TeleVideo, Inc. Form 10-K 10/31/02

Executive Officer

Position

Dr. K. Philip Hwang

Chairman of the Board and Chief Executive Officer TeleVideo, Inc.

Jun Keun Yum

Vice President of Operations, Chief Technology Officer and Director of Sales TeleVideo, Inc.

Richard I. Kim

Vice President of Marketing and Human Resources and Acting Chief Financial Officer TeleVideo, Inc.

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 þ No o

The approximate aggregate market value of registrant’s common stock held by non-affiliates on January 10, 2003 (based upon the closing sales price of such stock as reported in the over the counter market as of such date) was $791,700.

As of January 10, 2003, 11,310,000 shares of registrant’s common stock were outstanding.

Documents Incorporated by Reference: Certain portions of the Registrant’s Definitive Proxy Statement to be used in connection with Registrant’s Annual Meeting of Stockholders to be held on April 16, 2003 have been incorporated by reference into Part III of this Annual Report on Form 10-K.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

This Annual Report on Form 10-K for the fiscal year ended October 31, 2002 includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included in this Annual Report that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future, including, but not limited to, such matters as future product development, business development, marketing arrangements, future revenues from contracts, business strategies, expansion and growth of the company’s operations and other such matters are forward-looking statements. These kinds of statements are signified by words such as “believes,” “anticipates,” “expects,” “intends,” “may,” “will”, and other similar expressions. However, these words are not the exclusive means of identifying such statements. These statements are based on certain assumptions and analyses made by the company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, including the risk factors discussed below, general economic and business conditions, the business opportunities (or lack thereof) that may be presented to and pursued by the company, changes in law or regulations and other factors, many of which are beyond control of the company. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.

References in this Form 10-K to “TeleVideo,” the “Registrant”, “We” or the “Company” refer to TeleVideo, Inc. and its subsidiaries unless the context indicates otherwise. This report contains registered and unregistered trademarks of other companies.

Founded in 1975, TeleVideo is a market leader providing innovative high performance terminal and network computer products to the business and consumer markets. The Company markets its products worldwide primarily through distributors, value-added resellers (“VARs”), systems integrators and original equipment manufacturers (“OEMs”).

The Company first became a leader in the video display terminal industry by introducing a new generation of “smart” terminals based on the Intel microprocessor at a time when dumb terminals were the industry standard. TeleVideo holds a number of proprietary terminal emulations, including the TV910 and TV9425, which have been an industry standard for more than 15 years and are currently used in millions of terminals worldwide. Today, TeleVideo is utilizing its expertise in server-based network computing to forge new ground in delivering thin-client solutions. Thin-client are a category of terminals that do not have local storage devices, where all the programs and data are saved on the server.

TeleVideo’s TeleCLIENT products consist of a family of thin-client Windows-based terminals. The TC7010 is a stand-alone design that can be connected to a variety of monitors to meet specific needs. The TC7155 and TC7175 are integrated units with 15 and 17-inch color CRT monitors, respectively. The TeleCLIENT TC7300 Series is a fully integrated Windows-based thin-client with a built-in high-resolution thin film transistor (TFT) LCD screen. Bundled as an all-in-one design, the TC7300 Series is designed for use in limited workspaces.

In November 2001, TeleVideo introduced its latest line of products, TeleCLIENT TC7020 and TC7380, which are the wireless-touch screen versions of the TC7010 and TC7370 respectively. The all-in-one LCD flat panel and stand-alone Thin Clients come with built-in hardware and software to support wireless LAN connectivity. Through a built-in mini PCI slot, both TC7380 flat panel and TC7020 stand-alone Thin Clients can support widely available wireless LAN options using the 802.11b wireless protocol. Their availability will make deployment much easier and cost effective for IT departments and businesses than conventional wired deployments. Also, the all-in-one TC7380 LCD flat panel Thin Client comes with a touch screen display. The TC7380 utilizes a resistive touch screen that allows users to access application commands through touch activated prompts on the screen. This allows IT professionals and users in many industries such as point-of-sale, healthcare, financial and education to increase efficiency and productivity. The TC7020 stand-alone Thin Client also has built-in software that will support optional touch screen enabled monitors.

The TeleCLIENT family of products is designed for use in the healthcare, government, education, retail and other task-oriented client/server based computing environments. TeleVideo’s thin-clients are accelerated by a Pentium-class 300MHz microprocessor. Windows CE powers TeleCLIENT thin-clients, which enable fast and easy access to business-critical applications.

The TeleCLIENT family of products also provides flexibility to choose the Remote Desktop Protocol that executes either the Windows NT 4.0 Terminal Server Edition, or the Citrix ICA protocol through Citrix MetaFrame or WinFrame. Windows CE gives the TC7010, TC7020, TC7155, TC7175 and the TC7300 Series server-side access to popular Windows-based business applications such as the Microsoft Office suite

and Java, as well as the Internet. In addition, our TeleManager software provides complete remote administration of TeleCLIENT from one central location.

The 990 is a general-purpose terminal with ASCII, ANSI and PC TERM operating modes. For maximum versatility and flexibility, the terminal is compatible with a wide variety of keyboard styles and allows users to interface to a bar code scanner, wand reader, credit card reader, electronic scale or other specialized keyboards for point-of-sale or point-of-transaction processing.

The TeleVideo 995-65 14-inch monochrome terminal allows the user Alpha Windowing capability at a non-windowing price for new or existing software applications. The windows capability provides increased productivity for applications running on UNIX. The 995 also has a power management screen saver, which protects the environment and promotes energy conservation.

TeleVideo’s iTelePC iT2000 is an “internet appliance,” a new and relatively low-cost PC, designed for Internet access and specialized business use, but without the full capabilities of a personal computer. The iTelePC iT2000 comes integrated with a 15-inch monitor that brings the Internet to the household or business in a small, easy-to-use design. Powered by Microsoft Windows CE, the 233 MHz iT2000 comes with no set-up required. During the fiscal 2002, the demand for this product was at a lower level than we have expected, and the Company is analyzing the possibility to retire it from production.

In October 2000, the Company introduced a new line of products, mobile electronics, represented by Alladin-2000 and Mobile Secretary KFH-2001K. Also, during the fiscal year 2001, the Company introduced another auto safety product, Back-Up View.

The Aladdin A-2000 is an advanced two-way remote vehicle starting and security system, providing around-the-clock surveillance and security. The interactive bi-directional remote control is in constant communication with the system module, allowing the vehicle to be monitored closely through visual warning and audible or vibrating alarm. The Mobile Secretary is designed to allow the safe use of cellular phones while driving, and the Back-Up View is a system who can detect if there is an obstacle at a certain distance behind the vehicle, when the car is moving back. Due to the high level of competition on the market of these products, the Company didn’t meet its goals regarding sales and revenue expected for the first two quarters of the fiscal 2001. Consequently, in the third quarter of the fiscal 2001 we have decided to discontinue the production of auto safety devices.

TeleVideo serves markets that are characterized by rapid technological change and the Company has continuous ongoing programs to develop new products. The Company has recently introduced stand-alone versions of its thin-client products with varying monitor sizes, ranging up to 17” flat-panel displays. In addition, the company is continuing the development of a wireless thin-client product using the 802.11b protocol. Although the Company’s research and development staff consists of 4 employees as of December 10, 2002, engineers from participating companies support various joint projects of the Company. During fiscal 2002, TeleVideo spent approximately $0.6 million on Company-sponsored research and development. Company-sponsored research and development expenses for fiscal 2001 and 2000 were approximately $0.8 million and $0.9 million, respectively. The Company did not engage in any customer-sponsored research and development program during such years.

Because of the fast pace of technological advances, the Company must be prepared to design, develop and manufacture new and more powerful low-cost products in a relatively short time. TeleVideo believes it has had mixed success to date in accomplishing these goals simultaneously. Like other companies in the computer

industry, it will continue to experience delays in completing new product design and tooling. There is no assurance that the Company will be able to design and manufacture new products, including its iTelePC and TeleCLIENT family of products that respond to the rapid changes in the marketplace.

North American sales are handled from TeleVideo sales offices located in San Jose, California, Lake Forest, California and Hoffman Estates, Illinois. Products are sold through distributors, mass merchants, retail stores, VARs, systems integrators and OEMs. In April 2002, TeleVideo appointed a new salesperson in North Wales, Pennsylvania, to manage sales activity on the East Coast area.

Products sold in Europe, Asia Pacific, Africa and Latin America are handled by the Company’s office in San Jose, California through distributors, OEMs and international representatives. The Company also appointed, in fiscal 2002, an agent in the Netherlands to manage existing customer relationships and to build new ones throughout Europe. From January 2003, the Company appointed a new agent in the United Kingdom, simultaneous with the termination of the contract with the agent from the Netherlands.

TeleVideo distributors generally do not have exclusive geographic territories. Either party can generally terminate distributor contracts without cause upon advanced written notice of 30 days or 60 days. TeleVideo’s distributors typically handle a variety of computer-related products, including products competitive with those of TeleVideo. The typical distribution arrangement requires the distributor to purchase TeleVideo products with certain limited stock rotation rights. Distributors may also exercise price protection rights should the Company’s product price be reduced. None of these contracts are material to the Company.

TeleVideo, through its headquarters’ marketing and supporting staff, continues to work closely with its distributors, mass merchants, retail stores, VARs, systems integrators and original OEMs. TeleVideo’s marketing staff also provides the customers with training, sales and promotional materials, cooperative advertising programs, trade show participation and sales leads. The marketing organization also leads the product marketing role giving direction to product management and competitive positioning. The Company spent approximately 5% ($0.4 million), 3% ($0.2 million) and 3% ($0.2 million) of its net revenues on advertising in fiscal 2002, 2001 and 2000, respectively.

TeleVideo’s customers typically purchase the Company’s products on an as-needed basis. Therefore, the Company will continue to manufacture its products based on sales forecasts and upon customer orders. As a result of this strategy, the Company believes that backlog is not material to its business taken as a whole. Because of the possibility of customer changes in delivery schedules or cancellation of orders, which is not uncommon in the computer industry, the Company’s backlog as of any particular date may not be indicative of actual net sales for any succeeding period.

For the fiscal year ended October 31, 2002, one customer represented 10% of total net revenue. For the fiscal 2001, no single customer represented 10% or more of total net revenue. TeleVideo’s sales terms are typically net 30 or net 45 days.

The Company had export sales (primarily to Europe, Asia and Latin America) of approximately $1.3 million in fiscal 2002 (representing 16% of total net sales), $1.7 million in fiscal 2001 (25% of total sales) and $2.4 million in fiscal 2000 (34% of total net sales). In fiscal 2002, the Company appointed an agent in the Netherlands to manage existing customer relationships and to build new ones throughout Europe. The Company is evaluating the feasibility of establishing a fully equipped TeleVideo presence in Europe but has made no commitments in this regard.

