PNV NET INC, 10-K405, 1999-09-29

PNV NET INC
10-K405, 1999-09-29
COMMUNICATIONS SERVICES, NEC

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------------------

FORM 10-K
---------------------

<TABLE>
<C> <S>
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
</TABLE>

COMMISSION FILE NUMBER: 333-59889 AND 333-59903

PNV.NET, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 65-0612435
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
11711 N.W. 39TH STREET 33065
CORAL SPRINGS, FLORIDA (Zip code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (954) 745-7800

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: NONE
</TABLE>

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 [ ] No [X]

Indicate by check mark if the 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. [X]

The common stock of the registrant is not publicly traded. Therefore, the
aggregate market value of common stock held by non-affiliates is not readily
determinable.

On September 16, 1999, 4,331,014 shares of the registrant's common stock
were outstanding.

Documents incorporated by reference: NONE

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PNV.NET, INC.

FORM 10-K
FISCAL YEAR ENDED JUNE 30, 1999

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I
ITEM 1. Business.................................................... 3
ITEM 2. Properties.................................................. 38
ITEM 3. Legal Proceedings........................................... 38
ITEM 4. Submission of Matters to a Vote of Security Holders......... 39

PART II
ITEM 5. Market for the Registrant's Common Equity and Related 39
Stockholder Matters.........................................
ITEM 6. Selected Financial Data..................................... 39
ITEM 7. Management's Discussion and Analysis of Financial Condition 41
and Results of Operations...................................
ITEM 7A. Quantitative and Qualitative Disclosure about Market Risk... 52
ITEM 8. Financial Statements and Supplementary Data................. 53
ITEM 9. Changes In and Disagreements with Accountants on Accounting 53
and Financial Disclosure....................................

PART III
ITEM 10. Directors and Executive Officers of the Registrant.......... 54
ITEM 11. Executive Compensation...................................... 58
ITEM 12. Security Ownership of Certain Beneficial Owners and 63
Management..................................................
ITEM 13. Certain Relationships and Related Transactions.............. 64

PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 67
8-K.........................................................
SIGNATURES............................................................
</TABLE>

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PART I

ITEM 1. BUSINESS

INTRODUCTION

We are the leading provider of bundled telecommunications, cable television and
Internet access services to the trucking community. Our current customers
include drivers, long-haul trucking fleets, truckstop operators, and trucking
industry suppliers and manufacturers. As of July 31, 1999, we had deployed our
private, integrated network at 230 truckstops in 41 states through which we
offer telecommunications, cable television and Internet access services to
fleets and truck drivers in the privacy of the truck cab, as well as
comprehensive telecommunications services to truckstop operators for the public
areas inside the truckstop. During July 1999, we had approximately 35,000
subscribers. To date, we have raised more than $140.0 million in debt and equity
capital, which has allowed us to deploy our network and establish our brand name
in the trucking industry. We believe that our competitive advantages position us
to become the preferred provider of communications and Internet information
solutions to the trucking community. These competitive advantages include:

- our integrated nationwide network which allows us to deliver our bundled
telecommunications, cable television and Internet access services to truck
drivers in the privacy and convenience of their truck cabs;

- our strategic relationships with major truckstop operators and major industry
suppliers, such as TA, Pilot and Volvo Trucks, as well as our brand name
recognition in the trucking industry. We have entered into long-term
contracts with the operators of approximately 450 of the approximately 1,100
full service truckstops across the country. We also have contracts with
trucking associations representing more than 300 additional independent
truckstops that permit us to offer our services to their members; and

- the flexible and cost-efficient design of our network, which enables us to
offer a private full-service telecommunications network to the trucking
community.

We believe our competitive advantages position us to offer our services and
products to additional drivers, long-haul trucking fleets, truckstop operators
and trucking industry suppliers and manufacturers, as well as other trucking
industry participants. We currently offer:

- in-cab telecommunications and cable television services to truck drivers and
fleets, including incoming and outgoing local and long distance calling,
basic and premium cable television, as well as value-added communications
services, including a locator service, voice mail and wake-up calls;

- Internet access as an ISP, as well as content and applications on our
Internet website, to truck drivers and their families, fleets and industry
suppliers. These offerings are available in the truck cab or any other
Internet access point. They will also be available through public Internet
kiosks which we are deploying inside certain truckstops;

- a total telecommunications solution inside the truckstops for truckstop
operators, including prepaid phone cards, public phone operations and public
Internet kiosks; and

- advertising for industry suppliers and other industry participants through
our cable channel known as the "Drivers' Entertainment Network," our monthly
television programming guide and lifestyle magazine, Connect!, our Internet
website and our voice response system.

We believe the Internet will become a significant communications and commerce
medium for the trucking community. We intend to capitalize on our position as
the leading provider of bundled telecommunications, cable television and
Internet access services to the trucking community by providing a leading
trucking industry portal website and expanding our network to improve the
lifestyles of drivers and their families and the trucking industry's work
efficiencies. We are designing this portal to have the following components:

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- business-to-business electronic commerce applications that provide a platform
for fleets, drivers and industry suppliers to exchange information and
conduct transactions, such as load posting, freight matching and classified
ads;

- business-to-consumer electronic commerce applications that allow drivers and
constituent groups to purchase goods and services for their personal and
occupational use, including books, music, parts and electronics;

- advertising opportunities that allow advertisers to market their products,
provide links to their websites and target the driver market which has unique
demographic characteristics;

- specialized content on a wide variety of subjects of interest to the trucking
community and those who interact with the industry; and

- a "life style" segment that provides truck drivers with interactive tools and
services that permit them to personalize their on-line experience, including
e-mail, chat rooms, news, weather and games.

The foundation for our bundled telecommunications, cable television and Internet
access services is our private, integrated nationwide network. Our network
utilizes Cisco routers, PC-based PBX switches with proprietary software, modem
banks and a cable headend system, as well as a dedicated backbone that connects
all sites to a central server at our headquarters in Coral Springs, Florida. Our
network provides flexible voice and data channels and dedicated long distance
and Internet access. We have no direct competitors for our bundled in-cab
services.

INDUSTRY BACKGROUND

Trucking Industry. The trucking industry consists of originating shippers,
end-point receivers, freight haulers, equipment suppliers, truckstop operators,
individual drivers and an extended network of service providers. According to
the American Trucking Association, the estimated truck freight revenue in the
United States for 1997 was $371 billion. According to industry data, the
trucking industry has experienced an increase in intercity ton-miles every year
from 1987 through 1997 and a compound annual average growth rate of
approximately 4.7% over this 10-year period.

Industry data and a survey of approximately 800 truck drivers conducted for us
in December 1998 by a third party research firm indicate that the long-haul
trucking industry is telecommunications intensive. We believe that long-haul
drivers spend over $2.0 billion annually on long distance services while on the
road, excluding data, Internet access and messaging.

Our target customers are drivers, long-haul trucking fleets, truckstop
operators, advertisers and trucking industry suppliers, as well as other
trucking industry participants.

Drivers. Based on independent market research commissioned by us in September
1999, we estimate there are between 800,000 to 1,000,000 drivers in the United
States who regularly sleep in their cabs. This September 1999 research and our
December 1998 survey indicate that long-haul truck drivers spend an average of
between 19 and 23 days a month on the road. Industry data indicates that truck
drivers earn an average of approximately $30,000 to $50,000 per year. According
to our December 1998 survey, approximately 21% of long-haul truck drivers have
personal computers in their cab and approximately 30% of long-haul truck drivers
can access the Internet from home. A significant portion of the time a long-haul
truck driver spends on the road is spent at truckstops since:

- federal regulations prescribe minimum periods that a driver must be off-duty
during any one day;

- there frequently are restrictions on the roads and streets on which a
long-haul truck can travel;

- many truckstops have fueling agreements with fleet trucking companies that
require refueling at certain specified truckstops; and

- many full service truckstops provide a variety of services to long-haul truck
drivers, including showers, pay telephones, television rooms and stalls for
parking trucks.

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While on the road, drivers need access to telecommunications and entertainment
services. Long-haul drivers must stay in regular contact with customers and
fleet dispatchers to coordinate load pickup, delivery, and routes. Truck drivers
also use telephones for personal communications purposes to stay in touch with
family and friends. According to our December 1998 survey, while on the road,
long-haul drivers use an average of approximately 1,100 minutes of long distance
a month. Drivers' options for entertainment while on the road are generally
limited to community television and video game rooms at truckstops. These
facilities are typically crowded, afford drivers little programming choice or
privacy, and are uncomfortable. Drivers can purchase satellite television
systems for their cabs, but these systems are cumbersome to install and have
relatively high up front costs and monthly subscription fees. We believe that
communications and entertainment services that provide privacy, choice and
flexibility are highly valued by drivers.

Truckstop Operators. According to industry data from 1997, there are
approximately 2,000 truckstops in the United States along the interstate highway
system, of which approximately 1,100 are full-service truckstops that provide
more than just fuel. A large number of truckstops are affiliated with or owned
by chains that maintain centralized control over operations. Full service
truckstops, generally located on major interstate highways, offer a wide range
of services for drivers and fleets including fueling facilities, certified
scales, repair facilities, restaurants, community television and game rooms,
public telephones and showers. These truckstops are the primary location at
which long-haul truck drivers stop to fuel, eat, shower, and park for their rest
periods, overnight stays and layovers. This is due to the range of services that
these truckstops offer, their location and the obvious limitations that a large
truck has in stopping at other venues, including regular gas stations, fast food
restaurants, malls and motels. Therefore, truckstops are the primary location at
which drivers conduct business with fleets and customers, communicate with
family and friends, and seek entertainment. Truckstop operators traditionally
have had to utilize multiple vendors and solutions to address their
telecommunication needs inside the truckstop, resulting in inefficient and
sub-optimal services. We believe truckstop operators have come to view
telecommunications as an important service and are seeking a complete suite of
telecommunication services, including prepaid phone cards, in stop phone
operations, in-bound and out-bound long distance, control over dial around
compensation for fleets and in-stop public Internet access.

Long-Haul Trucking Fleets. We believe there are over 750 trucking fleets in our
target market. Fleets must manage uniquely complex information and logistics
issues. In this industry, practically all of a fleet's assets are moving and
destinations are not consistent or, in some cases, even known until the load is
assigned. Fuel taxes must be filed quarterly, by state, for every mile driven in
that state and reconciled with taxes paid at the pump in each state by each
truck. Fleets and drivers must have logbooks updated, cargoes permitted,
manifests maintained, deliveries verified and billing initiated. Fleets have to
manage payroll for a mobile work force and that work force has to access funds
while on the road. This complexity, coupled with the relative lack of in-house
information management resources at the trucking companies, their suppliers and
customers, creates a tremendous opportunity to deliver information, data and
transaction-based services to all participants in this industry. An additional
significant issue facing the long-haul trucking industry is driver turnover. We
believe that many fleet trucking companies attempt to reduce costs of $3,000 to
$5,000 per driver associated with annual driver turnover approximating 100% and
to mitigate this driver turnover by seeking ways to improve the quality of life
for long-haul truck drivers on the road. We believe that services which address
the fleets' needs for efficient communication with drivers and customers and
effective management of high driver turnover rates are highly valued.

Trucking Industry Suppliers and Other Participants. The trucking industry is
served by a wide array of suppliers ranging from large truck manufacturers and
small accessory providers to financial service providers and load brokers. We do
not believe there is currently any comprehensive effective way for drivers,
long-haul trucking fleets, truckstop operators and trucking industry suppliers,
as well as other industry participants, to exchange information and conduct
transactions. For example, drivers looking for information on available loads
and destinations rely primarily on systems that provide information via text
scrolling at public video monitors in truck stops. The information is not
categorized and is not searchable. Some truck manufacturers install on-board
computers that capture significant engine performance

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information, but still lack the means for regular or efficient access to this
data. We believe that, increasingly, the Internet will develop into a data
communications, commerce and advertising pipeline for industry suppliers.

BUSINESS STRATEGY

Our objective is to capitalize on our position as the leading provider of
bundled telecommunications, cable television, and Internet access services to
the trucking community and to become the preferred provider of communications
and Internet information solutions to the trucking community. We plan to achieve
our objective by:

- Continuing to deploy our network at additional truckstops and increasing
subscription sales. We intend to continue to deploy our network at
additional full-service truckstop locations, doubling by the end of 2002 the
number of truckstops at which our network is currently available. We believe
that the availability of our network at a larger number of truckstops,
together with our proposed marketing efforts and initiatives, will allow us
to increase our subscription sales to drivers and fleets.

- Becoming the leading trucking industry portal website. We are developing our
trucking industry portal to allow all participants in this vertical market to
communicate with each other, obtain industry-related information and
entertainment, and conduct commerce. Through the portal, we expect to offer
various business-to-business and business-to-consumer applications, including
applications unique to the industry, such as load posting, freight matching
and classified ads. We also intend to sell advertising on our website.

- Extending our brand name recognition. We intend to promote our strong brand
name in the trucking community and believe we will benefit from being an
early provider of content and services dedicated to the trucking community.
We believe that increasing the recognition of our strong brand name will
generate traffic growth on our portal and allow us to increase our
advertising revenues.

- Leveraging our position as an Internet service provider. We intend to use
our Internet access service to attract and retain subscribers by providing
connectivity between drivers, their families, fleets, truckstops, industry
suppliers and other industry participants. Our service allows drivers at
truckstops at which our network is deployed to access the Internet via a
local call from their truck cab.

- Providing a total communications solution to truckstop operators. We
recently contracted with TA, the largest truckstop chain in the United
States, to provide a total telecommunications solution inside its truckstops,
including public phone and prepaid phone card operations, as well as public
Internet kiosks. We intend to offer this solution to other major truckstop
chains.

- Providing comprehensive data and voice solutions to fleets and industry
suppliers. We intend to offer services to fleets and industry suppliers that
will allow them to install gateways into our network which will permit data
and voice communications among drivers, fleets and industry suppliers. We
also plan to offer fleets and industry suppliers the ability to integrate
their intranet sites with our network to access additional tools and
services.

- Expanding our entertainment services. We intend to expand our cable
television services to include additional programming, pay-per-view and other
channels specifically targeted to the trucking community that will increase
interest in our network among drivers and advertisers. We are designing our
website to provide content of interest to truck drivers and other trucking
community participants, as well as general information, including news,
weather, sports and entertainment.

- Maximizing and expanding our strategic relationships. We intend to expand
our relationships with trucking industry participants, including truckstop
operators, fleets and suppliers, including Volvo, to provide additional
distribution channels for our services and additional sources of advertising
revenue. We plan to continue to expand our sales force, focusing on driver
subscriptions funded through fleet payroll deduction programs. We have also
recently begun to offer several different service bundlings and price points
for our service offerings and plan to simplify the initial subscription
process.

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PRODUCTS AND SERVICES

The following chart sets forth our current and planned services and target
customers.

<TABLE>
<CAPTION>
LOCAL AND LONG CABLE INTERNET WEB BASED
DISTANCE TELEVISION ACCESS CONTENT AND PUBLIC INTERNET
CUSTOMERS TELECOMMUNICATIONS SERVICE ADVERTISING SERVICE APPLICATIONS KIOSKS
--------- ------------------ ---------- ----------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Individual drivers - - - - - -
Fleets - - - - - X
Truck stops - - - - - -
Original equipment - - - X X N/A
manufacturers
Other product and X N/A - X X N/A
service providers
</TABLE>

- ---------------------------

- - Current Services and Target Customers X Planned Services and Target Customers
N/A Not Applicable

Current Services

We currently offer:

- in-cab telecommunications and cable television services;

- Internet access service, as well as content and applications on our Internet
website;

- comprehensive telecommunications services and public Internet kiosks to
truckstop operators; and

- advertising opportunities for industry suppliers and others.

Telecommunications and Cable Television Services. We provide local and long
distance telephone services and cable television service to truck drivers in the
privacy of their cabs. Subscriptions can be purchased from vending machines at
truckstops that dispense cards similar to prepaid phone cards or, in the case of
monthly subscriptions, can be automatically billed to a credit card or checking
account or automatically deducted from the driver's compensation if we have a
payroll deduction arrangement with the driver's fleet. Services are sold both
individually and in a bundled package. As part of a subscription, the user
obtains a membership card and kit that includes a telephone, coaxial and
telephone cable and an owner's manual for a $10 fee, which is waived for fleet
and ongoing monthly subscribers. A subscriber accesses our network by plugging
the coaxial and telephone cable into a bollard installed at each parking stall
at a truckstop. The subscriber then dials * and logs on to our network. A
computerized voice response prompts the subscriber to enter the subscriber's
membership number. If the subscriber is a daily or monthly user, the computer
prompts the user to enter the subscriber's daily or monthly card number. If the
subscriber is in good standing, service is activated and the subscriber has
access to telephone, cable television and Internet services.

We market long distance services primarily to individual drivers. Users purchase
the minutes by charging a credit card or using a "cash card" purchased from our
vending machine at the truckstop. We also have a payment plan that allows fleet
drivers to purchase long distance minutes for personal use through payroll
deductions. The cash card is a multi-purpose prepaid card, the value of which
can be applied to the purchase of various services, including long distance
minutes and premium programming. We anticipate that, in the future, the cash
card can be used as a payment mechanism for certain additional services.

The basic cable television service at most truckstops currently features 13
basic channels, including ABC, CBS, NBC, Fox and our Drivers' Entertainment
Network, as well as CNN Headline News, ESPN and The Weather Channel. We also
offer a premium cable service which currently includes the 13 basic channels
plus five premium channels, which currently consist of Showtime, Showtime
Extreme, Showtime 2, TNT and Playboy.

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The telecommunications and cable television services that we offer drivers
address the needs of fleets to efficiently communicate with drivers and
efficiently manage high driver turnover rates as follows:

- Efficient Communications -- Dispatch Control. Our network provides truck
cabs the same communications capability as hotel rooms and homes. Drivers can
make and receive phone calls in the comfort and convenience of their cab.
Since dispatchers cannot call drivers at a pay phone, drivers calling
dispatch for next load or destination information may be put on hold or
forced to call back several times if information is not immediately
available. With the ability to receive as well as make calls, our network
streamlines the communication process.

- Efficient Communications -- Avoid Surcharges. We believe that control over
dial around compensation is a major issue for fleet operators. Many fleets
provide their drivers with a toll free "800#" for calling fleet operations.
When an 800# is called using a pay phone, the owner of the phone can charge
the 800# owner a per call surcharge of approximately $0.25. Surcharges add
significantly to fleet communications costs. If drivers make such toll-free
calls from a phone in their truck cabs connected to our network, fleets can
bypass these surcharges for comparable pay phone calls made by their drivers.

- Efficient Communications -- Targeted Messages. Fleets can use our voice mail
and voice response system to deliver messages targeted to their drivers. This
functionality allows fleets to broadcast general company information to their
highly mobile fleet.

- Driver Retention -- Lifestyle Improvement. We believe that the
telecommunications and cable television services that we offer through our
network greatly improve driver lifestyles on the road. Many fleets that have
purchased our services for their drivers have advised us that they have
experienced lower turnover rates and they consider providing our services to
be an effective recruiting tool. Fleets currently can purchase memberships
for their drivers directly or arrange for automatic deductions from driver
payrolls.

Internet Service Provider Services. We are an Internet service provider
offering Internet access to truck drivers from the privacy and convenience of
their truck cabs. We launched our Internet access service in July 1999. Until
October 1999, we are offering our Internet access service free of charge on a
promotional basis to our monthly subscribers. The service allows drivers at our
locations to access the Internet via a local call from their truck cabs.

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The following table sets forth certain current pricing and content information
regarding the in-cab telecommunications, cable television and Internet access
services that we currently sell, or plan to sell in the near future to
individual truck drivers:

<TABLE>
<CAPTION>
DAILY PREMIUM INTERNET SERVICE
BASIC DAILY UPGRADE BASIC MONTHLY PREMIUM MONTHLY PROVIDER
----------- ------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C>
- - $5 per 24 hrs. - $5 per 24 hrs. - $20 per 30 - $30 per 30 - $10 per month
days days for members on
- - 13 basic - Must be any monthly
channels purchased in - 13 basic - 13 basic plan
conjunction channels channels and 5
- - Telephone access with basic or premium - $15 per month
monthly - Telephone channels for members on
- - No long distance access daily plan
minutes - 5 premium - 30 minutes
channels - 15 minutes free long - Unlimited
- - Can be purchased free long distance Internet
through vending - Can be distance access on
machines or cash purchased - Can be network; 800
card through - Can be purchased toll
vending purchased through connection for
machine or through vending off-network
cash card vending machines, cash use
machines, cash card or
card or monthly - Can be
monthly subscription purchased
subscription through through
through checking, vending
checking, credit cards machines, cash
credit cards and payroll card or
and payroll deduction monthly
deduction subscription
through
checking,
credit cards
and payroll
deduction
</TABLE>

We also offer these in-cab telecommunications, cable television and Internet
access services to fleets and drivers whose fleets have a payroll deduction
arrangement with us. The following table sets forth certain current pricing and
content information regarding these services:

<TABLE>
<CAPTION>
FLEET FUNDED PROGRAM DRIVER FUNDED PROGRAM FLEET/DRIVER FUNDED PROGRAM
-------------------- --------------------- ---------------------------
<S> <C> <C>
- - Fleet pays $25 per month - Driver pays $25 per month - Fleet pays $5 per month per
per driver for telephone via payroll deduction for driver for telephone
access; free 800# calls; 60 Telephone access; free 800# access; and free 800#
minutes of long distance; calls; and 60 minutes of calls.
and premium cable long distance.
television. - Driver can pay $25 per
- On network unlimited month for premium cable
- - On network unlimited Internet access for an television package and $10
Internet access for an additional $10 per month; per month for unlimited
additional $10 per month off-network use available Internet access on network;
per driver; off-network use with long distance toll off-network use available
available with long charge. with long distance toll
distance toll charge charge.
- For every driver who signs
up for cable television
and/or Internet access
upgrade, fleet receives $5
per driver per month
rebate.
</TABLE>

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Comprehensive Telecommunication Services to Truckstop Operators. In March 1999,
we implemented a program to offer a comprehensive telecommunications solution to
truckstop operators. Under this program, we offer truckstop operators prepaid
phone cards, in-stop public phone operations, in-bound and out-bound long
distance, control over dial-around compensation for fleets and in-stop public
Internet access through kiosks. In March 1999, we entered into a four-year
contract with Travel Centers of America, or TA, the largest truckstop operator
in the United States, to provide a total communications solution, including
prepaid phone cards, public phone operations, and public Internet kiosks to
approximately 120 truckstops. In addition, we can provide support for frequent
fueler programs offered by the truckstop operators, which encourage drivers and
fleets to purchase fuel from a truckstop operator. We have also entered into a
contract with another large truckstop operator of more than 100 sites to provide
public Internet kiosks on an exclusive basis and prepaid phone cards on a
non-exclusive basis. We intend to offer other truckstop operators our
comprehensive telecommunications services.

Advertising. We have developed or are developing the following advertising
media specifically designed to allow suppliers to the trucking industry to
efficiently reach individual drivers and others:

- Connect! -- our monthly cable television programming guide and lifestyle
magazine. We distribute 100,000 copies of Connect! monthly at our truckstop
locations around the country free of charge. We believe that, due to its
television program guide section, copies will be read by drivers multiple
times during the month.

- Drivers' Entertainment Network -- our cable television channel. Drivers'
Entertainment Network currently features country music programming on a
two-hour video loop on which we offer advertising spots. We plan to expand
our programming content to include video magazine segments, educational
programming, business tools segments and sports-oriented content.

- Internet -- the trucking industry portal website that we are designing will
offer another medium for advertisers to reach individual drivers and others.
We are investing heavily to develop our portal and our business model
contemplates that we will expand our advertising base, and, in addition to
content and web banner advertising, sell strategic sponsorships for specific
services and content areas.

- Audio Messages -- can be delivered to drivers during service activation. In
order to activate service, our users interact with a voice response system
using their telephone. During this process we can play targeted audio
messages to the driver. This allows advertisers to play the equivalent of a
10 or 15 second radio spot with complete control over the frequency and
targeting of the advertisement.

We have recently entered into an advertising agreement with Volvo Trucks for its
advertising on our advertising media. Our agreement with Volvo Trucks restricts
until July 2000 our ability to accept advertising on our Drivers' Entertainment
Network for products or services of Volvo Trucks' competitors or on specified
portions of our website portal for trucks that compete with Volvo Trucks. Volvo
Trucks can terminate this agreement if our subscribers do not log-on to our
network at least 160,000 times each month in any three consecutive months.

