1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 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
October 31, 1999 was 15,113,462.

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

PAGE

ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheets..................................... 4
Consolidated Statements of Operations........................... 5
Consolidated Statements of Cash Flows........................... 6
Notes to the Consolidated Financial Statements.................. 7

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................... 9-13

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK..................................................... 14

PART II - OTHER INFORMATION

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............. 15

ITEM 5 OTHER INFORMATION............................................... 15

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K................................ 15

SIGNATURES............................................................... 16

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PART I

ITEM 1. FINANCIAL STATEMENTS

INTERVU INC.

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)

ASSETS

SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------

Current assets:
Cash and cash equivalents ............................................. $ 28,003 $ 13,086
Short-term investments in marketable securities ....................... 72,676 17,700
Accounts receivable, net of $722,000 and $122,000 allowance,
respectively ..................................................... 3,004 795
Prepaid and other current assets ...................................... 460 81
-------- --------
Total current assets .................................................... 104,143 31,662
Property and equipment, net ............................................. 12,930 2,654
Intangible assets ....................................................... 1,128 --
Other assets ............................................................ 2,188 45
-------- --------
Total assets .................................................... $120,389 $ 34,361
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable ...................................................... $ 2,775 $ 1,387
Accrued liabilities ................................................... 1,417 408
Payable to NBC Multimedia ............................................. -- 750
Accrued payroll and related ........................................... 781 677
Current portion, lease commitments .................................... 369 7
-------- --------
Total current liabilities ....................................... 5,342 3,229
Lease commitments ....................................................... 716 --
Other long-term liabilities ............................................. 32 --
Stockholders' equity:
Preferred stock,$0.001 par value: 5,000,000 shares authorized
Series G convertible preferred stock, Designated -- 1,280,000
shares; Issued and outstanding -- 1,280,000 shares at September 30,
1999 and December 31, 1998 ........................................ 1 1
Common stock, $0.001 par value: Authorized-- 45,000,000 shares;
Issued and outstanding -15,055,366 shares and 11,864,097 shares
at September 30, 1999 and December 31, 1998 ....................... 15 12
Additional paid-in capital ............................................ 156,909 57,057
Deferred compensation ................................................. (900) (746)
Accumulated deficit ................................................... (41,726) (25,192)
-------- --------
Total stockholders' equity ...................................... 114,299 31,132
-------- --------
Total liabilities and stockholders' equity ...................... $120,389 $ 34,361
======== ========

See accompanying notes.

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INTERVU INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- ------------------------------
1999 1998 1999 1998
----------- ----------- ----------- ----------

Revenues ...................................... $ 3,186 $ 474 $ 6,556 $ 871
Operating expenses:
Research and development .................... 2,519 1,359 6,553 3,144
Sales and marketing ......................... 4,500 1,910 9,476 4,105
General and administrative .................. 4,258 1,555 8,793 3,539
Charges associated with acquisitions and
related to NBC Strategic Alliance Agreement
798 250 798 4,623
----------- ----------- ----------- ----------
Total operating expenses ...................... 12,075 5,074 25,620 15,411
----------- ----------- ----------- ----------
Loss from operations .......................... (8,889) (4,600) (19,064) (14,540)
Interest income ............................... 1,447 457 2,530 888
----------- ----------- ----------- ----------
Net loss ...................................... $ (7,442) $ (4,143) $ (16,534) $ (13,652)
=========== =========== =========== ==========
Basic and diluted net loss per
share ....................................... $ (.52) $ (.41) $ (1.29) $ (1.49)
=========== =========== =========== ==========
Shares used in calculating basic
and diluted net loss per share .............. 14,355,825 10,129,159 12,842,281 9,132,861
=========== =========== =========== ==========

See accompanying notes.

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INTERVU INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)

NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------
1999 1998
----------- -----------

OPERATING ACTIVITIES
Net loss ................................................... $ (16,534) $(13,652)
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
Loss on disposal of property and equipment ................. -- 8
Issuance of common stock for services .................... 62 22
Amortization of deferred compensation .................... 199 136
Depreciation and amortization ............................ 2,323 314
Changes in operating assets and liabilities:
Accounts receivable ................................... (2,209) (366)
Prepaid and other current assets ...................... (380) (19)
Other assets .......................................... (2,143) (64)
Accounts payable ...................................... 1,389 1,131
Accrued liabilities ................................... 1,009 337
Payable to NBC Multimedia ............................. (750) 750
Accrued payroll and related ........................... 104 283
Other long-term liabilities ........................... 32 --
--------- --------
Net cash used in operating activities ...................... (16,898) (7,747)
INVESTING ACTIVITIES
Acquisition, net of cash acquired .......................... (1,530) --
Purchase of short-term investments ......................... (150,120) (43,934)
Proceeds from sale of short-term investments ............... 95,144 22,082
Purchases of property and equipment ........................ (11,049) (2,051)
--------- --------
Net cash used in investing activities ...................... (67,555) (23,903)
FINANCING ACTIVITIES
Payments on capital leases ................................. (70) (9)
Issuance of common stock ................................... 99,442 19,351
Repurchase of common stock ................................. (2) --
--------- --------
Net cash provided by financing activities ................. 99,370 19,342
Net increase (decrease) in cash and cash equivalents ....... 14,917 (12,308)
Cash and cash equivalents at beginning of period ........... 13,086 21,408
--------- --------
Cash and cash equivalents at end of period ................. $ 28,003 $ 9,100
========= ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligations entered into for equipment ....... $ 1,147 $--
--------- --------
Expense related to issuance of common stock ................ $ 62 $ 22
--------- --------