TeleVideo’s international sales are subject to certain risks common to non-United States operations, including but not limited to governmental regulations, import restrictions and export control regulations, changes in demand resulting from fluctuations in exchange rates, as well as risks such as tariff regulations. TeleVideo’s international sales are generally U.S. dollar-denominated and, therefore, are not directly subject

to international currency fluctuations. The strength of the dollar in relation to certain international currencies may, however, adversely affect the Company’s sales to international customers.

On February 2000, the Company purchased for $1,000,000 in cash an aggregate of 14,269,230 shares of unregistered Series A Convertible Preferred Stock of Mulix, Inc., a Delaware corporation. The Company’s investment in Mulix represents a 35% interest in this privately held corporation.

Mulix was dissolved effective November 30, 2000. Thus, the entire investment of $1.0 million was written off as of October 31, 2000.

In July 2000, the Company purchased for $600,000 in cash an aggregate of 9,608 shares of stock of K&T Telecom, Inc. K&T Telecom, Inc. is a Korean company and its main activity is manufacturing telecommunication and electronics devices, including a hands-free accessory and collision sensors. The Company’s investment in K&T Telecom, Inc. represents a 49% interest in this privately held corporation.

If K&T Telecom, Inc. subsequently increases its capital, TeleVideo will be given the opportunity to participate in the stock issuance in order to maintain the percentage of stock currently held by TeleVideo.

During the fiscal year 2002, due to the decrease of the fair market value of K&T Telecom investment, the Company decreased value of this investment on the financial statements from $274,230 to $209,176, proportionally with its interest in this company.

Based upon the financial results and prospects for recovery of its investment the Company is contemplating withdrawal from the joint venture.

In August 2000, the Company purchased for $650,000 in cash an aggregate of 9,608 shares of stock of Alpha Technology, Inc. Alpha Technology, Inc. is a Korean company, manufacturing electronic and car accessories, including two-way car alarm systems. The Company’s investment in Alpha Technology, Inc. represents a 49% interest in this privately held corporation.

TeleVideo has the right to participate in future sales of Alpha Technology, Inc. securities to maintain its proportionate interest in this company. If Alpha Technology, Inc. increases its capital thereafter, TeleVideo will be given the opportunity to participate in the stock issuance in order to maintain the percentage of stock held currently by TeleVideo.

In the fiscal year 2001, due to the decrease of the fair market value of Alpha Technology investment, the Company adjusted the carrying value of this investment on the financial statements from $600,000 to $418,033. In November 2001, the Company decided to withdraw from this joint venture, and to sell its interest in Alpha Technology to Gem Management, a company owned by Dr. Hwang’s wife, Gemma Hwang. In exchange for the 9,608 shares of Alpha Technology, the amount of approximately $418,000 (the value of transaction and the book value of Alpha Technology investment as of July 31, 2001) will be deducted from the Note Payable owed by TeleVideo to Gem Management. Before the transaction, the Company owed to Gem Management $1.5 million, bearing an annual interest of 8%.

In October 2000, the Company invested $1,000,000 in Televideo (China) Co., Ltd. (Ningbo China) for a 10% interest. The Company has agreed to invest an additional $2,000,000 in December 2000. The total investment will represent a 30% interest in this company, which will manufacture computer terminals and monitors.

The investment agreement also provides for the use of TeleVideo’s technical production skill for terminal products. For the use of this technology Ningbo China will pay the Company $2.5 million dollars over two years as follows: $1.2 million is to be received in December 2000 and the remaining $1.3 million in two installments of $650,000 in June 2001 and June 2002. This investment will give Ningbo China the right to use our technology and we will provide professional training for the use of this technology. The most important technology is related to the processor used for TeleClient.

During December 2000, the Company invested $2,000,000 in Ningbo China for an additional 20% ownership interest. Accordingly in December 2000, the Company changed its method of accounting for this investment to the equity method. No difference in the value of this investment was recorded as result of the change from the cost accounting method to the equity accounting method.

During December 2000, the Company received approximately $1,000,000 from Ningbo China. In January 2001 and April 2001, the Company received additional $120,000 and $200,000, respectively. The difference up to $1,400,000 was expensed as government and transfer fees. The Company agreed with Ningbo to reschedule the payment for the remaining amount of $1,100,000 as follows: $150,000 to be paid in June 2002, $250,000 to be paid in September 2002, $300,000 to be paid in December 2002 and $400,000 to be paid by March 31, 2003.

In the third quarter of fiscal 2001, because a couple of investors have withdrawn from this joint venture, the capital of Ningbo decreased to around $5.0 million, from an initial amount of 10.0 million. Due to this fact, the Chinese government asked Ningbo to change the initial agreement with TeleVideo and to record the payments made by Ningbo to TeleVideo as withdrawals of a portion of its investment, instead of payments for the technology and training. The Company agreed with this change, and, consequently, we reduced the amount showed as investment on the financial statements from $3.0 million to $1.7 million.

Due to the decrease of the fair market value of the Ningbo investment, the Company adjusted the carrying value of this investment on the financial statements from $1.7 million to $0.7 million, proportionally with its interest in this company. Also, as result of the withdrawn of a couple of the investors from this joint venture, the Company’s interest in Ningbo has increased from 30% to 60%.

In September 1998, the Company invested $1 million in the online comparison shopping Internet company, mySimon, Inc., receiving convertible preferred stock.

On February 29, 2000, CNET Networks, Inc. (formerly, CNET, Inc. or “CNET”) completed the acquisition of mySimon, Inc. As a result of this acquisition, the Company received 375,108 shares of common stock of CNET in exchange for 100% of its interest in mySimon, Inc. During same period of time, the Company also adjusted its balance sheet to reflect the conversion to a marketable security. The cost method used to book the investment in mySimon was changed to market value method in accordance with SFAS 115 to record the investment in CNET stock.

During the fiscal year 2000 and 2001, the Company recognized gains from the sales of CNET stocks of $10.1 million and $0.3 million respectively.

On January 10, 2003, the Company owned approximately 32,500 shares of CNET common stock and the market value was approximately $2.80 per share.

In February 1998, the Company purchased a 50% interest in Koram, Inc, a Korean restaurant venture. During 2000, the Company decided to discontinue its participation in this joint venture. The Company’s venture partner agreed to transfer the funds for our participation into the TeleVideo account when the exchange rate Korean Won and US Dollar will be the most advantageous. Also, the Company changed its

method of accounting for this investment to cost method. No difference in the value of this investment was recorded as result of the change from the equity accounting method to the cost accounting method.

In November 2001, the Company decided to pay back a portion from the Gem Management’s loan with the funds deposited in Korea, which were in a total amount of approximately $64,000. Before the transaction, the Company owed Gem Management $1.5 million, bearing an annual interest of 8%.

On May 12, 2000, the Company purchased for a cash investment of $917,431 an aggregate of 45,000 ordinary shares of Biomax Co., Ltd. (“Biomax”). Biomax is a startup company, with its principal offices located in Seoul, Korea, engaged in developing an herbal product to help lower cholesterol levels in humans. Its existing technology was developed by and obtained from the Korea Research Institute of Bioscience and Biotechnology. The Company’s investment in Biomax represents a 15% interest in this privately held corporation.

The agreement gives the Company the right to nominate one member to the Biomax Board of Directors. Dr. K. Philip Hwang, the Company’s Chairman of the Board and Chief Executive Officer, was nominated and elected to the Biomax board.

The Company has the right to participate in future sales of Biomax securities to maintain its proportionate interest in Biomax. In the event the Company wants to sell all or a portion of its shares, it has given Biomax and Biomax’s President, who is its controlling shareholder, a right of first refusal to purchase the shares. The controlling shareholder also must obtain the Company’s prior written consent in order to sell over 10% of Biomax.

Biomax also agreed to discuss with the Company certain specified kinds of events and transactions that could materially impact Biomax’s business, capital structure and financial condition. The agreement further prohibits Biomax from sharing its technology with third parties or assisting with research and development efforts of third parties without the prior written consent of the Company, other than in the normal course of business, and further prohibits the controlling shareholder from engaging in businesses that could compete with Biomax. The restrictions and promises in the agreement will terminate at such time as the Company has sold at least 70% of the shares it acquired under the agreement.

During the fiscal 2002, due to the decrease of the fair market value of Biomax investment, the Company adjusted the carrying value of this investment on the financial statements from $115,978 to $110,765, proportionally with its interest in this company.

On May 12, 2000, the Company purchased for $2,522,972 an aggregate of 15,278 ordinary shares of Xeline (Keyin) Telecom Co. Ltd. (“Xeline”). Xeline is a private company located in Seoul, Korea, which is engaged in developing power line technology for electricity transportation. The Company’s investment in Xeline represents a 5.75% interest in this corporation.

The Company has the right to participate in future sales of Xeline securities to maintain its proportionate interest in Xeline. In the event the Company wants to sell all or a portion of its shares, it has given Xeline and its controlling shareholder, who is also its President and Chief Executive Officer, a right of first refusal to purchase the shares.

Xeline also agreed to keep the Company expressly advised regarding certain specified kinds of events and transactions that could materially impact Xeline’s business, capital structure and financial condition. Xeline has agreed that it will not transfer its power line communications (“PLC”) technology to a third party without the prior written consent of the Company, except in the context of a strategic technology transfer agreement approved by the Xeline Board. The restrictions and promises in the agreement will terminate at such time as the Company has sold at least 70% of the shares it acquired under the agreement.

The investment agreement also contemplates that TeleVideo will participate in a strategic alliance with Xeline under the terms of which TeleVideo will support Xeline in its overseas marketing and sales activities

related to Xeline’s PLC technology. In addition, TeleVideo and Xeline will cooperate to incorporate Xeline’s PLC technology into TeleVideo’s computer products, including the Tele-Client series. The parties contemplate entering into a separate sale and marketing agreement to more fully document the terms and conditions of the strategic relationship.

During the fiscal years 2002, due to the decrease of the fair market value of Xeline investment, the Company adjusted the carrying value of this investment on the financial statements from $308,755 to $199,890 proportionally with its interest in this company.

In June 2000, the Company purchased for $1,000,000 in cash an aggregate of 285,714 shares of common stock of MultiMedia SOC, Inc. (formerly described as Synertek, Inc.), a Nevada corporation, representing an 8% interest in this company. MultiMedia SOC, Inc. manufactures and sells handheld digital multimedia and communications appliances.

During the fiscal years 2001 and 2002, due to the decrease of the fair market value of the MultMedia investment, the Company adjusted the carrying value of this investment on the financial statements from $211,528 to $153,689, proportionally with its interest in this company.

TeleVideo believes that brand recognition, product quality, availability, extensive standard product features, service and price are significant competitive factors in the Company’s markets. In addition to the factors listed above, the principal considerations for distributors and resellers in determining which products to offer include profit margins, immediate delivery, product support, and credit terms. TeleVideo has continued and in the future will likely continue to face significant competition, with respect to these factors, particularly from the large international manufacturers. Most of these companies have significantly greater financial, marketing and technological resources than the Company, and may be able to command better terms with their suppliers due to higher purchasing volumes. The Company’s most dominant competitors are Wyse Technology, Inc. and Neoware, Inc., with approximately 35% and 15% of the world-wide market, respectively, compared to less than 2% for the Company. Therefore, there is no assurance that the Company will be able to successfully compete in the future.