PLANNED SERVICES AND PRODUCTS

With our established network deployed at the truckstops and our industry
alliances, we are positioned to expand the scope of our services and target
customers. We believe that the Internet will become the dominant platform for
information exchange and delivery as well as the primary medium for transactions
in the trucking industry. The development of our trucking industry portal
website will allow us to deliver various information services, transactions and
advertising services and solutions based on communication, customized
information, commerce and education. Our business model contemplates that these
services will expand our customer base among trucking industry participants,
including suppliers, fleets and truckstops. We also plan to expand our service
offering by providing voice and data communications and

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on-line services to fleets and to expand the scope of our cable television
programming. We plan to introduce the following services in the months ahead:

- Trucking industry portal website. During fiscal 2000, we plan to expand our
trucking industry portal website. We expect the key features and applications
to include: trip planning, mapping and enroute fuel pricing information, site
location map, fleet services, load posting and matching, support for online
transactions, personalized services including a personal calendar, digital
logbook and e-mail, news, sports, weather, games and entertainment, on-line
banking and clearinghouse functions, and business-to-business and
business-to-consumer electronic commerce.

- Private Voice and Data Network and Tools for Fleets. As our network expands,
we will offer services to fleets that allow them to install gateways into our
network at their headquarters, terminal facilities and even key customer
facilities. Through these gateways, we can offer voice and data
communications among fleets, drivers and their customers. We plan to offer
installation of network nodes at select large fleet locations. We also will
make other applications and tools available to fleets over our network.

- Additional Cable Television Programming. We plan to expand our cable
television programming to include more dedicated format channels, including
educational channels, additional premium programming and pay-per-view events.

SALES, MARKETING AND CUSTOMER SERVICE

We offer our services to each of our customer groups through a combination of
our direct sales force, consisting of 84 full-time employees as of July 31,
1999, fleet sales force, retail distribution channels and telemarketing. We
support our sales activities with advertising in industry publications, our
website, our public Internet access kiosks, special promotions and other
activities. We have also developed a comprehensive customer support program.

Individual Drivers. We offer our services to individual drivers through a
combination of direct and indirect sales and marketing channels at each
truckstop at which we provide our service. We have installed vending machines at
all of the truckstops at which we have deployed our network. Drivers can
purchase monthly and daily subscriptions from these machines. To support our
vending machines, we deploy point of sale brochures, banners and other displays
throughout the truckstop. We also advertise in our own Connect! magazine, as
well as our Drivers' Entertainment Network and our voice response system. From
time to time we engage in special promotions and events in coordination with
truckstop operators.

We employ a field sales force that regularly visits our truckstop locations to
ensure that our materials are displayed and merchandised. We maintain additional
sales personnel at 50 to 60 of our largest truckstop locations to speak with
drivers and offer them monthly subscription plans. The field sales force also
supports subscription drives at fleet terminals. When a fleet agrees to allow
payroll deduction for our services, members of the field sales force spend
several days at the fleet terminal setting up displays and meeting with drivers.
We also have an in-house customer service and telemarketing group that sells
subscriptions to users who call us at the numbers provided on brochures and
other advertising materials. We also will be conducting on-going cross-selling
promotions, which will be heavily utilized to promote our ISP and our portal's
services and features. These promotions also will be supported by direct
marketing, print, online and point-of-purchase campaigns.

Pursuant to our contract with one large truckstop operator, we have entered into
an incentive arrangement pursuant to which the operator is compensated for
meeting subscription sales quotas. We are developing materials which will be
used to train the operators' employees to sell subscriptions and other services.

Truckstop Operators. We market our services to truckstop operators through
relationship account managers. Our marketing efforts with the truckstop
operators fall into two broad categories. First, we attempt to gain access to
the truckstop parking lot to install our network to provide in-cab telephone,
cable television and Internet access services for the drivers and fleets. Since
we already have contracts with many of the largest truckstops, we now focus most
of these efforts on account and relationship

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management. We have entered into agreements with certain large truckstop chains
which provide such truckstops with incentives to market our products and
services.

We also market our comprehensive telecommunications solution to the truckstop
operator. For the larger truckstop operators, we use our existing relationships
to gain access to their top-level executives. Our top management is very
involved in developing comprehensive telecommunications agreements with
truckstop partners. We supplement our direct sales efforts with advertising in
trade publications, periodic direct mail campaigns and participation in industry
trade shows.

Fleets. Our fleet sales force markets our telecommunications, cable television
and Internet access services to fleets. Our fleet sales force targets fleets
with 100 or more trucks. Our fleet sales force emphasizes long-term partnerships
and the fact that we have developed our network to meet the needs of the fleet.
Specifically, we focus on the retention improvements that our network can
deliver by enhancing drivers' lifestyle with telecommunications, cable
television and Internet access services, as well as in-bound telephone access.
As we develop our portal, the availability and benefits of driver and fleet
business applications will become an important part of our marketing effort to
the fleets. The efforts of our fleet sales force are supported through periodic
advertising in trade journals targeted at fleet management, direct mail
campaigns and attendance at key industry tradeshows and events.

Our research indicates that there are a large number of fleet trucking companies
with less than 100 trucks. This segment represents a substantial but highly
fragmented sector of the fleet market. We primarily communicate with these fleet
owners with telemarketing and direct mail and expect to also market to them
through the Internet.

We have established a program with TA pursuant to which we jointly market our
products and services to large fleets.

Industry Suppliers. The primary service currently targeted at trucking industry
suppliers and other participants is advertising media. We market our advertising
media through a direct sales force that calls on potential advertisers and their
advertising agencies. We also are offering our advertising services as a part of
a broader strategic relationship with industry suppliers, including Volvo
Trucks. To sell these services, we utilize direct mail campaigns and participate
in trade shows.

Marketing of Internet Services and Solutions. As we develop our portal, we will
implement a multi-media marketing campaign, which will include print ads, direct
mail, direct sales, materials at truckstops and advertising on the Driver's
Entertainment Network, to support its launch. We plan to market our portal as
the electronic gathering place where industry players can obtain information,
communicate and transact business. We plan to tailor aspects of the campaign to
each market and to emphasize the features applicable to that marketing
initiative, including direct marketing, print, cable television, intercept
programs, extensive point-of-purchase and online advertising. We also plan to
place advertising in our Connect! magazine, as well as on our Drivers'
Entertainment Network, our voice response system and to use significant point of
sale placements in truck stops to support the portal launch and the ongoing
development of our portal. We are also planning special events and promotions at
the truckstops.

Customer Service. To retain customers, encourage more usage and promote the
purchase of additional services, we have developed a comprehensive customer
support program. To gauge customer satisfaction and to identify potential new
services, we regularly conduct customer satisfaction and market research; either
through interviews at the truckstops or through telephone surveys. We use
independent third party research firms to conduct more comprehensive studies
while our staff performs smaller scale surveys. These surveys have consistently
shown a very high degree of customer satisfaction and identified promising new
service bundles and pricing. Our recent introduction of new monthly and daily
pricing plans was based on the results of one such survey.

Another key component of our retention and promotion efforts is the in-house
customer service team. This group is comprised of approximately 30 members and
is on duty 19 hours per day. This group is trained to handle all inquiries from
customers including basic technical issues with a smaller subset of the group
also trained in telemarketing. Among the programs that the customer service team
supports is a "welcome call"

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<PAGE> 13

program whereby new customers are automatically forwarded to a representative on
their first or second activation to insure that the user understands service
features and functionality and to gather basic information on the customer which
can be used for future marketing.

NETWORK BUILDOUT; TRUCKSTOP RELATIONSHIPS AND CONTRACTS

As of July 31, 1999, our network has been installed at 230 truckstops in 41
states, and we installed our network at 106 sites during the twelve months
ending July 31, 1999. We intend to continue the buildout of our network to more
than double the number of sites by June 2002. We believe that the availability
of our network at a larger number of truckstops will significantly increase
membership sales to drivers and long-haul trucking fleets. The installation of
our network on a timely basis will be subject to, among other things, our
ability to satisfy significant capital requirements associated with the
installation.

We have contracted with truckstop chains, independent truckstop owners and
associations of truckstop owners to provide our services over our network.
According to industry data from 1997, there are approximately 2,000 truckstops
in the United States located on the interstate highway system of which
approximately 1,100 are full service truckstops that provide more services than
just fuel. As of June 30, 1999, we have long-term contracts with the operators
of 450 truckstops to install our network. These operators include three of the
four largest full-service truckstop chains in the United States, TA, Petro
Stopping Centers, Inc., and Pilot Corporation. We also have entered into
contracts with the three largest associations representing more than 300
additional independent truckstops that have agreed to permit us to offer our
services to their members. The truckstops represented by associations generally
consist of smaller truckstop chains generally having less than 10 truckstops.
These associations act as purchasing agents for their members. We have entered
into contracts with these associations in order to gain access to and establish
a relationship with numerous independently-owned truckstops. These associations
do not have authority to legally bind their members. Therefore, while each
association has granted us the right to provide cable television and telephone
services to its members, this contractual provision is not binding on each
member. Prior to installing our network at an association member's truckstop, we
enter into a contract with the association member granting us the right to
install our network at the member's truckstops.

While most independent truckstop owners who own a single truckstop execute a
standard contract, the contracts executed by truckstop chains that operate
multiple truckstops vary significantly. We offer a standard contract to the
truckstop owners and associations generally consisting of a term ranging from
five to ten years with an automatic five year renewal. Pursuant to the terms of
the standard contract, generally we are granted the right to provide
telecommunications and cable television services to all of the owners'
truckstops for a mutually agreed upon period of time which, if we achieve our
contractual buildout milestones, generally extends for 10 years. We generally
pay commissions to truckstop owners/operators based upon a percentage of our
revenues which, depending on the particular product, has ranged between 10% and
50%, less specified costs on a negotiated basis. We have entered into a contract
with one major truckstop chain that requires us to pay the operator a base
amount for each of the operator's truckstops at which our network is installed
and additional amounts upon meeting certain incentive sales criteria.

We believe that the average truckstop represents a substantial capital
investment for the truckstop operator. Despite the amount of capital invested in
the parking lot, the typical truckstop does not generate any revenue from that
asset, except for a limited number of truckstops which charge for parking. At
the same time, margins on fuel have been under pressure, forcing truckstop
operators to differentiate their truckstops from their competitors and find
other sources of revenue. We believe that our network offers truckstops:

- an amenity for long-haul truck driver customers;

- a means for competitive differentiation; and

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<PAGE> 14

- the ability to generate incremental revenue through the revenue and
profit-sharing provisions of the contracts.

The table below summarizes our current contracts with truckstop owners and
operators and the buildout of their sites, as of July 31, 1999:

<TABLE>
<CAPTION>
TOTAL NO. OF LOCATIONS TOTAL NO. OF
TRUCKSTOP CHAINS AND OWNERS UNDER CONTRACT LOCATIONS INSTALLED
--------------------------- ---------------------- -------------------
<S> <C> <C>
Travel Centers of America.............................. 160 79
Pilot Corporation...................................... 119 49
Petro Stopping Centers, Inc............................ 44 24
Additional Owners of Multiple or Single Truckstops..... 127 78
--- ---
Total............................................... 450 230
=== ===
</TABLE>

In addition, we have contracts with truckstop associations representing over 300
additional truckstops.

NETWORK AND TECHNOLOGY

Our Design. The current architecture of our network consists of a PC-based PBX
at each truckstop connected to the host server. The PC-based PBX controls and
manages all interaction with the subscriber, including telephone communications,
cable television activation, Internet access and communications with the host
server. The current architecture of the various components of our network and
related services are described below. In the future, we may modify the
configuration of our network architecture for deployment at smaller truckstop
locations. In addition, we are currently exploring wireless technology with
respect to telecommunications services offered at truckstops at which our
network is deployed.

Components and Related Items Located at our Headquarters. The following
components and related items are located at our corporate headquarters:

Host Server. The host server maintains control of all membership information
and determines individual membership privileges. The PC-based PBX located at the
truckstop communicates via frame relay to the host server each time a member
attempts to log-on to or log-off of our network. The membership number is
checked in the database and specific information about the user, including their
membership expiration date, number of long distance minutes available and voice
mail messages, is downloaded to the site server for subsequent interaction with
and access by the user. We have multiple server redundancy capable of performing
all critical host server functions.

Software. We developed our software in-house and this software performs
numerous functions including:

- subscriber log-on entry;

- subscriber log-on host server validation;

- membership information maintenance, including membership cards and renewal
card tracking;

- log on information communicated to subscribers including expiration date,
stall number and call back number;

- wake-up call notification;

- cable television system control including activation of basic and premium
channels;

- outbound call control and tracking;

- least cost call routing;

- prepaid long distance call control and tracking including account balance
maintenance;

- extension to extension call control and tracking;

- call detail record storage and reporting;

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<PAGE> 15

- inbound call control and tracking;

- subscriber location tracking and voice mail services;

- subscriber voice messaging with broadcast capability; and

- stall maintenance tracking.

Billable Long Distance Call Management. We have the advantage of having an
intelligent PC-based PBX switch controlling each call at the place of
origination and can thereby reduce our cost per call. Prepaid calling card
vendors require the user to dial an 800 number, enter their card and access
numbers and then dial the number they wish to dial. Therefore, they are actually
making two calls each time. An inbound call to the calling switch and then an
outbound call from the calling switch to the applicable number. All completed
calls have double costs associated with them. If any calls are busy or not
answered, the calling card company must absorb the costs of the inbound call.

The long distance services that we offer have the equivalent of a prepaid
calling card switch at each site. All call management functions including adding
new minutes, deducting minutes for each call and terminating a call when all
minutes have been used are performed by PC-based PBX. Since call management is
performed locally at each site, the user can simply make long distance calls by
dialing 9,1 + number. The call is originated from the truckstop directly to the
applicable number as a single call. Therefore, if there is no answer or the line
is busy, the user is not billed and we do not incur the cost of an incoming
call. This feature reduces our cost per call as compared to typical prepaid
phone card vendors.

Components and Related Items Located at Each Truckstop. The following
components and related items are located at each truckstop:

PC-Based PBX. The PC-based PBX is both the controlling computer and intelligent
PBX. Each telephone extension and outside telephone line is connected and
controlled by the PC-based PBX. The hardware architecture utilizes off-the-shelf
components. Our software controls all aspects of user interaction. Unlike a
standard PBX, once a user picks up their telephone, all interaction with the
user is controlled by our software. Also, unlike a standard PBX system with
computer interfaces, our network is programmable, allowing for upgradability and
flexibility as new capabilities are needed or made available in the future.

Dedicated T-1 Access at Truckstop. We have installed a T-1 line at each
truckstop in order to obtain additional telecommunications capacity. Each T-1
line offers 24 channels of long distance voice or data capability at a fixed
cost. All 24 channels can be designated as voice channels for a flat monthly fee
or can be designated for data at an additional cost. The ability to designate
between voice or data channels allows flexibility as requirements change. Use of
T-1 lines allows us to bypass the local exchange carrier and associated LEC
access charges and obtain favorable pricing from long distance carriers,
creating a private network.

Frame Relay Network. We connect each truckstop via frame relay in a hub and
spoke configuration and can increase the bandwidth to each truckstop as traffic
warrants. The frame relay network protocol is Transmit Control Protocol/Internet
Protocol. This speeds up user access to the system and greatly increases system
flexibility. Additionally, we also perform site system monitoring and remote
access over the frame network, greatly enhancing site manageability.

Telephone Wiring. The telephone jack in each bollard in the truckstop parking
lot connects by twisted pair wiring to a pedestal box in the parking lot that in
turn is connected to the PC-based PBX inside the truckstop. Public pay phones
have been installed at certain truckstops that are connected to our network. The
PC-based PBX is connected to the public network through T-1 lines. Each
truckstop also has local telephone lines which are used to connect all local
calls.

Cable Television Headend and Wiring. The cable headend system is comprised of a
DBS satellite dish connected to an individual receiver. Other conventional
methods of Off-Air antennas and C-Band technologies are also used in supplying
channels to the user. An encrypted control unit is used to control

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<PAGE> 16

Pay-Per-View access. The television plug-in terminal in each bollard is
connected through a single coaxial cable to the pedestal box. The pedestal box
is connected through a single coaxial cable to the cable headend system inside
the truckstop.

Internet Access. We have equipped each truckstop with a modem bank for locally
connecting Internet access calls from the truck cab. This gives us the ability
to offer Internet access at all truckstops. Since connections between the member
and the on site modems are over our private network, no local telephone lines
are used. The user only ties up bandwidth on the frame network when active. Idle
users have no effect on the frame network bandwidth.

Voice Over IP. We have equipped each site additionally with a voice
compression/decompression capability allowing the transfer of point-to-point
voice calls over the frame relay network. We use industry standard voice
compression allowing near toll quality voice to travel over the network. We use
this system for calls between truckstops and our offices. Subscriber service
calls are transferred over the network and calls to drivers from the voice
mail/driver locator system are routed directly to the driver's telephone rather
than requiring the user to hang up and dial the callback number. There is no
variable cost associated with this type of call. If network bandwidth is
unavailable at the time, including during peak hours, the call can be routed as
a voice call over the T-1. This allows us the ability to build network capacity
based on normal usage patterns instead of adding redundant capacity to handle
peak usage.

Fleet Telecommunications Opportunities. By installing a router and PC-based
PBX, fleets can connect to our network allowing direct connections to their
drivers when they are connected to our network.

Truckstop Headquarters Telecommunications Opportunities. Large truckstop chains
can install a router and PC-based PBX, thereby connecting to our network
allowing voice and data communications among their truckstop locations.

COMPETITION

Overview. The market to provide telecommunications, cable television and
Internet access services to the trucking industry is highly competitive and
fragmented and is affected by the constant introduction of new products and
services by industry participants. Competition is based upon pricing, the
accessibility of services, and the perceived quality and reliability of the
telecommunications, cable television and Internet access services. Our
competition includes various providers and carriers of telecommunications, cable
television and Internet access services, many of which are substantially larger
than us and which have greater financial, technical, personnel and marketing
resources than we have.

Our ability to compete effectively in the market to provide telecommunications,
cable television and Internet access services to the trucking industry will
depend upon our continued ability to:

- enter into long-term contracts with truckstop owners and operators to become
their total communications solution;

- buildout additional sites for our network;

- provide our services at prices competitive with, or lower than, those charged
by our competitors;

- establish and maintain our strong relationships in the trucking industry;

- enhance the brand recognition of our network and our services; and

- provide a broad suite of services which can be bundled to meet the needs of
the customer at competitive prices.

Because we provide bundled telecommunications, cable television and Internet
access services, we face competition, with respect to one or more of these
services, from a number of sources.

Telecommunications. We compete with a large number of providers of
telecommunications services, including public phones, cellular and other
wireless telephones, long distance service providers, calling cards, prepaid
phone cards, collect calls and toll-free numbers. Many of our competitors have
significantly

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<PAGE> 17

larger capitalization and resources than us, which allow these companies to
achieve economies of scale and lower costs of funds employed. If any of our
competitors were to devote additional resources to the provision of
telecommunications services to our target customer base, there could be a
material adverse effect on our business and the price of our common stock.

In addition, the continuing trend toward consolidation of telecommunications
companies and the formation of strategic alliances within the telecommunications
industry is giving rise to significant new competitors. Many of these combined
entities have, or will have, resources far greater than us. These combined
entities may, now or in the future, be able to provide bundled packages of
telecommunications products, including local and long distance services and data
services and prepaid services in direct competition with the products offered,
or to be offered by us, and may be capable of offering these products sooner and
at more competitive rates. These types of consolidations and strategic alliances
could put us at a competitive disadvantage.

As a result of the 1996 Telecommunications Act, the RBOCs could compete with us
in the long distance telecommunications industry, both outside of their service
territory and, upon satisfaction of certain conditions, within their service
territory. A number of RBOCs have made initial applications for the approvals
necessary to enter their "in-region" long distance markets, although to date,
all such applications have been denied on the basis that the RBOC has not
satisfied the list of competitive requirements. However, there have recently
been extensive discussions among the PUCs, the FCC, and RBOCs in order to
develop a definitive understanding of these requirements and the specific
criteria to measure their satisfaction. These discussions may lead to one or
more successful RBOC "in-region" applications in the future. We believe that the
RBOCs expect to offset share losses in their local markets by capturing a
significant percentage of the in-region long distance market, especially in the
residential segment where the RBOCs' strong regional brand names and extensive
advertising campaigns may be very successful. This may have an unfavorable
effect on our business.

We also expect increasing competition from Internet telephony service providers
and others using newer and developing technologies. The use of the Internet to
provide telecommunications services, in particular, is a recent development.
This technology promises to substantially reduce the cost of carrying voice
conversations. Existing competitors are likely to continue to develop new
services that they offer to the trucking industry.

We believe that increasing competition in the telecommunications market will
result in significantly lower prices for long distance services. We may not be
able to reduce our prices sufficiently to compete effectively. Our failure to
increase our long-distance sales on a profitable basis could have a material
adverse effect on our financial condition and results of operations.

Our ability to compete effectively will depend partly upon our ability to
develop additional products and services which appeal to truckstop owners and
operators and drivers, as well as fleets. We believe that drivers currently use
public pay phones located at truckstops for a significant number of the calls
they make. We believe that our ability to offer telephone access at a cost
comparable to public phones with the added convenience and privacy of the truck
cab allows us to compete favorably. Cellular and other wireless service remains
unavailable in some remote truckstop locations and, even when cellular or other
wireless service is available, it historically has been expensive due to the
roaming charges that drivers frequently incur when they are away from home. We
believe that the accessibility of our network and our data transmission
capability allows us to compete effectively with cellular and other wireless
carriers. However, we expect competition from cellular and other wireless
telecommunications providers to be dynamic and increasingly more intense as a
result of the entrance of new competitors and the development of new
technologies, products and services, which may reduce the cost of cellular and
other wireless service by eliminating roaming charges and otherwise reducing
prices. At least one of our competitors, HighwayMaster, resells cellular service
to provide both voice and data communications to truck cabs. Our long distance
services, including our prepaid phone cards, compete with those provided by long
distance calling cards, prepaid phone cards and toll-free numbers, including
AT&T and MCI WorldCom, that drivers use to call fleet headquarters and home. We
may compete with other issuers of prepaid phone

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<PAGE> 18

cards that may distribute cards at or below our cost. Our contractual
arrangements with third parties relating to the prepaid phone cards that we
offer may make it difficult or impossible for us to reduce our prices for
prepaid long distance minutes to compete effectively on a profitable basis. Our
failure to increase our sales of prepaid phone cards on a profitable basis could
have a material adverse effect on our financial condition and results of
operations. We believe that our dedicated long distance network will allow us to
compete successfully with these providers by providing long distance services at
competitive rates.

Qualcomm's OmniTRACS service, a satellite based system, is used primarily for
mobile vehicle location and two-way text messaging. Based on publicly available
information, as of September 1998, the OmniTRACS service had an installed base
of approximately 250,000 units in 33 countries worldwide. The OmniTRACS service
addresses the trucking fleets' need for real-time mobile text communication. We
believe that our ability to provide communication capabilities and Internet
access over our network will allow us to compete effectively with the OmniTRACS
service.

Cable Television. The competition for our cable television offerings currently
consists of alternatives located outside the truck cab and primarily in the
truckstop. Community television and game rooms inside the truckstop are the most
readily available entertainment alternatives for truck drivers. These rooms
offer no privacy and limited choices in programming. We believe that a small
number of professional truck drivers have purchased DBS dishes to receive
television programming in their cabs. Cable, DBS and other video service
providers could seek to compete by offering cable television programming to
truckstops. We believe that our cable television services in the comfort and
convenience of the truck cab at a competitive price will allow us to compete
effectively against these alternatives.

Internet. The market for the provision of Internet access, content, transaction
processing and commerce solutions is extremely competitive and highly
fragmented. There are no substantial barriers to entry, and we expect that
competition will continue to intensify. Telecommunications carriers, including
RBOCs, Internet service providers, network and system integrators, and online
network service providers each offer Internet access. While we believe that our
network infrastructure, bundled services, and established relationships in the
trucking industry distinguish us from these providers, many of these competitors
have greater financial, technical and marketing resources, larger customer bases
and greater name recognition. We believe that Pay-Net, TIMM Communications and
certain other companies also have installed Internet/e-mail kiosks in
truckstops. Our Internet-based transaction processing services also will compete
with established providers of integrated transaction solutions for fleet
operators and their customers, including Ceridian's Comdata and J.B. Hunt
Logistics. Various websites, including www.trucknet.com, www.nettrans.com,
www.layover.com, www.truckstop.com, and www.yondar.com, also provide content and
commerce solutions to the trucking community. Several of these websites offer
specialized content directed to the trucking community and those who interact
with the industry, as well as "life style" segments that provide truck drivers
with interactive tools and services that permit them to personalize their
on-line experience, including free e-mail, chat rooms, news, weather and games.
These websites also offer tools and applications to assist the trucking
community, including mileage, routing and fuel optimization tools. Other
websites offer targeted electronic commerce solutions, such as load posting and
freight matching services, that are very similar to those that we plan to offer.
These websites, which offer content, tools and applications more extensive than
those that we believe that our portal will have at the time of its initial
launch, have market acceptance and established customer and advertising bases.
In the market for advertising revenue, we will compete with other online content
providers and traditional forms of media, including newspapers, magazines, radio
and television. We believe that the principal competitive factors in attracting
advertisers will include the amount of traffic on our website, brand
recognition, the demographics of our users, our ability to offer targeted
audiences and the overall cost-effectiveness of the advertising media that we
offer.

