<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _____________ to__________________
Commission file number: 000-23105
-----------------
AMERICAN INDEPENDENT NETWORK, INC.
(Exact name of small business issuer in its charter)
------------------
DELAWARE 752504551
(State or Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6125 AIRPORT FREEWAY, SUITE 200
HALTOM CITY, TX 76117
(817) 222-1234
(Address and telephone number of principal executive offices)
-----------------
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in the definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $1,243,145.
<PAGE> 2
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. THE AGGREGATE MARKET
VALUE OF THE COMPANY'S COMMON STOCK HELD BY NON-AFFILIATES AS OF JUNE 18, 1998
WAS $2,408,647.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. AS OF JUNE 18, 1998, THERE
WERE APPROXIMATELY 18,345,587 SHARES OF THE COMPANY'S COMMON STOCK ISSUED AND
OUTSTANDING.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
2
<PAGE> 3
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
Management's discussion and analysis is designed to provide a better
understanding of the Company's financial condition, results of operations,
liquidity, and capital resources. The discussion should be read in conjunction
with, and is qualified in its entirety by, the financial statements of the
Company and the Notes thereto included elsewhere herein for the Company's fiscal
years ended December 31, 1996 and 1997.
The Company was founded on December 11, 1992 and provides programming, media
production and syndication services to television and cable stations, as well as
satellite uplink services to certain cable channels. The Company has a
wholly-owned subsidiary, Eureka Media & Trading, Inc., formed in the State of
Nevada on September 6, 1995, which has not commenced operations. The Company is
in the process of changing the name of its subsidiary to "Senior Channel, Inc."
The Company originally broadcast its programs via analog transmission and, in
1996, had Affiliate Agreements with over 150 Affiliate Stations. However, in
late 1996, the Company converted from analog to digital transmission and in
connection with the conversion, was required to provide digital decoding
equipment to each of its Affiliate Stations. Due to the cost of providing the
decoding equipment, the Company was not able to furnish the equipment to all of
its then existing Affiliate Stations. Accordingly, upon conversion, the Company
initially entered into Affiliate Agreements with 33 Affiliate Stations. The
Company has since entered into Affiliate Agreements to provide family-oriented
television to a network of forty-four (44) television stations and cable systems
nationwide. The stations serviced by the Company are primarily "independent"
stations, meaning that they have no affiliation with the major network
organizations (NBC; ABC; CBS; FOX; WB Network; and Paramount). The Company
maintains a library of over 2,000 programs covering a wide array of topics and
interests, and includes cartoons, sports, sitcoms, movies, news and weather,
comedy, science and health shows, documentaries, and public interest programs.
The Company also offers original programs, celebrity golf tournaments,
professional boxing, fishing expeditions and interactive programming.
3
<PAGE> 4
RESULTS OF OPERATIONS
Revenues
Revenues are primarily derived from the Company's programming services, sales of
advertising and programming time, and leasing of digital satellite channels.
Revenues for 1997 were $1,243,145 compared to $642,399 for 1996, an increase
of $600,746 or 94%. The increase in revenues resulted from leasing out of
digital channels and a decrease in uplinking and programming expenses.
Cost of Operations
Costs of operations were $957,715 for the 1997 fiscal year and $987,715 for the
1996 fiscal year, a 3% decrease. The decrease in 1997 was due to a decrease in
uplinking and programming expenses. The decrease in unlinking expenses resulted
from the replacement of a rented mobile uplink with its own permanent unlink as
part of the digital system. Programming expenses, which include costs for
program development, editing, videotapes and other miscellaneous expenses,
decreased by approximately $70,000 (85%) for fiscal year ended 1997 as compared
to the 1996 fiscal year. Programming costs decreased as the Company acquired
more of its programming through barter. Net rental expenses, which include
office space, office equipment, and company vehicles increased by 9% in 1997 due
to the increase in office space rental from $4,800 per month to $5,400 per month
from June through December.
General and Administrative
General and administrative expenses for the fiscal year ended December 31, 1997
were $439,232, a decrease of $43,626 or 9% less than administrative expenses of
$482,858 for fiscal year 1996. The general and administrative expenses represent
35% and 75% of revenues for fiscal years 1997 and 1996, respectively. The
Company's general and administrative expenses consist of operating costs for the
Company's headquarters, the salaries of corporate officers and office staff,
travel, accounting, legal and other professional expenses, and advertising and
promotional costs.
Interest expense for the fiscal year 1997 was $381,654 and for fiscal year 1996
was $204,757, an increase of $176,897 or 86%. This increase was due to interest
paid on the outstanding balance on various bridge loans and a nine percent (9%)
interest factor payment on Series B Preferred Stock.
During the period November 1997 through March 1998, at the election of the
noteholders, the Company converted an aggregate approximate amount of $203,750
in outstanding debt and accrued interest into Common Stock of the Company. As a
result of the conversions, the Company expects interest payments for 1998 to be
correspondingly reduced.
Operating Results
The Company had a net operating loss of $2,640,982 for fiscal year ended
December 31, 1997. The loss for 1997 was primarily attributed to a provision
for doubtful accounts in the
4
<PAGE> 5
amount of $1,584,594, a non-recurring expense in the amount of $380,260
resulting from the conversion of Bride Loans to Common Stock, and a reserve in
the amount of $125,138 for trade credits.
For fiscal year 1996, the Company had an operating loss of $1,443,646. The
operating loss for 1996 was largely due to an increase in programming and rental
expenses, issue costs and interest on bridge loans, and interest factor payments
to Series B Preferred stock holders.
Earnings Per Share of Common Stock
The net earnings per common share are based upon the weighted average of
outstanding common stock and convertible preferred stock. The outstanding
warrants that accompany the preferred stock are not dilutive, therefore, they
are not included in the weighted average. In 1997, the net loss per of common
stock was $0.18. The loss is reflective of the provision for doubtful accounts
and the costs of converting Bride Loans to Common Stock.
