2) development of software to
analyze Internet performance and redirect individual end-users to optimal
servers and (3) development of software to help Web sites publish and promote
their events.
Selling, general and administrative expenses consist primarily of salaries,
commissions, promotional expenses, professional services and general operating
costs. Also included are the
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costs INTERVU incurs for bandwidth. INTERVU expects that as it adds additional
customers, the corresponding increase in video delivery volumes will allow
INTERVU to generate economies of scale relative to its bandwidth costs because
it will be able to obtain larger volume discounts. To the extent that INTERVU
does not realize such economies of scale, INTERVU's business will be adversely
affected.
As INTERVU expands its business in 1999 and beyond, its research and
development and selling, general and administrative expenses will increase
substantially. Research and development expenses will increase as INTERVU adds
engineers to its in-house software development team. INTERVU's selling, general
and administrative expenses will increase as INTERVU, among other things, hires
additional personnel, increases its advertising expenditures and establishes
additional sales offices.
INTERVU also expects to expand the INTERVU Network by adding servers in
additional Internet hosting centers. INTERVU will depreciate equipment added to
the INTERVU Network over the useful life of the asset and include this expense
in selling, general and administrative expense.
NBC Strategic Alliance
In connection with entering into a strategic alliance with NBC Multimedia,
Inc., INTERVU issued 1,280,000 shares of its Series G Convertible Preferred
Stock to NBC. INTERVU charged $3.4 million to expense in January 1998,
representing the fair value of 680,000 shares of Series G Preferred Stock at the
time NBC's obligation to return those shares lapsed. INTERVU expects to charge
the then fair value of the remaining 600,000 shares of Series G Preferred Stock
to expense during the fourth quarter of 1999 when NBC's obligation to return
those shares is expected to lapse, although if INTERVU breaches, renegotiates or
removes the provision of the NBC strategic alliance agreement relating to this
obligation, it may need to expense the charge at that time. INTERVU believes
that the fair value of each share of Series G Preferred Stock will roughly
approximate the price per share at which INTERVU's common stock is then trading,
multiplied by the 0.6298 conversion ratio applicable to the Series G Preferred
Stock. The non-cash charge with respect to the remaining 600,000 shares of
Series G Preferred Stock is expected to be substantial and to materially impact
INTERVU's results of operations in the period the expense is recognized. NBC
Multimedia is not required to return any shares upon termination until it
receives $2.0 million of non-refundable payments from INTERVU.
RESULTS OF OPERATIONS
INTERVU has incurred net losses in each fiscal period since its inception
and, as of June 30, 1999, had an accumulated deficit of $30.4 million. To date,
INTERVU has not generated any significant revenues, and, as a result of the
significant expenditures INTERVU plans to make as described above, INTERVU
expects to continue to incur significant operating losses and negative cash
flows from operations for the foreseeable future.
Total revenues for the three months ended June 30, 1999 increased to $1.7
million from $283,000 in the comparable period in 1998. Total revenues for the
six months ended June 30, 1999 increased to $3.0 million from $396,000 in the
comparable period in 1998.The increase in revenues is primarily due the
expansion of INTERVU's streaming media services and its
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customer base. INTERVU also generated additional revenue from its services to
NBC's VideoSeeker Web site.
Research and development expenses for the three months ended June 30, 1999
increased to $2.0 million from $846,000 the prior year. Research and development
expenses for the six months ended June 30, 1999 increased to $3.2 million from
$1.4 million the prior year. The increase in research and development expenses
was attributable to the increase in personnel and related expenses.
Sales and marketing expenses for the three months ended June 30, 1999
increased to $2.1 million compared to $1.1 million for the comparable period
from the prior year. Sales and marketing expenses for the six months ended
increased to $3.9 million from $1.8 million for the comparable period in the
prior year. The increase was attributable primarily to an increase in personnel
and associated costs, in expenditures for trade shows and other marketing
efforts.
General and administrative expenses for the three months ended June 30,
1999 increased to $2.3 million compared to $1.2 million for the comparable
period from the prior year. Sales and marketing expenses for the six months
ended increased to $4.0 million from $1.8 million for the comparable period in
the prior year. The increase was attributable primarily to an increase in
personnel and associated costs, consulting fees and Internet Service
Provider costs.
Charges associated with the NBC strategic alliance agreement for the three
months ended and the six months ended June 30, 1998 were $500,000 and $4.4
million, respectively. No such charges were recorded in the three months ended
and six months ended June 30, 1999, respectively. The charges in the 1998 period
reflected: (1) a non-cash charge of $3.4 million relating to the lapse of NBC's
obligation to return 680,000 shares of Series G Preferred Stock to INTERVU and
(2) a charge of $1.0 million relating to nonrefundable cash payments due to NBC
Multimedia under the strategic alliance agreement for the costs of producing and
operating NBC's VideoSeeker Web site and the costs of advertising and promotions
to be placed by INTERVU on NBC Internet sites.
