-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LsRpIaWZgDfiR33ujkCh+tTmjF0LBtHTKCx6EEnaU+cVn8nhIr8wpUTHJKlPhYRL Pep82qszgOEciuJJfPx5cw== 0001019687-02-000019.txt : 20020413 0001019687-02-000019.hdr.sgml : 20020413 ACCESSION NUMBER: 0001019687-02-000019 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20020109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERACTIVE NETWORK INC /CA CENTRAL INDEX KEY: 0000879482 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 943025019 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19579 FILM NUMBER: 2505375 BUSINESS ADDRESS: STREET 1: 180 SECOND STREET, SUITE B CITY: LOS ALTOS STATE: CA ZIP: 94022 BUSINESS PHONE: 6509473345 MAIL ADDRESS: STREET 1: 180 SECOND STREET, SUITE B CITY: LOS ALTOS STATE: CA ZIP: 94022 10-Q/A 1 intnet_10qa2-033101.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (AMENDMENT NO. 2) (Mark One) (x) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 -------------- ( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period from to ----- ----- Commission file number 000-19579 INTERACTIVE NETWORK, INC. (Exact name of registrant as specified in its charter) California 94-3025019 (State of incorporation) (I.R.S. employer identification number) 180 Second Street, Suite B Los Altos, California 94022 (Address of principal executive offices and zip code) (650) 947-3345 (Registrant's telephone number, including area code) with a copy to Robert S. Townsend Morrison & Foerster, LLP 425 Market Street San Francisco, CA 94105 (415) 268-7000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Shares outstanding as of January 4, 2002 - ----- ----------------------------------------- Common Stock 43,019,277 INTERACTIVE NETWORK, INC. INDEX PART I. FINANCIAL INFORMATION Page ---- ITEM 1. FINANCIAL STATEMENTS.....................................1 CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2001 (Unaudited) AND DECEMBER 31, 2000........1 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000.....2 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000...............................................3 NOTES TO FINANCIAL STATEMENTS (Unaudited)................4 SIGNATURES..........................................................11 EXPLANATORY NOTE This Amendment No. 2 on Form 10-Q/A to the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001 is being filed to amend Item 1 of Part I to read as follows. No other changes are being made to the Form 10-Q. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. INTERACTIVE NETWORK, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of As of March 31, 2001 December 31, 2000 -------------- ----------------- (Unaudited) Assets Current assets: Restricted cash $ 5,576,421 $ 5,609,735 Cash 413,979 685,168 Royalty fee receivable 67,500 250,000 Prepaid expenses and other current assets 53,027 47,218 -------------- -------------- Total current assets 6,110,927 6,592,121 Deposits and other assets 3,430 3,220 -------------- -------------- Total assets $ 6,114,357 $ 6,595,341 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable and accrued liabilities $ 435,861 $ 443,952 Promissory note - current 171,130 85,565 Deferred legal fees 957,775 957,775 -------------- -------------- Total current liabilities 1,564,766 1,487,292 Liabilities subject to compromise 5,499,998 5,503,263 Promissory note - noncurrent 513,390 598,955 Shareholders' deficit: Preferred stock, no par value, 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2001 and December 31, 2000 - - Common stock, no par value, 150,000,000 shares authorized; 43,019,277 shares issued and outstanding as of both March 31, 2001 and December 31, 2000 145,874,986 145,874,986 Accumulated deficit (147,338,783) (146,869,155) -------------- -------------- Total shareholders' equity (deficit) (1,463,797) (994,169) ------------- ------------- Total liabilities and shareholders' equity (deficit) $ 6,114,357 $ 6,595,341 ============== ==============
See accompanying notes to consolidated financial statements. 1 INTERACTIVE NETWORK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2001 2000 ---------- ---------- Royalty fees $ 67,500 $ - ---------- ---------- General and administrative expenses: Salaries 77,919 65,641 Employer payroll taxes 6,630 5,592 Contract labor 25,507 25,670 Rent 9,000 2,066 D&O insurance 15,900 - Other administrative costs 13,490 33,671 Legal fees 48,109 44,086 Accounting fees 21,096 37,318 Advisory fees - 390,000 Legal - NTN litigation 2,388 4,769 Shareholder relations - proxy 1,400 3,883 ---------- ---------- General and administrative expenses 221,439 612,696 ---------- ---------- Loss from operations (153,939) (612,696) Other (income) and expense Interest income (73,076) (2,526) Interest expense 137,965 7,872 Net loss from investment in affiliate accounted for by the equity method 304,859 5,491 Reserve for impairment of investment (54,859) - Litigation settlement - (219,215) ---------- ---------- Other (income) and expense, net 314,889 (208,378) ---------- ---------- Income (loss) before reorganization expenses (468,828) (404,318) Reorganization expenses - 106,272 ---------- ---------- Net income (loss) before federal & state taxes (468,828) (510,590) Federal & state taxes 800 800 Net income (loss) $(469,628) $(511,390) ========== ========== Basic and diluted loss per share $ (0.01) $ (0.01) Shares used in basic and diluted net loss per share 43,019,277 39,111,697