For fiscal 1996, net loss per share of common stock was $0.12. The loss for
fiscal year 1996 is reflective of the increased debt and other expenses of the
Company resulting from acquisition of a digital compression system and satellite
equipment.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations through a combination of the issuance of
equity securities to private investors, issuance of private debt, loans from
affiliates, and cash flow from operations. The Company has cumulative losses of
$4,135,723 from inception through December 31, 1997.
In December 1997, the Company entered into an agreement with Media Fund, Inc.
("MFI") pursuant to which MFI will receive 1,875,000 shares of the Company's
Common Stock, assets with a book value of $2,818,933 and 20% of the commercial
time slots on the Company's channels for a period of four (4) years in exchange
for up to 12 hours of network quality programming and $5,000,000 to be paid to
the Company in installments as follows: May 30, 1998 - $50,000; June 30, 1998 -
$750,000; September 30, 1998 - $300,000; December 30, 1998 - $300,000; March 30,
1999 - $300,000; June 30, 1999 - $300,000; and December 31, 2002 - $3,000,000.
Eighty percent (80%) of the first $2,000,000 or $1,600,000 must be used to
purchase digital to analog decoder equipment to help the Company achieve its
goal of broadcasting in over 70,000,000 households nationally. There are no
consequences to the Company, other than perhaps decreased advertising revenue,
if its goal is not met.
Current liabilities for fiscal year 1997 were $2,653,286, which exceed current
assets of $767,018 by $1,886,268. For fiscal year ended 1996, current
liabilities exceeded current assets by $2,040,747. The increase in current
assets in 1997 as compared to 1996 was primarily the result of the addition of
the note receivable. The current liabilities for 1997 increased by $511,727 as
compared to 1996 due primarily to increases in notes payable of $600,000 and
equipment lease payments of $36,000, and decreases in accounts payable of
$106,932 and customer deposits of $20,000.
5
<PAGE> 6
The Company has been able to generate funds from private placements to finance
operations, however, in the event the Company requires additional capital
investments, there can be no assurance that a sufficient amount of the Company's
securities can be sold to fund the continuing operating needs of the Company.
Financing activities during 1997 and 1996 consisted of Bridge Loans in the
cumulative amount of $2,057,750 and sales of Preferred Stock in the cumulative
amount of $1,837,551. Of the combined amount of $3,895,301, approximately
$1,933,499 was used for operating expenses, $1,402,802 was paid in issue costs,
and $559,000 for debt repayment.
Management believes that anticipated cash flows from operations will be
sufficient to meet the Company's expected cash needs and to finance future
operations, however, in the event that future revenues are not sufficient, the
Company will conduct private and/or public offerings of its equity stock to
raise the necessary capital.
IMPACT OF INFLATION
Management does not believe that general inflation has had or will have a
material effect on operations.
6
<PAGE> 7
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Number Title of Exhibit
- -------------- ----------------
<S> <C>
2.1 Articles of Incorporation of the Company, as amended(1)
2.2 Bylaws of the Company, as amended(1)
3.1 Form of Warrant Agreement(1)
6.1 Lease for Offices(1)
6.2 Employment Agreement with Dr. Donald W. Shelton(1)
6.3 Employment Agreement with Randy Moseley(1)
6.4 Stock Option Agreement with Dr. Donald W. Shelton(1)
6.5 Stock Option Agreement with Randy Moseley(1)
6.6 Form of License Agreement (Affiliate Agreement)(1)
6.7 GE Americom Lease Agreement(1)
6.8 Master Lease with Insight Investments(1)
</TABLE>
7
<PAGE> 8
6.9 Promissory Note Extension Agreement with Lyn Broadcasting
Corporation(1)
6.10 Promissory Note Extension Agreement with Shelly Media
Marketing(1)
6.11 Promissory Note Extension Agreement with Cleveland
Broadcasting Co.(1)
6.12 Promissory Note Extension Agreement with ATN Network,
Inc.(1)
6.13 Promissory Note with Super Six, Inc.(1)
6.14 Promissory Note with Jim Thornbo(1)
6.15 Promissory Note with Logistic Services International,
Inc.(1)
6.16 Promissory Note with Rajendra Shah(1)
6.17 Promissory Note with Gary Lamberg(1)
6.18 Promissory Note with Frank Lyons(1)
6.19 Loan and Security Agreement with Midas Fund(1)
6.20 United State Federal Communications Commission Radio
Station Authorization(1)
6.21 Form of Programming Agreement(2)
6.22 Promissory Note with ATN Network, Inc.(2)
6.23 "All News Channel" Agreement(2)
6.24 Promissory Note Extension Agreement with Super Six, Inc.(2)
6.25 Promissory Note Extension Agreement with Logistics
Services, Inc.(2)
6.26 Promissory Note Extension Agreement with Shelly Media
Marketing Corporation(2)
6.27 Promissory Note Extension Agreement with Cleveland
Broadcasting Corporation(2)
6.28 Promissory Note Extension Agreement with ATN Network
Inc.(2)
6.29 Form of Equipment Agreement(2)
6.30 Channel Use and Programming Agreement with Dominion Sky
Angel(2)
6.31 Agreement of Settlement, Compromise and Assignment(2)
6.32 Assignment of Senior Channel(2)
6.33 Agreement with Media Fund, Inc.(2)
6.34 1995 Stock Option Plan(2)
6.35 Promissory Note and Amendment to Agreement(3)
10.1 Consent of Jack F. Burke, Jr., Certified Public Accountant
27.1 Financial Data Schedule for fiscal year ended December 31,
1997
27.2 Financial Data Schedule for fiscal year ended December 31,
1996
- ----------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form 10-SB (File No. 000-23105), filed with the Securities and Exchange
Commission on September 19, 1997.
(2) Previously filed as an exhibit to the Company's Pre-Effective Amendment
No. 2 to the Registration Statement on Form 10-SB (File No. 000-23105),
filed with the Securities and Exchange Commission on April 10, 1998.