Interest income was $735,000 and $1.0 million for the three and six months
ended June 30, 1999 respectively, compared to $231,000 and $426,000 for the same
periods in 1998 respectively,. Interest income represents interest earned by
INTERVU on its cash, cash equivalents and short-term investments. The increase
in interest income over the comparable period in 1998 was the result of higher
cash, cash equivalents and short-term investments balances INTERVU obtained from
sales of equity securities.
INTERVU's net loss was $4.0 million and $7.1 million for the three and six
months ended June 30, 1999 respectively, compared to $3.1 million and $8.8
million for the same periods in 1998 respectively.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, INTERVU has financed its operations primarily through
sales of stock. Through June 30, 1999, INTERVU had raised $144.1 million from
the sale of preferred stock and common stock. At June 30, 1999, INTERVU had
$115.5 million of cash, cash equivalents and short-term investments.
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INTERVU has had significant negative cash flows from operating activities
since inception. Cash used in operating activities for the six months ended June
30, 1999 and 1998 was $5.7 million and $4.2 million, respectively. Cash used in
operating activities increased primarily as a result of increased business
activity and related operating expenses.
Cash used in investing activities was $44.2 million and $26.1 million for
the six months ended June 30, 1999 and 1998, respectively, which represented
purchases of short-term investments and capital expenditures for equipment,
software and furniture and fixtures. In March 1999, INTERVU financed $1.1
million of equipment under a three-year non-cancelable leaseline with an
interest rate of 7.75%. Additionally, INTERVU expects to expend significant
amounts for equipment, software and fixtures over the next 24 months to expand
the INTERVU Network, much of which it plans to finance through capital leases.
Cash provided by financing activities was $97.3 million for the six months
ended June 30, 1999, primarily representing net proceeds of $97.0 million
received upon completion of a public offering of 2,875,000 shares of Common
Stock at a price to the public of $36.00 per share. Cash provided by financing
activities was $18.1 million for the six months ended June 30, 1998, primarily
representing net proceeds of $17.8 million received upon completion of a public
offering of 1,495,000 shares of Common Stock at a price to the public of $13.25
per share.
In connection with the strategic alliance agreement INTERVU entered into
with NBC in October 1997, INTERVU became obligated to make $2,000,000 in
non-refundable payments to NBC Multimedia for certain production, operating and
advertising costs associated with some of NBC's Web sites, including payments of
(1) $750,000 paid on the completion of the initial public offering in November
1997, (2) $500,000 paid in April 1998, (3) $500,000 due in May 1998 and (4)
$250,000 due in August 1998. Through March 31, 1999, INTERVU has made a total of
approximately $1.3 million in payments to NBC Multimedia and $750,000 is
currently payable.
INTERVU believes existing cash and cash equivalents will be sufficient to
meet its working capital and capital expenditure requirements for the next
several years. However, if cash generated by operations is insufficient to
satisfy INTERVU's liquidity requirements, INTERVU may need to sell additional
equity or debt securities or obtain credit facilities. INTERVU currently does
not have any lines of credit.
On August 2, 1999, we entered into an Agreement and Plan of Merger to
acquire Netpodium Inc., a Seattle-based innovator of live, interactive
Web-based communication software and event hosting services. For additional
information regarding the proposed acquisition of Netpodium, see "Item 5. Other
Information." Although we will use our common stock as consideration for the
acquisition of Netpodium, the acquisition will affect our cash position because
we will be required to invest cash in Netpodium to maintain and expand its
business.
IMPACT OF YEAR 2000
Many computer systems and software products are coded to accept only
two-digit entries in date code fields. Beginning the year 2000, these date code
fields will need to distinguish 21st century dates from 20th century dates. As a
result, computer systems and/or software used by many companies may need to be
upgraded to comply with "Year 2000" requirements. Although INTERVU believes that
the INTERVU Network is Year 2000 compliant, INTERVU may discover coding errors
or other defects in the future. INTERVU has appointed a Year 2000 Task Force to
assess the scope of its risks and bring its applications into compliance. This
Task Force is undertaking its assessment of INTERVU's compliance and has begun
testing its corporate business and information systems. To date, INTERVU has
discovered few problems during its Year 2000 testing, and INTERVU has fixed
those identified in its day to day operating environment. INTERVU intends to
complete the compliance testing in September 1999. To date,
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INTERVU has incurred minimal expenses related to Year 2000 compliance. It
expects to incur approximately $50,000 of expenses in 1999 related to Year 2000
compliance. INTERVU has not adopted a contingency plan to address possible risks
to its systems.
INTERVU relies on a number of software and systems provided by third
parties to operate the INTERVU Network, any of which could contain coding which
is not Year 2000 compliant. These systems include server software used to
operate the network servers, software controlled routers, switches and other
components of the data network, firewall, security, monitoring and back-up
software used by INTERVU, as well as desktop PC applications software. In each
case, INTERVU employs widely available software applications from leading
third-party vendors and expects that such vendors will provide any required
upgrades or modifications in a timely fashion. However, if any third party
software suppliers fail to provide Year 2000 compliant versions of the software,
INTERVU's operations, including the INTERVU Network, could be disrupted.