REGULATORY MATTERS

Telecommunications. Regulation of the telecommunications industry is changing
rapidly. As a provider of telecommunications services nationwide, we are subject
to varying degrees of regulation in each of the jurisdictions in which we
provide our services. Laws and regulations and the interpretation of such laws

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and regulations, differ significantly among the jurisdictions in which we
operate. These laws and regulations are, moreover, subject to change as a result
of ongoing regulatory implementation proceedings, subject to review by courts
and otherwise. There can be no assurance that future regulatory, judicial and
legislative charges will not have a material adverse effect on our company, that
regulators and/or third parties will not raise material issues with regard to
our compliance or non-compliance with applicable regulations, and/or that we
will be in compliance with all such laws and regulations at any one point in
time.

On the federal level, we are considered a non-dominant domestic interstate
carrier subject to minimal regulation by the FCC. We are not required to obtain
FCC authority to provide domestic interstate telecommunications services, but we
are required to maintain, and do maintain, a domestic interstate tariff on file
with the FCC. The FCC presumes the tariffs of non-dominant carriers to be
lawful. Therefore, the FCC does not carefully review such tariffs. The FCC
could, however, investigate our tariffs upon its own motion or upon complaint by
a member of the public. As a result of any such investigation, the FCC could
order us to revise our tariffs, or the FCC could prescribe revised tariffs. In
late 1996, the FCC ruled that interexchange carriers are no longer required to
file their tariffs for domestic interstate interexchange services. In August
1997, the FCC affirmed its decision to end tariff filing requirements for
domestic interstate long distance services provided by non-dominant carriers.
The FCC also eliminated the requirement that non-dominant carriers disclose
information on rates and terms of their products. These detariffing orders have
been stayed by the US Court of Appeals for the District of Columbia. Most
recently, on March 18, 1999, the FCC adopted an order that would permit the
alternative of posting rates on a carrier's website. This order will not become
effective until the Court affirms the FCC's mandatory detariffing plan.

In addition to the general requirement that before providing U.S. international
telecommunications services we obtain authority under Section 214 of the
Communications Act and file a tariff containing the rates, terms and conditions
applicable to such international services, we are also subject in our provision
of such U.S. international services to FCC rules requiring, among other things,
the filing of certain carrier-to-carrier contracts, notifications or approvals
of certain foreign carrier investments, approval for assignments of FCC licenses
and transfers of control of certified carriers, and other international service
regulations. We are also subject to a number of reporting requirements including
requirements to report on our international revenue, traffic flows, and use of
international facilities. We have recently filed a Section 214 application
seeking international authority, which we expect to be granted as a matter of
course. Upon such grant we intend to file an international tariff with the FCC.
Because we have provided U.S. international service prior to obtaining such
Section 214 authorization, we are subject to sanctions, including fines, other
penalties and/or denial or revocation of our 214 authority. We do not believe
that an enforcement action is likely, and if such action is taken, we do not
believe that any such penalties or fines would be onerous, or that our
authorization would be revoked. There can be no assurance, however, that this
will be the case.

The Telecommunications Act was intended to increase competition in the U.S.
telecommunications markets. Among other things, the Telecommunications Act
contains special provisions that eliminate the restrictions on incumbent local
exchange carriers ("ILECs") such as the RBOCs from providing long distance
service. These provisions permit an RBOC to provide certain long distance
services (including international service) outside of its current home region
immediately upon the receipt of any state and/or

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federal regulatory approvals otherwise applicable in the provision of long
distance service. The provisions also permit an RBOC to provide certain long
distance services (including international service) within its home region if it
satisfies procedural and substantive requirements, including showing that
facilities-based local competition is present in its market, that it has entered
into interconnection agreements which satisfy a "14-point" checklist of
competitive requirements and that its entry into this market is in the public
interest.

A number of RBOCs have made initial applications for the approvals necessary to
enter their "in-region" long distance markets, although to date, all such
applications have been denied on the basis that the RBOC has not satisfied the
list of competitive requirements. However, there have recently been extensive
discussions among the PUCs, the FCC, and RBOCs in order to develop a definitive
understanding of these requirements and the specific criteria to measure their
satisfaction. These discussions may lead to one or more successful RBOC
"in-region" applications in the future. In particular, Bell Atlantic, which
serves the New York metropolitan and mid-Atlantic regions is considered by
industry observers to be the most likely RBOC to be the first to be permitted to
offer "in-region" long distance services.

The Telecommunications Act also addresses a wide range of other
telecommunications issues that may potentially impact our operations by spurring
additional competition in the telecommunications markets. For example, on August
1, 1996, the FCC adopted a Local Competition Order that required ILECs to allow
new competitors to interconnect to the ILEC network, to allow competitors to
lease portions of the ILEC network and offer, at wholesale rates, retail local
services that competitors may resell. The requirements of the Local Competition
Order have withstood challenges in the courts, for the most part. A 1999 Supreme
Court decision seems likely to promote competition for telecommunications
services generally, but it also required the FCC to conduct additional
proceedings. Consequently, there may be future changes to FCC rules that we
cannot predict and which may have adverse effects on our business.

The FCC has also taken steps to spur competition in the international
telecommunications markets in accordance with certain commitments made by the
U.S. under the World Trade Organization Basic Telecommunications Agreement which
have already resulted in additional competitors entering the U.S.
telecommunications markets. The World Trade Organization ("WTO") recently
concluded an agreement, known as the WTO Basic Telecommunications Agreement (the
"WTO Agreement"). Under the WTO Agreement, the U.S. and other members of the WTO
committed themselves to, among other things, opening their telecommunications
markets to foreign carriers. The FCC has adopted streamlined procedures for
processing market entry applications from foreign carriers, making it easier for
such carriers to compete in the U.S.

The FCC has also significantly revised the universal service subsidy regime.
Beginning on January 1, 1998, interstate telecommunications carriers and certain
other entities became obligated to make FCC-mandated contributions to universal
service funds based upon end-user revenue. These funds subsidize, among other
things, the provision of telecommunications services in certain high cost areas
and to low-income customers. All telecommunications carriers providing
interstate telecommunications services, including us, must contribute to the
universal service support fund. These contributions became due beginning in 1998
for all providers of interstate telecommunications services. Such contributions
are assessed as a percentage of end user telecommunications revenues and are
based on the amount of a carrier's interstate and international revenues. Since
January 1998, this percentage has been in the range of 4 to 5%. Contribution
factors vary quarterly and carriers are billed monthly. On July 30, 1999, the
United States Court of Appeals for the Fifth Circuit released a decision
reviewing the FCC's Universal Service Order. Among other things, the Fifth
Circuit found that the FCC does not have authority to include intrastate
revenues in the calculation of universal service contributions and reversed and
remanded for further reconsideration the FCC's decision to include international
revenues in the contribution base. On September 9, 1999, the FCC filed a motion
for stay of the Fifth Circuit's mandate and, in that motion, reportedly stated
an intent to file a petition for rehearings of the July 30, 1999 opinion. Until
this and certain other proceedings are completed, there can be no assurance as
to how the FCC's USF response will ultimately be implemented or enforced or what
effect it will have on competition within the telecommunications industry or
specifically on our competitive position.

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Interstate and international telecommunications carriers are also subject to
access charges imposed by local exchange carriers ("LEC's") for origination and
termination of calls over local telephone lines. Telephone companies' costs of
providing long distance services are greatly affected by the access charges. The
FCC has significantly revised its access charge rules in recent years to permit
LEC's greater pricing flexibility and relaxed regulation of switched and special
access services in those markets where there are other providers of access
services. The most recent pricing flexibility rules, which were adopted August
5, 1999, have not yet been released. These rules would, among other things,
grant certain LECs the ability to file access tariffs on a streamlined basis
with no cost support and to provide volume and term discounts after certain
competitive triggers have been met. The FCC continues to adjust its access
charge rules, and we cannot predict future rates.

The Telecommunications Act also requires interexchange carriers to compensate
payphone owners when a payphone is used to originate a coinless telephone call.
This rate is currently set at $0.24 per call.

The FCC also imposes requirements for the marketing of telephone services and
for obtaining customer authorization for changes in a customer's primary long
distance carriers. The FCC has recently imposed severe penalties on a number of
carriers for "slamming." Under an order recently issued by the FCC, carriers are
required to take certain additional steps to prevent slamming. The FCC is
continuing to examine its slamming rules.

The state PUCs also regulate telecommunications service providers. Most states
require carriers to obtain authorization, either pursuant to certification, the
fulfillment of tariff requirements or notification requirements, to provide
intrastate telecommunications services, or to be found exempt from regulation,
before commencing such services. Many states also require carriers to file and
maintain detailed tariffs or price lists listing the rates, terms and conditions
under which they provide service. We are currently authorized pursuant to
registration, certification, tariffs, notifications, or on an unregulated basis
to provide intrastate telecommunications services in the 48 contiguous states
and Hawaii.

The relevant regulatory authorities could find that we provided intrastate long
distance service prior to obtaining necessary authorization. In the event of any
such finding, we may be subject to sanctions, including fines, other penalties
and/or revocation of our authority. We do not believe that any enforcement
action is likely, or that if such action is taken, we do not believe that any
such fines or penalties would be onerous, or that our authorizations would be
revoked. There can be no assurance, however, that this will be the case.

While we believe that our service offerings do not subject us to rules and
regulations governing pay phone providers, competitive local exchange carriers,
operator service providers, and facilities-based providers, there can be no
assurance that all relevant regulatory authorities would agree, since such rules
and regulations are subject to different interpretations, and are subject to
change. In the event that any regulatory authorities were to determine that we
are subject to regulations governing pay phone, CLEC, operator service, or
facilities-based providers, including additional authorization requirements, we
could be subject to sanctions for providing service without appropriate
authorizations or for otherwise failing to comply with applicable regulatory
requirements. While we do not believe that such determinations would result in a
material adverse effect upon us or our operations, there can be no assurance
that this will be the case.

Many states impose various reporting and other requirements. A number of state
PUCs have also adopted rules governing the marketing of telephone services and
obtaining customer authorizations for changes of a customers' primary long
distance carrier, access charges, and also contributions to state universal
funds, among other issues. State PUCs also regulate access charges and other
pricing for telecommunications services within each state. We may also be
required to contribute to universal service funds in some states.

Additionally, many states require prior approval or notification for corporate
actions including transfers of control of certified carriers, transfers of
carrier assets, including customer bases, carrier stock offerings, incurrence by
carriers of significant debt obligations and name changes. The FCC also requires
prior approval or notification under certain circumstances. We recently changed
our name from Park 'N View,

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Inc. to PNV.net, Inc. We are in the process of notifying the various state PUCs
and, where necessary, seeking approval in connection with, among other things,
the name change, a prior debt offering and our Series D preferred stock
offering. We are also in the process of making required filings with the FCC. We
cannot be certain that we will obtain all necessary regulatory approvals in
connection with the name change and such offerings. Additionally, we may be
subject to fines or other sanctions for failure to seek prior approval, where
necessary, for certain of these corporate actions or for failure to notify the
FCC or state PUCs in a timely enough fashion.

States generally retain the right to sanction a carrier and/or to condition,
modify, cancel, terminate or revoke authorization to provide telecommunications
services within the state for failure to comply with these and other state law
and/or rules, regulations and policies of the state regulatory authorities. Any
such penalties, including revocation, termination or suspension of our authority
to provide service would limit our ability to provide telecommunications
services to the long-haul trucking industry and could have a material adverse
effect on our business, financial condition and results of operation.

Cable Television. Cable television companies are subject to extensive
governmental regulation. We do not believe that we are subject to such
regulations. However, in the event we are required to comply with such
regulations, the expense, potential delay and management distraction potentially
resulting from the compliance process could have a material adverse effect on
our results of operations and financial condition.

Internet. Both the provision of Internet access service and the provision of
underlying telecommunications services are affected by federal, state and local
regulation. Currently only a small body of laws and regulations directly apply
to access to or commerce on the Internet. Moreover, in an April 1998 report to
Congress, the FCC determined that Internet service providers were not
telecommunications carriers and should consequently not be regulated as such.
However, this report stated that it expected the regulatory status of Internet
service providers in the future to continue to be uncertain. For example, the
report concluded that some services offered over the Internet, including
phone-to-phone Internet protocol telephony, may be functionally
indistinguishable from traditional telecommunications service offerings, and
their non-regulated status may have to be re-examined.

Due to the Internet's increasing popularity and use, additional laws and
regulations may be adopted at the international, federal, state and local levels
with respect to the Internet, covering issues, which are currently largely
subject to policies set by individual ISPs, such as user privacy, freedom of
expression, pricing, characteristics and quality of products and services,
taxation, advertising, intellectual property rights, information security and
the convergence of traditional telecommunications services with Internet
communications. Moreover, a number of laws and regulations have been proposed
and are currently being considered by federal, state and foreign legislatures
with respect to such issues. The nature of any new laws and regulations and the
manner in which existing and new laws and regulations may be interpreted and
enforced cannot be fully determined. The adoption of any future laws or
regulations might decrease the Internet's growth, decrease demand for our
service, impose taxes or other costly technical requirements or otherwise
increase the cost of doing business or in some other manner have a material
adverse effect on us. In addition, applicability to the Internet of existing
laws governing issues including property ownership, copyrights and other
intellectual property issues, taxation, libel, obscenity and personal privacy is
uncertain. As our services are available over the Internet in multiple states,
and as we facilitate sales by our customers to end users located in such states,
one or more states may seek to assert jurisdiction over various aspects of our
business. Any new legislation or regulation, or the application of laws or
regulations from jurisdictions whose laws may not currently apply to our
business, could have a material adverse effect on us.

The Communications Decency Act of 1996 imposed criminal liability on persons
sending or displaying in a manner available to minors indecent material on an
interactive computer service, including the Internet, and on any entity
knowingly permitting facilities under its control to be used for such
activities. Sections of this Act that, among other things, proposed to impose
criminal penalties on anyone distributing "indecent" material to minors over the
Internet, were held to be unconstitutional by the United States Supreme

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Court. Subsequently, the Child Online Protection Act of 1998 prohibited and
imposed criminal penalties and civil liability on anyone engaged in the business
of selling or transferring, by means of the World Wide Web, material that is
harmful to minors without restricting access to such material by persons under
seventeen years of age. The Child Online Protection Act has been challenged by
civil rights organizations in part on the grounds that, like the Communications
Decency Act, it violates the First Amendment. A United States District Court has
preliminarily enjoined enforcement of the law until final resolution of the
case. Numerous states have adopted or are currently considering similar types of
legislation. Such legislation could subject us and/or our customers to potential
liability, which in turn could have an adverse effect on us. The potential
liability could require us to implement measures to reduce our exposure to such
liability. Such measures may require the expenditure of substantial resources or
the discontinuation of some of our product or service offerings. Further, the
costs of defending against any such claims and potential adverse outcomes of
such claims could have a material adverse effect on us. Moreover, we do not
currently have an acceptable use policy in place which would bar unlawful use of
our network. As a result, we are currently at increased risk of liability for
unlawful use of our network.

Even with such a policy in place, we still cannot control the content of
information transferred over our network. The law relating to the liability of
online service providers, private network operators and Internet service
providers for information carried on or disseminated through the facilities of
their networks is continuing to evolve and remains unsettled. In the past, one
federal district court in the northern district of California, where we conduct
business, has ruled that Internet service providers could be found liable for
copyright infringement as a result of information disseminated through their
networks. We cannot assure you that similar claims will not be asserted in the
future. Federal laws have been enacted, however, which provide Internet service
providers with immunity from publisher or speaker liability for information that
is disseminated through their networks when they are acting as mere conduits of
information. A Federal Court of Appeals has recently held that the
Telecommunications Act creates immunity from liability on the part of Internet
service providers for libel claims arising out of information disseminated over
their services by third-party content providers.

In addition, the Digital Millennium Copyright Act, enacted in 1998, creates a
safe-harbor from copyright infringement liability for Internet service providers
if:

- the transmission was initiated by or at the direction of a person other than
us;

- the transmission or routing is carried out through an automatic technical
process without selection of the material by us;

- we do not select the recipients of the material except as an automatic
response to the request of another person;

- no copy of the material in the course of intermediate or transient storage is
maintained on the system in a manner ordinarily accessible to anyone other
than the recipients nor for a period longer than is reasonably necessary for
the transmission or routing to occur; and

- no modification of the transmission's content occurs through our system.

We cannot assure you, however, that the Digital Millennium Copyright Act or any
other legislation will protect us from copyright infringement liability. We
maintain general liability insurance. However, any imposition of liability on us
for alleged negligence, intentional harmful acts, including infringement, or
other liability could have a material adverse effect on us.

Changes in the regulatory structure and environment affecting the Internet
access market, including regulatory changes that directly or indirectly affect
telecommunications costs or increase the likelihood of competition from RBOCs or
other telecommunications companies, could have an adverse effect on our
business. Although the FCC has decided not to allow local telephone companies to
impose per-minute access charges on Internet service providers, and that
decision has been upheld by the reviewing court, further regulatory and
legislative consideration of this issue is likely. In addition, some telephone
companies are seeking relief through state regulatory agencies. Such rules, if
adopted, are likely to have a

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greater impact on consumer-oriented Internet access providers than on
business-oriented Internet service providers, including us. Nonetheless, the
imposition of access charges would affect our costs of serving dial-up customers
and could have a material adverse effect on us.

PROPRIETARY RIGHTS

We believe that recognition of our products and services is an important
competitive factor in our industry and attempt to protect them with copyrights,
trademarks, trade secret laws, restrictions on disclosure and other methods. We
cannot be certain that these methods will offer sufficient protection. We have
entered into proprietary rights agreements with key technical employees. Despite
these precautions, it may be possible for a third party to copy or otherwise
obtain and use our products, services or technology without authorization, or to
develop similar technology independently. Accordingly, we have filed an
application for a United States trademark registration for the following: "PARK
'N VIEW," "INCAB PNV," "PNV USA," "YOUR CAB. YOUR CABLE. YOUR CALL," "PNV
CONNECT" and "PNV NET" and hold trademark registrations for "WHERE SMART DRIVERS
STAY CONNECTED" and "PARK 'N VIEW" (with design).

We regard our software as proprietary and attempt to protect it as a trade
secret. We hold no patents or copyrights on our software technology. We are
currently drafting a patent application on our truck stop bollard for filing
with the United States Patent and Trademark Office. Other products exist for
which possible patent registration is being investigated.

A substantial amount of uncertainty exists concerning the scope of protection
copyright and trademark laws afford on the Internet, and we cannot be assured
that copyright and trademark laws will be afforded on the Internet.

EMPLOYEES

As of July 31, 1999, we had 242 employees, including 12 part-time employees,
none of whom are represented by a collective bargaining agreement. These
employees do not include temporary personnel and consultants who we retain from
time to time. We consider our employee relations to be good.

RISK FACTORS

Set forth below is a description of certain risk factors that may adversely
affect our business, financial condition and results of operations.

WE HAVE A LIMITED OPERATING HISTORY AND HAVE NOT BEEN PROFITABLE AND EXPECT
FUTURE LOSSES AND NEGATIVE CASH FLOW.

From November 1993 to November 1995, our predecessor, Park 'N View, Ltd.,
developed our network and installed and operated it at one truckstop as a field
test. We began offering services on our network in December 1995 with the
completion of our first site. We deployed our network at 14 truckstops in 1996,
59 truckstops in 1997, 113 truckstops in 1998 and 43 truckstops from January 1,
1999 to July 31, 1999. Consequently, we have a limited operating history upon
which you may evaluate us and we face all of the risks and uncertainties of
early-stage companies. To date, we have not been profitable. We may never be
profitable or, if we become profitable, we may be unable to sustain
profitability. We have recognized limited revenues since our inception and have
incurred substantial costs to build and deploy our network, offer our services
and operate our business. We have incurred net losses of approximately $61.5
million from our inception through June 30, 1999. To date, our cash flow from
operations has been substantially insufficient to meet our cash requirements. We
expect to incur substantial net losses and experience substantial negative cash
flows for the foreseeable future. As of June 30, 1999, our total liabilities
plus our preferred stock outstanding exceeded our total assets by $57.0 million.

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MANY OF OUR COSTS ARE FIXED AND WE EXPECT OUR COSTS TO INCREASE WHICH MAY
REQUIRE US TO SEEK ADDITIONAL FINANCING IN THE FUTURE, WHICH MAY NOT BE
AVAILABLE ON ACCEPTABLE TERMS, IF AT ALL.

A high percentage of the costs of operating our network are fixed, including our
commitments under our contract with AT&T for T-1 lines and our equipment leases
with Cisco for routers. In addition, many of our costs are based on our
expectations of the future demand for our services and are relatively fixed in
the short-term. If our revenues do not increase, we may not be able to reduce
our costs in a timely manner to account for any shortfall in revenues. Recently,
we significantly increased our costs for:

- additional personnel to expand our sales and marketing programs and to
develop the portal website;

- the deployment of prepaid phone card machines at truckstops operated by a
major chain; and

- the publication of Connect!.

During the remainder of fiscal 2000, we plan to further increase our costs for:

- additional personnel to expand our sales and marketing programs and to
develop the portal website;

- the deployment of public Internet kiosks at certain truckstops;

- the installation of additional switching capacity necessary for our provision
of public phone operations at truckstops operated by two major truckstop
chains; and

- the addition of personnel in other areas to support the expansion of our
operations that our business plan contemplates.

We also plan, during the remainder of fiscal 2000, to deploy prepaid phone card
machines at additional truckstops and to continue our publication of Connect!.
In addition, beginning in November 2000, we will be required to make the
scheduled semiannual interest payments on our 13% notes from our available cash.
Prior to that time, we have made, or will make, the first four scheduled
interest payments from funds and securities in an escrow account.

Our capital requirements will depend on numerous factors, including the growth
of our revenues, if any, and the rate of such growth and our expenditures. We
expect that the net proceeds from our sale of Series D preferred stock in
September 1999, together with existing cash and anticipated cash generated from
operations, will be sufficient to fund our anticipated cash requirements during
the remainder of fiscal 2000. Following our use of such funds, if equity, debt
or other financing is not available, we may experience insufficient liquidity
which could have a material adverse effect on our financial condition and
results of operations. The indenture governing our 13% notes substantially
restricts our ability to obtain additional debt financing. There can be no
assurance that additional financing will be available when needed, if at all,
or, if available, on terms acceptable to us. If adequate funds are not available
on acceptable terms, we may curtail or cease our operations. Moreover, even if
we are able to continue our operations, the failure to obtain any needed
financing could have a material adverse effect on our business and financial
results. Any inability to fund our future capital requirements would have a
material adverse effect on our business, financial condition and operating
results. See the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" under the heading "Liquidity and
Capital Resources" for more information on our capital requirements.

WE CANNOT PREDICT OUR SUCCESS BECAUSE OUR BUSINESS MODEL IS UNPROVEN.

Currently, our revenues are generated primarily from sales of subscriptions to
the telecommunications and cable television services offered on our network and
to a lesser extent from prepaid phone card operations and resales of long
distance telephone minutes and advertising sales. Our future success depends
upon, among other things, our ability to increase revenues from our current
sources and generate revenues from additional sources, including, specifically,
our ability to:

- increase sales of subscriptions to the telecommunications and cable
television services offered on our network;

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- convert daily subscribers to monthly subscribers and otherwise increase our
revenue on a per subscriber basis;

- generate sales of subscriptions to our Internet access service;

- increase resales of long distance telephone minutes;

- generate advertising revenue;

- generate revenues from e-commerce activities through the portal we are
developing; and

- expand our prepaid phone card operations.

If we are unable to increase our revenues from our current sources and generate
revenue from other sources, our business, financial condition and operating
results will be materially adversely affected. We may not be able to sustain our
current revenues or successfully generate additional revenue.

WE MAY NOT BE ABLE TO RETAIN OUR CURRENT SUBSCRIBERS OR INCREASE SALES OF
SUBSCRIPTIONS TO SERVICES OFFERED ON OUR NETWORK AND THE LONG DISTANCE
TELEPHONE MINUTES WE OFFER OVER OUR NETWORK.

Our future success depends upon our ability to significantly increase the number
of subscribers to services currently offered on our network and to generate fees
for Internet access service. The number of our active subscribers did not
increase significantly from September 1998 to June 1999 and decreased by 622
subscribers from March 1999 to June 1999.