(3) Previously filed as an exhibit to the Company's Amendment No. 4 to the
Registration Statement on Form 10-SB (File No. 000-23105), filed with the
Securities and Exchange Commission on July 15, 1998.
(b) REPORTS ON FORM 8-K.
During the fourth quarter of fiscal year ended December 31, 1997, the Company
did not file any reports on Form 8-K.
8
<PAGE> 9
PART F/S
The following financial statements are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
Financial Statements: Page
--------------------- ----
<S> <C>
Report of Independent Certified Public Accountants F-1
Comparative Balance Sheet at December 31, 1997 and
December 31, 1996 F-2
Comparative Analysis of Stockholders' Equity for the
Twelve Months ended December 31, 1997 and 1996 F-4
Comparative Statement of Operations for the Twelve Months
ended December 31, 1997 and 1996 F-5
Comparative Statement of Cash Flows for the Twelve Months
ended December 31, 1997 and 1996 F-6
Notes to Financial Statements F-7
</TABLE>
9
<PAGE> 10
JACK F. BURKE, JR.
CERTIFIED PUBLIC ACCOUNTANT
P.O. BOX 15728
HATTIESBURG, MS 39404
REPORT OF INDEPENDENT AUDITOR
The Board of Directors
American Independent Network, Inc.
Haltom City, Texas 76117
I have audited the accompanying balance sheets of American Independent Network,
Inc., as of December 31, 1997 and 1996, and the related statements of
operations, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of American Independent Network
management. My responsibility is to express an opinion on these financial
statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I 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 statements presentation.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of American Independent Network, Inc.
at December 31, 1997 and 1996 and the results of its operations and its cash
flows for the years ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 15 to the
financial statements, the company has suffered recurring net operating losses
and has a current ratio deficit which raises substantial doubts about its
ability to continue as a going concern. Management's plans in regard to the
matters are also described in Note 15. The financial statements do not include
any adjustments that might result from the outcome of the uncertainty.
As described in Note 16 to the financial statements, the Company has restated
the financial statements for the year ended December 31, 1996 due to an error in
recording the exchange of non monetary assets which resulted in an overstatement
of Income.
Sincerely,
/s/ JACK F. BURKE, JR.
Jack F. Burke, Jr.
July 10, 1998
1
<PAGE> 11
AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE BALANCE SHEET
DECEMBER 31,
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 34,768 $ 59,846
Accounts Receivable 2,250 10,730
Trade Credits Receivable 30,000 30,000
Note Receivable Net (Doubtful Accounts $700,000) 700,000 0
Prepaid Expenses 0 236
----------- -----------
TOTAL CURRENT ASSETS 767,018 100,812
----------- -----------
PLANT, PROPERTY AND EQUIPMENT
Leasehold Improvements 22,851 22,851
Less Amortization (8,028) (3,458)
Equipment and Furnishings 125,096 88,144
Digital Compression Equipment 831,391 605,000
Accumulated Depreciation (103,954) (49,242)
----------- -----------
TOTAL PLANT, PROPERTY AND EQUIPMENT 867,356 663,295
----------- -----------
OTHER ASSETS
Trade Credits Receivable Net (Allowance $125,138) 261,990 432,128
Other Investments 893,658 2,463,933
Note Receivable Net (Doubtful Accounts 884,595) 884,595 0
----------- -----------
TOTAL OTHER ASSETS 2,040,243 2,896,061
----------- -----------
TOTAL ASSETS $ 3,674,617 $ 3,660,168
----------- -----------
</TABLE>
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
2
<PAGE> 12
AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE BALANCE SHEET
DECEMBER 31,
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY 1997 1996
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 177,404 $ 284,336
Notes Payable 2,133,930 1,533,867
Accrued Interest - Notes 119,530 142,962
Advances from Affiliates 9,602 5,042
Customer Deposits 0 20,000
Interest Due Preferred Shareholders 37,440 15,972
Equipment Lease Payments 175,380 139,380
----------- -----------
TOTAL CURRENT LIABILITIES 2,653,286 2,141,559
----------- -----------
LONG TERM DEBT
Deferred Income Tax 661,824 0
Equipment Lease Payments 216,407 251,617
----------- -----------
Total Long Term Debt 878,231 251,617
----------- -----------
TOTAL LIABILITIES 3,531,517 2,393,176
----------- -----------
STOCKHOLDER'S EQUITY
Preferred Stock - 1,000,000 shares $1 Par
Authorized - 1996 107,546 shares issued,
1997 53,427 shares issued 53,427 107,546
Common Stock - 20,000,000 shares $.01 Par
Authorized, 1996 14,045,268 shares issued,
1997 18,232,715 shares issued 182,325 140,453
Additional Paid - In Capital 4,511,821 2,513,734
Retained Earnings (Deficit) (4,135,723) (1,494,741)
Note Receivable (468,750) 0
----------- -----------
TOTAL STOCKHOLDER'S EQUITY 143,100 1,266,992
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 3,674,617 $ 3,660,168
----------- -----------
</TABLE>
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
3
<PAGE> 13
AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE ANALYSIS OF STOCKHOLDERS' EQUITY
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balance, December 31, 1995 47,841 $ 47,841 10,000,000 $ 100,000
Preferred A Shares Issued 42,918 42,918
Issued Cost of Preferred A
Conversion n of Preferred A
Shares to Common (90,759) (90,759) 181,518 1,815
Preferred B Shares Issued 107,546 107,546
Issued Cost of Preferred B
Common Issued to Bridge