The Company subcontracts substantially all of the manufacturing of its products to manufacturers in Taiwan, the People’s Republic of China and South Korea. The testing, inspection and some minor assembly work are done at our California headquarters. We believe our current facilities in California will continue to be adequate for our purposes for the foreseeable future.

The Company’s largest supplier accounted for approximately 40% (approximately $2.1 million) of net purchases in fiscal 2002. Loss of this supplier might have an adverse effect on the product supply of the Company. The Company believes, however, that in most cases, alternative sources of supply could be arranged as and when needed by the Company. To date, TeleVideo has not experienced any significant difficulties or delays in production of its products.

The Company regards certain aspects of its products as proprietary and relies upon a combination of trademark and copyright laws, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary rights. The Company has registered trademarks in the United States and in over 20 foreign countries for “TeleVideo” and the TeleVideo logo.

The continuing development of the Company’s products and business is dependent, primarily, on the knowledge and skills of certain of its employees. To protect its rights to its proprietary information, the Company requires all employees and consultants to enter into confidentiality agreements that prohibit the

disclosure of confidential information to persons unaffiliated with the Company. There can be no assurance, however, that these agreements will provide meaningful protection for the Company’s technology or other confidential information in the event of any unauthorized use or disclosure. There also can be no assurance that third parties will not independently develop products similar to or duplicative of products of the Company. The Company believes that due to the rapid pace of technological change in its industry, the Company’s success is likely to depend more upon continued innovation, technical expertise, marketing skill and customer support than on legal protection of the Company’s proprietary rights.

Most of the Company’s products are subject to regulations adopted by the Federal Communications Commission (“FCC”), which establishes radio frequency emanation standards for computing equipment. TeleVideo believes that all of the Company’s products that are subject to such regulations comply with these regulations. Although there can be no assurance, the Company has no reason to believe that new products will not also be approved. Failure to comply with the FCC specifications could preclude the Company from selling non-complying systems in the United States until appropriate modifications are made. To date, the Company has not encountered any FCC compliance problems.

As of January 10, 2003, the Company’s full-time employees totaled 30, as compared with 31 reported at the end of fiscal 2001. Of the total number of employees, 14 are engaged in product research, engineering, development and manufacturing, 8 in marketing and sales and 8 in general management and administration. We believe that our future success will depend, in part, on our ability to continue to attract and retain highly skilled technical, marketing and management personnel.

None of the Company’s employees are subject to a collective bargaining agreement or represented by a union, and the Company has never experienced a work stoppage. We believe that our employee relations are good.

The Company’s headquarters, research and development and administrative operations are housed in a 69,630 square foot building located on 2.5 acres in San Jose, California. On December 28, 1998, the Company sold the building and has leased it back. The aggregate monthly lease payments are $114,000. Please refer to Note 9 of the financial statements (“Sale and Leaseback of Building”) for additional details. The lease expires on December 31, 2013.

The Company leases domestic sales offices in Hoffman Estates, Illinois and Lake Forest, California. Both are month-to-month tenancy leases. Management believes that the Company would be able to secure an extension to the leases if such extensions are deemed necessary in the future. Both leases are accounted for as operating leases.

No matters were submitted to a vote of security holders during the fourth quarter of fiscal 2001.

The following sets forth certain information with regard to executive officers of TeleVideo (ages are as of January 10, 2003):

Dr. K. Philip Hwang, age 67, is the founder of the Company and has been Chairman of the Board and Chief Executive Officer since October 1976. From August 1990 to April 1991 and from June 2000 to April 2002, he has served as the Acting Chief Financial Officer. Dr. Hwang is also a member of the Board of Directors of Biomax Co., Ltd.

Jun Keun Yum, age 51, joined TeleVideo in January 1999 as Vice President of Operations and Chief Technology Officer. From February 2000 to present, he served as the Vice President of Sales. Mr. Yum was a General Manager and Executive Director of Samsung Electronics Co., Ltd., Seoul, Korea from January 1993 to December 1998. From October 1986 to December 1992, he was co-founder and President of Pixelab, Inc. of Lisle, Illinois. Mr. Yum has a BS degree in Electrical Engineering from Han Yang University of Seoul, Korea and an MS degree in Electrical Engineering from Illinois Institute of Technology.

Richard I. Kim, age 32, joined TeleVideo in April of 2002 as Vice President of Marketing and Human Resources. Mr. Kim practiced corporate law at Cahill, Gordon & Reindel from 1996 to 1998 and at Brobeck, Phleger & Harrison from 1998 to 2002. Mr. Kim has a B.A. degree in philosophy and political science from Rutgers University and J.D. degree from Columbia Law School.

The Company’s common stock is traded in the over-the-counter market and quoted on the NASD electronic bulletin board under the symbol “TELV.OB”. The following table sets forth for the periods indicated the high and low last sales prices for the common stock. The prices quoted below reflect inter-dealer prices, without retail mark-ups, markdowns or commissions and may not necessarily represent actual transactions.

On January 10, 2003 there were 739 holders of record of the Company’s Common Stock and the closing price of the Company’s common stock in the over-the-counter market was $0.07 per share.

The Company has never paid cash dividends on its Common Stock and does not anticipate paying cash dividends in the foreseeable future. The Company presently intends to retain any earnings for use in its business.

The following selected financial data reflect the continuing operations of TeleVideo for the fiscal years ended October 31, 2002 through 1998. The data below has been derived from the Company’s audited consolidated financial statements for the fiscal years presented and should be read in conjunction with such audited financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented elsewhere herein.


(1)	Includes loss from investments of $4,781,000.

(2)	Includes net gains from the sales of C-NET stocks of $10,059,000.

(3)	Includes net loss from investment in APT venture of $4,076,903.

(4)	Amounts reflect restatement in 1998 to write off company’s investment in Three H and TLK due to impairment in 1996 and 1997 respectively.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the accompanying Notes to Consolidated Financial Statements for a discussion of operating results, liquidity needs and acquisitions and dispositions during the periods.

The Company continues to focus its efforts toward providing high-performance Windows-based terminals to the business and consumer markets. In recent years, the Company has phased out the sale of multimedia products and monitors to focus on utilizing its expertise in server-based network computing to forge new ground in delivering thin-client solutions. In November 1998, the Company launched its Windows-based terminal products.

In August 2000 the Company acquired Promise Engineering, Inc., subsequently renamed TeleVideo Mobile Electronics Division, which provides a channel for products made by TeleVideo investees (Alpha and K&T). These products are car accessories, including car alarms and hands-free phone accessories. The new product line did not have significant operations in 2000. In the fiscal 2001, due to the lower than expected sales activity for these products, the Company discontinued the production of car accessories products.

The Company faces strong competition in the marketplace and continues to look for ways to improve operating efficiency. In order to lower the production costs, the Company has continued to negotiate with its suppliers and has also shifted many production processes overseas to subcontractors.

Net sales for fiscal year 2002 were approximately $8.2 million, compared with $6.9 million in fiscal 2001, an increase of $1.3 million, or 19%. Sales of terminals have decreased in fiscal 2002 to $2.3 million from $3.3 million in fiscal 2001, a decrease of 30%. This decrease reflects the Company focus on the sales of its new TeleClient, instead of the old terminals. The sales of TeleClient were approximately $5.8 million in the year 2002, compared with $3.3 million in the year 2001, an increase of 76%.

Cost of sales for fiscal year 2002 was approximately $7.1 million, compared with $6.2 million in fiscal 2001, an increase of $0.9 million, or 15%. Cost of sales as a percentage of net sales decreased to 87% in 2002 from 90% in 2001. The decrease of cost of sales as a percentage of total sales in 2002, is due to the increase in the total net sales and the Company’s efforts to decrease all categories of expenses.

Sales and marketing expenses for fiscal year 2002 were approximately $1.6 million compared with $1.9 million in fiscal 2001, a decrease of $0.3 million, or 16%. As a percentage of net sales, sales and marketing expenses decreased to 20% in fiscal 2002 from 28% in fiscal 2001. The decrease represents the results of the Company’s efforts to decrease all the categories of expenses as well as an increase in net sales.

Research and development expenses were approximately $0.6 million in fiscal 2002, compared with $0.8 million in fiscal 2001. As a percentage of net sales, research and development expenses decreased to 7% in fiscal 2002 compared with 12% in fiscal 2001. The decrease primarily represents the results of the Company’s efforts to decrease all the categories of expenses. In the fiscal 2002 the personnel involved in research and development has decreased from 5 to 4 people, resulting a reduction in salary expenses of approximately $0.1 million.

General and administrative expenses were approximately $1.9 million in fiscal 2002, compared with $1.5 million in fiscal 2001, an increase of $0.4 million or 27%. As a percentage of net sales, general and administrative expenses were 23% in fiscal 2002, compared with 22% in 2001.

As a result, the Company’s loss from operations was approximately $2.9 million in fiscal 2002 as compared with $3.5 million in fiscal 2001, a decrease of $0.6 million or 17%.

Other income net of other expenses were approximately $0.4 million in fiscal 2002 as compared with other expenses of $2.9 million in fiscal 2001. The decrease is due in principal to the decrease recorded in the loss from investments, from $4.8 million in fiscal 2001 to $1.0 million in fiscal 2002.

The net loss for fiscal year 2002 was approximately $2.6 million compared with a net loss of $6.5 million in fiscal 2001, a decrease of $3.9 million, or 60%. This decrease is due principally to the decrease of loss from investments, from approximately $4.8 million recorded in 2001 to $1.0 million recorded in the fiscal 2002.

No income tax was recorded for 2002, compared with an income tax benefit recorded at the end of fiscal 2001. The Company has approximately $90.0 million in federal net operating loss and credit carryovers and approximately $5.0 million in state net operating loss carryovers to offset future federal and state corporate income tax liabilities. No net deferred tax asset has been recognized by the Company for any future tax benefit to be provided from the loss & credit carry forwards since realization of any such benefit is not assured.

Net loss per share in fiscal year 2002 was $0.23, compared to a net loss per share in fiscal 2001 of $0.57 based on 11,310,000 weighted average shares outstanding.

Net sales for fiscal year 2001 were approximately $6.9 million, compared with $7.0 million in fiscal 2000, a decrease of $0.1 million, or 1.4%. In fiscal 2001, monitor and multimedia sales totaled $28,000 as compared with fiscal 2000, when sales of monitors and multimedia products totaled $58,000. Sales of terminals have decreased in fiscal 2001 to $3.3 million from $4.5 million in fiscal 2000, a decrease of 27%. This decrease reflects the Company focus on the sales of its new TeleClient, instead of the old terminals. The sales of

Cost of sales for fiscal year 2001 was approximately $6.2 million, compared with $6.4 million in fiscal 2000, a decrease of $0.2 million, or 3%. Cost of sales as a percentage of net sales also decreased to 90% in 2001 from 92% in 2000. The decrease in cost of sales, as a percentage of total sales, in 2001 is due principally to the increase in sales of TeleClient products with a greater margin than the terminals. In the fourth quarter of 2001, the Company recorded a $0.2 million expense for inventory obsolescence for certain of its computer monitors and safety auto devices in inventory at October 31, 2001.