Even if truck drivers initially subscribe to our network, they may not renew
their subscriptions. Of our new monthly subscribers in April 1999, our data
indicates that 82% were still active monthly subscribers in July 1999. There are
many factors that could cause a subscriber to cancel an ongoing monthly
subscription or fail to purchase a subscription, including dissatisfaction with
our network and the services offered, or with the number and location of the
truckstops at which our network is available, or truck driver turnover. Some
drivers have experienced problems in connecting to our network due to an
accumulation of moisture in the parking lot access points, or bollards. This
operational problem may cause drivers to cancel or decide not to purchase a
subscription. In July 1999, we began offering Internet access service free of
charge on a promotional basis. Beginning in October 1999, we intend to charge
separate subscription fees for this service. Once we begin to charge a separate
fee, truck drivers may be unwilling to purchase a subscription to this service.
Many truck drivers may not own a computer for accessing the Internet.

Our power plan programs and payroll deductions, designed to increase ongoing
monthly subscriptions, may not be successful. We began marketing our power plan
program in October 1997 and had approximately 11,890 subscribers under this
program as of July 31, 1999. We began marketing our payroll deduction program in
March 1999 and had approximately 2,430 subscribers under this program as of July
31, 1999.

Our future success also depends on our ability to increase our resales of long
distance telephone minutes. We began marketing resales of long distance
telephone minutes in February 1999. Since that time we have increased our long
distance resales from $36,000 in February to $54,000 in July 1999. We believe
that increasing competition in the telecommunications industry will result in
significantly lower prices for long distance services. We may not be able to
reduce our prices sufficiently to compete effectively. Our failure to increase
our resales of long distance minutes on a profitable basis could have a material
adverse effect on our financial condition and results of operation.

OUR LONG-TERM SUCCESS DEPENDS ON THE DEVELOPMENT OF ELECTRONIC COMMERCE
TRANSACTIONS ON THE PORTAL, WHICH IS UNCERTAIN.

Our success depends on our ability to develop and generate revenue from
electronic commerce activities on the portal. If we are unable to develop
electronic commerce activities on the portal or if business-to-business
electronic commerce within the trucking industry does not grow or grows more
slowly than expected, either of these developments will have a material adverse
effect on our business. Many truck drivers may not have a computer for accessing
the Internet from their trucks which may adversely affect

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the growth of electronic commerce in the trucking industry and on our portal.
According to a survey of approximately 800 truck drivers conducted for us by a
third party research firm in December 1998, approximately 21% of truck drivers
have computers in their truck cabs.

OUR LONG-TERM SUCCESS DEPENDS ON OUR ABILITY TO GENERATE ADVERTISING REVENUES
AND ADOPTION OF THE INTERNET AS AN ADVERTISING MEDIUM IS UNCERTAIN.

Our business model contemplates that we will generate significant advertising
revenue from sales of advertising in Connect! and on the portal. We began
publishing Connect! in July 1999 and have not yet launched the portal. If we are
not successful in developing content for Connect! and the portal that attract a
significant number of truck drivers and other trucking industry participants, it
is unlikely that we will be able to attract advertisers.

The growth of Internet advertising requires validation of the Internet as an
effective advertising medium. This validation has yet to fully occur. Acceptance
of the Internet among advertisers will also depend on growth in the commercial
use of the Internet. If we do not generate advertising revenue or if widespread
commercial use of the Internet does not develop, or if the Internet does not
develop as an effective and measurable medium for advertising, our business,
financial condition and operating results could be materially adversely
affected.

WE ARE HIGHLY LEVERAGED WHICH COULD ADVERSELY AFFECT OUR ABILITY TO OPERATE
AND EXPAND OUR BUSINESS.

We have a significant amount of debt outstanding. On June 30, 1999, we had $71.1
million of outstanding indebtedness and $57.0 million of stockholders'
deficiency.

We may not be able to meet our debt service requirements. We will be in default
under the terms of the indenture governing our 13% notes if we are unable to
make required interest payments or we otherwise fail to comply with the various
covenants in the indenture. We are required to make semiannual interest payment
on our 13% notes in May and November each year. The 13% notes mature in May
2008. We have made the first two interest payments and intend to make the next
two interest payments from funds and securities in an escrow account. Beginning
with the November 2000 scheduled interest payment, we will be required to make
these interest payments from our available cash. A default would permit the
holders of our 13% notes to accelerate the maturity of these notes, which would
have a material effect on our business, financial condition and results of
operations. Even if we are able to meet our debt service obligations, the amount
of debt we have could adversely affect us in a number of ways. For example, we
could be required to dedicate a substantial portion of our cash flow from
operations to the payment of principal and interest on our debt, thereby
reducing the funds available for the growth of our business.

WE DERIVE MOST OF OUR REVENUE FROM OUR OPERATIONS AT TRUCKSTOPS AND TRUCKSTOPS
MAY ENTER INTO CONTRACTS WITH OTHER PROVIDERS IF WE DO NOT MEET OUR
OBLIGATIONS.

Most of our current revenues are generated from our operations at truckstops. We
expect that the provision of telecommunications, cable television and Internet
access services through our network will continue to be a primary source of
revenue for the foreseeable future. See the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" under
the heading "Overview" and the section entitled "Business" under the heading
"Network Buildout; Truckstop Relationships and Contracts" for discussions about
our contractual relationships with truckstop owners and associations. TA owns or
operates over 150 of the truckstops that we have under contract.

We have contracted with truckstop operators located throughout the United
States. While most independent truckstop owners who own a single truckstop
execute a standard contract, the contracts executed by truckstop chains that
operate multiple truckstops vary significantly. These contracts generally
provide that the truckstop chains and independent truckstop owners may terminate
the contracts, and our exclusive rights under the contracts, if we fail in any
material respect to perform any of our obligations under the contracts and fail
to remedy the breach within 30 days after we receive notice of the breach.

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Any failure by us to meet our contractual obligations that results in the
termination of our contracts, could have a material adverse effect on our
financial condition and results of operations.

OUR CONTRACTS WITH TRUCKING ASSOCIATIONS TO INSTALL OUR NETWORK AT
APPROXIMATELY 300 MEMBER TRUCKSTOPS ARE NOT LEGALLY BINDING ON THEIR MEMBERS.

As of June 30, 1999, we had entered into contracts with the three largest
trucking associations representing more than 300 additional independent
truckstops pursuant to which these associations have agreed to permit us to
offer our services to their members. These associations do not have authority to
legally bind their members. Therefore, while each association has granted us the
right to offer cable television and telephone services to their members, this
contractual provision is not binding on any member. Prior to installation of our
network at an association member's truckstop, we must enter into a contract with
the association member granting us the right to install our network at the
member's truckstops. Accordingly, our contracts with truckstop associations may
not result in our network being installed at additional truckstop locations. See
the section entitled "Business" under the heading "Network Buildout; Truckstop
Relationships and Contracts."

OUR TELECOMMUNICATIONS AND CABLE TELEVISION PRODUCTS AND SERVICES COMPETE WITH
THOSE OFFERED BY MANY WELL-ESTABLISHED COMPETITIVE PROVIDERS.

In the market for the telecommunications and cable television services that we
offer, we compete with various elements of other providers' offerings based on
ease of access, functionality and cost. These industries are highly competitive,
and we expect to face strong competition from existing and potential
competitors. Our competitors comprise a broad range of companies engaged in
telecommunications and cable television services, including, but not limited to,
public phone operators, prepaid phone card providers, cellular and other
wireless telecommunications companies, long distance telecommunications
carriers, cable operators and direct broadcast satellite companies, as well as
companies developing new technologies. The Telecommunications Act of 1996 also
permitted the Regional Bell Operating Companies, or RBOCs, to enter the
out-of-region long distance market and, if certain requirements are met, to
enter the long distance market in its in-region states. Some of these
competitors and potential competitors, including those arising from the
consolidation of telecommunications and cable television companies and the
formation of strategic alliances, are well established companies and have
significantly greater financial, marketing and programming resources than us.

Our telecommunications services compete with public pay phones, cellular and
other wireless telephones, long distance providers, calling cards, prepaid phone
cards, collect calls and toll-free numbers. We believe that drivers currently
use public pay phones located at truckstops for a significant number of the
calls they make and we may not successfully attract drivers who predominantly
use these public pay phones. Although cellular and other wireless service may be
presently unavailable in some remote truckstop locations, we expect competition
from cellular and other wireless telecommunications providers to be increasingly
more intense as a result of the entrance of new competitors and the development
of new technologies, products and services, which may reduce the cost of
cellular and other wireless services. Our telecommunications services may not be
able to compete successfully against cellular and other wireless offerings. Our
resales of long distance telephone minutes also compete with those provided by
calling cards, prepaid phone cards, collect calls and toll-free numbers. Our
telecommunications services may not be able to effectively compete against these
or future telecommunications competitors, many of which have large customer
bases and significantly more resources than us. We believe that increasing
competition in the telecommunications industry will result in significantly
lower prices for long distance services. We may not be able to reduce our prices
sufficiently to compete effectively. Our failure to increase our resales of long
distance minutes on a profitable basis could have a material adverse effect on
our financial condition and results of operations.

The prepaid phone card sector of the long distance telecommunications market is
highly competitive and is affected by the constant introduction of new cards and
services by industry participants. Competition is based upon pricing, customer
service and perceived reliability of the prepaid phone cards. Our competitors

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include some of the largest telecommunications providers, as well as emerging
carriers in the prepaid phone card market which have greater financial,
technical, personnel and marketing resources than us and greater name
recognition and larger customer bases than us. Our ability to compete
effectively in the prepaid phone card sector of the long distance
telecommunications market will depend upon our ability to provide reliable cards
at prices competitive with, or lower than, those charged by our competitors. Our
contractual arrangements with third parties relating to the prepaid phone cards
that we offer may make it difficult or impossible for us to reduce our prices
for prepaid long distance minutes to compete effectively on a profitable basis.
Our failure to increase our sales of prepaid phone cards on a profitable basis
could have a material adverse effect on our financial condition and results of
operations.

The competition for our cable television offerings currently consists of
alternatives located outside the truck cab and primarily in the truckstop.
Community television and game rooms inside the truckstop are the most readily
available entertainment alternatives for truck drivers. We believe that a small
number of professional truck drivers have purchased direct broadcast satellite,
or DBS, dishes to receive television programming in their cabs. Cable, DBS, and
other video service providers to such users as residential apartment buildings
could seek to compete by offering cable television programming to truckstops. We
may not be able to compete successfully against these providers, most of which
will have access to greater resources and provide more programming than our
network. See the section entitled "Business" under the heading "Competition."

WE HAVE MANY STRONG COMPETITORS FOR OUR CURRENT AND PLANNED INTERNET ACCESS
SERVICES.

The market for providing Internet access is extremely competitive and highly
fragmented. There are no substantial barriers to entry, and we expect that
competition will continue to intensify. We may not be able to compete
successfully against current or future ISPs, many of whom may have financial
resources greater than ours. Increased competition could cause us to increase
the sales and marketing expenses related to our Internet access services as well
as cause our users to obtain Internet access from other sources. We may not be
able to offset the effects of these increased costs through an increase in the
number of subscribers to our Internet access service and we may not have the
resources to continue to compete successfully as an ISP.

We believe that new competitors, including large computer hardware and software,
media, and telecommunications companies, will continue to enter the Internet
access market. As consumer awareness of the Internet grows, existing competitors
are likely to further increase their emphasis on their Internet access services,
resulting in even greater competition. In addition, telecommunications companies
may be able to offer customers reduced communications costs in connection with
these services, reducing the overall cost of their Internet access solutions and
significantly increasing pricing pressures on our Internet access services. The
ability of our competitors to acquire other ISPs, to enter into strategic
alliances or joint ventures or to bundle other services and products with
Internet access could also put us at a significant competitive disadvantage.

We intend to deploy public Internet kiosks in certain truckstops of two major
chains during the remainder of fiscal 2000. There is at least one company that
has installed Internet/e-mail kiosks in a number truckstops.

OUR CURRENT AND PLANNED INTERNET PRODUCTS AND SERVICES FACE INTENSE
COMPETITION.

Competition for Internet products and services and electronic commerce is
intense. We expect that competition will continue to intensify. Barriers to
entry are minimal, and competitors can launch new websites at a relatively low
cost. Various websites currently exist that provide content and commerce
solutions to the trucking community. Several of these websites have market
acceptance, established customer and advertising bases and offer a greater
variety of content and applications than our portal may initially offer. Our
competitors may develop new Internet products or services that are superior to,
or have greater market acceptance than, our products and services. If we are
unable to compete successfully against our competitors, our business, financial
condition and operating results could be adversely affected.

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WE ARE DEPENDENT ON THIRD PARTIES FOR THE PUBLIC PHONE AND PREPAID PHONE CARD
OPERATIONS WE OFFER.

We are currently dependent on third parties for the public phone and a portion
of the prepaid phone card operations that we offer truckstops. We are obligated
to provide public phone operations in the truckstops of one major chain. We have
contracted with a third party to provide these operations and do not intend to
provide this service directly. This third party's failure to provide public
phone operations would result in our breach of our contract with the truckstop
chain. Our system is currently unable to provide all of the components necessary
for prepaid phone card operations. Although we believe that other third parties
could provide these services for us or, over time, we could develop the systems
so that we could provide these services, any inability to rely on third party
systems without disruption prior to such development would eliminate our ability
to offer prepaid phone card operations to truckstops and could have a material
adverse effect on our business, financial condition and results of operations.

WE ARE DEPENDENT ON TELECOMMUNICATIONS CARRIERS AND OTHER SUPPLIERS.

We rely on local and long distance telecommunications carriers to provide
telecommunications services via local lines and T-1 lines. We may experience
disruptions or capacity constraints in our local and long distance
telecommunications services. If disruptions or capacity constraints occur, we
may have no means of replacing these services on a timely basis, at a cost
acceptable to us, or at all. In addition, local phone service is sometimes
available only from the local monopoly telephone company in the markets we
serve. We believe that the federal Telecommunications Act of 1996 generally will
lead to increased competition in the provision of local telephone service, but
we cannot predict when or to what extent this will occur or the effect of
increased competition on pricing or supply.

The long distance telecommunications carrier from which we purchase long
distance minutes for resale also sells or leases products and services to our
competitors and may be, or in the future may become, a direct competitor itself.
Our suppliers and our telecommunications carrier may enter into exclusive
arrangements with our competitors or stop selling or leasing their products or
services to us at commercially reasonable prices, or at all.

OUR SUCCESS WILL DEPEND ON THE TIMELY AND COST-EFFECTIVE INSTALLATION OF OUR
NETWORK FOR WHICH WE RELY ON THIRD PARTIES.

Our future success will depend in large part on the timely and cost-effective
installation of our network at additional truckstops for which we rely on third
parties. To date, the installation of our network at truckstops by these
contractors has been completed substantially on our schedule and within our
budget, and, generally, the installation services performed by these contractors
have been satisfactory to us. Although we believe that there are sufficient
alternative sources for the installation of our network, we may not be able to
obtain these services on a timely basis or at a cost acceptable to us. If we
were unable to continue our buildout as planned, it could have a material
adverse effect on our business, financial condition and results of operations.

WE DEPEND ON THIRD PARTIES TO SUPPLY US WITH PROGRAMMING AND EQUIPMENT.

We purchase our satellite equipment, headend equipment, telephone switching
equipment, computer hardware and cable programming from outside suppliers and do
not have purchase agreements with any supplier other than our cable programming
supplier, Echostar Communications Corporation. We presently purchase our
satellite equipment and computer hardware from a sole supplier and we believe
that limited alternative sources for these items exist. If we were required to
purchase alternative telephone switching equipment from another source, it would
require reprogramming of some of our software or if we were required to purchase
any alternative equipment from another source, it could require that we modify
and redesign our network in certain respects which, in each case, could result
in service delays and expense to us. In addition, we purchase the cable
programming offered on our network from Echostar. Although we believe that
limited alternative sources for cable programming exist, utilizing an
alternative source could require retrofitting certain equipment at each
truckstop site and could result in an interruption in our

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ability to offer cable television services through our network for a limited
period of time. If we are unable to obtain any of the foregoing equipment,
particularly telephone switching equipment, or cable programming, this could
have a material adverse effect on our ability to expand our business in a timely
fashion and, as a result, on our results of operations and financial condition.

We depend on a few third-party suppliers of hardware components. Currently, we
acquire routers used to provide our networking services from only one source.
From time to time, we have experienced delayed delivery from some suppliers. If
we are unable to develop alternative sources of supply, if required, we could
experience delays and increased costs in expanding our network infrastructure.

WE HAVE CONTRACTS WHICH REQUIRE US TO PAY A SPECIFIED MINIMUM DOLLAR AMOUNT
REGARDLESS OF OUR NEEDS.

We have contracts with AT&T under which we obtain T-1 lines and related
communications services for our network and purchase long distance telephone
minutes that we resell. These contracts require us to pay specified minimum
dollar amounts regardless of the number of T-1 lines or long distance telephone
time we need. In return for our commitment to minimum payments, we have obtained
certain discounts applied to our payments for these services. See the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" under the heading "Liquidity and Capital Resources." If
we do not obtain the available discounts with regard to our required payments,
this could have a material adverse effect on our business, financial condition
and results of operations.

OUR BUSINESS DEPENDS UPON THE HEALTH OF THE TRUCKING INDUSTRY.

Our business depends on the trucking industry which is dependent on economic
factors, including the level of domestic economic activity and interest rates,
as well as operating factors such as fuel prices and fuel taxes over which we
have no control and which could contribute to a decline in truck travel. The
long-haul trucking business is also a mature industry that has grown slowly in
recent years and has, in the past, been susceptible to recessionary downturns.

OUR NETWORK MAY BE VULNERABLE TO SECURITY BREACHES AND INAPPROPRIATE USE BY
INTERNET USERS WHICH COULD DISRUPT OUR SERVICE.

The future success of our business will depend on the security of our network
and, in part, on the security of the network infrastructures of our third-party
providers, over which we have no control. Despite the implementation of security
measures, our infrastructure is vulnerable to computer viruses or similar
disruptive problems. Computer viruses or problems caused by third parties,
including the sending of excessive volumes of unsolicited bulk e-mail or "spam,"
could lead to interruptions, delays, or cessation in service to our subscribers.
Third parties could also potentially jeopardize the security of confidential
information stored in our computer systems or our subscribers' computer systems
by their inappropriate use of the Internet, which could cause losses to us or
our subscribers or deter persons from subscribing to our services. Inappropriate
use of the Internet includes attempting to gain unauthorized access to
information or systems, commonly known as "cracking" or "hacking." Although we
intend to continue to implement security measures to prevent this, "hackers"
have circumvented security measures adopted by others in the past, and may be
able to circumvent our security measures in the future.

To alleviate problems caused by computer viruses or other appropriate uses or
security breaches, we may have to interrupt, delay, or cease service to our
subscribers, which could have a material adverse effect on our business,
financial condition, and results of operations. In addition, we expect that our
subscribers will increasingly use the Internet for commercial transactions in
the future. Any network malfunction or security breach could cause these
transactions to be delayed, not completed at all, or completed with compromised
security. Subscribers or others may assert claims of liability against us as a
result of any failure by us to prevent these network malfunctions and security
breaches. Until more comprehensive security technologies are developed, the
security and privacy concerns of existing and potential subscribers may inhibit
the growth of the Internet service industry in general and our subscriber base
and revenue in particular.

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WE MAY FACE POTENTIAL LIABILITY FOR INFORMATION DISSEMINATED THROUGH OUR
NETWORK.

Since the law relating to liability of ISPs for information carried on or
disseminated through their networks is not settled, even with the defenses
available in Section 223 of the Communications Decency Act of 1996 and the
recent enactment of the Digital Millennium Copyright Acts, we may be subject to
such liability. A number of lawsuits have sought to impose liability for
defamatory speech, indecent materials and infringement of copyrighted materials.
The United States Supreme Court has let stand a lower court ruling that an ISP
was protected from liability for material posted on its system by a provision of
the Communications Decency Act. However, the findings in that case may not apply
in other circumstances. Other courts have held that online service providers and
ISPs may be subject to damages for copying or distributing copyrighted
materials. Provisions of the Communications Decency Act that imposed criminal
penalties for using an interactive computer service for transmitting obscene or
indecent communications have been found unconstitutional by the United States
Supreme Court. However, the Child Online Protection Act requires limits on
access to pornography and other material deemed "harmful to minors." This
legislation imposes criminal penalties and civil liability. Numerous states have
adopted or are adopting similar types of legislation. We may be subject to
claims relating to content that is published on or downloaded from our sites. We
also could be subject to liability for content that is accessible from our
website through links to other websites or that is posted by users in chat rooms
or bulletin boards. Potential liability imposed on ISPs like us for material
carried on or disseminated through our network could require us to implement
measures to reduce our exposure to that liability. These measures may require us
to spend substantial resources or discontinue certain service offerings. We do
not have errors and omissions insurance that would cover claims relating to
these risks. The imposition of liability could have a material adverse effect on
our business or financial results.

OUR BUSINESS IS CHARACTERIZED BY EVOLVING TECHNOLOGY WHICH WE MAY NOT BE ABLE
TO KEEP UP WITH IN A COST-EFFECTIVE WAY.

The services that we offer through our network are characterized by evolving
technology, changes in customer needs, rapidly growing competition and frequent
new product and service introductions. Our future success will depend, in part,
on our ability to:

- effectively use and offer leading technologies;

- continue to develop our technical expertise;

- enhance our current networking services;

- develop new products and services that meet changing customer needs;

- advertise and market our services; and

- influence and respond to emerging industry standards and other technological
changes.

We must accomplish these tasks in a timely and cost effective manner. New
technologies, such as wireless data transmissions, or industry standards may
replace or provide lower cost alternatives to our existing products and services
or could render our existing products and services noncompetitive and adversely
affect their marketability. We also believe that our ability to compete
successfully depends on the continued compatibility and interoperability of our
services with products and architectures offered by other vendors. Although we
intend to support emerging standards in the market for the Internet and other
network connectivity, new industry standards could emerge, and we may not be
able to conform to these new standards in a timely fashion and maintain a
competitive position in the market. Our pursuit of necessary technological
advances and maintenance of technological compatibility may require substantial
time and expense.

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RISK OF FAILURE OF OUR COMPUTER AND COMMUNICATIONS HARDWARE SYSTEMS INCREASES
WITHOUT BACK-UP FACILITIES.

We depend on the efficient and uninterrupted operation of our computer and
communications hardware systems in Coral Springs, Florida. However, we do not
have remote back-up facilities for our computer systems. Interruptions could
result from natural disasters, technical failures, including power loss, the
failure of telecommunications equipment and systems and similar events. Any
interruptions in the delivery of our services could result in customer
dissatisfaction and which in turn could adversely affect usage of our network
and results of operations.

WE FACE RISKS ASSOCIATED WITH BECOMING YEAR 2000 COMPLIANT.

IBM recently completed a readiness review of our services, software, switches
and routers and other systems, as well as our analysis and planning,
remediation, readiness testing, staffing, and contingency planning for Year 2000
issues. IBM concluded that we were not ready for the Year 2000. However, IBM did
conclude that our proprietary software and databases likely would not require
any Year 2000 remediation.

Following the completion of IBM's readiness review, in August 1999, we hired
additional product development employees to address, among other things, Year
2000 issues. We also retained IBM to provide project management assistance for
our Year 2000 compliance efforts, to assist us with the implementation of the
recommendations included in IBM's readiness review, to develop action plans for
mission critical systems and to provide other Year 2000 preparation services.
IBM also conducted project management training for our personnel who will lead
our Year 2000 efforts. With the assistance of IBM, we conducted an inventory
assessment of our mission critical systems during the third quarter of 1999. Our
Year 2000 preparation, planning and remediation efforts are substantially
complete.

On a preliminary basis, we have estimated $400,000 as the maximum cost of
evaluating, testing, reprogramming, and modifying our services, systems and
equipment. This estimate includes the approximately $86,000 paid to IBM for its
readiness review and approximately $186,000 payable to IBM for their project
management, implementation assistance and other services. This estimate also is
based on the belief that no major problems will be encountered in becoming Year
2000 compliant.

We may have to replace the non-information technology systems that cannot be
repaired. IBM has reviewed our non-information technology systems and concluded
that we did not have compliance information from the suppliers of our
non-information technology systems. As a result, while we do not believe that we
have many non-information technology assets with microprocessors, we presently
have no basis on which to estimate the costs of assessing and repairing or
replacing our non-information technology systems or to determine whether such
costs will have a material adverse effect on our operations or our financial
condition.

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products, services and systems purchased by us and others with whom we transact
business, including those which form significant portions of our network and may
be sole or limited source suppliers, do not have business systems or products
that comply with Year 2000 requirements, despite the implementation of a Year
2000 compliance program or assurances of Year 2000 compliance by such suppliers.
If these networks fail, our business will be significantly impacted.