Loan Investors 212,183 2,122
Issuance of Common Stock
for Contributed Capital 1,451,567 14,516
Issuance of Common Stock
for Exercise of Stock Options 2,000,000 20,000
Sale of Common Stock 200,000 2,000
Net Loss for the Year
Ended December 31, 1996 0 0 0 0
----------- ----------- ----------- -----------
Balance December 31, 1996 107,546 107,546 14,045,268 140,453
Preferred B Shares Issued 175,154 175,154
Issued Cost of Preferred B
Preferred Stock Conversions (229,273) (229,273) 458,546 4,585
Common Issued to Bridge
Loan Investments 1,521,039 15,210
Conversion of Bridge Loans 132,862 1,327
Sale of Common Stock 200,000 2,000
Sale of Common Stock
for a Note Recievable 1,875,000 18,750
Net Loss for the Year
Ended December 31, 1997 0 0 0 0
----------- ----------- ----------- -----------
Balance December 31, 1997 53,427 $ 53,427 18,232,715 $ 182,325
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid-in Note Retained
Capital Receivable Earnings
<S> <C> <C> <C>
Balance, December 31, 1995 $ 1,664,341 $ 0 $ (51,095)
Preferred A Shares Issued 229,546
Issued Cost of Preferred A (82,793)
Conversion n of Preferred A
Shares to Common 88,944
Preferred B Shares Issued 591,504
Issued Cost of Preferred B (255,808)
Common Issued to Bridge
Loan Investors
Issuance of Common Stock
for Contributed Capital
Issuance of Common Stock
for Exercise of Stock Options 180,000
Sale of Common Stock 98,000
Net Loss for the Year
Ended December 31, 1996 0 0 (1,443,646)
----------- ----------- -----------
Balance December 31, 1996 2,513,734 0 (1,494,741)
Preferred B Shares Issued 963,347
Issued Cost of Preferred B (547,999)
Preferred Stock Conversions 224,688
Common Issued to Bridge
Loan Investments 380,260
Conversion of Bridge Loans 429,791
Sale of Common Stock 98,000
Sale of Common Stock
for a Note Recievable 450,000 (468,750)
Net Loss for the Year
Ended December 31, 1997 0 0 (2,640,982)
----------- ----------- -----------
Balance December 31, 1997 $ 4,511,821 $ (468,750) $(4,135,723)
----------- ----------- -----------
</TABLE>
The Accompanying "Notes to Financial Statements"
Are An Integral Parts of These Financial Statements
4
<PAGE> 14
AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
REVENUES
INCOME FROM NETWORK OPERATIONS $ 1,243,145 $ 642,399
------------ ------------
COST AND EXPENSCS
Satellite Rental 581,861 598,590
Uplinking of Programming 0 115,802
Programming Expenses 12,162 81,849
Production Expenses 111,558 110,802
Depreciation 54,692 14,096
Amortization Leasehold 4,590 4,590
Rental Expenses (Net) 67,714 61,986
Provision for Doubtful Accounts 1,584,595 0
Administration Expenses 439,232 482,858
Reserve for Trade Credits 125,138 0
------------ ------------
Total Costs and Expenses 2,981,542 1,470,573
------------ ------------
Net INCOME (LOSS) FROM OPERATIONS (1,738,397) (828,174)
------------ ------------
OTHER INCOME - GAIN ON Sale OF ASSETS 785,257 0
------------ ------------
OTHER EXPENSES
Interest Expense (Net) 381,654 204,757
Debt Issue Cost 250,135 385,000
Loss on Sale of Assets 13,969 14,238
Loss ON Conversion of Bridge Loans to Common Stock 380,260 0
------------ ------------
TOTAL OTHER EXPENSES 1,026,018 603,995
------------ ------------
GAIN (LOSS) BEFORE INCOME TAXES (1,979,158) (1,432,169)
INCOME TAX BENEFIT (EXPENSE) (661,824 (11,477)
------------ ------------
NET GAIN (LOSS) $ (2,640,982) $ (1,443,646)
------------ ------------
EARNINGS PER SHARE OF COMMON STOCKS $ (0.18) $(0.12)
WEIGHTED AVERAGE SHARES 14,834,322 11,628,104
</TABLE>
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
5
<PAGE> 15
AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE STATEMENT OF CASH FLOW
FOR THE TWELVE MONTHS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash Flows Provided (Used)
by Operating Activities
Net Gain (Loss) $(2,640,982) $(1,443,646)
Adjustment to Reconcile Net Income to Net
Cash from Operating Activities
Amortization of Leasehold 4,570 4,590
Depreciation 54,712 14,096
Provision for Doubtful Accounts 1,584,595 0
Gain on Sale of Assets with Note Receivable (785,257) 0
Reserve for trade Credits 125,138 0
Non Cash Operating Expenses 3,991 0
Accounts Receivable 8,480 12,346
Non cash revenues (120,000) 0
Cost of Loan Conversion to Common Stock 380,260 0
Trade Credits Receivable 45,000 31,000
Deferred tax expense 661,824 11,477
Investment in Stocks 0 52,000
Prepaid Assets 0 (237)
Accounts Payable (106,932) 4,605
Accrued Interest (1,964) 115,637
Advances from Affiliates 4,561 (5,215)
Conversion of interest payable to common stock 165,612 0
Customer Deposits (20,000) 20,000
Investment in Senior Channel (689,680) 0
----------- -----------
TOTAL CASH USED BY OPERATING ACTIVITIES (1,326,072) (1,183,347)
----------- -----------
Cash Flows from Investing Activities
Investment in Equipment (99,915) (214,003)
Investment in Film Library (7,523) (1,000)
Investment in Common Stock 0 (200,000)
----------- -----------
TOTAL CASH USED BY INVESTING ACTIVITIES (107,438) (415,003)
----------- -----------
Cash Flows Provided by Financing Activities
Notes Payable Increase 819,580 627,066
Long Term Lease Decrease (101,650) 0
Preferred Stock Increase 175,154 150,464
Common Stock Increase 2,000 36,516
Additional Paid-In Capital Increase 513,348 760,449
----------- -----------
TOTAL CASH PROVIDED BY FINANCING ACTIVITY 1,408,432 1,574,495
----------- -----------
Net Cash Increase (Decrease) (25,078) (23,855)
Cash Beginning of Year 59,846 83,701
----------- -----------
Cash End of Year $ 34,768 $ 59,846
----------- -----------
</TABLE>
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
6
<PAGE> 16
AMERICAN INDEPENDENT NETWORK, INC.