See accompanying notes.

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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
patented 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 consolidated 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. The condensed
consolidated financial statements have been restated to reflect the Company's
acquisition of Netpodium Inc. in August 1999, which was accounted for as a
pooling of interest. Significant intercompany accounts and transactions have
been eliminated in consolidation. 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. 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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3. ACQUISITIONS

On July 14, 1999, INTERVU acquired Videolinx Communications, Inc., a
Virginia-based visual communications 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. The acquisition was accounted for as a purchase in
accordance with the provisions of Accounting Principles Board Opinion ("APB")
No. 16. Under the purchase method of accounting, the purchase price was
allocated to the assets acquired and liabilities assumed based on their
estimated fair values at the date of acquisition. 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 25, 1999, INTERVU acquired Netpodium Inc., a Seattle-based
innovator of live, interactive, Web-based communication software and event
hosting services. The acquisition will expand INTERVU's audio and video Internet
broadcasting offerings in the business services market. Under the terms of the
acquisition, which was accounted for as a pooling of interests, INTERVU issued
1,011,236 shares of common stock to Netpodium's shareholders and assumed all
outstanding Netpodium options.

4. SUBSEQUENT EVENT

On November 11, 1999, INTERVU announced a strategic multi-tiered
alliance with the CNN News Group. As part of the agreement, INTERVU will issue
$20 million of common stock to CNN. In return, CNN will provide INTERVU with
three years of on-air and online advertising and promotional opportunities
across CNN's properties, and INTERVU will sub-license CNN's domestic television
networks to its corporate clients for internal distribution on their LANs.
INTERVU will be able to provide fee based Internet video management and delivery
services for three years and will also deliver audio streaming services
immediately. Following the first anniversary of the agreement, if the per Share
Market Value of the shares prior to the end of any fiscal quarter falls below
$20.00 per share, INTERVU has agreed to issue a letter of credit in the amount
of $10.0 million to CNN prorated by the number of INTERVU shares remaining held
by CNN and by the number of days into the agreement. INTERVU may become
obligated to pay to CNN up to $10 million in cash or common stock, at INTERVU's
option, if CNN holds the shares issued to it for three years and the price per
share of INTERVU's common stock does not increase 1.5 times the initial price at
the effective date of the Agreement.

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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 10K 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 sales and
marketing, 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.

Sales, marketing, 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 sales, marketing, 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. in October 1997, 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 upon a
termination of the agreement 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 of 17.2 million with respect to the remaining 600,000 shares of
Series G Preferred Stock will impact INTERVU's results of operations in the
fourth quarter of 1999.

RESULTS OF OPERATIONS

INTERVU has incurred net losses in each fiscal period since its
inception and, as of September 30, 1999, had an accumulated deficit of $41.7
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 September 30, 1999 increased
to $3.2 million from $474,000 in the comparable period in 1998. Total revenues
for the nine months ended September 30, 1999 increased to $6.6 million from
$871,000 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.

Research and development expenses for the three months ended September
30, 1999 increased to $2.5 million from $1.4 million for the comparable period
in the prior year. Research and development expenses for the nine months ended
September 30, 1999 increased to $6.6 million from $3.1 million for the
comparable period in 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 September 30,
1999 increased to $4.5 million compared to $1.9 million for the comparable
period from the prior year. Sales and marketing expenses for the nine months
ended increased to $9.5 million from $4.1 million for the comparable period in
the prior year. The increase was attributable primarily to an increase in the
Company's sales force and associated costs, in expenditures for trade shows and
in other marketing efforts.

General and administrative expenses for the three months ended September
30, 1999 increased to $4.3 million compared to $1.6 million for the comparable
period from the prior year. General and administrative expenses for the nine
months ended increased to $8.8 million from $3.5 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 for Internet Service
Provider costs.