We have not fully determined the risks associated with the reasonably worst-case
scenario. With the assistance of IBM, we developed contingency procedures that
would go into effect if any of our systems or suppliers experience Year 2000
problems. While we have customary plans for back-up and recovery of our system,
we have not enhanced these plans to address Year 2000 issues.

In the event any material errors or defects are not detected and fixed or third
parties cannot timely provide us with services, systems or equipment that meet
the Year 2000 requirements, our business, results of operations and financial
condition could be materially adversely affected. Known or unknown errors or
defects that affect the operation of our services, systems or equipment could
result in delay or loss of revenues, interruption of telecommunications, cable
television and Internet services, cancellation of subscriptions, diversion of
development resources, damage to our reputation, damages paid to customers and
litigation costs. For a more detailed discussion of our Year 2000 readiness
review, see the section entitled "Management's Discussion and Analysis of
Results of Operations and Financial Condition" under the heading "Year 2000."

WE ARE SUBJECT TO BURDENSOME GOVERNMENT REGULATION TO VARYING DEGREES.

Regulation of the telecommunications industry is changing rapidly. As a provider
of telecommunications services nationwide, we are subject to varying degrees of
regulation in each of the jurisdictions in which we provide our services. Laws
and regulations, and the interpretation of such laws and regulations, differ
significantly among the jurisdictions in which we operate. These laws and
regulations are, moreover, subject to changes as a result of ongoing regulatory
implementation proceedings, subject to review by courts and otherwise. This is
particularly true in regard to Internet services, which, while not heavily
regulated at this time, are the subject of intense debate over the degree that
they should be regulated in the future, if at all. There can be no assurance
that future regulatory, judicial and legislative changes will not have a
material adverse effect on the company, that regulators and/or third parties
will not raise material issues with regard to our compliance or non-compliance
with applicable regulations, and/or that we will be in compliance with all such
laws and regulations at any one point in time.

We are subject, in our provision of telecommunications services, to the
provisions of the Communications Act of 1934, as amended by the
Telecommunications Act of 1996, the FCC regulations thereunder as well as the
applicable laws and regulations of the various states administered by state
public utilities commissions, state public service commission or like state
regulatory bodies ("PUCs"). We are required by most states to obtain
authorization before commencing intrastate services. On the federal level, we
are considered a non-dominant domestic interstate carrier subject to minimal
regulation by the FCC. We are not required to obtain FCC authority to expand our
interstate operations, but we are required to maintain, and do maintain, a
domestic interstate tariff on file with the FCC. The FCC presumes the tariffs of
non-dominant carriers to be lawful. Therefore, the FCC does not carefully review
such tariffs. The FCC could, however, investigate our tariffs upon its own
motion or upon complaint by a member of the public. As a result of any such
investigation, the FCC could order us to revise our tariffs, or the FCC could
prescribe revised tariffs. In late 1996, the FCC ruled that interexchange
carriers are no longer required to file their tariffs for domestic interstate
interexchange services. In August 1997, the FCC affirmed its decision to end
tariff filing requirements for domestic interstate long distance services
provided by non-dominant carriers. The FCC also eliminated the requirement that
non-dominant carriers disclose information on rates and terms of their products.
These detariffing orders have been stayed by the US Court of Appeals for the
District of Columbia. Most recently, on March 18, 1999, the FCC adopted an order
that would permit the alternative of posting rates on a carrier's website. This
order will not become effective until the Court affirms the FCC's mandatory
detariffing plan.

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In addition to the general requirement that before providing U.S. international
services we obtain authority under Section 214 of the Communications Act and
file a tariff containing the rates, terms and conditions applicable to such
international services, we are also subject in our provision of U.S.
international services to FCC rules requiring, among other things, the filing of
certain carrier-to-carrier contracts, notifications or approvals of certain
foreign carrier investments, approval for assignments of FCC licenses and
transfers of control of certified carriers, and other international service
regulations. We are also subject to a number of reporting requirements,
including requirements to report on our international revenue, traffic flows,
and use of international facilities. We have recently filed a Section 214
application seeking international authority, which we expect to be granted as a
matter of course. Upon such grant we intend to file an international tariff with
the FCC. Because we have provided U.S. international service prior to obtaining
Section 214 authorization, we are subject to sanctions including fines, other
penalties and/or denial or revocation of our 214 authority. We do not believe
that an enforcement action is likely, and if such action is taken, we do not
believe that any such penalties or fines would be onerous, or that our
authorization would be revoked. There can be no assurance, however, that this
will be the case.

The state PUCs also regulate telecommunications service providers. Most states
require carriers to obtain authorization, either pursuant to certification, the
fulfillment of tariff requirements or notification requirements to provide
intrastate telecommunications services, or to be found exempt from regulation
before commencing such services. Many states also require carriers to file and
maintain detailed tariffs or price lists listing the rates, terms and conditions
under which they provide service. We are currently authorized, pursuant to
registration, certification, tariffs, notifications or on an unregulated basis
to provide intrastate long distance telephone service in the 48 contiguous
states and Hawaii.

The relevant regulatory authorities could find that we provided intrastate long
distance service prior to obtaining necessary authorization. In the event of any
such finding, we may be subject to sanctions, including fines, other penalties
and/or revocation of our authority. We do not believe that any enforcement
action is likely, or that if such action is taken, that any such fines or
penalties would be onerous, or that our authorizations would be revoked. There
can be no assurance, however, that this will be the case.

While we believe that our service offerings do not subject us to rules and
regulations governing pay phone providers, competitive local exchange carriers,
operator service providers and facilities-based providers, there can be no
assurance that all relevant regulatory authorities would agree, since such rules
and regulations are subject to different interpretations, and are subject to
change. Were any regulatory authorities to determine that we are subject to
regulations governing pay phone, CLEC, operator service or facilities-based
providers, including additional authorization requirements, we could be subject
to sanctions for providing service without appropriate authorizations or for
otherwise failing to comply with applicable regulatory requirements. While we do
not believe that such determinations would result in a material adverse effect
upon us or our operations, there can be no assurance that this would be the
case.

Federal and state regulatory authorities also impose various reporting
requirements and obligations to contribute to "universal service" and other
subsidy funds, and to take certain steps to protect consumers. Some state PUCs
also require prior approval for transfers of control of certified carriers,
transfer of carrier assets, including customer bases, carrier stock offerings,
the incurrence by carriers of significant debt obligations and name changes. The
FCC also requires prior approval or notification under certain circumstances. We
recently changed our name from Park 'N View, Inc. to PNV.net, Inc. We are in the
process of notifying the various PUCs, and, where necessary, seeking approval in
connection with, among other things, the name change, a prior debt offering and
our Series D preferred stock offering. We are also in the process of making
required filings with the FCC. We cannot be certain that we will obtain all
necessary regulatory approvals in connection with the name change and such
offerings. Additionally, we may be subject to fines or other sanctions for
failure to seek prior approval, where necessary, for certain of these corporate
actions and/or for failure to notify the FCC and/or state PUCs in a timely
enough fashion.

Delay or failure in complying with applicable regulations could result in
sanctions, including fines or other penalties, and our authorizations being
conditioned, modified, canceled, terminated or revoked, which

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would limit or eliminate our ability to provide telecommunications services.
Conditions, modifications, cancellations, termination or revocation could have a
material adverse effect on our business, financial condition and results of
operations.

WE MAY BECOME SUBJECT TO GOVERNMENTAL REGULATION OF CABLE TELEVISION
COMPANIES.

Cable television companies are subject to extensive governmental regulation.
Because our cable system equipment is installed exclusively on private property,
we do not believe that we are subject to such regulations. However, in the event
we are required to comply with such regulations, the expense, potential delay
and management distraction potentially resulting from the compliance process
could have a material adverse effect on our results of operations and financial
condition.

OUR ISP SERVICE MAY BECOME REGULATED BY THE FEDERAL COMMUNICATIONS COMMISSION
OR OTHER GOVERNMENT AGENCIES.

ISPs are not currently regulated like telecommunications service providers by
the Federal Communications Commission or any other agency. In a report to
Congress adopted on April 10, 1998, the FCC reaffirmed that Internet service
providers should be classified as unregulated "information service providers"
rather than regulated "telecommunications providers" under the terms of the
Telecommunications Act of 1996.

This finding is important because it means that regulations governing regular
telephone service do not directly apply to ISP services. ISPs are not required
to contribute a percentage of their gross revenues from ISP services to support
"universal service" subsidies for local telephone services and other public
policy objectives, such as enhanced communications systems for schools,
libraries, and some health care providers. The FCC action seems likely to
discourage states from regulating Internet service providers as
telecommunications carriers or imposing similar subsidy obligations.

Nevertheless, Internet-related regulatory policies are continuing to develop,
primarily as determined by the industry itself, and it is possible that we could
be exposed to direct governmental regulation in the future. For example, in the
same report to Congress, the FCC stated its intention to consider whether to
regulate voice and fax telephony services provided over the Internet as
"telecommunications" even though Internet access itself would not be regulated.
We cannot predict whether in the future the FCC will modify its current policies
against regulation of ISPs.

Due to the increasing popularity and use of the Internet, it is possible that
additional laws and regulations may be adopted with respect to the Internet,
covering issues such as content, privacy, access to some types of content by
minors, pricing, bulk e-mail or "spam," encryption standards, consumer
protection, electronic commerce, taxation, copyright infringement, and other
intellectual property issues. ISPs are, of course, subject to certain
regulations applicable to businesses generally. We cannot predict the impact, if
any, that any future regulatory changes or developments may have on our
business, financial condition, and results of operations. Changes in the
regulatory environment relating to the Internet access industry, including
regulatory changes that directly or indirectly affect telecommunication costs or
increase the likelihood or scope of competition from regional telephone
companies or others, could have a material adverse effect on our business,
financial condition and results of operations.

WE HAVE NOT PAID AND DO NOT ANTICIPATE PAYING ANY CASH DIVIDENDS ON OUR COMMON
STOCK IN THE FORESEEABLE FUTURE.

We have never paid, and for the foreseeable future do not anticipate paying, any
cash dividends on our common stock. We intend to retain our earnings, if any,
for use in our growth and ongoing operations. In addition, the terms of the
indenture governing our 13% notes restrict our ability to pay dividends on the
common stock.

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LIMITATIONS IMPOSED BY RESTRICTIVE COVENANTS COULD LIMIT HOW WE CONDUCT
BUSINESS.

The indenture governing our 13% notes contains covenants that restrict our
ability to, among other things:

- incur additional debt;

- pay dividends and make other distributions;

- prepay subordinated indebtedness;

- repurchase capital stock;

- make investments and other restricted payments;

- engage in transactions with affiliates;

- engage in business other than the provision of telecommunications,
television, Internet and other related services to the trucking industry;

- enter into sale and leaseback transactions;

- create liens;

- sell assets; and

- engage in mergers and consolidations and certain other events which could
cause an event of default.

As a result of these restrictions, we are limited in how we conduct our business
and we may be unable to raise additional debt or equity financing to operate
during general economic or business downturns, to compete effectively or to take
advantage of new business opportunities. This may affect our ability to generate
revenues and make profits.

WE MAY NOT HAVE IDENTIFIED ALL THE RISKS AND UNCERTAINTIES THAT WE MAY FACE.

The risks described in this section or elsewhere in this Annual Report on Form
10-K are not the only ones that we may face. Additional risks that are not yet
identified or that we currently think are immaterial may materially adversely
affect our business, financial condition and results of operations in the
future.

FORWARD-LOOKING STATEMENTS

Some of the information in this Annual Report on Form 10-K contains
forward-looking statements within the meaning of the federal securities laws.
These statements include, among others, statements found under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."

Forward-looking statements typically are identified by use of terms such as
"may," "will," "expect," "anticipate," estimate and similar words, although some
forward-looking statements are expressed differently. You should be aware that
PNV.net's actual results could differ materially from those contained in the
forward-looking statements due to a number of factors, including our limited
operating history and whether we will be able to achieve or maintain
profitability, whether we can significantly increase subscriptions to the
telecommunications and cable television services that we offer through our
network, whether we can convert daily subscribers to monthly subscribers and
otherwise increase our revenue on a per subscriber basis, whether a significant
number of truck drivers subscribe to our Internet access service, whether we can
generate advertising revenue, whether we can increase resales of long distance
telephone minutes, whether we can successfully implement our business plan with
respect to our development of the portal, whether we can develop electronic
commerce activities on the portal we are developing, whether we can increase
distribution channels for and sales of prepaid phone cards, whether we can
attract and retain sufficient sales and marketing and technical personnel, Year
2000 problems, increased competition, the unknown effects of possible system
failures and rapid changes in technology, adverse changes in economic conditions
and in the markets we serve, regulatory, economic and other changes and changes
in the law.

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<PAGE> 38

ITEM 2. PROPERTIES

We are headquartered in Coral Springs, Florida, where we lease an approximately
28,000 square foot facility in which our administrative offices and warehouse
facility are located. This lease extends to August 2002. We also lease an
approximately 11,650 square foot facility in Ft. Lauderdale which previously
served as our headquarters and warehouse facilities prior to our move to our
Coral Springs facility. This lease extends to June 2001. We have sublet a
portion of the Ft. Lauderdale facility to a third party. In addition, we
recently entered into a lease, extending to June 2004, for an approximately
5,500 square foot facility in New York, New York in which our media and Internet
product development staff are located. See note 4 of notes to financial
statements for information about our commitments under these real estate leases.

ITEM 3. LEGAL PROCEEDINGS

In July 1998, Lorenzo Ortiz filed a lawsuit against a truckstop chain at which
our network is deployed, as well as a contractor utilized by us in connection
with the installation of our network at a truckstop owned by the chain, in the
11th Judicial District, Webb County, Texas, seeking unspecified actual and
punitive damages allegedly resulting from an injury suffered by Mr. Ortiz at the
truckstop in connection with the installation. On July 6, 1999, defendant Red
Line Contracting, Inc. filed a third-party complaint against us seeking
indemnity and/or contribution for the plaintiff's claims. Pursuant to our
contract with the truckstop chain defendant, we agreed, among other things, to
indemnify the truckstop chain for claims relating to the installation of our
network. Further, pursuant to the contract, we maintain liability insurance in
the amount of $1.0 million on each truckstop at which our network is deployed
and we agreed to name the truckstop chain as an additional insured on our
insurance policy. Our insurance policy does not cover any punitive damages that
may be awarded in this lawsuit. We inadvertently failed to timely name the
truckstop chain defendant as an additional insured and our commercial insurance
carrier has, as a result, denied coverage of the truckstop chain with respect to
this lawsuit and is defending us under a reservation of its rights. The
truckstop chain has agreed to our assumption of the defense of this lawsuit. We
have agreed to indemnify the truckstop chain from any losses relating to this
lawsuit and have secured this obligation with a letter of credit in the amount
of $.2 million.

In March 1999, Daniel Ray Claybaugh filed a lawsuit against us and a truckstop
chain at which our network is deployed that seeks unspecified actual damages
resulting from an injury suffered by Mr. Claybaugh at a truckstop in Arizona in
the Circuit Court for Knox County, Tennessee. Although our insurance carrier is
providing a defense and indemnification pursuant to the terms of its policy, it
has refused to recognize the truck stop chain as an additional insured on the
policy. In accordance with our contract with the truckstop owner, we have agreed
to assume the costs of defense for the truckstop owner.

In August 1999, Robert T. and Julie McCurry filed a lawsuit against us in
Superior Court of Shasta County, California and a truckstop chain at which our
network is deployed that seeks a total of $2.0 million in actual damages
resulting from an injury suffered by Mr. McCurry. The amount sought exceeds the
limit of our insurance policy. We have notified our insurance carrier of this
lawsuit and are unaware of any issues which would result in the denial of
insurance coverage.

We also have received 20 to 25 additional claims arising from slip and fall
incidents relating to our network. We have advised our insurance carrier of
these incidents and the carrier has denied coverage or is reserving its rights
to deny coverage on several of these incidents due to our alleged failure to
provide timely notice of such incidents. Our present understanding of these
claims is preliminary. Based upon our understanding, however, management does
not believe that the outcome of any of these lawsuits or claims will have a
material adverse effect on our financial condition or results of operations.

We anticipate that we will be, from time to time, subject to claims and suits
for personal injury arising in the ordinary course of our business. We
anticipate that these future claims and suits, to the extent for actual damages,
will generally be covered by insurance.

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<PAGE> 39

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

Our stockholders approved by written consent, effective May 25, 1999, an
amendment to our certificate of incorporation, as amended, to change our name.
This amendment was effected on June 4, 1999. The numbers of shares voting in
favor of the amendment were 4,284,864 shares of common stock, 388,065 shares of
Series A preferred stock, 1,372,370 shares of Series B preferred stock and
2,310,793 shares of Series C preferred stock. Votes were not received with
respect to 33,750 shares of common stock and 40,750 shares of Series C preferred
stock.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for our common equity securities.
As of September 16, 1999, there were 19 record holders of common stock.

PNV.net has never paid any cash dividends on its capital stock. PNV.net
anticipates that it will retain earnings, if any, to finance the growth and
development of its business. Therefore, PNV.net does not expect to pay cash
dividends on our common stock for the foreseeable future. Any future
determination to pay cash dividends will be at the discretion of the board of
directors and will be dependent upon our financial condition, operating results,
capital requirements and such other factors as the board of directors deems
relevant. We cannot declare or pay any cash dividends on our common stock unless
permitted by the indenture governing our 13% notes, which includes various
financial restrictions on our ability to declare and pay cash dividends.

During the period covered by this Annual Report on Form 10-K we have issued or
sold the following equity securities:

(1) In March 1999, in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, PNV.net issued a warrant to
purchase an aggregate of up to 100,000 shares of common stock at an exercise
price of $9.20 per share in connection with PNV.net entering into a
contractual arrangement with the warrantholder.

(2) In March 1999, in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, PNV.net issued an aggregate of
23,000 shares of Series C Preferred Stock to Robert P. May, for aggregate
consideration of $184,000.

(3) In June 1999, in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, PNV.net issued 10,000 shares of
common stock to a consultant pursuant to the exercise of an option with an
exercise price of $0.001 per share for an aggregate exercise price of
$10.00.

(4) From July 1, 1998 to June 30, 1999, in reliance on the exemptions from
registration provided by Section 4(2) of, and Rule 701 under, the Securities
Act of 1933, PNV.net issued options to purchase an aggregate of 1,345,969
shares of common stock, having a weighted average exercise price of $4.72,
to employees under the PNV.net, Inc. Stock Option Plan.

ITEM 6. SELECTED FINANCIAL DATA

This section presents selected historical financial data of PNV.net. You should
read carefully the financial statements included in this Report on Form 10-K.
The selected data in this section is not intended to replace the financial
statements and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

PNV.net derived the statement of operations data for the Successor for the years
ended June 30, 1997, 1998 and 1999 and the balance sheet data as of June 30,
1998 and 1999 from audited financial statements in this report. PNV.net derived
the statement of operations data for the Predecessor for the year ended December
31, 1994 and for the period from January 1, 1995 to November 2, 1995, and for
the Successor for the period from September 18, 1995 (Successor's date of
incorporation) to June 30, 1996 and the balance sheet data for the Predecessor
as of December 31, 1994 and for the Successor as of June 30, 1996

39
<PAGE> 40

and 1997 from the audited financial information of the Predecessor and the
Successor that is not included herein.

<TABLE>
<CAPTION>
PREDECESSOR(1) SUCCESSOR(1)
-------------------------- -----------------------------------------------------
PERIOD PERIOD FROM
FROM SEPTEMBER 18,
YEAR JANUARY 1, 1995 (DATE OF
ENDED 1995 TO INCORPORATION) YEAR ENDED JUNE 30,
DECEMBER 31, NOVEMBER 2, TO JUNE 30, ------------------------------------
1994 1995 1996 1997 1998 1999
------------ ----------- -------------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues............. -- -- $ 150 $ 888 $ 3,504 $ 8,453
Cost of revenues......... -- -- 437 2,077 6,599 15,717
------- ---------- ---------- ----------
Gross margin............. -- -- (287) (1,189) (3,095) (7,264)
Selling, general and
administrative
expenses............... $ 288 $ 476 1,576 4,432 10,379 19,546
Stock-based
compensation........... -- -- -- -- -- 5,035
Write down of
equipment.............. -- -- -- 595 35 --
----- ----- ------- ---------- ---------- ----------
Loss from operations..... (288) (476) (1,863) (6,216) (13,509) (31,845)
Interest expense......... -- -- 103 157 1,031 10,515
Interest income and
other.................. -- -- (5) (328) (806) (2,588)
----- ----- ------- ---------- ---------- ----------
Net loss................. $(288) $(476) $(1,961) $ (6,045) $ (13,734) $ (39,772)
===== ===== ======= ========== ========== ==========
Net loss attributable to
common stockholders.... -- -- $(1,983) $ (6,962) $ (16,526) $ (42,703)
Net loss per share (basic
and diluted)........... -- -- -- $ (1.61) $ (3.83) $ (9.89)
Shares used to compute
basic and diluted net
loss per share......... -- -- -- 4,318,182 4,318,182 4,318,456
</TABLE>

<TABLE>
<CAPTION>
PREDECESSOR(1) SUCCESSOR(1)
------------------ ----------------------------------------
AS OF JUNE 30,
AS OF DECEMBER 31, ----------------------------------------
1994 1996 1997 1998 1999
------------------ ------- -------- -------- --------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $ 20 $ 366 $ 4,717 $19,811 $ 4,101
Working capital........................... 7 (82) 2,814 57,139 18,828
Total assets.............................. 175 2,898 12,939 94,578 61,386
Total long-term debt and long-term portion
of capital leases....................... 217 3,388 425 70,605 71,110
Total redeemable preferred stock.......... -- 721 19,131 39,134 42,093
Partnership deficiency/common
stockholders' deficiency................ (55) (1,970) (8,932) (20,270) (56,986)
</TABLE>

- ---------------------------

(1) In November 1995, our Predecessor, Park 'N View, Ltd., transferred certain
of its assets, contractual rights and liabilities to PNV.net in exchange for
2,318,182 shares of common stock issued to the former partners of Park 'N
View, Ltd. The net liabilities transferred were recorded by PNV.net at Park
'N View, Ltd.'s historical carrying amount of $84,446. The financial
information identified herein as for the "Predecessor" is for Park 'N View,
Ltd. as of December 31, 1994 and the year ended December 31, 1994 and the
period from January 1, 1995 to November 2, 1995, the date the net
liabilities were transferred to PNV.net. The financial information
identified herein as for the "Successor" is for PNV.net as of and for the
period ended June 30, 1996 and for the years ended June 30, 1997, 1998 and
1999.

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<PAGE> 41

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

You should read the following discussion together with the financial statements
and other financial information included in this Annual Report on Form 10-K.
This report contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those indicated in
the forward-looking statements. Our fiscal year ends on June 30 and is named for
the year in which it ends.

OVERVIEW

Background

From November 1993 to November 1995, our predecessor, Park 'N View, Ltd.
developed our network and installed and operated it at one truckstop as a field
test. There were no revenues or significant selling expenses generated by Park
'N View, Ltd. during this period. Following the formation of PNV.net in
September 1995, and the transfer to PNV.net of the business and net liabilities
of Park 'N View, Ltd., we began the buildout of our network utilizing
principally proceeds from sales of our securities and began offering services on
our network in December 1995 with the completion of our first site. As of July
31, 1999, our network was available at 230 full-service truckstops. We have
incurred net losses of approximately $61.5 million from our inception through
June 30, 1999. As of June 30, 1999, our total liabilities plus our preferred
stock outstanding exceeded our total assets by $57.0 million.

During the third and fourth quarters of fiscal 1999 and the first quarter of
fiscal 2000, we granted options to purchase our common stock to employees and
consultants at exercise prices which we have determined were below the deemed
fair market value of our common stock on the grant dates for financial reporting
purposes. As a result of these option grants, for stock options granted to
employees in fiscal 1999, we recorded total deferred stock compensation expense
of $13.4 million which is being expensed over the vesting period of the options
in accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and recognized stock-based compensation
expense of approximately $5.0 million. For stock options granted to consultants
in fiscal 1999, we recognized consulting service expense of approximately $.1
million. For stock options granted to employees in the first quarter of fiscal
2000, we intend to record deferred compensation expense of $2.1 million, which
will be amortized over the vesting period of the options. Of the remaining total
deferred stock compensation for stock options granted to employees in fiscal
1999 and the first quarter of fiscal 2000, we expect that $7.4 million, $2.1
million, $.6 million and $.2 million will be expensed in fiscal 2000, 2001, 2002
and 2003, respectively. In March 1999, we issued a warrant to purchase 100,000
shares of our common stock to a customer at an exercise price determined to be
below the deemed fair market value of our common stock on the issuance date for
financial reporting purposes. We are amortizing this warrant over the life of
the contract. As of June 30, 1999, the amount of deferred expense was $.7
million.