NOTES TO COMPARATIVE FINANCIAL STATEMENTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997 AND 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents: Consist of cash balances. Cash equivalents consisted
of highly liquid investments with an original maturity date of ninety days or
less. The Company does not have any cash equivalents.
Trade Credits Receivable: The Company owns trade credits in the amount of
$417,128 at December 31, 1997 and $462,128 at December 31, 1996. As defined by
the International Reciprocal Trade Association, a trade dollar is a unit of
account that denotes the right to receive (receivable) or the obligation to pay
(a payable), one US dollar worth of goods and services within a barter system or
network. While all of the trade credits may be used by The Company at any time,
The Company has shown a pattern of using $25,000 to $30,000 worth of the credits
in each of the past two years. Therefore the company's trade credits are being
classified as current $30,000 and other assets of $387,128 at December 31, 1997.
The Trade Credits were obtained in 1994 in exchange for an Investment in Common
Stock and was valued at the fair value of the asset investment in common stock.
The Company uses the credits primarily for travel expense. The Company, also
exchanged Trade Credits for computer equipment and Fine Art. Management does not
consider impairment under FAS 121 is appropriate as management intends to fully
utilize the credits and the credits do not have an expiration date. Due to the
slow rate of usage the Company has established a valuation account of $125,138.
The trade group, the Company is a member of, currently has over twenty four
hundred participants. The Company can use these trade credits without any
infusion of cash except sales or excise taxes.
Accounts Receivable: Allowance for doubtful accounts. The Company has accounts
receivable at December 31, 1997 of $2,250 owed by regular customers. Management
deems this amount to be fully collectable. No allowances for doubtful accounts
is necessary. At December 31, 1996 the accounts receivable total was $10,730.
Plant, Property and Equipment: is recorded at cost.
Depreciation and Amortization: The cost of plant, property and equipment is
depreciated over the estimated useful life of the assets ranging from equipment
at 5 years to leasehold improvements at 20 years. Depreciation is on a straight
line basis. Depreciation and for amortization 1997 was $59,282 and for 1996 was
$18,868.
Income Taxes: The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109
is an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the company's financial statements or tax returns. In
estimating future tax consequences, SFAS 109 general considers all expected
future events other than enactment's of changes in the tax law or rates. Income
tax accounting information is disclosed in Note 3 to the comparative financial
statements.
Use of Estimates: The preparation of financial statements in conformity with
general accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
7
<PAGE> 17
OTHER INVESTMENTS - CONSIST OF THE FOLLOWING
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Prepaid Media $1,426,933
Investments in Stocks (See Note 11 "Investment in Common Stock") $ 196,455 200,000
Film Library (See Note 12 "Film Library") 7,523 1,000
Investment Senior Channel (See Note 10" Senior Channel") 689,680
Trade Due Bills 0 836,000
---------- ----------
Total $ 893,658 $2463,933
---------- ----------
</TABLE>
NOTE 2 NOTES PAYABLE
Notes Payable at December 31, 1997 - Consist of the Following Notes:
<TABLE>
<CAPTION>
CREDITOR DUE DATE INTEREST PRINCIPAL ACCRUED
INTEREST
<S> <C> <C> <C> <C>
Shelley Media Marketing(1) 9/30/98 10% $ 51,100 $ 0
Cleveland Broadcasting Co.(1) 9/30/98 10% 26,089 0
ATN Network, Inc.(1) 9/10/98 10% 284,241 0
Pacific Acquisition Group 12/31/98 11% 250,500 0
Bridge Loan 10/30/97 15% 1,522,000 119,530
---------- --------
Total $2,133,930 $119,530
---------- --------
</TABLE>
(1)Affiliated Companies
Notes Payable at December 31, 1996 - Consist of the Following Notes:
<TABLE>
<CAPTION>
CREDITOR DUE DATE INTEREST PRINCIPAL ACCRUED
INTEREST
<S> <C> <C> <C> <C>
Lyn Broadcasting Corporation(1) 8/31/97 10% $4,500 $ 17,047
Shelley Media Marketing(1) 9/30/97 10% 51,100 10,398
Cleveland Broadcasting Co.(1) 9/30/97 10% 38,274 7,654
ATN Network, Inc. 9/30/97 10% 25,366 21,739
Advances from Affiliates(1) Demand 10% 5,042 1,545
Pacific Acquisition Group 12/31/97 11% 485,500 42,476
Bridge Loan 8/30/97 15% 1,122,750 42,103
Less Cost of Bridge
Loan Acquisition (193,623) 0
---------- ---------
TOTAL 1,538,909 142,962
Less Amount Classified as
Advances from Affiliates 5,042 0
---------- ---------
TOTAL $1,533,867 $ 142,962
---------- ---------
</TABLE>
(1)Affiliated Companies
8
<PAGE> 18
The Company has engaged in transactions with certain other enterprises that are
affiliated companies. These companies are controlled by the management and
principal stockholders of American Independant Network. The controlled companies
transactions are as follows:
<TABLE>
<CAPTION>
1997 1996
FUNDS FUNDS
BORROWED REPAID BORROWED REPAID
<S> <C> <C> <C> <C>
Cleveland Broadcasting 12,185
San Antonio Broadcasting 2,200 20,556 19,521
TV Channel 22 12,310 5,500 6,250
Lynn Broadcasting 4,500(1) 100,000(2)
ATN Network 579,250 320,376(2) 115,786(2)
Shelley Media 350
</TABLE>
(1) Repaid with common stock issued @ $3.25 per share
(2) Repaid $100,000 with common stock @ $0.10 per share
NOTE 3 INCOME TAXES
DEFERRED INCOME TAX LIABILITY CONSIST OF THE FOLLOWING COMPONENTS
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Provision for Income Taxes
Current 0 0
Deferred Liability (1,137,548) 0
Deferred tax asset 475,724 (11,477)
---------- ----------
Total Provision for Income Taxes (661,824) (11,477)
---------- ----------
</TABLE>
The tax effects of temporary differences which give rise to deferred income by
assets and liabilities consist of the following:
<TABLE>
<CAPTION>
Deferred income tax assets
<S> <C> <C>
Valuation allowance 475,724 0
Net operating loss 207,477 207,477
Deferred income tax liabilities
Installment sale method on Notes Payable (1,137,548) 0
Valuation allowance (207,477) (207,477)
---------- ----------
Net deferred tax asset liability (661,824) 0
---------- ----------
</TABLE>
Bridge loan conversion cost $(380,260) consist the fair
market value of common stock issued and has no income tax attributes.
