8-K

 

 
   As filed with the Securities and Exchange Commission on December 9, 1998
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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 8-K


                                CURRENT REPORT
                    Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934


      Date of report (Date of earliest event reported): December 8, 1998

                           INTERACTIVE NETWORK, INC.
            (Exact Name of Registrant as Specified in Its Charter)

                                  California
                (State or Other Jurisdiction of Incorporation)

           0-19579                                     94-3025019
(Commission File Number)                  (I.R.S. Employer Identification No.)


1161 Old County Road, Belmont, Ca                        94002
(Address of Principal Executive Offices)              (Zip Code)


                                (650) 508-8793
             (Registrant's Telephone Number, Including Area Code)




                                With a copy to:
                            Marshall L. Small, Esq.
                            Morrison & Foerster LLP
                               425 Market Street
                            San Francisco, CA 94105

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Item 5.   OTHER EVENTS.

      On December 8, 1998, the Registrant issued a press release, a copy of 
which is attached hereto as Exhibit 1.1 and incorporated herein by reference.

Item 7.   FINANCIAL STATEMENTS AND EXHIBITS

(c)   Exhibits
      --------

1.1   Press Release issued by the Registrant dated December 8, 1998.

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                                  SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, 
the Registrant has duly caused this report to be signed on its behalf by the 
undersigned hereunto duly authorized.


                                       INTERACTIVE NETWORK, INC.



Date:  December 9, 1998                By: /s/ BRUCE BAUER
                                           -------------------------------------
                                           Bruce Bauer
                                           President and Chief Executive Officer

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EX-1.1

 
                                                                   EXHIBIT 1.1



                                 PRESS RELEASE


     Belmont, CA. December 8, 1998.  Interactive Network, Inc. announced today 
that it was shortly planning to file a plan of reorganization under its Chapter 
11 bankruptcy proceeding, originally filed September 14, 1998, pursuant to a 
Settlement Agreement entered into in July 1998, ending protracted litigation 
with its major secured creditors/investors.  The plan of reorganization 
contemplates payment to all the Company's creditors in full on their allowed 
claims, and the conversion by the Company's secured creditors/investors (TCI, 
NBC, Motorola and Sprint) of approximately $39,000,000 in debt (including 
accrued interest) into approximately 7,800,000 shares of the Company's Common 
Stock, and the release by the secured creditors of their liens on the Company's
assets, including its patent portfolio.  The Company intends to contest certain 
creditors' claims, including an unsecured claim of $3,394,000 asserted by its 
former Chief Executive Officer, David Lockton, based on an alleged deferred 
compensation arrangement.  The Company may also assert claims against Mr. 
Lockton, based on what it believes are his mismanagement, breaches of fiduciary 
duty and failure to satisfy a contractual condition to his receipt of 
compensation.

     In September, 1998, Mr. Lockton proposed a plan to the Company's board of 
directors to take the Company private by offering its current shareholders 
10-15% of a new company he planned to organize, valuing the Company's current 
patent portfolio for that purpose at $5,000,000.  Earlier in sworn deposition 
testimony, Mr. Lockton had testified that if the secured creditors had been 
allowed to take control of the Company's patent portfolio for $25,000,000 that 
would be tantamount to "stealing" the Company's patent portfolio.  The Company's
board of directors has refused to consider Mr. Lockton's "going private" plan,
and intends to vigorously exploit the Company's patent portfolio once its
Chapter 11 proceeding is concluded, which is expected to occur in January 1999.
At that time, the Company will receive $10,000,000 in cash pursuant to the
Settlement Agreement with its secured creditors/investors, approximately 70% of
which it anticipates will be required to pay its unsecured creditors (and less
if the Company is successful in resisting Mr. Lockton's claim for deferred
compensation).  While the Company has valued its patent portfolio (which
constitutes the largest part of its present assets) at $40,000,000 for purposes
of the Chapter 11 proceedings, the Company makes no representation as to what
the patent portfolio may in fact be worth when the Company is free to exploit
it.  The Company has in the recent past received and continues to receive
indications of interest in its patent portfolio from responsible businesses,
including Cable and Wireless Communications and Two Way TV, that it intends to
pursue actively once its Chapter 11 proceeding is concluded.

     David Lockton has advised the Company that he and certain other 
shareholders that he claims together hold 5% of the company's Common Stock,
intend to call a special shareholders' meeting to be held on December 30, 1998, 
for which he intends to solicit proxies to replace the current board of 
directors.  Under S.E.C. regulations the Company may not solicit proxies for a 
shareholders' meeting until it is in a position to send an annual report, 
including updated financial statements, to its shareholders.  Mr. Lockton, while
he was Chief Executive Officer, did not keep the Company's books and records up 
to date and failed to continue the services of its outside auditors.  Current 
management has requested its former outside auditors to again become its 
auditors (subject to approval by the Bankruptcy Court), and hopes to have 
updated financial statements available to send to its shareholders early in 
1999, looking to a shareholders' meeting to elect directors sometimes in March 
1999.  The Company is seeking action in the courts to fix the date of its
shareholders' meeting in March 1999, rather than the date sought by Mr. 
Lockton.  Accordingly, shareholders are requested not to send any proxies to Mr.
Lockton until the Company announces the date of its special shareholders' 
meeting fixed by the Court, and has an opportunity to send its own proxy
material to shareholders.  At that time, the Company would expect to add
nominees to its own slate of directors in addition to and/or in replacement of
one or more of its current directors.  In addition, the Company intends to put
in place an Advisory Board, made up of several independent analysts who are
expert in the area of intellectual property and technology transfer as related
to the Company's patent portfolio, to assist the

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Company in developing the opportunities the Company believes may be available to
it in the internet, telecommunications and entertainment industries.

      This news release contains forward-looking statements regarding future 
events and performance of the Company that involve risks and uncertainties that
could cause actual results to differ materially.

     The Company's shareholder relations message center telephone number is 
1-650-620-9731.

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