In September 1999, we sold 3,000,000 shares of our Series D preferred stock for
$10.50 per share. We have determined that the purchase price was below the
deemed fair market value of the Series D preferred stock for financial reporting
purposes. As a result, we have recorded the deemed fair market value of the
Series D preferred stock as paid-in capital and the difference between the
purchase price and deemed fair market value as a dividend.

We had approximately $52.7 million in net operating loss carryforwards at June
30, 1999 for income tax purposes. Utilization of the net operating loss
carryforwards may be subject to a substantial annual limitation due to the
"change in ownership" provisions of the Internal Revenue Code of 1986. The
annual limitation may result in the expiration of net operating losses before
utilization of the losses.

Certain fiscal 1997 and 1998 revenue amounts have been reclassified to conform
to the fiscal 1999 presentation.

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<PAGE> 42

Our prospects must be considered in light of our limited operating history. We
face all the risks and uncertainties of early-stage companies. Our future
success depends upon, among other things, our ability to increase revenues from
our current sources and generate revenues from additional sources, including
specifically, our ability to:

- increase sales of subscriptions to the telecommunications and cable
television services offered on our network;

- convert daily subscribers to monthly subscribers and otherwise increase our
revenue on a per subscriber basis;

- generate sales of subscriptions to our Internet access service;

- increase resales of long distance telephone minutes;

- generate advertising revenue;

- generate revenues from e-commerce through the portal we are developing; and

- expand our prepaid phone card operations.

There can be no assurance that we will achieve or sustain profitability.

Net Revenues

To date, our revenues have been generated principally from sales to long-haul
truck drivers of monthly and daily subscriptions to the telecommunications and
cable television services offered on our network and, to a lesser extent, from
prepaid phone card operations, resales of long distance telephone minutes,
advertising and membership kits.

The following table sets forth the number of monthly and daily subscribers to
our network during the last month in each of our four most recent fiscal
quarters.

<TABLE>
<CAPTION>
PERIOD MONTHLY SUBSCRIBERS DAILY SUBSCRIBERS TOTAL SUBSCRIBERS
------ ------------------- ----------------- -----------------
<S> <C> <C> <C>
September 1998............................. 19,207 8,925 28,132
December 1998.............................. 21,997 11,203 33,200
March 1999................................. 21,632 14,136 35,768
June 1999.................................. 21,317 13,829 35,146
</TABLE>

Because a substantial number of our subscriptions have historically been sold
through vending machines and due to the deployment of our network over a three
year period, our subscriptions have not followed the typical pattern exhibited
by a mature subscriber-based business with recurring and automatically renewing
subscriptions. In addition to monthly subscriptions purchased at vending
machines located at truckstops where our network is deployed, our monthly
subscribers consist of the following categories:

- Drivers whose subscription fees are automatically charged to their credit
cards or deducted from their checking accounts, until cancelled, under a
program we refer to as the "power plan program;"

- Fleet drivers whose subscription fees are automatically deducted from their
compensation, until cancelled, under our payroll deduction program in which
their fleets participate. As of June 30, 1999, 23 fleets were participating;
and

- Fleet drivers whose subscription fees are paid by their fleets. We have
contracts with nine fleets under which they have agreed to pay ongoing
monthly subscription fees over varying periods of time.

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<PAGE> 43

The following table sets forth our monthly subscribers by category during the
last month in each of our four most recent quarters:

<TABLE>
<CAPTION>
PERIOD POWER PLAN PAYROLL DEDUCTION FLEET FUNDED VENDING MACHINE
- ------ ----------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C>
September 1998........................... 11,723 307 2,566 4,611
December 1998............................ 13,606 506 2,974 4,911
March 1999............................... 13,594 330 2,818 4,890
June 1999................................ 11,988 2,000 3,200 4,129
</TABLE>

Prior to the commencement of our power plan program in October 1997, all of our
monthly subscriptions were purchased at vending machines at truckstops at which
our network was deployed. Currently, all purchases of daily subscriptions are
limited to vending machines at these truckstops.

We market our telecommunications, cable television and Internet access services
directly, and indirectly through fleets, to long-haul truck drivers. During
February 1999, we temporarily significantly reduced our sales and marketing
force to conserve cash and believe that this had an adverse impact on our
subscription sales for the remainder of fiscal 1999. We also jointly market our
services directly to drivers with some truckstop chains. Subscribers first
purchase a membership card and starter kit for $10. This fee is waived for
subscribers under our ongoing monthly subscription programs. Drivers then
sign-up under an ongoing monthly subscription program or, alternatively,
purchase a monthly or daily card from vending machines at the truckstop. Monthly
subscribers receive a number of free long distance telephone minutes depending
on the package of services purchased. Our sales to truck drivers at our vending
machines are cash transactions completed at the point of sale. Under the power
plan program, a subscriber's monthly subscription is automatically renewed and
the monthly fee is automatically deducted from or charged to the subscriber's
checking account or credit card. Under the payroll deduction program, a
subscriber's monthly subscription is automatically renewed and the monthly fee
is automatically deducted from the subscriber's fleet compensation. Subscribers
under the power plan or payroll deduction programs may cancel their
subscriptions at any time.

We offer a $10 cash card located at truckstops where our network is deployed.
This card serves as an additional method of payment for the purchase of long
distance telephone minutes over our network and pay-per-view programming. A
truck driver generally pays for long distance telephone minutes with our cash
card or the driver's credit card. Truck drivers may also pay for these minutes
through payroll deductions.

We generally recognize revenue in the period earned. Pre-paid revenues are
recorded as deferred revenue until earned. Monthly subscription fees are
recorded as revenue ratably over the subscription period.

During the fourth quarter of fiscal 1999, we also began to generate revenue from
our prepaid phone card operations in one major truckstop chain and sales of
advertising principally in our Connect! magazine. In July 1999, we began to
offer Internet access service on our network free of charge on a promotional
basis. Beginning in October 1999, we intend to charge separate fees for monthly
and daily subscriptions to this service. We also have recently begun to offer a
total communications solution to truckstop owners and operators consisting of
public phone and prepaid phone card operations as well as public Internet
kiosks. We contracted with two truckstop chains to provide one or more of these
services. We intend to offer these services to other truckstop owners and
operators. We have recently entered into an advertising agreement with Volvo
Trucks for its advertising on our advertising media and we intend to expand our
sales and marketing efforts with regard to sales of advertising. Our agreement
with Volvo Trucks restricts until July 2000 our ability to place advertising on
our Drivers' Entertainment Network for products or services of Volvo Trucks'
competitors or on specified portions of our portal for trucks that compete with
Volvo's Trucks. Volvo Trucks may elect to extend this restriction until July
2001 for an additional $300,000 payment to us. Volvo Trucks can terminate this
agreement if our subscribers do not log-on to our network at least 160,000 times
each month in any three consecutive months.

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<PAGE> 44

Cost of Revenues

Our fixed operating expenses currently consist principally of:

- amortization and depreciation of the capitalized costs of our network,
prepaid phone card machines and increased switching capacity to accommodate
our public phone operations;

- cable programming, which we purchase on a per parking stall basis;

- T-1 lines, local telephone lines and routers for our frame relay, which are
installed at each truckstop at which our network is deployed;

- commissions paid to one truckstop chain under a contract we entered into in
the first quarter of fiscal 2000; and

- long distance telephone time under a contract with AT&T.

Our variable operating expenses consist principally of purchases of long
distance and other telephone services, commissions paid to truckstop operators
under our contracts with them for services through our network, payments to the
provider of certain components of our prepaid phone card operations, incentive
payments to one truckstop chain relating to subscription sales quotas and the
starter kit equipment.

Under our contracts with most truckstop operators, commission expenses are
generally:

- 35% of revenues, after deducting promotions and sales tax of approximately
$5.12 per subscription, from sales from on-site vending machines for the
first five years and 40% for the second five years; and

- with regard to subscriptions under our power plan program and payroll
deduction programs, 35% of revenues, after deducting promotions and sales tax
of approximately $8.60 per subscription, for the first month and 10% of
revenues thereafter.

The contracts further provide that we will pay an additional commission to
truckstop operators equal to 10% of their revenues from subscription sales to
fleets pro rata based on the number of their stalls. In addition, under our
contract with one truckstop chain, our commissions payable is a fixed amount
plus an incentive payment that is determined based on its satisfaction of
monthly subscription sales quotas for each truckstop.

During late fiscal 1999, we significantly increased our operating expenses in
connection with the publication of our Connect! magazine and the commencement of
development of the portal and we expect costs incurred in these activities will
increase significantly at least during fiscal 2000. We expect our other
operating expenses to also significantly increase as we continue to buildout our
network and implement our business plan.

Selling Expenses

We market our network to drivers through a direct sales force and intend to
continue to maximize and expand this sales force. We currently maintain
additional sales personnel at 50 to 60 of our largest truckstop locations. Our
sales force also sells to fleet drivers whose fleets have agreed to establish
payroll deduction accounts. We also have a sales force that sells our
advertising media. Selling expenses have therefore consisted principally of
salaries, benefits, travel and marketing expenses. In addition, we have marketed
subscriptions through point-of-sale merchandising materials and, at larger
sites, through field sales representatives. We added approximately 18 persons to
our sales and marketing staff during the first quarter of fiscal 2000 and intend
to add at least 25 persons to this staff during the second quarter of fiscal
2000.

General and Administrative Expenses

We significantly increased the size of our management team during fiscal 1999
and the number of our full-time employees increased to 215 as of June 30, 1999
from 174 as of June 30, 1998, which resulted in an increase in general and
administrative expenses. We expect that general and administrative expenses will

44
<PAGE> 45

increase substantially as we expand our sales and marketing programs, operations
and administrative staff to support the expansion of our operations that our
business plan contemplates. Such expenses will be incurred in advance of any
anticipated related revenues. We also will incur public relations expense in
fiscal 2000.

RESULTS OF OPERATIONS

Year Ended June 30, 1999 Compared to Year Ended June 30, 1998

Revenues. Our net revenues increased 143% to $8.5 million for fiscal 1999, from
$3.5 million for fiscal 1998. Service revenues increased 148% to $8.2 million
for fiscal 1999 from $3.3 million for fiscal 1998. The increase in revenues for
fiscal 1999 was primarily due to increases in sales of subscriptions to our
network and to a lesser extent, sales of long distance time.

Cost of Revenues. Cost of revenues, excluding service depreciation, increased
138% to $11.2 million for fiscal 1999 from $4.7 million for fiscal 1998. This
increase was principally due to costs associated with the increase in the number
of sites of our network, the costs associated with the increase in sales volume
and routing equipment leases incurred in connection with upgrading our network.
Service costs (which includes commission payable to truckstops, cable
programming, leased telephone lines and purchased long distance minutes, starter
kits, freight, site repairs and routing equipment leases incurred in connection
with the upgrading the cost of phone lines and purchased long distance minutes)
increased 188% to $9.5 million for fiscal 1999 from $3.3 million for fiscal
1998. This increase was due to the increase in the number of sites, long
distance telephone minutes included with memberships and the addition of T-1
lines, which began to be installed at our sites in the three month period ended
December 31, 1998. Service depreciation increased $2.6 million to $4.5 million
for fiscal 1999 from $1.9 million for fiscal 1998. This increase in service
depreciation reflects the additional buildout of our network. As we increase the
number of truckstops at which our network is deployed, we believe that cost of
revenues will increase significantly. Fixed costs are a significant portion of
the cost of revenues and as the number of new sites increase, fixed costs will
continue to increase.

Selling Expense. Selling expense increased 67% to $8.7 million for fiscal 1999
from $5.2 million for fiscal 1998. This increase was primarily attributable to
an increase in salaries, travel and marketing expenses. Salaries increased 43%
to $4.0 million for fiscal 1999 from $2.8 million for fiscal 1998. Travel and
per diem expenses increased 18% to $1.3 million for fiscal 1999 from $1.1
million for fiscal 1998. Marketing expenses increased 173% to $3.0 million for
fiscal 1999 from $1.1 million for fiscal 1998. This increase in salaries and
travel reflects the additional sales personnel needed for new sites. This
increase in marketing expenses reflects additional marketing efforts to increase
our subscriptions to services offered on our network.

General and Administrative Expenses. General and administrative expenses
increased 108% to $10.8 million for fiscal 1999 from $5.2 million for fiscal
1998. The increase was primarily attributable to an increase in salaries, travel
and professional fees. Salaries increased 122% to $5.1 million for fiscal 1999
from $2.3 million for fiscal 1998. Travel and per diem expenses increased 175%
to $1.1 million for fiscal 1999 from $.4 million for fiscal 1998. Professional
fees increased 25% to $.5 million for fiscal 1999 from $.4 million for fiscal
1998.

Stock-Based Compensation Expense. During the third and fourth quarters of
fiscal 1999, we granted options to purchase our common stock to employees and
consultants at exercise prices which we have determined were below the deemed
fair market value of our common stock on the grant dates for financial reporting
purposes. As a result of these options, we recorded total deferred stock
compensation expense of $13.4 million which is being amortized over the vesting
period of the options, generally three to four years, in accordance with APB 25
and recognized stock-based compensation expense of approximately $5.0 million in
fiscal 1999.

Interest Expense (Income) and Other-Net. Interest expense (income) and
other-net increased to $7.9 million for fiscal 1999 from $.2 million of interest
expense and other-net for fiscal 1998. The additional net

45
<PAGE> 46

interest expense for fiscal 1999 compared to fiscal 1998 is primarily
attributable to the interest expense on our 13% notes in the aggregate principal
amount of $75.0 million issued in May 1998.

Net Loss. Our net loss increased 191% to $39.8 million for fiscal 1999 from
$13.7 million for fiscal 1998. We expect to incur significant net losses and
negative cash flow from operations for the foreseeable future.

Year Ended June 30, 1998 Compared to Year Ended June 30, 1997

Revenues. Our net revenues increased 289% to $3.5 million for fiscal 1998 from
$.9 million for fiscal 1997. This increase in net revenues was primarily due to
additional subscription sales.

Cost of Revenues. Cost of revenues, excluding service depreciation, increased
236% to $4.7 million for fiscal 1998 from $1.4 million for fiscal 1997
principally due to increased sales volume. Cost of revenues includes commissions
payable to truckstops, cable programming, leased telephone lines, equipment and
freight. Service depreciation increased 217% to $1.9 million for fiscal 1998
from $.6 million for fiscal 1997 resulting primarily from increased buildout of
our network.

Selling Expenses. Selling expenses increased 271% to $5.2 million for fiscal
1998 from $1.4 million for fiscal 1997. This increase was primarily attributable
to an increase in salaries, travel, and marketing expenses. Salaries increased
300% to $2.8 million for fiscal 1998 from $.7 million for fiscal 1997. Travel
expenses increased 450% to $1.1 million for fiscal 1998 from $.2 million for
fiscal 1997. Marketing expenses increased 175% to $1.1 million for fiscal 1998
from $.4 million for fiscal 1997. This increase in salaries, travel and
marketing expenses reflects additional sales personnel and marketing efforts for
new sites.

General and Administrative Expenses. General and administrative expenses
increased 68% to $5.2 million for fiscal 1998 from $3.1 million for fiscal 1997.
This increase was primarily attributable to an increase in salaries,
professional fees and rent. Salaries increased 77% to $2.3 million for fiscal
1998 from $1.3 million for fiscal 1997. This increase was due to additional
administrative personnel to support additional sites. Professional fees
increased 300% to $.4 million for fiscal 1998 from $.1 million for fiscal 1997
primarily due to our need for accounting and legal assistance. Building rent
increased 300% to $.4 million for fiscal 1998 from $.1 million for fiscal 1997
due to the increase in office and warehouse space.

Interest Income (Expense) and Other-Net. Interest income (expense) and
other-net decreased $.4 million to $(.2 million) for fiscal 1998 from $.2
million for fiscal 1997, reflecting an increase in interest income of $.5
million from investment of cash in short-term investments and an increase in
interest expense and other-net of $.9 million. This increase in interest expense
is primarily related to interest on our 13% notes. See note 5 of notes to
financial statements.

Net Loss. Our net loss increased 128% to $13.7 million for fiscal 1998 from
$6.0 million for fiscal 1997 primarily as a result of the foregoing factors.

Year Ended June 30, 1997 Compared to Period from September 18, 1995 (Date of
Incorporation) to June 30, 1996

Revenues. Our net revenues increased 350% to $.9 million for fiscal 1997 from
$.2 million for the period from September 18, 1995 to June 30, 1996 (the "fiscal
1996 period"). Service revenues increased 700% to $.8 million for fiscal 1997
from $.1 million for the fiscal 1996 period. Equipment sales decreased 32% for
fiscal 1997 to $52,000 from $77,000 for the fiscal 1996 period. Advertising
revenue increased 475% for fiscal 1997 to $23,000 from $4,000 for the fiscal
1996 period. Other revenues increased $58,700 for fiscal 1997 to $59,000 from
$300 for the fiscal 1996 period. This increase in service revenue reflects
additional subscription membership to our network and the decrease in equipment
sales is the result of our discontinuing the selling of telephone kits to the
truckstop. This increase in advertising revenue was principally due to a
contract for advertising on our network. This increase in other revenues was due
to the sale of surplus cable equipment.

46
<PAGE> 47

Cost of Revenues. Cost of revenues, excluding service depreciation, increased
250% to $1.4 million for fiscal 1997 from $.4 million for the fiscal 1996 period
principally due to increased subscription sales volume. Service depreciation
increased 600% to $.6 million for fiscal 1997 from $.1 million for the fiscal
1996 period.

Selling Expenses. Total selling expenses increased 180% to $1.4 million for
fiscal 1997 from $.5 million for the fiscal 1996 period. Salaries increased 600%
for fiscal 1997 to $.7 million from $.1 million for the fiscal 1996 period.
Marketing expenses increased 100% for fiscal 1997 to $.4 million from $.2
million for the fiscal 1996 period. This increase in salaries, travel and
marketing expenses was primarily due to additional sales personnel and marketing
efforts to support the new sites built during the year.

General and Administrative Expenses. Total general and administrative expenses
increased 182% to $3.1 million for fiscal 1997 from $1.1 million for the fiscal
1996 period. Salaries increased 225% for fiscal 1997 to $1.3 million from $.4
million for the fiscal 1996 period. Travel expenses increased 300% for fiscal
1997 to $.4 million from $.1 million for the fiscal 1996 period. This increase
reflects the addition of administrative personnel to support sites built
throughout the year.

Interest Income (Expense) and Other-Net. Interest income (expense) and
other-net increased 300% to $.2 million for fiscal 1997 from ($.1 million) for
the fiscal 1996 period reflecting an increase in interest income of $.3 million
from investment of cash in short-term investments and a gain on a sale of fixed
assets of $26,000, which was partially offset by an increase in interest expense
of $54,000. The principal amount of the related debt securities, together with
interest accrued thereon, was converted by the holders thereof into shares of
Series A preferred stock.

Net Loss. Our net loss increased 200% to $6.0 million for fiscal 1997 from $2.0
million for the fiscal 1996 period primarily as a result of the foregoing
factors.

47
<PAGE> 48

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited quarterly results of operations
data for the eight quarters ended June 30, 1999. Our management believes that
this information has been prepared substantially on the same basis as the
audited financial statements appearing elsewhere herein, and all necessary
adjustments, consisting only of normal recurring adjustments, have been included
in the amounts stated below to present fairly the unaudited quarterly results of
operations. The quarterly data should be read in conjunction with our audited
financial statements and notes to financial statements appearing elsewhere
herein. The operating results for any quarter are not necessarily indicative of
the operating results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1998 1998 1998 1998
------------- ------------ ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues..................... $ 568,942 $ 669,478 $ 868,037 $ 1,397,319 $ 1,723,787 $ 1,985,412
Cost of revenues:
Service cost.................... 496,142 683,954 933,687 1,222,393 1,513,006 2,300,751
Service depreciation............ 303,096 396,442 512,311 694,883 822,652 1,047,954
Equipment cost.................. 221,410 253,945 296,251 584,479 367,241 579,471
Advertising..................... -- 4,399 10,325
----------- ----------- ----------- ----------- ----------- -----------
Total cost of revenues......... 1,020,648 1,334,341 1,742,249 2,501,755 2,707,298 3,938,501
----------- ----------- ----------- ----------- ----------- -----------
Gross margin................... (451,706) (664,863) (874,212) (1,104,436) (983,511) (1,953,089)
Selling, general and
administrative expenses......... 1,719,951 2,212,037 2,571,078 3,875,405 3,602,680 5,338,719
Stock-based compensation......... -- -- -- -- -- --
Write-down of equipment.......... -- -- -- 35,151 -- --
----------- ----------- ----------- ----------- ----------- -----------
Loss from operations............. (2,171,657) (2,876,900) (3,445,290) (5,014,992) (4,586,191) (7,291,808)
Interest expense................. 9,709 11,226 3,014 1,006,645 2,644,737 2,596,997
Interest income and other........ (126,272) (160,171) (110,999) (408,244) (749,246) (797,106)
----------- ----------- ----------- ----------- ----------- -----------
Net loss....................... (2,055,094) (2,727,955) (3,337,305) (5,613,393) (6,481,682) (9,091,699)
Preferred stock dividends and
amortization of preferred stock
issuance costs.................. (531,418) (730,343) (728,082) (802,694) (691,704) (714,281)
Accretion of Series C Preferred
shares to fair value............ -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net loss attributable to common
stockholders................. $(2,586,512) $(3,458,298) $(4,065,387) $(6,416,087) $(7,173,386) $(9,805,980)
=========== =========== =========== =========== =========== ===========

<CAPTION>
THREE MONTHS ENDED
--------------------------
MARCH 31, JUNE 30,
1999 1999
----------- ------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues..................... $ 2,287,604 $ 2,455,917
Cost of revenues:
Service cost.................... 2,713,624 2,936,811
Service depreciation............ 1,259,697 1,387,547
Equipment cost.................. 434,064 292,414
Advertising..................... 27,510 19,313
----------- ------------
Total cost of revenues......... 4,434,895 4,636,085
----------- ------------
Gross margin................... (2,147,291) (2,180,168)
Selling, general and
administrative expenses......... 4,587,833 6,017,092
Stock-based compensation......... 250,000 4,785,315
Write-down of equipment.......... --
----------- ------------
Loss from operations............. (6,985,124) (12,982,575)
Interest expense................. 2,678,414 2,594,462
Interest income and other........ (461,296) (580,683)
----------- ------------
Net loss....................... (9,202,242) (14,996,354)
Preferred stock dividends and
amortization of preferred stock
issuance costs.................. (728,513) (708,105)
Accretion of Series C Preferred
shares to fair value............ -- (88,420)
----------- ------------
Net loss attributable to common
stockholders................. $(9,930,755) $(15,792,879)
=========== ============
</TABLE>

48
<PAGE> 49

LIQUIDITY AND CAPITAL RESOURCES

Since our incorporation in September 1995, we have satisfied our cash
requirements through the proceeds of sales of common stock, sales of preferred
stock, certain debt securities and 13% notes which we sold together with
warrants to purchase 505,375 shares of our common stock. To date, we have raised
$112.4 million in debt and equity capital.

From November 1995 to November 1996, in connection with our capitalization,
certain investment limited partnerships managed by Patricof & Co. Ventures, Inc.
invested $3.8 million, purchasing shares of our Series A preferred stock and our
common stock as well as debt securities. In November 1996, a group of investors
comprised of the funds managed by Patricof and certain partners in such funds
made an additional $15.0 million investment in PNV.net, purchasing shares of our
Series B preferred stock. In August 1997, a group of investors, led by a
subsidiary of The Hillman Company, invested $18.6 million, purchasing shares of
our Series C preferred stock.

In May 1998, we sold an aggregate $75.0 million of units consisting of our 13%
notes due 2008 and 75,000 warrants to purchase 505,375 shares of common stock
for $.01 per share. We received net proceeds after commissions, but before
offering expenses, of $72.4 million. The indenture governing our 13% notes does
not contain any financial ratios or tests that we are required to satisfy.

In September 1999, ABRY Broadcast Partners III, L.P., Halpern Denny Fund IV,
L.P. and Cummins Engine Company, Inc. purchased a total of 3,000,000 shares of
our Series D preferred stock for $10.50 per share. We received net proceeds
after commissions, but before offering expenses, of $29.6 million.

Net cash used in operating activities was $29.3 million for fiscal 1999, $9.4
million for fiscal 1998 and $3.4 million for fiscal 1997. The $19.9 million
increase in net cash used in operating activities for fiscal 1999 as compared to
fiscal 1998 resulted primarily from an increase in cost of revenues and selling,
general and administrative activities. The $6.0 million increase in net cash
used in operating activities for fiscal 1998 as compared to fiscal 1997 resulted
primarily from increased marketing and additional staff to support the larger
number of sites and subscribers.