9
<PAGE> 19
RECONCILIATION OF STATUTORY U.S. TAX RATE WITH EFFECTIVE TAX RATE.
<TABLE>
<CAPTION>
<S> <C> <C>
Statutory U.S. tax rate on pretax loss 0% 0%
Average tax rate on temporary differences 41 0
Average tax rate on change in valuation allowance 0 1
-- --
Effective tax rate 41 1
-- --
</TABLE>
NOTE 4 SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
Cash Paid
Interest $127,861 $91,724
Income Taxes 0 0
</TABLE>
NOTE 5 DISBURSEMENTS FROM BRIDGE LOAN PROCEEDS AND PREFERRED STOCK SALES
Financing activities during 1997 and 1996 consisted of bridge loans of
$2,057,750 and preferred stock sales of $1,837,551. The disbursements from the
financing escrow's were $1,933,499 to the operating account, $1,402,802 for
issue costs and $559,000 for debt repayment.
NOTE 6 DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument where it is practicable to estimate that
value.
NOTES RECEIVABLE: The carrying amount approximates fair value because
each is valued at estimated discounted future cash flows.
LONG TERM INVESTMENTS: The fair value of these investments is estimated
based on quoted market prices for those and similar investments.
NOTES PAYABLE: The carrying value approximates fair value because of the
short maturity date of these investments.
10
<PAGE> 20
The estimated fair value of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
1997 1996
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
<S> <C> <C> <C> <C>
Notes Receivable $1,584,595 $1,584,595 0 0
Long Term Investments $ 196,455 $ 390,910 $1,037,000 $1,037,000
Accounts Payable $ 177,404 $ 177,404 $ 284,336 $ 284,336
Equipment Lease Payments $ 391,787 $ 354,219 $ 390,997 $ 347,316
Notes Payable $2,133,930 $2,133,930 $1,533,867 $1,533,867
</TABLE>
NOTE 7 LEASE OBLIGATIONS AND LONG TERM DEBT DISCLOSURE
The Company is obligated on three leases. The leases are as follows:
BUILDINGS: The Company utilizes the space as both corporate offices and
studios. The lease is $5,400 per month and expires May 31, 1998.
EQUIPMENT: The Company has entered a master equipment lease (digital
compression equipment) for a period of thirty-six months ending December 1,
1999. The lease has a fair market value purchase option at the end of the lease.
The total lease obligation is $390,996 and the lease has been treated as a
capital lease. In May 1997, the Company entered into a lease for additional
digital compression equipment for a period of 9 months with payments of $4,302
per month. The lease period is from June 1, 1997 to May 1, 2000. The lease has
been capitalized.
SATELLITE: The Company leased satellite transponder space under an
initial operating lease. The lease is for three years ending July 31, 1999 with
a total lease obligation of $2,250,000. The Company modified its lease reducing
its satellite band width from 24 Mhz which reduces its future lease cost from
$1,187,500 to $619,848 under the lease modification. The Company pays the new
balance at the rate of $30,000 per month the period January 1, 1998 through July
1, 1999 when the lease terminates.
DETAILS OF LEASE OBLIGATIONS ARE AS FOLLOWS:
<TABLE>
<CAPTION>
CAPITALIZED CAPITALIZED OPERATING
EQUIPMENT EQUIPMENT TRANSPONDER
LEASE #1 LEASE #2 LEASE
<S> <C> <C> <C>
1998 $139,380 $51,624 $360,000
1999 $139,380 $51,624 $210,000
2000 $ 24,237 $21,510
</TABLE>
11
<PAGE> 21
NOTE 8 SALE OF ASSETS
AIN entered into an agreement with Media Fund, Inc. Dated December 10,
1997. This agreement materially affects the financial statements and AIN daily
operations.
Media Fund, Inc., under the provisions of the above agreement, gave to
AIN a promissory note in the amount of $ 5,000,000. The agreement has certain
restrictions as to the use of funds received from Media Fund, Inc. (see below).
AIN exchanged the following assets of the company for the $5,000,000
promissory note:
<TABLE>
<CAPTION>
<S> <C>
NOTE RECEIVABLE (PRESENT VALUE) $3,637,940
Common stock 1,875,000 shares @ $.25 468,750
----------
3,169,190
----------
BOOK VALUE OF ASSETS SOLD
Prepaid television inventory 1,426,933
Other long term assets (trade due bills) 837,000
Accounts Receivable (Inet Inc.) 120,000
----------
Total Asset Book Value 2,383,933
----------
GAIN ON SALE $ 785,257
----------
Media Fund, Inc. payment schedule on promissory note:
Due within 12 months
May 30, 1998 50,000
June 30, 1998 750,000
September 30, 1998 300,000
December 30, 1998 300,000
----------
1,400,000
----------
Due beyond 12 months
March 30, 1999 300,000
June 30, 1999 300,000
December 31, 2002 3,000,000
----------
3,600,000
----------
</TABLE>
MEMO: An allowance for Doubtful Accounts in the amount of $1,584,595 has been
established due to incomplete financial information on Media Fund, Inc.
The note is uncollateralized.