Sales and marketing expenses for fiscal year 2001 were approximately $1.9 million compared with $2.5 million in fiscal 2000, a decrease of $0.6 million, or 24%. As a percentage of net sales, sales and marketing expenses decreased to 28% in fiscal 2001 from 36% in fiscal 2000. The decrease primarily represents the results of the Company’s efforts to decrease all the categories of expenses. In the year 2000 the Company closed three of its five sales offices in United States.

Research and development expenses were approximately $0.8 million in fiscal 2001, compared with $0.9 million in fiscal 2000. As a percentage of net sales, research and development expenses decreased to 12% in fiscal 2001 compared with 13% in fiscal 2000. The decrease primarily represents the results of the Company’s efforts to decrease all the categories of expenses. In fiscal 2001 the personnel involved in research and development has decreased from 8 to 5 people, resulting a reduction in salary expenses of $0.1 million.

General and administrative expenses were $1.5 million in fiscal 2001, compared with $2.1 million in fiscal 2000, a decrease of $0.6 million or 29%. As a percentage of net sales, general and administrative expenses were 22% in fiscal 2001, compared with 30% in 2000. The decrease is due principally to the reduction in salary expenses of approximately $0.3 million.

As a result, the Company’s loss from operations was approximately $3.5 million in fiscal 2001 as compared with $4.9 million in fiscal 2000, a decrease of $1.4 million or 29%.

Other expenses, net of other income, were $2.9 million in fiscal 2001 as compared with other income of $9.6 million in fiscal 2000. Other income in 2000 represents primarily the gain from CNET stock sales of approximately $10.1 million, partially offset by the write off of the investment in Mulix, an equity method investee, in the amount of $1.0 million. Other expenses in 2001 represents the loss from investments, recorded due to the decrease in the fair market value of these companies.

The net loss for fiscal year 2001 was approximately $6.5 million compared with a net income of $4.6 million in fiscal 2000, a decrease of $11.1 million, or 241%. This decrease is due to the loss from investments of approximately $4.8 million recorded in fiscal 2001, compared with $1.0 million recorded in fiscal 2000, and to the gain from CNET stock sales in amount of $0.3 million recorded in fiscal 2001, compared with $10.1 million recorded in fiscal 2000, partially offset by the decrease of loss from operations to $3.5 million in fiscal 2001 from $4.9 million recorded in fiscal 2000, and the supplementary revenue provided in 2001 by the sublease of the headquarter space, amounting approximately $0.9 million.

An income tax of $0.1 million was recorded in fiscal 2000, as the Company was required to pay income taxes related to the gain on sale of CNET stock. The Company’s utilization of net operating loss carryovers was limited and therefore the gains from sales of CNET stock generated alternative minimum tax liability. In the fiscal 2001 was recorded an income tax benefit of $3,000. The Company has approximately $90.0 million in federal net operating loss and credit carryovers and approximately $5.0 million in state net operating loss carryovers available to offset future federal and state corporate income tax liabilities. No net deferred tax asset has been recognized by the Company for any future tax benefit to be provided from the loss and credit carry forwards since realization of any such benefit is not assured.

Diluted net loss per share in fiscal 2001 was $0.57 based on 11,310,000 weighted average shares outstanding, compared to diluted net income per share in fiscal 2000 of $0.41 based on 11,307,000 weighted average shares outstanding.

In March 2000, the Company received approximately 375,000 shares of CNET common stock when CNET acquired mySimon, an Internet company. During fiscal year 2000, TeleVideo sold approximately 335,000 shares of CNET stock, the proceeds of which aggregated $10,953,000. During fiscal year 2001 the Company sold approximately 7,000 shares of CNET stock for approximately $0.3 million.

In December 1998, the Company sold its 69,360 square foot headquarters building in San Jose, California, including land and improvements, to TVCA, LLC, a Delaware limited liability company (“TVCA”) unaffiliated with TeleVideo, for $11.0 million. Consideration consisted of $8.25 million in cash and a $2.75 million promissory note. The note bears interest at 7.25% per annum. Principal and accrued interest are payable in equal monthly installments of $21,735 on the first day of each month through December 1, 2013, with the remaining principal due at that time.

The Company concurrently leased back this facility over a 15-year lease term expiring in December 2013. The land component has been recorded as an operating leaseback. The building component has been accounted for as a capital lease, whereby a leased building asset and capital lease obligation were recorded at the fair value of approximately $6.27 million. Accumulated amortization on the building as of October 31, 2002 and 2001 was $1.6 million and $1.1 million, respectively. As a result of the sale for $11.0 million, a deferred gain of approximately $8.0 million was recorded. The deferred gain attributable to the land element, which approximates $3.44 million, is being amortized over the 15-year lease life on the straight-line method. The deferred gain attributable to the building element, which approximates $4.56 million, is being amortized over the leased building asset life, which has been determined to be the 15-year lease term, on a straight-line method.

In December 2000, the Company entered into a lease agreement to sublease a portion of its main facility to a company unaffiliated with TeleVideo. The operating sublease provides that the sublessee pay taxes, maintenance, insurance and other occupancy expense applicable to the subleased premises. The remaining minimum sublease rental commitment, under the operating sublease is $1,055,000 for the year 2003.

In February 2001, the Company borrowed approximately $375,000 from Salomon Smith Barney, a member of Citigroup, for working capital purposes. This loan was secured with the 39,508 Company’s CNET shares of stock. In April 2001, due to the decrease in stock price, the Company was requested to pay off a portion of the loan and, consequently, we sold approximately 7,000 of shares of CNET stock.

Because the stock price decreased again that month, the Company was required to pay off another portion of this loan. The Company decided not to sell shares, and we borrowed approximately $200,000 from Gem Management, Inc., a company owned by Gemma Hwang, the spouse of the Company’s CEO and majority shareholder, Dr. K.P. Hwang.

At the end of fiscal 2002, the Company had a working capital deficiency of approximately $0.3 million, compared with a working capital of $1.5 million recorded at the end of fiscal 2001, a decrease of $1.8 million, or 120%.

The Company believes that, with respect to its current operations, the Company’s cash balance of approximately $0.9 million at October 31, 2002, plus revenues from operations and other non-operating cash receipts, including rental income from the subleasing of a part of the headquarter space, notes receivable and Gem Management loan, will be sufficient to meet the Company’s working capital and capital expenditure needs for the next twelve months. The credit line from Gem Management has an unused balance of approximately $1.0 million.

In May 2001 the Company obtained a line of credit from Gem Management, a related entity owned by Gemma Hwang, the spouse of the Company’s CEO and majority stockholder, Dr. K. P. Hwang, in amount of $3.5 million, including the previous loan of $200,000. The Company can borrow money under this line of credit when needed, in order to assure the continuity of the operations. The Company grants to Gem Management a secured interest in the following described property as collateral for the line of credit:


	b) 45,000 shares of the common stock of Biomax;

	c) 285,714 shares of the common stock of Synertech;

	d) 30% from the TeleVideo Ningbo China equity;

	e) any and all intellectual property of TeleVideo, including but not limited to patents, hardware and software engineering documents;

	f) any and all trademarks, trade names and intangible assets of TeleVideo.

Under this line of credit, which bears interest at prime plus one percent per annum, payable monthly, the Company received $300,000 in June 2001, $500,000 in July 2001, $500,000 in September 2001, $500,000 in December 2001, $500,000 in April 2002 and $500,000 in October 2002. In November 2001 the Company paid back approximately $482,000 from this loan by giving in exchange its interest in Alpha Technology and the proceeds from Koram investment. On January 10, 2003 the outstanding balance for this loan was approximately $2,500,000 and the annual interest rate was 5.25%.

The terminal market is intensely competitive. The principal elements of competition are pricing, product quality and reliability, price/performance characteristics, compatibility, marketing and distribution capability, service and support, and reputation of the manufacturer. TeleVideo competes with a large number of manufacturers, most of which have significantly greater financial, marketing and technological resources than TeleVideo. There can be no assurance that the Company will be able to continue to compete effectively.

The computer market is characterized by rapid technological change and product obsolescence, often resulting in short product life cycles and rapid price declines. The Company’s success will continue to depend primarily on its ability to continue to reduce costs through manufacturing efficiencies and price negotiation with suppliers, the continued market acceptance of its existing products and its ability to develop and introduce new products. There can be no assurance that TeleVideo will successfully develop new products or that the new products it develops will be introduced in a timely manner and receive substantial market acceptance. There can also be no assurance that product transitions will be managed in such a way to minimize inventory levels and product obsolescence of discontinued products. The Company’s operating results could be adversely affected if TeleVideo is unable to manage all aspects of product transitions successfully.

The Company generally utilizes standard parts and components available from multiple suppliers. However, certain parts and components used in the Company’s products are obtained from a single source. If contrary to its expectations, the Company is unable to obtain sufficient quantities of any single-sourced components, the Company will experience delays in product shipments.

The Company offers its products through various channels of distribution. Changes in the financial condition of, or in the Company’s relationship with, its distributors could cause actual operating results to vary from those expected. Also, the Company’s customers generally order products on an as-needed basis. Therefore, virtually all product shipments in a given fiscal quarter result from orders received in that quarter. The Company anticipates that the rate of new orders will vary significantly from month to month. The Company’s manufacturing plans and expenditure levels are based primarily on sales forecasts. Consequently, if anticipated sales and shipments in any quarter do not occur when expected, expenditure and inventory levels

could be disproportionately high and the Company’s operating results for that quarter, and potentially future quarters, would be adversely affected.

The market price of TeleVideo’s common stock could be subject to fluctuations in response to quarter to quarter variations in operating results, changes in analysts’ earnings estimates, market conditions in the computer technology industry, as well as general economic conditions and other factors external to the Company. In fiscal 2002, the highest price for TeleVideo shares of stock was $0.18, and the lowest price was $0.04.

The Company markets its products worldwide. In addition, a large portion of the Company’s part and component manufacturing, along with key suppliers, are located outside the United States. Accordingly, the Company’s future results could be adversely affected by a variety of factors, including without limitation, fluctuation in foreign currency exchange rates, changes in a specific country’s or region’s political or economic conditions, trade protection measures, import or export licensing requirements, unexpected changes in regulatory requirements and natural disasters.

Investments in affiliates represent approximately 11% of the Company’s total assets at October 31, 2002. As a result, the Company’s success will be adversely affected if the investees fail to execute their business plans. If there is additional impairment in the carrying value of the affiliate investments the Company will reduce the carrying value of such investments. During the fiscal year 2002, the Company has decreased the carrying value of its affiliate investments by approximately $1.4 million.