Net cash (used in) provided by investing activities was $14.4 million for fiscal
1999, ($63.9) million for fiscal 1998 and $(6.4) million was used in fiscal
1997. The $78.3 million change in net cash provided by investing activities for
fiscal 1999 as compared to fiscal 1998 resulted primarily from the purchase of
short term investments in 1998 after the receipt of the proceeds from the $75.0
million unit offering and the subsequent sale of the short term investments in
1999 to support our operations and to increase the buildout of our network. The
$57.5 million increase in net cash used in investing activities for fiscal 1998
as compared to fiscal 1997 resulted primarily from the additional buildout of
our network and the purchase of short-term investment securities.

Net cash (used in) provided by financing activities was ($.8) million for fiscal
1999, $88.4 million for fiscal 1998 and $14.2 million for fiscal 1997. The $89.2
million decrease in net cash provided by financing activities for fiscal 1999 as
compared to fiscal 1998 was because no additional financing was obtained in
fiscal 1999. The $74.2 million increase in net cash provided by financing
activities for fiscal 1998 as compared to fiscal 1997 resulted primarily from
the issuance of Series C preferred stock and an offering of units consisting of
our 13% notes and warrants to purchase 505,375 shares of common stock.

During fiscal 1999, our working capital decreased $38.3 million. The decrease
was primarily attributable to a decrease in cash and cash equivalents of $15.7
million and a decrease in short term investments of $23.7 million, as a result
of operating losses, and an increase in accrued interest of $.3 million.

We had capital expenditures of $17.9 million in fiscal 1999 related principally
to the deployment of our network at approximately 102 truckstops. Our capital
expenditures for fiscal 1999 also related to our purchase of prepaid phone card
machines and the installation of increased switching capacity related to our
public phone operations. In addition, component equipment has decreased to $2.7
million as of June 30, 1999. It is anticipated that such amount may increase in
the near term to support the installations of our network. Component equipment
is temporarily staged at our warehouse until all equipment for a site is

49
<PAGE> 50

received, certain assembly operations are complete and the site is ready to
accept the equipment for installation. The period of time that the component
equipment is staged at our warehouse is approximately 45 days and the
construction period at the site is approximately 30 days. Accordingly, the time
period between the date of acquisition of the component equipment and the
completion date for the installation at the site is approximately 75 days. The
level of equipment inventory at any point of time will be dependent upon the
anticipated number of truckstops at which our network will be installed during
the next 75 days. An increase in component equipment will adversely affect
liquidity by the amount of such increase.

We currently estimate that our capital expenditures for fiscal 2000 will consist
of the following, among others:

- $12.0 million for the deployment of our network at approximately 80
additional truckstops;

- $2.2 million for the installation of additional switching capacity related to
our public phone operations, leasehold improvements and equipment for our
headquarters and the purchase of additional prepaid phone card machines; and

- up to $4.5 million for the purchase of public Internet kiosks.

Our capital commitments consist primarily of capital leases, commissions payable
to one truckstop chain, noncancelable leases of routers for our frame relay and
contracts for T-1 lines and for long distance and other telephone services.
Pursuant to our principal contract with AT&T for obtaining T-1 lines, we are
required to purchase T-1 lines having a value at our discounted rates, of at
least $2.0 million during the first year of operation, which corresponds to
approximately 200 of the T-1 lines currently provided to us by AT&T, and $3.0
million in each of the second and third years, which corresponds to
approximately 300 T-1 lines. The first year of operation under this contract
commenced March 1999. In addition, our contract with AT&T for long distance and
other telephone services requires us to purchase each month services having a
discounted price of $40,000 for a two-year period that began August 1998.

At June 30, 1999, our minimum commitments under capital leases and noncancelable
operating leases with terms in excess of one year, including commitments under
the contracts relating to our purchase of T-1 lines and long distance services
and the routers for our frame relay, totaled $4,659,433, $4,731,697, $3,090,678
and $49,482, for the four years ending June 30, 2000 through 2003, respectively.
See note 4 of notes to financial statements.

We are required to make semiannual interest payments on our 13% notes in May and
November of each year. The 13% notes mature in May 2008. We have made the first
two interest payments and intend to make the next two interest payments from
funds and securities in an escrow account established in connection with and
from the proceeds of our sale of these notes. Beginning with the November 2000
scheduled interest payment, we will be required to make these interest payments
from our available cash.

Our cash and short-term investments as of June 30, 1999 was approximately $12.5
million available for working capital.

Our capital requirements will depend on numerous factors, including the growth
of our revenues, if any, and the rate of such growth and our expenditures. We
expect that we will have significant capital requirements in the future to fund
our anticipated capital expenditures and for working capital purposes. We expect
that the net proceeds of our sale of Series D preferred stock in September 1999,
together with existing cash and anticipated cash generated by operations, will
be sufficient to meet our working capital and capital expenditure requirements
during the remainder of fiscal 2000. Following our use of such funds, if equity,
debt or other financing is not available, we expect that we may experience
insufficient liquidity which could have a material adverse effect on our
financial condition and results of operations. The indenture governing our 13%
notes substantially restricts our ability to obtain additional debt financing.
There can be no assurance that additional financing will be available when
needed, if at all, or, if available, on terms acceptable to us. Any inability to
fund our future capital requirements could have a material adverse effect on our
business, financial condition and operating results.

50
<PAGE> 51

YEAR 2000

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As a result,
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the Year 2000. In addition, the Year 2000 is a leap year, and some computer
programs may not properly provide for February 29, 2000. System failures and
miscalculations causing disruptions of normal business activities may occur
including, among other things, our temporary inability to provide
telecommunications, cable television and Internet access services or engage in
similar normal business activities. As a result, many companies' software and
computer systems may need to be upgraded or replaced in order to comply with
Year 2000 requirements.

We retained IBM to review our computer systems and network switching, routing
and telecommunications equipment, constituting the equipment used in providing
our telecommunications, cable television and Internet access services, as well
as our internal management information systems, to identify those items and
systems that are not Year 2000 compliant. We paid IBM approximately $86,000 to
complete its review.

IBM recently completed its readiness review of our services, software, switches
and routers and other systems, as well as our analysis and planning,
remediation, readiness testing, staffing, and contingency planning for Year 2000
issues. IBM concluded that we were not ready for the Year 2000. However, IBM did
conclude that our proprietary software and databases were ready and would not
require any Year 2000 remediation.

Following the completion of IBM's readiness review, in August 1999, we hired
additional product development employees to address, among other things, Year
2000 issues. We also retained IBM to provide project management assistance for
our Year 2000 compliance efforts, to assist us with the implementation of the
recommendations included in IBM's readiness review, to develop action plans for
mission critical areas, and to provide other Year 2000 preparation services. IBM
also conducted project management training for our personnel who will lead our
Year 2000 efforts. With the assistance of IBM, we conducted an inventory
assessment of our mission critical systems during the third quarter of 1999. We
believe that our Year 2000 preparation, planning and remediation efforts are
substantially complete when IBM completes its services for us during the third
quarter of 1999.

We also utilize software and hardware developed by third parties both for our
network and internal information systems. We have made inquiries to our
significant suppliers regarding their Year 2000 compliance or the status of
their review and implementation of their own Year 2000 compliance programs.
While some of these suppliers have provided oral or written assurances, we do
not have any information regarding, or any oral or written assurances from, some
of our significant suppliers and providers of equipment, telecommunications and
data communications regarding their Year 2000 compliance or the status of their
review and implementation of their own Year 2000 compliance programs. If our
primary suppliers and providers experience business interruptions as a result of
the failure to achieve Year 2000 compliance, our ability to provide
telecommunications, cable television and Internet services could be impaired,
which could have a material adverse effect on our business, results of
operations and financial condition.

We conducted tests of our product delivery system during the third quarter of
1999 and documented our tests with the assistance of IBM. We are working to
modify such systems and equipment to make them compliant. Noncompliant items
will be replaced or otherwise remediated. We expect any necessary modifications
will be made on a timely basis and do not believe that the cost of the
modifications will have a material effect on our business, results of operations
or financial condition. We estimate that the capital

51
<PAGE> 52

and other costs associated with any upgrade and conversion of our existing
services, systems and equipment relating to the Year 2000 issue will not be
material.

Our non-information technology systems are more difficult to assess and repair
than information technology systems. We may have to replace, prior to the end of
1999, the non-information technology systems that cannot be repaired. IBM has
reviewed our non-information technology systems and concluded that we did not
have compliance information from the suppliers of our non-information technology
systems. As a result, while we do not believe that we have many non-information
technology assets with microprocessors, we presently have no basis on which to
estimate the costs of assessing and repairing or replacing our non-information
technology systems or to determine whether such costs will have a material
adverse effect on our operations or our financial condition.

Our services and systems operate in complex network environments and directly
and indirectly interact with a number of other hardware and software systems. We
face risks to the extent that suppliers of products, services and systems
purchased by us and others with whom we transact business, including those which
form significant portions of our network and may be sole or limited source
suppliers, do not have business systems or products that comply with Year 2000
requirements, despite the implementation of a Year 2000 compliance program or
assurances of Year 2000 compliance by such suppliers. If these networks fail,
our business will be significantly impacted.

We do not currently have any information regarding the Year 2000 status of our
customers, many of whom are private companies and individuals. As is the case
with similarly situated companies, if our customers experience Year 2000
problems, which result in business interruptions or otherwise impact their
operations, we could experience a decrease in the demand for our Internet access
services. We have not made inquiries to our customers regarding their Year 2000
compliance because we do not believe that noncompliance by our customers will
have a material adverse effect on our business, results of operations and
financial condition.

We have not fully determined the risks associated with the reasonably worst-case
scenario. Contingency planning includes the identification of Year 2000
scenarios, including potential problems at various severity levels, and the
development of Year 2000 contingency plans for selected scenarios and the
testing of those plans. With the assistance of IBM, we developed contingency
procedures that would go into effect if any of our systems or suppliers
experience Year 2000 problems. While we have customary plans for back-up and
recovery of our system, we have not enhanced these plans to address Year 2000
issues.

Our expectation that we will be able to upgrade our services, systems and
equipment to address the Year 2000 issue and our expectation regarding the costs
associated with these upgrades are forward-looking statements subject to a
number of risks and uncertainties. Actual results may vary materially as a
result of a number of factors. We cannot assure you that we will be able to
timely and successfully modify our services, systems and equipment to comply
with Year 2000 requirements. Any failure to do so could have a material adverse
effect on our business, results of operations and financial condition.
Furthermore, despite testing by us and our suppliers, our services, systems and
equipment may contain undetected errors or defects associated with Year 2000
date functions. In the event any material errors or defects are not detected and
fixed or third parties cannot timely provide us with services, systems or
equipment that meet the Year 2000 requirements, our business, results of
operations and financial condition could be materially adversely affected. Known
or unknown errors or defects that affect the operation of our services, systems
and equipment could result in delay or loss of revenues, interruption of
telecommunication, cable television and Internet services, cancellation of
subscriptions, diversion of development resources, damage to our reputation,
damages paid to customers and litigation costs.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion contains forward-looking statements that are subject to risks and
uncertainties. Actual results could vary materially as a result of a number of
factors including

52
<PAGE> 53

those set forth in the section entitled "Risk Factors." We do not use any
derivative financial instruments for hedging, speculative or trading purposes.

As of June 30, 1999, we had short-term investments and restricted investments of
approximately $8.4 million and $10.7 million, respectively. Substantially all of
the short-term investments consisted of highly liquid investments with remaining
maturities at the date of purchase of less than 90 days. The restricted
investments consisted of US Treasury securities with remaining maturities of
less than one year. These investments are subject to interest rate risk and will
decrease in value if market interest rates increase. A hypothetical increase or
decrease in market interest rates by 10 percent from the June 30, 1999 rates
would cause the fair value of these investments to decline by an insignificant
amount. We have the ability to hold these investments until maturity and,
therefore, we do not expect our operating results, cash flows or the value of
these investments to be affected to any significant degree by the effect of a
sudden change in market interest rates. Declines in interest rates over time
will, however, reduce our interest income.

We do not own any equity investments. Therefore, we do not currently have any
direct equity price risk.

At June 30, 1999, we had fixed interest rate debt of $75.0 million. A
hypothetical increase or decrease in market interest rates by 10% from the June
30, 1999 rates would not have a material impact on the fair market value of this
debt. We do not hedge any interest rate exposure.

All of our revenues are realized currently in U.S. dollars. In addition, we do
not maintain any asset or cash account balances in currencies other than the
United States dollar. Therefore, we do not believe that we currently have any
significant direct foreign currency exchange rate risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements of the registrant are set forth on pages F-1 through
F-19 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

53
<PAGE> 54

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers, and their ages and positions, as of August
31, 1999, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Robert P. May.......................... 50 Chief Executive Officer and Director
Ian Williams........................... 49 Chairman of the Board and Director
Stephen L. Conkling.................... 54 President and Chief Operating Officer
R. Michael Brewer...................... 55 Vice President -- Finance and Chief Financial
Officer
Anthony W. Allen....................... 37 Vice President -- Operations and Secretary
Richard K. Brenner..................... 44 Vice President -- Marketing
Bill J. Buzbee......................... 53 Vice President -- Business Development
Mark Cleveland......................... 36 Vice President -- Sales
James D. Green......................... 40 Vice President -- Product Development
Yves Roland Maynard.................... 38 Vice President -- Engineering
Steven Yevoli.......................... 29 Vice President -- New Media and E-Business
Robert M. Chefitz...................... 39 Director
Thomas P. Hirschfeld................... 35 Director
Richard M. Johnston.................... 64 Director
Daniel K. O'Connell.................... 69 Director
</TABLE>

Robert P. May has served as our Chief Executive Officer since March 1999. Prior
to joining PNV.net, from March 1998 to February 1999, Mr. May was a private
investor. From October 1996 to February 1998, Mr. May served as Chief Operating
Officer of Cablevision Systems Corporation. In this position he oversaw several
key transactions including the successful integration of the New York-area cable
systems of Tele-Communications, Inc. From April 1995 to September 1996, Mr. May
served as Chief Operating Officer of Towne Air Freight, a regional airfreight
trucking company. From 1993 to October 1995, Mr. May also served as a Chief
Executive Officer of Intelligent Electronics' Intelogistics Division, a
distributor of desktop hardware and related outsourcing services. From 1973 to
1993, Mr. May was employed by Federal Express Corporation where he served in a
variety of senior management positions. Mr. May attended Curry College and
Boston College.

Ian Williams, a founder of PNV.net, has served as our Chairman of the Board
since August 1998 and as a director of PNV.net since its incorporation in
September 1995. From September 1995 to March 1999, Mr. Williams served as our
Chief Executive Officer. From September 1995 to July 1998, Mr. Williams served
as our President. From March 1993 to September 1995, Mr. Williams served as
President of Park 'N View, Ltd., the predecessor of PNV.net. Prior to joining
Park 'N View, Ltd., from 1991 to March 1993, Mr. Williams served as President of
Arden Technologies, Inc., a manufacturer and distributor of wireless cable
transmitters. Mr. Williams' responsibilities at Arden, as well as other previous
employers, included the design of numerous satellite master antenna television
systems, multi-channel low-power television systems, FM rebroadcast and
distribution systems and wireless television broadcast systems and the
installation of low-power television and cable systems throughout Canada, the
Arctic, and over thirty other countries throughout the world. Mr. Williams holds
a diploma from West Gloucestershire College of Education in the United Kingdom.

Stephen L. Conkling has served as our President since August 1998 and as Chief
Operating Officer since December 1997. From April 1996 to July 1998, Mr.
Conkling served as our Vice President -- Finance. Prior to joining PNV.net, from
January 1995 to March 1996, Mr. Conkling served as Chief Financial

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<PAGE> 55

Officer of Advanced Promotion Technologies, a publicly held database marketing
company that filed for Chapter 11 bankruptcy protection within two years after
Mr. Conkling left the company. From November 1993 to January 1995, Mr. Conkling
was a consultant, providing strategic and financial strategy services. From 1991
to November 1993, Mr. Conkling served as Chief Executive Officer of Imagery, a
document imaging software company. Mr. Conkling served as Chief Financial
Officer of Interactive Systems, a systems software company, from 1984 to January
1991. Prior to 1984, he worked for Xerox Corporation for 16 years in various
finance and marketing positions. Mr. Conkling holds a B.S. in Industrial
Management from Purdue University and an M.B.A. from the University of Southern
California.

R. Michael Brewer has served as our Chief Financial Officer and Vice
President -- Finance since August 1998. Prior to joining PNV.net, from January
1994 to August 1998, Mr. Brewer served as Vice President of Finance and Chief
Financial Officer for Boca Research, Inc., a computer peripheral manufacturing
company. From 1978 to January 1994, Mr. Brewer served as Vice President of
Finance for the U.S. operations of Mitel Corporation, a Canadian company which
manufactured PBX telephone equipment and semiconductors. Mr. Brewer holds a B.S.
in Business Administration from the University of Minnesota. Mr. Brewer received
his Florida CPA in 1975.

Anthony W. Allen has served as our Vice President -- Operations since March 1997
and Secretary since our incorporation in September 1995. Prior to joining
PNV.net from 1993 to August 1997, Mr. Allen served as Director of Marketing for
Arden Technologies, Inc., a manufacturer and distributor of wireless cable
transmitters. From September 1995 to March 1997, Arden Technologies, Inc.
contracted with us to provide Mr. Allen's services to PNV.net. From 1990 to
1993, he served as Director & General Manager of International Microwave
Distribution Systems, Ltd. in Barbados, where he was responsible for the
international distribution and installation of wireless cable products. From
1988 to 1990, he served as Regional Sales Manager for Southfields Coachworks
Ltd., located in the United Kingdom, a manufacturer of semi-trailers and heavy
truck bodywork. Mr. Allen holds a diploma in mechanical engineering from Harper
Adams in the United Kingdom.

Richard K. Brenner has served as our Vice President -- Marketing since June 1999
and as our Vice President -- Sales from November 1997 to May 1999. Prior to
joining PNV.net from February 1996 to October 1997, Mr. Brenner was the founder
and President of Brenner Consulting Group, a consulting firm that provided
marketing consulting services to PNV.net. See the section entitled "Certain
Transactions." From June 1995 to February 1996, Mr. Brenner served as Vice
President -- Worldwide Business Planning for Scott Paper Company, where he
directed business planning for all Scott brands. From January 1994 to June 1995,
Mr. Brenner served as Vice President -- Marketing of Advanced Promotion
Technologies, a publicly held database marketing company that filed for Chapter
11 bankruptcy protection within two years after Mr. Brenner left the company.
Mr. Brenner worked for Procter & Gamble from 1986 to January 1994 in various
marketing and product management positions. Prior to joining Procter & Gamble,
Mr. Brenner worked for Leo Burnett USA, an advertising agency, as an account
supervisor. Mr. Brenner holds a B.A. in Business Administration from the
University of Maryland and a M.A. in Management from Northwestern University.

Bill J. Buzbee has served as our Vice President -- Business Development since
October 1997 and Vice-President -- Marketing and Sales from April 1995 to
October 1997. Prior to joining PNV.net from October 1993 to April 1995, he
served as Manager of Fuel/Ancillary Sales for National Auto/Truckstops Corp., a
truckstop operator. From 1989 to 1993 and from 1972 to 1984, Mr. Buzbee worked
for Truckstops of America and served in various capacities, including general
manager of several truckstop facilities. Mr. Buzbee worked for a Petro Stopping
Center franchisee from 1984 to 1986. Mr. Buzbee attended State Community College
in Columbia, Tennessee and David Lipscomb University in Nashville, Tennessee.

Mark A. Cleveland has served as our Vice President of Sales since June 1999.
Prior to joining PNV.net, from April 1990 to April 1999, Mr. Cleveland served as
Vice President of Jubitz Fleet Services, a division of Jubitz Corporation, a
company that provides a variety of services to fleets. From July 1997 to April
1999, Mr. Cleveland also served as the Vice President of Network Development for
SmartStop Inc., a

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<PAGE> 56

company, partially-owned by Jubitz Fleet Services, that marketed prepaid phone
cards and public access telephone services in truckstops. From July 1984 to
August 1989, Mr. Cleveland was the President of Horizon Satellite Systems, Inc.,
a retail and commercial satellite communications services provider, and he was
elected to the board of directors of the Satellite Broadcasting and
Communications Association. From September 1989 to March 1999, Mr. Cleveland was
a sales and marketing consultant. From June 1986 to June 1989, Mr. Cleveland was
a founder and Vice President of ONTOP Software Systems, a developer of business
operating software products in Portland, Oregon. Mr. Cleveland holds a B.A. in
Marketing and Finance from the University of Oregon.

James D. Green has served as our Vice President -- Product Development since
November 1996. Prior to joining PNV.net, Mr. Green served as President of
GreenLight Technologies, Inc., a software development company specializing in
frequency marketing and transaction processing services for truckstops and
trucking companies from its formation in March 1994 to November 1996. GreenLight
performed certain software programming consulting services for us. See the
section entitled "Certain Transactions." From 1984 to February 1994, Mr. Green
worked for Comdata Corporation as Senior Product Manager responsible for all
transportation card based products. Mr. Green worked as Product Manager for
Financial Institutional Services Inc. from 1982 to 1984 and as consultant for
Computer Sciences Corporation from 1980 to 1982. Mr. Green holds a B.S. in
Business Administration from The Evergreen State College in Olympia, Washington.

Yves Roland Maynard has served as our Vice President -- Engineering since
September 1995 and as Vice President -- Engineering of our predecessor, Park 'N
View, Ltd., from 1993 to August 1995. Mr. Maynard was employed by Glocom
Engineering from August 1990 to May 1993, and by Glocom Engineering Ltd./ Canada
from 1987 to May 1990, as Director of Engineering, where he was responsible for
the engineering and installation of microwave distribution systems. His
experience at Glocom includes the engineering and installation of microwave
distribution systems for companies in Canada, the United States and the
Caribbean, and the design of equipment and construction methods necessary to
deliver cable television and telephone services. From 1986 to 1987, Mr. Maynard
was employed by Island Engineering BWI as Director of Engineering. Mr. Maynard
holds a degree in Industrial Electronics from Red River Community College in
Winnipeg, Manitoba.

Steven Yevoli has served as our Vice President of New Media/E-Business since May
1999. Prior to joining PNV.net, from May 1998 to May 1999, Mr. Yevoli served as
Director of Cablevision Systems Corporation's E-commerce Division. In this
position, he was responsible for the electronic commerce operations of various
entities, including Madison Square Garden and Radio City Music Hall. From
September 1996 to April 1998, Mr. Yevoli served as one of the five original
members of Cablevision System's New Media Team. In this position, he assisted in
launching one of the country's first cable modem services, Optimum Online. From
October 1997 to June 1998, for Cablevision Systems, Mr. Yevoli also assisted in
the development and launch EZSeek.com, a portal in Long Island, NY. From
September 1995 to September 1996, Mr. Yevoli served as Director of New Media of
Rainbow Interactive, the first interactive group of Rainbow Media, a subsidiary
of Cablevision Systems. From September 1993 to August 1995, Mr. Yevoli served as
Vice President -- Music Division of Sabbeth Industries, in which position he was
responsible for distribution of overruns and out-of-stock music to foreign
markets. Mr. Yevoli holds a B.S. in Business from Ithaca College.

Robert M. Chefitz has served as a director of PNV.net since November 1995. Mr.
Chefitz has served as a Managing Director of Patricof & Co. Ventures, Inc., a
venture capital firm, since 1991. Mr. Chefitz joined Patricof in 1987 and served
as Vice President until 1991. From 1981 to 1987, Mr. Chefitz served in various
management positions with Golder, Thoma & Cressey Co. of Chicago, Illinois. Mr.
Chefitz's experience includes consulting with management teams to consolidate
fragmented industries, including communications, security and specialty
retailing. Mr. Chefitz serves as a director of Protection One, Inc. and several
privately held companies in which the limited partnerships managed by Patricof
are investors. Mr. Chefitz holds a B.A. in History from Northwestern University
and an M.B.A. from Columbia University.

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<PAGE> 57

Thomas P. Hirschfeld has served as a director of PNV.net since November 1995.
Mr. Hirschfeld has served as a Managing Director of Patricof since March 1999
and as a Principal of Patricof from January 1995 through February 1999. From
January 1994 to January 1995, he served as Assistant to the Mayor of New York
City. From August 1986 to December 1993, Mr. Hirschfeld worked for Salomon
Brothers as an investment banker. Mr. Hirschfeld serves as a director of Talk
City, Inc., a provider of on-line communities and interactive services for
businesses and consumers, and Audible, Inc., a provider of spoken audio content
over the Internet. Mr. Hirschfeld serves as a director of a number of privately
held companies in which the limited partnerships managed by Patricof are
investors. Mr. Hirschfeld holds a B.A. in Classics from Harvard College, and an
M.A. in Politics and Economics from Ballise College, Oxford University.