RESTRICTIONS ON CASH RECEIVED:
Eighty (80%) percent of first $2,000,000 or $1,600,000 must be used to
purchase IRD (Digital to Analog Decoders) equipment, and towards its goal of
total households reached of seventy million (70,000,000) plus nationally.
12
<PAGE> 22
ADDITIONAL CONDITIONS OF THE ABOVE AGREEMENT:
1. Media Fund, Inc. receives twenty (20%) percent of all spots of AIN,
HTN, and Senior Network for a period of four years beginning December 10, 1998
with three (3) renewal options of five (5) years each.
2. Media Fund, Inc. was issued 1,875,000 shares in AIN, HTN (Hispanic
Television Network) and Senior Network.
3. Media Fund, Inc. will provide up to twelve (12) hours of Network
quality programming per day which AIN agrees to air. The commercial slots due
Media Fund, Inc. per the agreement will be used by Media Fund, Inc. for Media
Fund clients.
NOTE 9 PREFERRED STOCK
Preferred stockholders' may convert one share of preferred stock into two shares
of common. Preferred stockholders' also receive nine percent interest per annum
in lieu of dividends. Summary of preferred stock transactions are as follows:
<TABLE>
<S> <C>
Number of Preferred B Shares sold in 1996
per Comparative Analysis of Stockholders' Equity 107,546
Number of Preferred B Shares sold in 1997
per Comparative Analysis of Stockholder's Equity 175,154
---------
Total Number of Preferred B Shares Sold 282,700
Number of Preferred B Shares converted to Common Stock at
December 31, 1997 at the rate of two Common for each
Preferred B, which would equal 458,546 shares of Common (229,273)
---------
Number of Preferred B Shares outstanding at December 31, 1998 53,427
---------
</TABLE>
NOTE 10 SENIOR CHANNEL
In 1997 the Company acquired the Copyright to the Senior Channel in exchange for
programming services in the amount of $689,680 that was billed at standard
programming rates. The Senior Channel has twenty four hour programming per day.
The Company's cash plan projections indicate the cost will be recovered in four
to five years. The Company continues to evaluate this asset quarterly and will
amortize the cost over five years.
NOTE 11 INVESTMENT IN COMMON STOCK
The Company owns 368,100 shares of Quick Tent, Inc. (NASD Small Cap QTNT). The
Company sold Quick Tent, Inc. stock in November, 1997 at $1.085 per share. The
quoted market value at December 31, 1997 was $1.062 per share. The cost basis in
the financial statements is $0.523 per share for a capitalized amount of
$196,455. This investment is included in Other Investments.
13
<PAGE> 23
NOTE 12 FILM LIBRARY
The Film Library consists of approximately 2,000 films and television produced
tapes at a cost of $7,523.
NOTE 13 BRIDGE LOAN
Bridge Loan holders have the option of converting their loans to Common Stock at
$3.25 per share. Loans in the amount of $161,006 were converted into 49,540
Common Shares. To equate the difference between market price of $0.25 and
conversion price of $3.25 an additional 1,521,039 were issued. This gave rise to
an ordinary item - of Loan Conversion to Common Stock in the amount of $380,260.
The market value of $0.25 per share was derived from the sale of 200,000 shares
at $0.50 per share discounted for the much larger number of shares involved and
the restrictions on the stock.
NOTE 14 RECONCILIATION OF CHANGES IN NOTES PAYABLE TO CASH FLOW GENERATED BY
INCREASE IN NOTES PAYABLE
<TABLE>
<S> <C>
Notes payable 1997 2,133,930
Notes payable 1996 1,533,867
-----------
Net Change 600,063
Notes paid by Conversion to Common Stock 265,506
Non cash digital equipment note (45,989)
-----------
Cash flow generated by notes payable $ 819,580
-----------
</TABLE>
NOTE 15 GOING CONCERN
As shown in the accompanying financial statements the company has had recurring
net operating losses resulting in cash flow problems. All of the company's debt
is short term resulting in a substantial current ratio deficit (current
liabilities and long term liabilities due within twelve months are greater than
current assets and assets available for use within twelve months). These
circumstances raise substantial doubt as to the company's ability to continue as
a going concern. Such conditions may prevent the company from meeting its
liabilities within a timely manner.
Management fully believes it will lease a minimum of two satellite access
channels. This in conjunction with the collection of short term notes receivable
and normal operating revenues will provide the company sufficient cash flow to
continue as a going concern and to reach its penetration of household (viewer)
goals for the year.
The financial statements do not include any adjustments that might be necessary
if the company is unable to continue as a going concern.
14
<PAGE> 24
NOTE 16 RESTATED FINANCIAL STATEMENTS
The Company has restated its financial statements for the year ended December
31, 1997 and 1996. For the year ended December 31, 1996 the restatement consists
of the correction of recording a non monetary exchange. Income for the year was
overstated by $450,000.
For the year ended December 31, 1997 the restatement consists of the following:
present value for notes receivable; allowance for doubtful accounts for both
notes receivable and trade credits receivable; recording of cost incurred in
conversion of bridge loans to common stock; recalculation of income tax expense.