See accompanying notes to consolidated financial statements. 2 INTERACTIVE NETWORK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2001 2000 ------------ ------------ Cash flows from operating activities: Net loss $ (469,628) $ (511,390) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Reorganization expenses - 105,521 Loss from investment in affiliate 304,859 5,491 Allowance for investment in affiliate (54,859) - Changes in assets and liabilities: Royalty fee receivable 182,500 - Prepaid expenses and other assets (10,000) - Accounts payable (8,091) (40,970) Other accrued liabilities 716 (603,509) ------------ ------------ Cash provided by (used in) operating activities: (54,503) (1,044,857) Cash flows from investing activities: Investment in TWIN Entertainment (250,000) (500,000) ------------ ------------ Cash provided by (used in) financing activities: (250,000) (500,000) ------------ ------------ Cash flows from financing activities: Sale of common stock - - Exercise of options - 490,997 ------------ ------------ Cash provided by (used in) financing activities: - 490,997 ------------ ------------ Net decrease in cash (304,503) (1,053,860) Cash at beginning of period 6,294,903 7,576,158 ------------ ------------ End of period $ 5,990,400 $ 6,522,298 ============ ============
See accompanying notes to consolidated financial statements. 3 INTERACTIVE NETWORK, INC. Notes to Unaudited Consolidated Financial Statements March 31, 2001 The consolidated financial information of Interactive Network, Inc. (the "Company") furnished herein reflects all adjustments, consisting only of normal recurring adjustments which in the opinion of management are necessary to present fairly the financial position of the Company as of March 31, 2001 and the results of its operations and cash flows for the periods presented. This Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K Report for the year ended December 31, 2000 filed with the Securities and Exchange Commission ("SEC") on April 16, 2001. The results of operations for the three-month period ended March 31, 2001 are not necessarily indicative of the results for any subsequent quarter or for the entire year ending December 31, 2001. Current liabilities consist of accounts payable, and legal fees and expenses incurred in connection with the Company's Chapter 11 bankruptcy proceedings and general corporate work. Payment of Morrison & Foerster's pre-confirmation fees, which is subject to Bankruptcy Court approval, was deferred by agreement until April 22, 2000, when payment was due in full without interest. As the Company lacked funds to pay Morrison & Foerster's fees at that time, Morrison & Foerster did not apply to the Bankruptcy Court for approval of its fees. However, it expects to do so soon. The amount of preconfirmation fees sought by Morrison & Foerster is subject to reduction by the Bankruptcy Court and the payment of the preconfirmation fees is subject to an agreement between Morrison & Foerster and the Company. INVESTMENT IN AFFILIATE. The Company owns 50% of the outstanding capital stock of TWIN Entertainment, Inc. ("TWIN Entertainment"), a corporate joint venture between the Company and Two Way TV Limited ("Two Way TV"). TWIN Entertainment's offices are located at 4929 Wilshire Boulevard - Suite 930, Los Angeles, CA 90010. TWIN Entertainment operates in the United States and Canada using technology licensed by the Company and Two Way TV. The Company made additional investments in TWIN Entertainment in the form of loans of $750,000 in September 2000, $250,000 in December 2000 and $250,000 in February 2001, and Two Way TV made similar investments, leaving the relative ownership interests in TWIN Entertainment unchanged. Each party reserves the right to convert such amounts to equity in TWIN Entertainment in the future under terms to be determined and agreed upon at a later date by the parties. Condensed financial data of TWIN Entertainment for the three month period ended March 31, 2001 follows:
FROM INCEPTION AT THREE MONTHS ENDED JANUARY 10, 2001 THROUGH MARCH 31, 2001 MARCH 31, 2001 -------------- -------------- SUMMARY OF OPERATIONS Revenues $ 0 $ 0 Costs and expenses 872,112 3,058,561 Income taxes 0 800 Net loss (872,112) (3,059,361) Interactive Network's equity in net income (436,056) (1,529,680) BALANCE SHEET DATA ASSETS Current assets 413,696 60,247 Non-current assets 438,092 351,115 ------------ ------------ Total assets $ 851,788 $ 411,362 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities 369,974 Long-term debt 2,500,000 Other non-current liabilities Shareholders' deficit (2,018,186) ------------ Total liabilities and shareholders' deficit $ 851,788
4 The Company periodically evaluates the recoverability of its equity investments, in accordance with APB No. 18, "The Equity Method of Accounting for Investments in Common Stock," and if circumstances arise where a loss in value is considered to be other than temporary, the Company will record a write-down of investment cost. The Company's recoverability analysis is based on the projected undiscounted cash flows of the operating ventures, which is the lowest level of cash flow information available. The Company's share of the operating loss from its joint venture investment in TWIN Entertainment was approximately $305,000 for the quarter ended March 31, 2001 accounted for by the equity method. The Company also adjusted its allowance against its investment and outstanding loans in the amount of $54,859 to write the investment, including loans, down to zero at March 31, 2001, as no assurance can be made that the joint venture will be profitable in the future. 5 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 THEREUNTO DULY AUTHORIZED. Date: January 9, 2002 INTERACTIVE NETWORK, INC. (Registrant) By: /S/ Bruce W. Bauer -------------------------- Bruce W. Bauer Chairman of the Board President, Chief Executive Officer and Chief Financial Officer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----