The Company is subject to market risk for changes in interest rates, because its line of credit with Gem Management has a variable interest rate, equal with Wall Street prime rate published at beginning of each month, plus one percent. Anyway, the Company could renegotiate its agreement with Gem Management, regarding the interest rate, as it happened in fiscal 2002, but the success of these negotiations can not be assured. The market risk for changes in interest rate for the Company’s investments is not significant because these investments are limited to highly liquid instruments with maturities of three months or less. At October 31, 2002, the Company has approximately $0.9 million classified as cash and cash equivalents.

The Company is also subject to equity price risk related to its investments in marketable securities. At October 31, 2002, the Company owned approximately 32,508 shares of CNET common stock. As of October 31, 2002, the estimated fair value of these marketable securities was approximately $64,000. All of the Company’s transactions with international customers and suppliers are denominated in US dollars.

We have audited the accompanying consolidated balance sheets of TeleVideo, Inc. and Subsidiaries as of October 31, 2002 and 2001, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of TeleVideo, Inc. and Subsidiaries as of October 31, 2002 and 2001, and the consolidated results of their operations and their consolidated cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated statements of operations, stockholders’ equity and cash flows of TeleVideo, Inc. and Subsidiaries for the year ended October 31, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statement referred to above presents fairly, in all material respects, the consolidated results of operations and consolidated cash flows of TeleVideo, Inc. and Subsidiaries for the year ended October 31, 2000, in conformity with accounting principles generally accepted in the United States of America.

Founded in 1975, TeleVideo, Inc. is a market leader providing innovative high performance terminal and network computer products to the business and consumer markets. The Company markets its products worldwide primarily through distributors, value-added resellers (“VARs”), systems integrators and original equipment manufacturers (“OEMs”).

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries, after elimination of inter-company accounts and transactions.

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Inventories are stated at the lower of cost or market. Cost is computed on a currently adjusted standard cost basis (which approximates average cost) for both finished goods and work-in-process and includes material, labor and manufacturing overhead costs. Amounts shown are net of reserves for obsolescence of $0.8 million and $0.7 million as of October 31, 2002 and 2001, respectively: (in thousands)

Investments in marketable equity and debt securities are classified as available-for-sale in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115, Accounting for Certain Investments in Debt and Equity Securities. Available-for-sale securities are securities not classified as either trading or held-to-maturity. Securities available-for-sale are reported at fair value with unrealized gains and losses, net of tax, included in accumulated other comprehensive income (loss) in stockholders’ equity. Premiums and discounts are included in interest income over the period to maturity using the interest method. Gains and losses on sale are determined using the specific identification method.

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided over the estimated useful lives of the assets using both straight-line and accelerated methods. Leasehold improvements and property under capital lease are amortized over the shorter of the lease term or economic life of the asset.

Investments in affiliated companies, owned 20% or more, are accounted for on the equity method. Accordingly, consolidated net income includes the Company’s share of their net earnings. Investments of less than 20% are carried at cost. The Company makes periodic evaluations of the recoverability of its investments in affiliates based upon internal and external events effecting expected realization of the Company’s investment.

In accordance with Staff Accounting Bulletin No. 101 “Revenue recognition in Financial Statements,” the Company recognizes revenue when products are shipped, by meeting all four of the following criteria: (i) persuasive evidence of arrangements exists; (ii) delivery has occurred; (iii) the Company’s price to the buyer is fixed or determinable; and (iv) collectibility is reasonably assured. The Company performs periodic evaluations of its customers’ financial condition and maintains a reserve for potential credit losses and adjusts the reserve periodically to reflect both actual and potential credit losses. In addition, such allowances provide for returns resulting from stock balancing agreements and price protection programs. Product warranties are based on the ongoing assessment of actual warranty expenses incurred.

Advertising costs are expensed as incurred. Advertising expense totaled approximately $0.4 million in fiscal 2002, and approximately $0.2 million in fiscal years 2001 and 2000.

Costs incurred for the development and enhancement of new products and services are charged to expense as incurred.

The Company accounts for income taxes using the asset and liability method in accordance with Statement of Financial Accounting Standards No. 109 (“SFAS 109”). Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The Company accounts for stock-based awards to employees using the intrinsic value method in accordance with Accounting Principles Board (APB) No. 25, Accounting for Stock Issued to Employees. Accordingly, no accounting recognition is given to stock options granted at fair market value until they are exercised. Compensation expense related to employee stock options is recorded if, on the date of grant, the fair value of the underlying stock exceeds the exercise price.

The Company’s business is conducted in a single operating segment. The Company’s Chief Executive Officer reviews a single set of financial data that encompasses the Company’s entire operations for purposes of making operating decisions and assessing performance.

Basic net earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net earnings (loss) per share reflects potential dilution from outstanding stock options using the treasury stock method. Potentially dilutive securities are excluded from the earnings per share calculations when their inclusion would be anti-dilutive.

The fair value of cash and cash equivalents, accounts receivable and trade payables approximates carrying value due to the short-term nature of such instruments. The fair value of notes receivable is estimated by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same maturities. The carrying amount and estimated fair value of notes receivable as of October 31, 2002 was approximately $2,500,000 and $2,900,000, respectively. The carrying amount and estimated fair value of notes receivable as of October 31, 2001 was approximately $2,600,000 and $2,900,000, respectively. The fair value of investment securities is based on quoted market prices, if available.

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain reclassifications have been made to conform to the 2002 presentation, including changes which effect comparability of the annual financial information to previously filed quarterly information. None of such reclassifications are material to the financial statements taken as a whole.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company’s has sustained recurring losses from operations and used cash in operations for each of the three years ended October 31, 2002, and had an accumulated deficit of $98,123,000 and $95,489,000 as of October 31, 2002 and 2001, respectively. As of October 31, 2002, the Company has a working capital deficiency approximating $0.3 million and a capital deficiency approximating $2 million. During 2002 and 2001 the Company has relied on financial support from its related party.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying financial statements is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, and to succeed in its future operations. In order for operations to continue through October 31, 2003, the Company may need to reduce operating expenses, sell its investment in marketable securities or raise additional capital through debt or equity financing. The ultimate success of the Company will depend on increasing revenues and generating income from operations.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

The amortized cost, unrealized gains and losses, and fair values of the Company’s available-for-sale securities held at October 31, 2002 are summarized as follows: (in thousands)

In the fiscal 2001, proceeds on sales of securities classified as available-for-sale were $290,000 and the gains from sales of these securities were $265,000.

In February 2000, the Company purchased for $1,000,000 in cash an aggregate of 14,269,230 shares of unregistered Series A Convertible Preferred Stock of Mulix, Inc. (“Mulix”), a Delaware corporation. The Company’s investment in Mulix represents a 35% interest in this privately held corporation. Mulix was dissolved as effective November 30, 2000. Thus, the entire investment was written off as of October 31, 2000.

In July 2000, the Company purchased for $600,000 in cash an aggregate of 9,608 shares of Stock of K&T Telecom, Inc. The Company’s investment in K&T Telecom, Inc. represents a 49% interest in this privately-held corporation whose primary operations include manufacturing telecommunications and electronics devices (hands-free phones accessories and collision sensors).

The financial statements sent to the Company by K&T Telecom reports no sales for the first nine months of the year 2002 and an accumulated net loss from the start of the business of approximately $0.2 million.

Total assets were in amount of approximately $0.9 million and total liabilities were of approximately $0.5 million at September 30, 2002, resulting total stockholders’ equity in amount of approximately $0.4 million. Considering that Televideo interest in this company is 49%, the fair market value of this investment was estimated at approximately $0.2 million at the end of fiscal 2002.

In August 2000, the Company purchased for $650,000 in cash an aggregate of 9,608 shares of Stock of Alpha Technology, Inc. The Company’s investment in Alpha Technology, Inc. represents a 49% interest in this privately-held corporation whose primary operations include manufacturing electronics and car accessories (two way car alarm systems). The Company’s interest in Alpha Technology was used in November 2001 to pay off approximately $418,000 (the book value as of July 31, 2001) of the loan from Gem Management, a related entity owned by the chief executive officer’s spouse.

In October 2000, the Company invested $1,000,000 in Televideo (China) Co., Ltd. (Ningbo China) for a 10% interest. The Company invested an additional $2,000,000 in December 2000. The total investment represents 60% interest in this entity. No difference in the value of this investment was recorded as result of the change from the cost accounting method to the equity accounting method.

The investment agreement also provides for the use of Televideo’s technologies and production skill for terminal products. During the fiscal 2001, the Company received $1.4 million from Ningbo.

In the third quarter of fiscal 2001, because a couple of investors have withdrawn from this joint venture, the capital of Ningbo was decreased to around $5.0 million, from an initial amount of 10.0 million. Due to this fact, the Chinese government asked Ningbo to change the initial agreement with TeleVideo and to record the payments made by Ningbo to TeleVideo as withdrawal of investment, instead of payments for the technology and training. The Company agreed with this change, and, consequently, the Company reduced the investment on the financial statements from $3.0 million to $1.7 million.

The financial statements sent to the Company by Ningbo reports sales of approximately $0.1 million and a net loss of approximately $0.2 million for the period January to September 2002. The accumulated net loss from the start of the business is approximately $0.7 million.

The total assets at September 30, 2002 were approximately $2.5 million, including technology and training prepaid to TeleVideo in amount of approximately $1.2 million. Total liabilities were in amount of $0.1 million, resulting total stockholders’ equity of approximately $2.4 million. Deducting the prepayment to TeleVideo, recorded as asset, the remaining total stockholders’ equity is approximately $1.2 million, and, considering that the Company’s interest increased to 60% after two investors had withdrawn, the fair market value of this investments was estimated to approximately $0.7 million at the end of fiscal 2002.

In September 1998, the Company invested $1 million in the online comparison shopping Internet company, mySimon, Inc., receiving convertible preferred stock.

In February 2000, CNET Networks, Inc. (formerly, CNET, Inc.) completed the acquisition of mySimon, Inc. As a result of this acquisition, the Company received 375,108 shares of common stock of CNET Networks, Inc. (“CNET”) in exchange for 100% of its interest in mySimon, Inc. During 2000, the cost method used to book the investment in mySimon was changed to the market value method in accordance with SFAS 115 to record the investment in CNET stock.

On March 3, 1997, the Company deposited $224,820 in escrow in Korea, to purchase a 50% ownership in Koram, Inc. (“Koram”), a restaurant venture in Seoul, Korea. In February 1998, the Company completed its purchase of a 50% interest in Koram. The Company’s investment was written down to $109,820 during 1997, due to the devaluation of the Korean won. During 2000, the Company decided to discontinue its participation in this joint venture and entered into an agreement with its venture partner whereby the venture partner would pay the market value for the Company’s 50% interest. As such the Company accounts for this investment under the cost method of accounting. This investment was previously accounted for under the equity method of accounting, and no difference in the value of this investment was recorded as result of the change from the equity accounting method to the cost accounting method.

In May 2000, the Company purchased for a cash investment of $917,431 an aggregate of 45,000 ordinary shares of Biomax Co., Ltd. (“Biomax”). Biomax is a startup company with its principal offices located in Seoul, Korea, which is engaged in developing an herbal product to help lower cholesterol levels in humans. The Company’s investment in Biomax represents a 15% interest in this privately held corporation.