Charges associated with the NBC strategic alliance agreement for the
three months ended and the nine months ended September 30, 1998 were $250,000
and $4.6 million, respectively. No such charges were recorded in the three
months ended and nine months ended September 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. As
noted above, the Company expects to incur a significant non-cash charge of $17.2
million in the fourth quarter of 1999 when NBC's obligation to return 600,000
shares of Series G Preferred Stock upon termination of the agreement lapse.

Interest income was $1.4 million and $2.5 million for the three and nine
months ended September 30, 1999 respectively, compared to $457,000 and $888,000
for the same periods in 1998. 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 $7.4 million and $16.5 million for the three and
nine months ended September 30, 1999 and 1998 respectively, compared to $4.1
million and $13.7 million for the same periods in 1998.

LIQUIDITY AND CAPITAL RESOURCES

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Since inception, INTERVU has financed its operations primarily through sales of
stock. Through September 30, 1999, INTERVU had raised $146.2 million from the
sale of preferred stock and common stock. At September 30, 1999, the principal
source of liquidity for INTERVU was $100.7 million of cash, cash equivalents,
investments in marketable securities.

INTERVU has had significant negative cash flows from operating
activities since inception. Cash used in operating activities for the nine
months ended September 30, 1999 and 1998 was $16.9 million and $7.7 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 $67.6 million and $23.9 million
for the nine months ended September 30, 1999 and 1998, respectively, primarily
representing purchases of short-term investments and long-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, some of which it plans to
finance through capital leases.

Cash provided by financing activities was $99.4 million for the nine
months ended September 30, 1999, primarily representing net proceeds of $97.1
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 $19.3 million for the nine months ended September 30,
1998, primarily representing net proceeds of $18.4 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. As of September 30, 1999, INTERVU has paid a total
of $2.0 million to NBC Multimedia.

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.

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

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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 has undertaken its assessment of INTERVU's
compliance and 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
completed the compliance testing in November 1999. To date, INTERVU has incurred
minimal expenses related to Year 2000 compliance. Expenses incurred are less
than the $50,000 budgeted for assessing Year 2000 compliance. INTERVU has
adopted a preliminary 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. During the Task Force compliance
assessment, INTERVU has aggressively sought out these upgrades and modifications
and implemented on INTERVU systems as necessary. 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. During
the Task Force compliance assessment, INTERVU aggressively sought out ISP and
supplier Year 2000 compliance statements. INTERVU has not independently verified
the statements and has published those compliance statements as republications.
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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTERVU is exposed to changes 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 affect the fair
value of interest sensitive financial instruments at September 30, 1999.

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PART II

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

On October 20, 1999, INTERVU held a Special Meeting of Stockholders at
which the following proposals were voted on by the shareholders:

1. To consider and vote upon a proposal to amend the 1998 Stock Option Plan from
2,000,000 to 3,000,000 shares.
Votes
For 7,396,070
Against 3,154,275
Withheld 11,065

ITEM 5. OTHER INFORMATION

On November 11, 1999, INTERVU announced a strategic multi-tiered
alliance with the CNN News Group. As part of the agreement, INTERVU will issue
$20 million of common stock to CNN. CNN will provide INTERVU with three years of
on-air and online advertising and promotional opportunities across CNN's
properties, and INTERVU will sub-license CNN's domestic television networks to
its corporate clients for internal distribution on their LANs. INTERVU will
provide fee based Internet video management and delivery services for three
years and will also deliver audiostreaming services immediately. Following the
first anniversary of the agreement, if the net share market value of the shares
prior to the end of any fiscal quarter falls below $20.00 per share, INTERVU has
agreed to issue a letter of credit in the amount of $10.0 million to CNN
prorated by the number of INTERVU shares remaining held by CNN and by the days
into the agreement. INTERVU may become obligated to pay to CNN up to $10
million in cash or common stock, at INTERVU's option, if CNN holds the shares
issued to it for three years and the price per share of INTERVU's common stock
does not increase to 1.5 times the initial price at the effective date of the
Agreement.

On September 21, 1999 INTERVU was granted a patent from the U.S. Patent
& Trademark Office entitled "System and Method for Delivery of Video Data Over
a Computer Network." This patent covers the storage, organization and
management of the large amounts of audio and video content that is delivered
across the Internet, as well as how distributed delivery centers are tied
together to share the high volumes of information and resultant high loads of
traffic.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

Exhibit
Number
-------

27.1 Financial Data Schedule

(b) No reports on From 8-K were filed for the quarter ended
September 30, 1999.

15
16

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: November 15, 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) November 15, 1999
- -----------------------
Harry Gruber

Vice President and Chief Financial Officer
/s/ Kenneth L. Ruggiero (Principal Financial and Accounting Officer) November 15, 1999
- -----------------------
Kenneth L. Ruggiero