Year 2000 compliance problems also could undermine the general
infrastructure necessary to support INTERVU's operations. For instance, INTERVU
depends on third-party Internet service providers (known as "ISPs") or hosting
centers to provide connections to the Internet and to customer information
systems. Any interruption of service from ISPs or hosting centers could result
in a temporary interruption of the INTERVU Network and other services. INTERVU
has attempted to address this risk by obtaining the same service capacity from
multiple ISPs. Any interruption in the security, access, monitoring or power
systems at the ISPs or hosting centers could result in an interruption of
services. Moreover, it is difficult to predict what effects Year 2000 compliance
problems will have on the integrity and stability of the Internet. If businesses
and consumers are not able to reliably access the Internet, the demand for
INTERVU's services could decline, resulting in an adverse impact to INTERVU's
business, financial condition and results of operations.
INTERVU's operations also could be adversely affected if its customers fail
to ensure that their software systems are Year 2000 compliant. INTERVU cannot
assess or control the degree of Year 2000 compliance in its customers'
information systems. Disruptions in the information systems of customers could
temporarily prevent such customers from accessing or using the INTERVU Network,
which could materially affect INTERVU's business, financial condition and
results of operations. The spending patterns of current or potential customers
may be affected by Year 2000 issues as companies expend significant resources to
correct or update their systems for Year 2000 compliance. Because of these
expenditures, INTERVU's customers may have less money available to pay for
services, which could have a material adverse affect on INTERVU's business,
financial condition and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTERVU is exposed to change in interest rates primarily from its
investments in certain available for sale securities. Under its current
policies, INTERVU does not use interest rate derivative instruments to manage
exposure to interest rate changes. A hypothetical one-percent change in interest
rates on instruments of all maturities would not materially effect the fair
value of interest sensitive financial instruments at June 30, 1999.
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PART II
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 27, 1999, INTERVU held an Annual Meeting of Stockholders at which
the following proposals were voted on by the shareholders:
1. Election of two directors for a three-year term to expire at the 2002 Annual
Meeting of Stockholders. The votes cast for, against, withheld of abstained as
to each nominee are set forth below.
NOMINEE FOR AGAINST WITHHELD
Edward E. David, Jr. 11,063,889 0 58,135
Alan Z. Senter 11,063,889 0 58,135
2. To consider and vote upon a proposal to amend the Amended and Restated
Articles of Incorporation of INTERVU's common stock from 20,000,000 to
45,000,000 shares.
Votes
For 10,829,042
Against 283,135
Withheld 9,847
Broker Non-Vote 0
ITEM 5. OTHER INFORMATION
On July 14, 1999, INTERVU acquired VideoLinx Communications, Inc., a
Virginia based visual communication services company, through a merger of an
INTERVU subsidiary with and into VideoLinx. INTERVU acquired VideoLinx to
strengthen INTERVU's focus on providing high-quality service to the Internet
audio and video conferencing space. The acquisition also provided INTERVU with
the ability to provide streaming customers with redundant call centers located
in San Diego, CA and Fairfax, VA. The new center in Virginia will provide
additional back up to enhance staffing for various time zones, reliability and
peak load management. Under the terms of the acquisition agreement, INTERVU
issued 38,399 shares of INTERVU common stock to VideoLinx's former stockholders
and repaid approximately $145,000 of VideoLinx's indebtedness upon the closing.
On August 2, 1999, INTERVU entered into an Agreement and Plan of Merger to
acquire Netpodium Inc., a Seattle-based innovator of live, interactive web-based
communication software and event hosting services. INTERVU believes the
acquisition will expand INTERVU's audio and video Internet broadcasting
offerings in the business services market. Under the terms of the definitive
agreement, INTERVU will issue 1,011,236 shares of common stock to Netpodium's
shareholders and assume all outstanding Netpodium options. The parties intend
for the transaction to be accounted for as a pooling of interests. The
acquisition, which is subject to certain conditions, is scheduled to close by
September 7, 1999. Following the acquisition, Netpodium will be a wholly owned
subsidiary of INTERVU.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number
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3.1 Amended and Restated certificate of Incorporation
(incorporated by reference to INTERVU's Annual Report
on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1998).
3.2 Amendment to Amended and Restated certificate of
Incorporation
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed for the six months ended June 30, 1999.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant duly causes this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
InterVU Inc.
Date: August 13, 1999 By: /s/ Harry Gruber
--------------- ------------------------------------------------
Harry Gruber
Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board and Chief Executive Officer
/s/ Harry Gruber (Principal Executive Officer) August 13, 1999
- ----------------------------------------- -------------------
Harry Gruber
Vice President and Chief Financial Officer
/s/ Kenneth L. Ruggiero (Principal Financial and Accounting Officer) August 13, 1999
- ----------------------------------------- -------------------
Kenneth L. Ruggiero
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