The financial statements received from Biomax reports no sales and a net loss of approximately $0.4 million for the first nine months of the year 2002. The accumulated net loss from the start of the business is in amount of approximately $0.9 million.

Total assets were in amount of approximately $1.0 million and total liabilities were of approximately $0.3 million at September 30, 2002, resulting total stockholders’ equity in amount of approximately $0.7 million. Considering that Televideo interest in this company is 15%, the fair market value of this investment was estimated at approximately $0.1 million at the end of fiscal 2002.

In May 2000, the Company purchased for $2,522,972 in cash an aggregate of 15,278 ordinary shares of Xeline (Keyin) Telecom Co. Ltd. (“Xeline”). Xeline is a private company located in Seoul, Korea, which is

engaged in developing power-line communications technology. The Company’s investment in Xeline represents a 5.75% interest in this corporation.

The financial statements sent to the Company by Xeline reports sales of approximately $0.2 million and a net loss of approximately $0.2 million for the first six months of the year 2002. The accumulated net loss from the start of the business is of approximately $3.3 million.

Total assets were in amount of approximately $7.5 million and total liabilities were of approximately $4.0 million at June 30, 2002, resulting total stockholders’ equity in amount of approximately $3.5 million. Considering that Televideo interest in this company is 5.75%, the fair market value of this investment was estimated at approximately $0.2 million at the end of fiscal 2002.

In June 2000, the Company purchased for $1,000,000 in cash an aggregate of 285,714 shares of common stock of MultiMedia SOC, Inc., a Nevada corporation, representing an 8% interest in this company. MultiMedia SOC, Inc. manufactures and sells handheld digital multimedia and communications appliances.

The financial statements sent to the Company by MultiMedia SOC, Inc. report sales of approximately $35,000 and a net loss of approximately $0.6 million for the period January to September 2002. The accumulated net loss recorded from the start of the business is approximately $1.7 million.

Total assets were in amount of approximately $2.0 million at September 30, 2002. Total liabilities were approximately $0.1 million, resulting total stockholders’ equity in amount of approximately $1.9 million. Considering that TeleVideo’s interest in this company is 8%, the fair market value of this investment was estimated at approximately $0.2 million at the end of fiscal 2002.

To estimate the fair market value of these investments, the Company used the stockholders’ equity reported in the most recent financial statements provided to the Company by these entities, adjusted proportionally with our interest in each of these companies.

This method was used considering that all these investments were private companies, in the incipient phase of activity, recording low or no sales, with most of their funds used for research and development.

In addition to the financial statements provided by our investees, the Company’s CEO visited two or three times every year the headquarters and facilities of each of these companies located in China and Korea. Also, the Company contracted an agent in Korea to oversee the activity of investees located in that country.

A summary of the changes in the Company’s investments in affiliates for the two years ended October 31, 2002 follows: (in thousands)

In August 2000, the Company acquired Promise Engineering, Inc., a Washington corporation for $316,433. After acquisition, PEI was renamed TeleVideo Mobile Electronics Division (“TMED”). PEI was a research and development company, focused on cooling and heating car systems. TeleVideo paid cash of $166,433, and further warranted PEI that TeleVideo would issue, transfer and convey to a former officer of PEI, one hundred thousand (100,000) shares of the common stock of TeleVideo and would pay the difference of $150,000 in the event that annual sales revenue of TMED reaches $10,000,000 in any 12 month period. However, TeleVideo may issue, transfer and convey to TMED Employee the first 100,000 shares collectively within six months of the establishment of TMED if in the sole opinion of Chairman and CEO, Dr. K. Philip Hwang, TMED Employee’s performance is satisfactory and acceptable. A second block of 100,000 shares of the common stock of TeleVideo shall be issued, transferred and conveyed to TMED Employee if the annual sales revenue of TMED reaches $20,000,000 in any 12-month period. When computing sales revenue of $20,000,000, the $10,000,000 sales revenue referred above shall be included. If TMED executes a non-cancelable, non-revocable procurement agreement with Cartell, Inc. with a minimum term of three (3) or more years and the first manufacturing product shipment is accepted by Cartell, Inc. then, within thirty (30) days of the said acceptance, an additional nine hundred thousand (900,000) shares of common stock of TeleVideo shall be transferred and conveyed to TMED Employee.

Due to the high level of competition on the market of these products, the Company didn’t meet its goals regarding sales revenue expected for the first two quarters of fiscal 2001. Consequently, in the third quarter of the fiscal 2001 the Company discontinued the production of auto safety devices.

The Company’s reserves for doubtful accounts receivable, inventory obsolescence and deferred tax assets consist of the following: (in thousands)

In May 2001 the Company obtained a line of credit from Gem Management in amount of $3.5 million, including the previous loan of $200,000. The Company can borrow money under this line of credit when needed, in order to assure the continuity of the operations. In consideration of the line of credit from Gem Management, the Company granted as collateral to Gem Management a secured interest in the Company property. Under this line of credit, which bears interest at 8% per annum, payable monthly, the Company received $300,000 in June, $500,000 in July, $500,000 in September and $500,000 in December 2001. In November 2001 the Company paid back approximately $482,000 from this loan by giving in exchange its interest in Alpha Technology and the proceeds from Koram investment.

During the fiscal 2002, the Company received $500,000 in April and another $500,000 in October. In June 2002, due to the decrease recorded by the interest rate on the market, the interest rate for this note was changed from 8% to prime rate plus one percent. On January 10, 2003 the outstanding balance for this loan was approximately $2,500,000, and the interest rate was 5.25%.

In December 1998, the Company sold its main facility (land and building) for approximately $11.0 million and concurrently leased back this facility over a 15-year lease term expiring in December 2013. The land component has been recorded as an operating lease. The building component has been accounted for as a capital lease, whereby a leased building asset and capital lease obligation were recorded at the fair value of approximately $6.27 million. Accumulated amortization on the building as of October 31, 2002 and 2001 was $1.6 million and $1.1 million, respectively. As a result of the sale for $11.0 million (which includes a $2.75 million note receivable), a deferred gain of approximately $8.0 million was recorded. The deferred gain attributable to the land element, which approximates $3.44 million, is being amortized over the 15-year lease life on a straight-line method. The deferred gain attributable to the building element, which approximates $4.56 million, is being amortized over leased building asset life, which has been determined to be the 15-year lease term, on a straight line method. The aggregate monthly lease payments are $109,000. These payments escalate to $126,000 through 2013.

The $2.75 million note receivable bears interest at 7.25% per annum. Principal and accrued interest is payable in equal monthly installments of $21,735 each on the first day of each month, which the Company began receiving on January 1, 1999. If not earlier paid in full, unpaid principal and accrued interest shall be due and payable to TeleVideo, Inc. on December 1, 2013.

In December 2000, the Company subleased a part of its headquarters space. The leasing agreement is for a period of three years, beginning January 2001 with a monthly rent amount of $81,250. This sublease does not affect the Company’s manufacturing facilities.

Under the lease agreement, the sublessee is required to open a standby letter of credit in amount of $500,000. The letter of credit had an initial term of one year, beginning January 2001, and this term was be automatically extended until the end of the leasing contract, which is January 10, 2004.

The Company has authorized 3,000,000 shares of preferred stock. No preferred stock has been issued to date.

The Company has one stock option plan, the 1991 ISO Plan (“1991 ISO Plan”) accounted for under the APB Opinion 25 and related interpretations. The 1991 ISO Plan provides for the granting of incentive options to employees, including officers, for up to 4,000,000 shares. The outstanding options have a term of ten years when issued and vest over five years. The exercise price of each option equals the market price of the Company’s stock on the date of grant. Accordingly, no compensation cost has been recognized for any grants under the plans. Had compensation cost for the plans been determined based on the fair value of the options at the grant dates consistent with the method of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), the Company’s net income (loss) and net income

(loss) per share would have been changed to the pro forma amounts indicated below. Pro forma results may not be indicative of the pro forma results in the future periods.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted-average assumptions used for grants in 2002, 2001 and 2000 respectively: no expected dividends; weighted average risk-free interest rate of 3.56%, 6.13% and 6.13%; stock volatility 150%, 150% and 150%; and expected lives of 10 years. The weighted average fair value of options granted was $0.00, $0.15 and $1.12 in 2002, 2001 and 2000, respectively.

A summary of the status of the Company’s stock option plans as of October 31, 2002, and changes during the three years ending October 31, 2002 is presented below:

At October 31, 2002, the Company had tax loss carryforwards of approximately $94 million for federal income tax and approximately $5 million for state income tax reporting purposes. The net operating loss carryforwards expire through fiscal 2022. The Tax Reform Act of 1986 contains provisions that may limit the net operating loss carryforwards to be used in any given year upon occurrence of certain events, including significant changes in ownership interests.

No deferred tax asset or benefit was recorded at October 31, 2002 and 2001, as all amounts have been fully reserved. The components are as follows: (in thousands)

The following is a reconciliation of expected tax expense (benefit) to actual for each of the years ended October 31 (in thousands):

The following is a reconciliation of the numerators and the denominators used in the basic and diluted net earnings (loss) per share calculations for each of the years ended October 31 (in thousands):

A total of 340,625 options in 2002, 340,625 options in 2001, and 331,400 options in 2000 were excluded from the computation of diluted earnings per share because either (1) the option’s exercise price was greater than then average market price of the common shares, or (2) the inclusion of the options in 2002 and 2001 would have been antidilutive because the Company experienced a net loss during those years.

The Company, which operates in a single operating segment, designs, produces and markets high performance terminals and monitors designed for office and home automation both domestically and internationally. The Company had export sales primarily to Europe, Asia and Latin America of approximately 16% ($1.3 million), 25% ($1.7 million), and 34% ($2.4 million) of net sales during fiscal 2002, 2001, and 2000, respectively.

For the fiscal years ended October 31, 2002 and 2000, one customer accounted for 10% and 12%, respectively, of the Company’s sales. For the fiscal year ended October 31, 2001, none from our customers accounted for more than 10% of the total sales.

Information about the Company’s operations in different geographic locations is as follows:

In the fourth quarter of 2002, the Company recorded a $695,000 expense for inventory obsolescence for certain of its terminals, TeleCLIENT products, and auto safety devices in inventory at October 31, 2002. The Company also decreased the value of its investment in Ningbo China, recording a loss from investments of approximately $0.7 million.

On October 8, 2002, TeleVideo received a term sheet for the proposed merger of Homebound Acquisition, Inc., a Delaware corporation controlled by Dr. K. Philip Hwang, Registrant’s Chief Executive Officer and Chairman of the Board of Directors, with and into the Company, resulting in a going private transaction.

The Company filed with SEC two current reports (Form 8-K), on October 15 and November 27, 2002, respectively, and the Schedule 13-D related to this transaction was filed on October 18, 2002.