The results are as follows:
<TABLE>
<CAPTION>
AS RESTATED AS REPORTED
<S> <C> <C>
Total Assets $ 3,674,617 $ 7,215,160
Total Liabilities $ 3,531,517 $ 3,799,764
Total Stockholders Equity $ 143,100 $ 3,415,396
Income tax expense $ (661,824) $(1,137,548)
Net Earnings (Loss) $(2,640,982) $ 325,347
Net Earnings (Loss) per Share ($ 0.18) $ 0.02
</TABLE>
15
<PAGE> 25
<TABLE>
<CAPTION>
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit Number Title of Exhibit
- -------------- ----------------
<S> <C>
2.1 Articles of Incorporation of the Company, as amended (1)
2.2 Bylaws of the Company, as amended (1)
3.1 Form of Warrant Agreement (1)
6.1 Lease for Offices (1)
6.2 Employment Agreement with Dr. Donald W. Shelton (1)
6.3 Employment Agreement with Randy Moseley (1)
6.4 Stock Option Agreement with Dr. Donald W. Shelton (1)
6.5 Stock Option Agreement with Randy Moseley (1)
6.6 Form of License Agreement (Affiliate Agreement) (1)
6.7 GE Americom Lease Agreement (1)
6.8 Master Lease with Insight Investments (1)
6.9 Promissory Note Extension Agreement with Lyn Broadcasting
Corporation (1)
6.10 Promissory Note Extension Agreement with Shelly Media
Marketing (1)
6.11 Promissory Note Extension Agreement with Cleveland
Broadcasting Co.(1)
6.12 Promissory Note Extension Agreement with ATN Network,
Inc.(1)
6.13 Promissory Note with Super Six, Inc.(1)
6.14 Promissory Note with Jim Thornbo (1)
6.15 Promissory Note with Logistic Services International,
Inc.(1)
6.16 Promissory Note with Rajendra Shah (1)
6.17 Promissory Note with Gary Lamberg (1)
6.18 Promissory Note with Frank Lyons (1)
6.19 Loan and Security Agreement with Midas Fund (1)
6.20 United State Federal Communications Commission Radio
Station Authorization (1)
6.21 Form of Programming Agreement(2)
6.22 Promissory Note with ATN Network, Inc.(2)
6.23 "All News Channel" Agreement(2)
6.24 Promissory Note Extension Agreement with Super Six, Inc.(2)
6.25 Promissory Note Extension Agreement with Logistics
Services, Inc.(2)
6.26 Promissory Note Extension Agreement with Shelly Media
Marketing Corporation(2)
6.27 Promissory Note Extension Agreement with Cleveland
Broadcasting Corporation(2)
6.28 Promissory Note Extension Agreement with ATN Network
Inc.(2)
6.29 Form of Equipment Agreement(2)
6.30 Channel Use and Programming Agreement with Dominion Sky
Angel(2)
6.31 Agreement of Settlement, Compromise and Assignment(2)
</TABLE>
<PAGE> 26
6.32 Assignment of Senior Channel(2)
6.33 Agreement with Media Fund, Inc.(2)
6.34 1995 Stock Option Plan(2)
6.35 Promissory Note and Agreement Amendment(3)
10.1 Consent of Jack F. Burke, Jr., Certified Public Accountant
27.1 Financial Data Schedule for fiscal year ended December 31,
1997
27.2 Financial Data Schedule for fiscal year ended December 31,
1996
- ----------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form 10-SB (File No. 000-23105), filed with the Securities and Exchange
Commission on September 19, 1997.
(2) Previously filed as an exhibit to the Company's Pre-Effective Amendment
No. 2 to the Registration Statement on Form 10-SB (File No. 000-23105),
filed with the Securities and Exchange Commission on April 10, 1998.
(3) Previously filed as an exhibit to the Company's Amendment No. 4 to the
Registration Statement on Form 10-SB (File No. 000-23105), filed with the
Securities and Exchange Commission on July 15, 1998.
<PAGE> 27
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN INDEPENDENT NETWORK, INC.
/s/ DONALD W. SHELTON
Date: July 14, 1998 ---------------------------------------------
Dr. Donald W. Shelton, Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ DONALD W. SHELTON
- ------------------------ Chairman of the Board of July 14, 1998
Dr. Donald W. Shelton Directors, Chief Executive
Officer, and Director
/s/ RANDY MOSELEY
- ----------------------- President, Chief Financial July 14, 1998
Randy Moseley Officer, Secretary, and
Director
</TABLE>
<PAGE> 1
EXHIBIT 10.1
Consent of Inclusion
I Jack Burke, Jr. hereby consent to the inclusion of the financial statements
of American Independent Network, Inc. (the "Company") for years ended December
31, 1997 and December 31, 1996 in the Company's Annual Report on Form 10-KSB to
be filed with the Securities and Exchange Commission.
Dated: July 10, 1998 /s/ JACK BURKE, JR.
-------------------------------
Jack Burke, Jr., C.P.A.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR DECEMBER 31, 1997 AND 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH 10-KSB/A
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 34,768
<SECURITIES> 196,455
<RECEIVABLES> 2,250
<ALLOWANCES> 1,584,595
<INVENTORY> 0
<CURRENT-ASSETS> 767,018
<PP&E> 867,356
<DEPRECIATION> 103,954
<TOTAL-ASSETS> 3,674,617
<CURRENT-LIABILITIES> 2,653,286
<BONDS> 0
0
53,427
<COMMON> 182,325
<OTHER-SE> (92,652)
<TOTAL-LIABILITY-AND-EQUITY> 3,674,617
<SALES> 1,243,145
<TOTAL-REVENUES> 1,243,145
<CGS> 0
<TOTAL-COSTS> 2,981,542
<OTHER-EXPENSES> 1,026,018
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 381,654
<INCOME-PRETAX> (1,979,158)
<INCOME-TAX> 661,824
<INCOME-CONTINUING> (2,640,982)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,640,982)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR DECEMBER 31, 1997 AND 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH 10-KSB/A.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 59,846
<SECURITIES> 200,000
<RECEIVABLES> 10,730
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100,812
<PP&E> 663,295
<DEPRECIATION> 49,242
<TOTAL-ASSETS> 3,660,168
<CURRENT-LIABILITIES> 2,141,559
<BONDS> 0
0
107,546
<COMMON> 140,453
<OTHER-SE> 1,018,993
<TOTAL-LIABILITY-AND-EQUITY> 3,660,168
<SALES> 642,399
<TOTAL-REVENUES> 642,399
<CGS> 0
<TOTAL-COSTS> 1,470,573
<OTHER-EXPENSES> 603,995
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 204,757
<INCOME-PRETAX> (1,432,169)
<INCOME-TAX> (11,477)
<INCOME-CONTINUING> (1,443,646)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,443,646)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