In May 2001 the Company obtained a line of credit from Gem Management, a related entity owned by Gemma Hwang, spouse of the Company’s CEO and majority stockholder, Dr. K. P. Hwang, in amount of $3.5 million, including a previous loan of $200,000. The Company can borrow money under this line of credit when needed, in order to assure the continuity of the operations. In consideration of Gem Management loan to

the Company, the Company granted to Gem Management as collateral for this line of credit, a secured interest in the following described property:


	a) 15,278 shares of the common stock of Xeline (Keyin Telecom);

	b) 45,000 shares of the common stock of Biomax;

	c) 285,714 shares of the common stock of MultiMedia SOC;

	d) 60% from the TeleVideo Ningbo China equity;

	e) any and all intellectual property of TeleVideo, including but not limited to patents, hardware and software engineering documents;

	f) any and all trademarks, trade names and intangible assets of TeleVideo.

Under this line of credit, which bears interest at 8% per annum, payable monthly, the Company received $300,000 in June, $500,000 in July, $500,000 in September and $500,000 in December 2001. In November 2001 the Company paid back approximately $482,000 from this loan by giving in exchange its interest in Alpha Technology and the proceeds from Koram investment.

Under this line of credit, the Company received $500,000 in April 2002 and another $500,000 in October of 2002. In June 2002, due to the market interest rate drops, the interest rate for this note was changed from 8% to prime rate plus one percent. On January 10, 2003 the outstanding balance for this loan was approximately $2,500,000, and the interest rate was 5.25%.

On December 12, 2002 the Company filed with SEC Schedule 13-E3 and Preliminary Schedule 14-C, related to the proposed going-private transaction, as more fully described in those filings.

The following items included in the Company’s Definitive Proxy Statement dated February 28, 2003 used in connection with the Company’s Annual Meeting of Stockholders to be held on April 16, 2002 are incorporated herein by reference:


	The Consolidated Financial Statements, Notes thereto, the Report of Choi, Cho & Ahn, and the Report of Grant Thornton LLP, Independent Public Accountants, thereon are included in Part II of this Report on Form 10-K.


	All schedules have been omitted since the required information is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the accompanying Consolidated Financial Statements.


	The following exhibits have been or are being filed herewith and are numbered in accordance with Item 601 of Regulation S-K:


(1)	Filed herewith.

(2)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 1987, filed on January 29, 1988.

(3)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 1991, filed January 27, 1992.

(4)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K, filed January 29, 1985 and Annual Report on Form 10-K, filed January 28, 1986.

(5)	Incorporated by reference from the Registrant’s Current Report on Form 8-K, filed on January 2, 1999.


	The following Reports on Form 8-K were filed by the Company during the quarter ended October 31, 2002:


	Report on Form 8-K regarding the proposed merger of Homebound Acquisition, Inc., a Delaware corporation controlled by Dr. K. Philip Hwang, Registrant’s Chief Executive Officer and Chairman of the Board of Directors, with and into Registrant, resulting in a going private transaction, filed on October 15, 2002 under Item 5.

	Report on Form 8-K announcing that the Company has signed a definitive agreement for the merger of Homebound Acquisition, Inc, a Delaware corporation controlled by Dr. K. Philip Hwang, Registrant’s Chief Executive Officer and Chairman of the Board of Directors, with and into Registrant, resulting in a going private transaction, filed on November 27, under Item 5.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	By:	/s/ K. PHILIP HWANG



	K. Philip Hwang
	Chairman of the Board,
	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 on the dates indicated.


	1. I have reviewed this annual report on Form 10-K of Televideo, Inc.;

	2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

	3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

	4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:


	a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;


	5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):


	a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


	6. The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


	1. I have reviewed this annual report on Form 10-K of Televideo Inc.;

	2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

	3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

	4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:


	a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;


	5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):


	a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


	6. The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


	/s/ RICHARD I. KIM

	Richard I. Kim
	Vice President of Marketing and Human Resources
	and Acting Chief Financial Officer


(1)	Filed herewith.

(2)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 1987, filed on January 29, 1988.

(3)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 1991, filed January 27, 1992.

(4)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K, filed January 29, 1985 and Annual Report on Form 10-K, filed January 28, 1986.

(5)	Incorporated by reference from the Registrant’s Current Report on Form 8-K, filed on January 2, 1999.

EX-3.1 3 f87288exv3w1.txt EXHIBIT 3.1 Exhibit 3.1 RESTATED CERTIFICATE OF INCORPORATION OF TELEVIDEO SYSTEMS, INC. TeleVideo Systems, Inc. a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is TeleVideo Systems, Inc., and the date of filing of its original certificate of incorporation with the Secretary of State was January 13, 1987. 2. The text of the Certificate of Incorporation is hereby amended and restated to read in full as follows: ARTICLE 1 The name of the Corporation is TeleVideo Systems, Inc. ARTICLE 2 The address of the registered office of the Corporation in the State of Delaware is 1219 Orange Street, in the city of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company. ARTICLE 3 The purpose of the Corporation is to engage in any lawful act or activity for which the corporations may be organized under the General Corporation Law of Delaware. ARTICLE 4 The total number of shares of stock of all classes which the Corporation has authority to issue is 78,000,000 shares, consisting of 75,000,000 shares of common stock with a par value of $0.01 per share, and 3,000,000 shares of Preferred Stock with a par value of $0.01 per share. The Board of Directors is authorized to provide for the issuance of the shares of the Preferred Stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof, and to increase or decrease the number of shares of any such series (but not below the number of shares of such series then outstanding). ARTICLE 5 Stockholders of the Corporation holding a majority of the Corporation's outstanding voting stock shall have the power to adopt, amend or repeal Bylaws. The Board of Directors of the Corporation shall also have the power to adopt, amend or repeal Bylaws of the Corporation, except as such power may be expressly limited by Bylaws adopted by the shareholders. ARTICLE 6 Election of Directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. ARTICLE 7 A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of the foregoing provisions of this Article 7 shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. 3. This Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, TeleVideo Systems, Inc., has caused this certificate to be signed and attested by its duly authorized officers this 21 day of January, 1987. TELEVIDEO SYSTEMS, INC. By: /s/ K. Philip Hwang -------------------------------- K. Philip Hwang Chairman of the Board Attest: By: /s/ Allan D. Smirni -------------------------------- Allan D. Smirni Secretary CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TeleVideo, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware: DOES HEREBY CERTIFY: FIRST: That by unanimous written consent of the Board of Directors, resolutions were duly adopted setting forth a proposed amendment of the Restated Certificate of Incorporation of said corporation, declaring said amendment to be advisable and declaring that the matter should be brought before the stockholders for consideration at its next annual meeting of the stockholders or otherwise brought before the stockholders for consideration. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Restated Certificate of Incorporation of this corporation be amended by changing the first paragraph of the Article thereof numbered "4" so that, as amended, said first paragraph of such Article shall be and read as follows: "The total number of shares of stock of all classes which the Corporation has authority to issue is 78,000,000 shares, consisting of 75,000,000 shares of Common Stock with a par value of $0.01 per share, and 3,000,000 shares of Preferred Stock with a par value of $0.01 per share. Upon the amendment of this article to read as herein set forth, each four shares of Common Stock outstanding shall be combined and converted into one share of Common Stock. In lieu of fractional shares, the Company shall pay in cash the fair market value of any fractional shares based on the last sale price on the last trading day preceding the date of this amendment." SECOND: That thereafter, pursuant to resolution of its Board of Directors, the corporation's Annual Meeting of Stockholders was duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said corporation has caused this certificate to be signed by K. Philip Hwang, its authorized officer, this 21st day of April, 1998, and such amendment is effective on the date of filing in the Office of the Delaware Secretary of State. /s/ K Philip Hwang ------------------------------------- K. Philip Hwang PRESIDENT AND CHIEF EXECUTIVE OFFICER Attest: /s/ Kathy K. Cleveland - ------------------------------------- Kathy K. Cleveland SECRETARY EX-23.1 4 f87288exv23w1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated January 22, 2003, accompanying the consolidated financial statements included in the Annual Report of TeleVideo, Inc. and Subsidiaries on Form 10-K for the year ended October 31, 2002. We hereby consent to the incorporation by reference of said report in the Registration Statement of Televideo, Inc. on Form S-8 (File No. 333-26203, effective November 2, 1992). /s/ CCA Accountancy Corporation San Jose, California February 3, 2003 EX-23.2 5 f87288exv23w2.txt EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated January 11, 2001, on the consolidated statements of operations, stockholders' equity and cash flows for the year ended October 31, 2000, included in the Annual Report of Televideo, Inc., and Subsidiaries on form 10-K for the year ended October 31, 2002. We hereby consent to the incorporation by reference of said report in the Registration Statement of Televideo, Inc. on Form S-8 (File No. 33-26203, effective November 2, 1992). /s/ Grant Thornton LLP San Jose, California February 4, 2003 EX-99.1 6 f87288exv99w1.txt EXHIBIT 99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, K. Philip Hwang, certify that the Annual Report on Form 10-K for the year ended October 31, 2002 fully complies with the requirements in Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in such Annual Report fairly presents, in all material respects, the financial condition and results of operations of TeleVideo, Inc. for the periods being presented. Date: February 11, 2003 By: /s/ K. Philip Hwang ----------------------- Chief Executive Officer EX-99.2 7 f87288exv99w2.txt EXHIBIT 99.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Richard Kim, certify that the Annual Report on Form 10-K for the year ended October 31, 2002 fully complies with the requirements in Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in such Annual Report fairly presents, in all material respects, the financial condition and results of operations of TeleVideo, Inc. for the periods being presented. Date: February 11, 2003 By: /s/ Richard Kim ------------------------------------------ Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
		For the fiscal year ended: October 31, 2002

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
		For the transition period from to


Delaware		94-2383795
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
2345 Harris Way, San Jose, California (Address of principal executive offices)		95131 (Zip Code)


PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal and Other Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
PART IV
	Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
EXHIBIT 3.1
EXHIBIT 23.1
EXHIBIT 23.2
EXHIBIT 99.1
EXHIBIT 99.2


PART I		2
ITEM 1.	BUSINESS	2
ITEM 2.	PROPERTIES	9
ITEM 3.	LEGAL AND OTHER PROCEEDINGS	9
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	10
	EXECUTIVE OFFICERS	10
PART II		11
ITEM 5.	MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	11
ITEM 6.	SELECTED FINANCIAL DATA	12
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	17
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	17
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	37
PART III		37
PART IV		38
ITEM 14.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K	38


		High		Low

FISCAL 2001:
	First Quarter	$	0.5469	$	0.2188
	Second Quarter		0.4062		0.1500
	Third Quarter		0.2000		0.1500
	Fourth Quarter		0.1800		0.1300

FISCAL 2002:
	First Quarter	$	0.1800	$	0.1200
	Second Quarter		0.1600		0.1100
	Third Quarter		0.1400		0.0500
	Fourth Quarter		0.0600		0.0400


Item 5.	*Market for the Registrant’s Common Equity and Related Stockholder Matters*



				Year Ended October 31,

				2002			2001			2000			1999			1998(4)


				(In thousands, except per share data)
Statement of Operations Data:
	Net sales			$	8,204		$	6,936		$	6,974		$	8,070		$	14,751
	Operating loss				(2,915	)		(3,544	)		(4,918	)		(4,570	)		(4,727	)
	Net (loss) income				(2,634	)		(6,464	)(1)		4,627	(2)		(8,881	)		(8,881	)(3)
		Net (loss) income per share
			Basic and diluted		(0.23	)		(0.57	)		0.41			(0.33	)		(0.79	)
Balance Sheet Data:
	Cash and cash equivalents			$	898		$	870		$	3,261		$	4,487		$	1,640
	Working capital				(282	)		1,461			4,881			5,596			2,533
	Total assets				12,894			15,903			23,349			18,317			10,433
	Stockholders’ (deficiency) equity				(1,957	)		779			8,316			2,504			6,211


Item 7.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*


Item 7A.	*Quantitative and Qualitative Disclosures About Market Risk*


Item 8.	*Financial Statements and Supplementary Data*


		Page No.
		in 10-K

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
CONSOLIDATED FINANCIAL STATEMENTS



			October 31,

			2002			2001


			(In thousands, except share
			and per share amounts)
ASSETS
Current assets:
	Cash and cash equivalents		$	898		$	870
	Marketable securities			64			160
	Accounts receivable, less allowance of $80 in 2002 and $128 in 2001			1,558			1,683
	Inventories, net			1,420			2,331
	Prepayments and other			244			252
	Notes receivable — current			84			78

		Total current assets		4,268			5,374

Property, plant and equipment:
	Production equipment			671			671
	Office furniture and equipment			1,251			1,142
	Leased property under capital lease			6,270			6,270

				8,192			8,083
	Less accumulated depreciation and amortization			3,340			2,860

		Property, plant and equipment, net		4,852			5,223
Investments in affiliates				1,379			2,827
Note receivable, less current portion				2,395			2,479

		Total assets	$	12,894		$	15,903

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
	Accounts payable		$	416		$	812
	Notes payable			2,517			1,500
	Accrued liabilities			707			745
	Obligation under capital lease — current			372			318
	Deferred gain on sale of land and building — current			538			538

		Total current liabilities		4,550			3,913

	Obligation under capital lease, less current portion			4,826			5,198
	Deferred gain on sale of land and building, less current portion			5,475			6,013
		Total liabilities		14,851			15,124

Stockholders’ (deficit) equity:
	Common stock, $.01 par value; Authorized — 23,000,000 shares Outstanding — 11,309,772 shares at October 31, 2002 and 2001 (net of 120,000 treasury shares)			454			454
	Additional paid-in capital			95,734			95,734
	Accumulated other comprehensive (loss) income			(22	)		80
	Accumulated deficit			(98,123	)		(95,489	)

		Total stockholders’ (deficit) equity		(1,957	)		779

		Total liabilities and stockholders’ (deficit) equity	$	12,894		$	15,903


										Accumulated			Total
	Common Stock				Additional					Other			Stockholders			Comprehensive
					paid in		(Accumulated			Comprehensive			Equity			Income
	Shares		Amount		capital		Deficit)			Income			(Deficit)			(Loss)


	(In thousands)
Balances, October 31, 1999		11,271		453		95,703		(93,652	)		—			2,504			(3,707	)
Exercise stock options		39		1		31		—			—			32			—
Net income		—		—		—		4,627			—			4,627			4,627
Unrealized gain on marketable securities		—		—		—		—			1,153			1,153			1,153
Balances, October 31, 2000		11,310		454		95,734		(89,025	)		1,153			8,316			5,780
Net loss								(6,464	)					(6,464	)		(6,464	)
Unrealized (loss) on marketable securities		—		—		—		—			(1,073	)		(1,073	)		(1,073	)
Balances, October 31, 2001		11,310		454		95,734		(95,489	)		80			779			(7,537	)
Net loss								(2,634	)					(2,634	)		(2,634	)
Unrealized (loss) on marketable securities		—		—		—		—			(102	)		(102	)		(102	)
Balances, October 31, 2002		11,310		454		95,734		(98,123	)		(22	)		(1,957	)		(2,736	)


Production equipment			1-10 years
Office furniture			1-10 years
Leased properties under capital lease			15 years


	*Equity Method*


	*Cost Method*


	*Fiscal 2001 Compared to Fiscal 2000*


	/s/ CCA ACCOUNTANCY CORPORATION



	Equity Method																	Cost Method

	Mulix		K&T			Alpha			Ningbo			Koram			Sub total			My Simon		Biomax			Keyin			MMSOC			Sub total			Total

Balances, Oct. 31, 2000		—		600			650			1,000			117			2,367			—		917			2,523			1,000			4,440			6,807
Investment		—		—			—			2,000			—			2,000			—		—			—			—			—			2,000
Impairment losses on securities		—		—			—			—			—			—			—		(801	)		(2,214	)		(789	)		(3,804	)		(3,804	)
Equity in earnings (loss) in affiliates		—		(326	)		(232	)		(222	)		(31	)		(811	)		—		—			—			—			—			(811	)
Withdraws from investments		—		—			—			(1,279	)		(86	)		(1,365	)		—		—			—			—			—			(1,365	)
Balances, Oct. 31, 2001		—		274			418			1,499			—			2,191			—		116			309			211			636			2,827
Impairment losses on securities		—		—			—			—			—			—			—		(5	)		(109	)		(57	)		(171	)		(171	)
Equity in earnings (loss) in affiliates		—		(65	)		—			(794	)		—			(859	)		—		—			—			—			—			(859	)
Withdraws from investments		—		—			(418	)		—			—			(418	)		—		—			—			—			—			(418	)
Balances, Oct. 31, 2002		—		209			—			705			—			914			—		111			200			154			465			1,379


		Balance at		(Credited)					Balance at
		Beginning		to Costs &					the End of
		of Period		Expenses		Deductions			Period

YEAR ENDED OCTOBER 31, 2000:
	Reserve for doubtful accounts	$	1,383	$	342	$	(1,580	)	$	145
	Reserve for inventory obsolescence		1,037		190		(746	)		481
	Reserve for deferred taxes		37,542		550		(1,573	)		36,519
YEAR ENDED OCTOBER 31, 2001:
	Reserve for doubtful accounts		145		182		(199	)		128
	Reserve for inventory obsolescence		481		204		5			690
	Reserve for deferred taxes		36,519		—		(3,493	)		33,026
YEAR ENDED OCTOBER 31, 2002:
	Reserve for doubtful accounts		128		181		(229	)		80
	Reserve for inventory obsolescence		690		695		(625	)		760
	Reserve for deferred taxes		33,026		—		(193	)		32,833


	2002		2001

Co-op advertising	$	252	$	252
Employee compensation and benefits		92		110
Warranty		169		169
Legal reserve		193		193
Royalties		—		—
Other		1		21

	$	707	$	745


October 31	Amount

2003	$	1,293
2004		1,304
2005		1,304
2006		1,358
2007		1,369
Thereafter		8,927



	Outstanding						Exercisable

			Weighted		Weighted		Weighted		Weighted
			Average		Average		Average		Average
Range of	Number		Remaining		Exercise		Number		Exercise
Exercise Prices	Outstanding		Contractual Life		Price		Exercisable		Price

1991 ISO Plan
$0.01 - $0.84		123,000		6.42	$	0.84		92,250	$	0.84
$0.88 - $1.32		50,250		1.69		1.00		50,250		1.00
$1.52 - $2.12		24,249		4.46		1.99		34,249		1.99
$2.64 - $2.88		500		2.72		2.64		500		2.64

Totals		207,999		4.94	$	1.07		177,249	$	1.11


								Weighted
								Average
1991 ISO Plan		Available			Outstanding			Exercise Price

Balance, October 31, 1999			586,007			287,500		$	1.06
	Granted		(154,000	)		154,000			1.14
	Exercised		—			(1,190	)		0.93
	Cancelled		92,185			(92,185	)		0.94

Balance, October 31, 2000			524,192			348,125			1.04
	Granted		—			—			—
	Exercised		—			—			—
	Cancelled		137,626			(137,626	)		1.16

Balance, October 31, 2001			661,818			210,499			0.96
	Granted		—			—			—
	Exercised		—			—			—
	Cancelled		2,500			(2,500	)		2.26

Balance, October 31, 2002			664,318			207,999		$	0.95


	2002			2001

Net operating loss and tax credit carryforwards	$	32,449		$	31,764
Other		384			1,262

		32,833			33,026
Less valuation allowance		(32,833	)		(33,026	)

	$	—		$	—


		United
		States			Europe		Other		Total


		(In thousands)
2002
	Total revenues	$	6,937		$	604	$	663	$	8,204
	Operating (loss) income		(3,169	)		121		133		(2,915	)
	Identifiable assets		12,894			—		—		12,894
2001
	Total revenues		5,236			805		895		6,936
	Operating (loss) income		(3,879	)		161		179		(3,544	)
	Identifiable assets		15,903			—		—		15,903
2000
	Total revenues		4,599			1,209		1,166		6,974
	Operating (loss) income		(5,393	)		242		233		(4,918	)
	Identifiable assets		23,349			—		—		23,349


Item 9.	*Changes in and Disagreements with Accountants on Accounting and Financial Disclosure*


	Pages in
	Proxy Statement

Item 10. Directors and Executive Officers of the Registrant		7
Item 11. Executive Compensation		11
Item 12. Security Ownership of Certain Beneficial Owners and Management		8
Item 13. Certain Relationships and Related Transactions		12


Exhibit
Number			Description of Exhibit

	3	.1(1)	Restated Certificate of Incorporation of Registrant, as amended and currently in effect
	3	.2(2)	Bylaws of the Registrant
	10	.1(3)	TeleVideo, Inc. 1991 Incentive Stock Option Plan and form of Incentive Stock Option Agreement
	10	.2(3)	TeleVideo, Inc. 1992 Outside Directors’ Stock Option Plan+
	10	.3(4)	Management Bonus Plan effective fiscal 1984, as amended
	10	.4(2)	Form of Distributor and Licensing Agreement
	10	.5(2)	Form of Original Equipment Manufacturer Agreement
	10	.6(5)	Real Estate Purchase Agreement dated December 28, 1998 and accompanying Lease and Agreement of Lease, Escrow Agreement, Pledge and Security Agreement and Assignment between the Registrant and TVCA, LLC, dated December 28, 1998
	23	.1(1)	Consent of CCA Accountancy Corp.
	23	.2(1)	Consent of Grant Thornton LLP
	99	.1(1)	Certification of Chief Executive Officer
	99	.2(1)	Certification of Chief Financial Officer


+	Denotes a management contract or compensatory plan or arrangement.



Signature	Title	Date


/s/ K. PHILIP HWANG K. Philip Hwang	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	February 10, 2003

/s/ RICHARD KIM Richard Kim	Vice President of Marketing and Human Resources and Acting Chief Financial Officer	February 10, 2003

/s/ ROBERT E. LARSON Robert E. Larson	Director	February 10, 2003

/s/ WOO K. KIM Woo K. Kim	Director	February 10, 2003


	/s/ K. PHILIP HWANG

	K. Philip Hwang
	President and Chief Executive Officer