Richard M. Johnston has served as a director of PNV.net since August 1997. Mr.
Johnston has served as Vice President-Investments since 1970 and is a director
of The Hillman Company, an investment holding company with diversified
operations. Mr. Johnston served as Assistant to the President of Hillman from
1965 to 1970 and Assistant to the Vice President-Investments of Hillman from
1961 to 1965. Mr. Johnston serves as a director of Metrocall, Inc., a leading
provider of paging and other wireless messaging services, Superconductor
Technologies, Inc., a development and manufacturing company of super cooled
filters for communication applications, and several privately held companies in
which Hillman is an investor. Mr. Johnston holds a B.S. in Commerce from
Washington & Lee University and an M.B.A. from Wharton School of Finance of the
University of Pennsylvania.

Daniel K. O'Connell has served as a director of PNV.net since November 1995. Mr.
O'Connell has been a private investor since April 1991. From 1964 to April 1991,
Mr. O'Connell worked for Ryder System, Inc., an international transportation
services company and served in various capacities including Executive Vice
President from 1974 to 1991, Financial Vice President from 1970 to 1974, General
Counsel from 1968 to 1970 and attorney from 1964 to 1968. He is a director of
American Retirement Corporation in Nashville, Tennessee, which develops, owns
and manages assisted living, continuing care and congregate living retirement
communities throughout the United States, and of Fortress-FAE Corporation in
Boston, Massachusetts, which transports and stores art objects and other
high-value personal property. Mr. O'Connell holds a B.A. from Southern Illinois
University and a J.D. from Georgetown University Law Center. Mr. O'Connell's son
is a partner in the law firm of Kilpatrick Stockton LLP, which provides legal
services to us.

Executive officers are appointed by the board of directors on an annual basis
and serve until their successors have been duly elected and qualified. There are
no family relationships among any of our directors or executive officers, except
that Mr. Williams and Mr. Allen are brothers-in-law.

COMPOSITION OF THE BOARD OF DIRECTORS

Our bylaws provide that the number of members of our board of directors will
consist of between one and seven and that the board has the power to determine
the number of directors, when not determined by the stockholders, and to fill
vacancies on the board. Currently, the number of directors is fixed at seven and
we have six directors and one vacancy on the board of directors. All directors
are elected annually to serve until the next annual stockholders' meeting
following their election and until their successors are elected and qualified.

Of our current directors, under the terms of the preferred stock designations
and stockholder agreement to which we are a party, Mr. Chefitz and Mr.
Hirschfeld are the designees of the holders of the Series A preferred stock, Mr.
May is the designee of the holders of the Series B preferred stock, Mr. Johnston
is the designee of the holders of the Series C preferred stock and Mr. Williams
and Mr. O'Connell are the designees of the holders of the common stock.

BOARD COMMITTEES

The audit committee of the board of directors reviews, acts on and reports to
the board of directors with respect to various auditing and accounting matters,
including the recommendation of our auditors, the

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scope of the annual audits, fees to be paid to the auditors, the performance of
our independent auditors and our accounting practices. The members of the audit
committee are Mr. O'Connell, Mr. Hirschfeld and Mr. Johnston.

The compensation committee of the board of directors reviews the performance of
all executive officers and determines the salaries and benefits for all
executive officers. The members of the compensation committee are Mr. Chefitz
and Mr. Williams.

DIRECTOR COMPENSATION

Other than reimbursing directors for customary and reasonable expenses of
attending board of directors or committee meetings, we do not currently
compensate our directors for serving in this capacity.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee made decisions concerning the compensation of our
executive officers for the years ended June 30, 1998 and June 30, 1999, during
which time, Mr. Williams, our Chairman of the Board, has been a member of the
committee. No interlocking relationship exists between any member of our board
or our compensation committee and any member of the board of directors or
compensation committee of any other company, and no such interlocking
relationship has existed in the past.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following table sets forth all compensation during fiscal 1998 and 1999 for
each of our chief executive officers during fiscal 1999 and our four other most
highly compensated executive officers during fiscal 1999 who were serving as
executive officers as of the end of fiscal 1999.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(1)
--------------------------- ---- -------- ------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. May.................... 1999 $ 91,667 -- $15,775 567,083 $1,375
Chief Executive Officer and 1998 -- -- -- -- --
Director(2)
Ian Williams..................... 1999 165,000 $50,000 -- -- 1,856
Chairman of the Board, Chief 1998 157,000 -- -- -- --
Executive
Officer and Director(3)
Stephen L. Conkling.............. 1999 140,000 50,000 -- 65,735 1,575
President and Chief Operating 1998 132,501 -- -- -- --
Officer
R. Michael Brewer................ 1999 95,474 48,000 -- 81,096 1,238
Vice President -- Finance and 1998 -- -- -- -- --
Chief Financial Officer(4)
James D. Green................... 1999 130,000 20,000 -- 75,867 1,556
Vice President -- Product 1998 127,500 -- -- -- --
Development
Richard K. Brenner............... 1999 130,433 10,000 -- 101,912 1,425
Vice President -- Marketing(5) 1998 73,333 27,500 -- -- --
</TABLE>

- ---------------------------

(1) Represents our contribution under our 401(k) Profit Sharing Plan on behalf
of this executive officer.

(2) Mr. May joined us in March 1999. Mr. May's "Other Annual Compensation"
includes reimbursements of $6,470 for premiums paid by Mr. May on a
whole-life insurance policy for the benefit of Mr. May's designated
beneficiaries and $7,805 paid to Mr. May for temporary living and relocation
expenses.

(3) Mr. Williams served as our Chief Executive Officer until March 1999.

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(4) Mr. Brewer joined us in August 1998. His bonus compensation consists of a
hiring bonus of $10,000 and a guaranteed bonus of $38,000 that was earned in
the fiscal 1999, but paid in fiscal 2000.

(5) Mr. Brenner joined us in November 1997.

STOCK OPTIONS

The following table sets forth information regarding options granted to each of
our executive officers named in the Summary Compensation Table during fiscal
1999. All of the options were granted under our stock option plan and are
"nonqualified" options. We have not granted any stock appreciation rights.

To the extent the options set forth in the table below have become exercisable,
these options may be exercised for a period of three years following a
termination of the optionee's employment, except for the option granted to Mr.
May, which may be exercised at any time during the term of his option. All
options set forth in the table below terminate ten years from the date of grant,
except for the option granted to Mr. May, which terminates seven years from the
date of grant.

The potential realizable values are based on an assumption that the price of our
common stock will appreciate at the compounded annual rate shown from the date
of grant until the end of the option term. These amounts are calculated based on
the requirements of the Securities and Exchange Commission and do not reflect
our estimate of future common stock prices.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (1)
-------------------------------------------------------- -----------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR PER SHARE DATE 0% 5% 10%
---- ---------- ---------------- ----------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert P. May(2)........ 567,083 42.45% $5.00 03/02/09 -- $1,750,643 $4,519,652
Ian Williams............ -- -- -- -- -- -- --
Stephen L. Conkling..... 65,735(3) 4.92 5.00 03/02/09 -- 206,408 523,908
James D. Green.......... 43,000(5) 3.22 5.00 03/02/09 -- 135,020 342,710
32,867(3) 2.46 5.00 03/02/09 -- 103,202 261,950
Richard K. Brenner...... 80,000(4) 5.99 3.00 03/02/09 $160,000 151,200 382,400
21,912(3) 1.64 5.00 03/02/09 -- 68,804 174,639
R. Michael Brewer....... 80,000(5) 5.99 5.00 03/02/09 -- 251,200 637,600
1,096(3) .08 5.00 03/02/09 -- 3,441 8,735
</TABLE>

- ---------------------------

(1) The exercise price of the options granted was the fair market value of the
common stock on the date of grant as determined by our board of directors
based on our financial condition and prospects, except that the exercise
price of options granted to Mr. Brenner was below this value. We
subsequently determined that the exercise price of the options granted was
below the deemed fair market value of the common stock for financial
reporting purposes. See the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" under the heading
"Overview."

(2) This option becomes exercisable, subject to continued employment, in equal
monthly increments of approximately 2.1% each, subject to certain
accelerated vesting in the event of an initial public offering of our common
stock. Generally, the exercise price per share is $5 per share price.

(3) This option becomes exercisable, subject to continued employment, in
cumulative annual increments of 20% each beginning on the date of grant and
the first, second, third and fourth anniversaries of the date of grant.

(4) This option becomes exercisable, subject to continued employment, as to
68,000 of the underlying shares on the date of grant and as to 4,000 shares
each in November 1999, 2000 and 2001.

(5) This option becomes exercisable, subject to continued employment, in
cumulative increments of 20% on the date of grant and in August 1999, 2000,
2001 and 2002.

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The following table sets forth information concerning the number and value of
unexercised options held by the executive officers named in the Summary
Compensation Table as of June 30, 1999.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AS OF JUNE 30, 1999 AS OF JUNE 30, 1999 (1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert P. May................................ 35,442 531,641 $354,420 $5,316,410
Ian Williams................................. -- -- -- --
Stephen L. Conkling.......................... 71,874 91,739 917,648 1,049,994
Richard K. Brenner........................... 72,382 29,530 859,820 319,300
R. Michael Brewer............................ 16,219 64,877 162,190 648,770
James D. Green............................... 37,900 75,845 464,226 815,266
</TABLE>

- ---------------------------

(1) Based on a value of $15.00 per share, the deemed fair market value of our
common stock as of June 30, 1999 for financial reporting purposes, less the
per share exercise price, multiplied by the number of shares issued upon
exercise of the option. All options were granted under our stock option
plan.

EMPLOYMENT, SEVERANCE AND OTHER ARRANGEMENTS

In March 1999, under an employment agreement without a fixed term that either
party may terminate at any time, we employed Robert P. May as our chief
executive officer, and agreed to nominate him as a director. Under this
agreement, Mr. May's base annual salary is $275,000 and he is eligible for a
bonus initially targeted at 50% of his base annual salary based upon goals and
objectives to be established by the board of directors annually following our
fiscal year-end. This bonus may be increased or decreased by the board of
directors. Mr. May may also receive a discretionary bonus. We have agreed to
reimburse Mr. May for certain expenses related to his temporary living and
relocation, to pay certain life insurance premiums on his behalf and to
establish a nonqualified deferred compensation plan under which he may defer
amounts in excess of permissible contributions to our 401(k) plan. We have not
yet established the deferred compensation plan.

In March 1999, in accordance with this employment agreement, we issued to Mr.
May 23,000 shares of our Series C preferred stock for a purchase price of $8.00
per share. In partial payment of this purchase price, Mr. May issued to the
company his promissory note, also dated March 1999, in the original principal
amount of $92,000, which amount accrues interest at the rate of 6% per annum.
The principal balance of this note, together with accrued interest, is due in
March 2003. Under his employment agreement, Mr. May has agreed to pay the
remaining $92,000 of this purchase price over an eight month period that began
in March 1999.

If we terminate Mr. May's employment without cause, we are obligated to pay him
his base salary and the amount of the life insurance premiums that we have
agreed to pay on his behalf for six months. If a change in our control occurs
and we terminate Mr. May's employment without cause during the 18 months
following the change in control, we are obligated to pay him his base salary for
18 months and the amount of the life insurance premiums for six months, as well
as an amount equal to any bonus paid to Mr. May in the previous year. If Mr. May
does not agree to release the company and our representatives from liability
relating to his employment, we are obligated to pay him his base salary for one
month only upon termination.

In March 1999, in accordance with his employment agreement, we granted Mr. May,
under our stock option plan, an option to purchase 567,083 shares of common
stock for $5.00 per share. We also agreed with Mr. May that, if certain sales of
our stock in an aggregate amount up to $20.0 million closed prior to February
29, 2000, we would grant him additional options to purchase shares of common
stock such that, immediately following any such grant of additional options, he
would hold options to purchase an aggregate of up to five percent of the common
stock, calculated on a fully diluted basis, outstanding after

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such sale. Under this agreement, we granted to Mr. May an option to purchase
130,097 shares of common stock having an exercise price of $5.00 per share upon
the closing of the sale of our Series D preferred stock in September 1999. This
option became exercisable as to 12.48% of the underlying shares of common stock
on the date of grant and becomes exercisable in equal monthly increments of
approximately 2.1% each, subject to certain accelerated vesting in the event of
an initial public offering of our common stock.

In November 1996, we acquired computer software from a software development
company known as GreenLight Technologies, Inc., of which James D. Green owned
50% of its capital stock. In connection with the acquisition, we agreed to pay
Mr. Green an annual salary of at least $100,000 as long as he is employed by us.
For additional information relating to the acquisition of GreenLight
Technologies, see the section entitled "Certain Transactions."

Other than Mr. May, we do not have an employment agreement with any executive
officer named in the Summary Compensation Table. In the event the employment of
any executive officer is terminated, we have verbally agreed to pay each of
these officers his base annual salary for a three-month period other than Mr.
Conkling or Mr. Brenner, each of whom we have agreed to pay for a six-month
period. Pursuant to our stock option plan, the exercisability of options granted
under the plan is accelerated in the event of certain changes in control of
PNV.net.

BONUS PLAN

In February 1998, the board of directors adopted a bonus plan to provide annual
cash and/or stock awards to some of our key employees, including all of our
executive officers. Pursuant to the bonus plan, each of these key employees are
each eligible for bonuses of up to 61% of annual base salary depending upon the
employee's position with PNV.net and achievement of certain subjective employee
goals and objective company goals, both of which are determined by the board of
directors. The allocation of the bonus between cash and/or stock awards is
determined by the board of directors. To date, we have not established any goals
or made any awards under this bonus plan.

STOCK OPTION PLAN

Our stock option plan was adopted by our board of directors on February 7, 1996,
and approved by our stockholders on the same date for the benefit of our
officers, directors, employees and consultants. This plan has been amended, most
recently in August 1999 to approve an additional 250,000 shares of common stock
for issuance under this plan, and this amendment was subsequently approved by
our stockholders. An aggregate of 2,184,166 shares of common stock is reserved
for issuance under this plan. As of September 16, 1999, we had outstanding
options to purchase an aggregate of 1,951,493 shares of common stock under this
plan at a weighted average exercise price of approximately $4.09 per share.

This plan is currently administered by our board of directors. Our board of
directors may interpret this plan and may prescribe, amend and rescind rules and
make all other determinations necessary or desirable for the administration of
this plan. This plan permits our board of directors to select the officers,
directors, employees, and consultants who will receive awards and generally to
determine the terms and conditions of those awards.

We may issue two types of stock options under this plan: incentive stock
options, which are intended to qualify under the Internal Revenue Code of 1986,
as amended, and nonqualified stock options. The option price of each incentive
stock option granted under this plan must be at least equal to the fair market
value of a share of common stock on the date the incentive stock option is
granted.

In the event of a merger, consolidation, reorganization, recapitalization, stock
dividend or other change in corporate structure affecting the number of issued
shares of our common stock, then our board of directors may make equitable
adjustments to the terms of this plan. In particular, our board of directors may
make an equitable substitution or proportionate adjustment in the number and
type of shares authorized by this

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plan, the number and type of shares covered by outstanding awards under this
plan, and the exercise prices of these awards.

The terms of this plan provide that our board of directors may amend or
terminate this plan at any time, provided, however, that some amendments require
approval of our stockholders. No action may be taken which adversely affects any
rights under outstanding awards without the holder's consent.

401(k) PLAN

We adopted a Section 401(k) profit sharing plan in February 1999. The 401(k)
plan is designed as a tax-qualified plan under which all employees who are at
least 18 years of age and have completed at least one year of service with us
are eligible to participate. If, however, an employee was employed by us on
January 1, 1999, this employee became eligible to participate in the 401(k) plan
regardless of age or length of service with us. Under the 401(k) plan,
participants may elect to defer a portion of their compensation on a pre-tax
basis. In addition, at the discretion of the board of directors, we may make
matching contributions and/or nonelective employer contributions to the 401(k)
plan for all eligible employees. During fiscal 1999, we made contributions of
$59,430.

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<PAGE> 63

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to the beneficial
ownership of our common stock as of September 16, 1999, by each person or group
of affiliated persons who is known by PNV.net to beneficially own 5% or more of
our common stock, each director, each executive officer named in the Summary
Compensation Table and all of our directors and executive officers as a group.
Unless otherwise indicated, the persons named in the table have sole voting and
sole investment control with respect to all shares beneficially owned.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF SHARES
NAME BENEFICIALLY OWNED OUTSTANDING
---- ------------------ -----------------
<S> <C> <C>
Patricof & Co. Ventures, Inc., as Manager(1)............... 2,373,602 20.54%
445 Park Avenue, New York, New York 10022
ABRY Broadcast Partners III, L.P.(2)....................... 1,904,762 16.48
18 Newbury Street, Boston, Massachusetts 02116
State of Michigan Retirement System(3)..................... 1,143,663 9.90
430 West Allegan Street, Lansing, Michigan 48922
Sam Hashman(4)............................................. 1,011,560 8.75
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees(5)................................. 825,000 7.14
2000 Grant Building, Pittsburgh, Pennsylvania 15219
Halpern Denny Fund II, L.P................................. 619,048 5.36
500 Boylston Street, Boston, Massachusetts 02116
Robert M. Chefitz(6)....................................... 2,373,602 20.54
c/o Patricof & Co. Ventures, Inc.,
445 Park Avenue, New York, New York 10022
Thomas P. Hirschfeld(7).................................... 2,373,602 20.54
c/o Patricof & Co. Ventures, Inc.,
445 Park Avenue, New York, New York 10022
Richard M. Johnston(8)..................................... 0 --
Daniel K. O'Connell(9)..................................... 270,810 2.34
Robert P. May(10).......................................... 139,195 1.19
Ian Williams(10)(11)....................................... 441,953 3.92
Stephen L. Conkling(10).................................... 85,449 *
Richard K. Brenner(10)..................................... 76,382 *
R. Michael Brewer(10)...................................... 32,219 *
James D. Green(10)......................................... 46,500 *
All directors and officers as group
(15 persons)(12).......................................... 3,612,644 29.95
</TABLE>

- ---------------------------

* Less than 1%

(1) Consists of shares of common stock and shares of common stock presently
issuable upon conversion of outstanding shares of Series B and Series C
preferred stock owned as follows:

- 1,755,698 shares held by APA Excelsior IV, L.P.

- 309,602 shares held by APA Excelsior IV/Offshore, L.P.

- 308,302 shares held by The P/A Fund, L.P.

Patricof & Co. Ventures, Inc., directly or indirectly, controls, and has
sole voting or investment power with regard to shares beneficially owned by
such limited partnerships.

(2) Consists of shares of common stock presently issuable upon conversion of
outstanding shares of Series D preferred stock.

(3) Consists of shares of common stock presently issuable upon conversion of
outstanding shares of Series B and Series C Preferred stock. Does not
include shares held by APA Excelsior IV, L.P., a limited partnership of
which the State of Michigan Retirement System is a limited partner.

(4) Includes 22,950 shares of common stock beneficially owned by PNV General
Partner, Inc., of which Mr. Williams, Mr. Hashman and Monte Nathanson, the
general partner of MPN Partners, Ltd., each owns one-third of such shares.

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<PAGE> 64

(5) Consists of shares of common stock presently issuable upon conversion of
outstanding shares of Series C preferred stock owned as follows:

- 625,000 shares held by Juliet Challenger, Inc., an indirect, wholly-owned
subsidiary of The Hillman Company.

- 187,500 shares held by a trust for the benefit of Henry L. Hillman.

- 12,500 shares held by The Hillman Company.

The Hillman Company is controlled by the trust for the benefit of Henry L.
Hillman. The trustees of the trust are Henry L. Hillman, Elsie Hilliard
Hillman and C. G. Grefenstette. The trustees share voting and investment
power with respect to the shares held of record by the trust and the assets
of The Hillman Company. Does not include an aggregate of 250,000 shares
held by four trusts for the benefit of members of the Hillman family, as to
which shares the trustees (other than Mr. Grefenstette, who is one of the
trustees of such family trusts) disclaim beneficial ownership. Also does
not include 187,500 shared held by Venhill Limited Partnership, as to which
shares the trustees disclaim beneficial ownership. Howard B. Hillman, the
general partner of Venhill Limited Partnership, is a step-brother of Henry
L. Hillman.

(6) Represents an aggregate of 2,373,602 shares of common stock and shares of
common stock presently issuable upon conversion of outstanding shares of
Series B and Series C preferred stock owned by funds managed by Patricof.
Mr. Chefitz, a director of PNV.net, is a Managing Director of Patricof, and
a general partner in the limited partnerships which Patricof & Co.
Ventures, Inc. manages. Mr. Chefitz does not exercise sole or shared voting
or investment power with respect to such shares and disclaims beneficial
ownership of such shares, except to the extent of his pecuniary interest
therein.

(7) Represents an aggregate of 2,373,602 shares of common stock and shares of
common stock presently issuable upon conversion of outstanding shares of
Series B and Series C preferred stock owned by funds managed by Patricof.
Mr. Hirschfeld, a director of PNV.net, is a Managing Director of Patricof.
Mr. Hirschfeld does not exercise sole or shared voting or investment power
with respect to such shares and disclaims beneficial ownership of such
shares, except to the extent of his pecuniary interest therein.

(8) Does not include 1,250,000 shares of common stock presently issuable upon
conversion of outstanding shares of Series C preferred stock owned by
affiliates and related parties of The Hillman Company. Mr. Johnston is Vice
President-Investments and a director of The Hillman Company. Mr. Johnston
does not exercise sole or shared voting or investment power with respect to
such shares and disclaims beneficial ownership of such shares.

(9) Represents an aggregate of 270,810 shares of common stock owned by Nelgo
Investments, a partnership of which Mr. O'Connell is a general partner. Mr.
O'Connell owns 15% of Nelgo Investments.

(10) The following table indicates those people whose total number of
beneficially owned shares include shares subject to options exercisable
prior to November 15, 1999:

<TABLE>
<CAPTION>
SHARES SUBJECT TO OPTIONS
-------------------------
<S> <C>
Robert P. May............................................... 116,195
Stephen L. Conkling......................................... 85,449
Richard K. Brenner.......................................... 76,382
R. Michael Brewer........................................... 32,219
James D. Green.............................................. 46,500
</TABLE>

(11) Includes 22,950 shares of common stock beneficially owned by PNV General
Partner, Inc., of which Mr. Williams, Mr. Hashman and Monte Nathanson, the
general partner of MPN Partners, Ltd., each owns one-third of such shares.

(12) Includes an aggregate of 523,279 shares of common stock subject to options
that are presently exercisable or become exercisable by November 15, 1999.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

FINANCING TRANSACTIONS IN CONNECTION WITH THE ORGANIZATION OF PNV.NET

In November 1995, PNV.net, which was organized by Patricof & Co. Ventures, Inc.,
Ian Williams and the then partners of Park 'N View, Ltd., Sam Hashman, Monte
Nathanson and Nelgo Investments, of which Daniel O'Connell is a general partner,
acquired the business and assets, and assumed the liabilities, of Park 'N View,
Ltd. In connection with this purchase, we issued approximately 2.3 million
shares of common stock to Park 'N View, Ltd. Park 'N View, Ltd. subsequently
distributed those shares to its partners. The amount of the net liabilities
assumed by PNV.net was $84,000. In addition, over a 12-month period commencing
in November 1995, funds managed by Patricof invested $3.8 million in PNV.net in
exchange for which we issued to the funds managed by Patricof an aggregate of
2.0 million shares of common stock, 70,010 shares of Series A preferred stock
and $3.0 million aggregate principal amount of

64
<PAGE> 65

our 8% subordinated notes. During the fall of 1996, we issued to the funds
managed by Patricof an additional $1.5 million aggregate principal amount of our
8% subordinated notes and warrants to purchase 239,250 shares of common stock.
In connection with the sale of the Series A preferred stock, PNV.net entered
into certain agreements with certain holders of our capital stock. Pursuant to
these agreements, certain holders of common stock and Series A preferred stock
obtained rights of first refusal with respect to proposed sales of stock by
PNV.net or by certain holders of shares of our common stock. The holders of our
outstanding shares of common stock and Series A preferred stock also had certain
co-sale rights.

1996 PRIVATE EQUITY INVESTMENT

In November 1996, in connection with the sale of the Series B preferred stock,
the funds managed by Patricof:

- converted $3.0 million aggregate principal amount of our 8% subordinated
notes plus $.2 million in interest accrued on those notes into 318,065 shares
of the Series A preferred stock;

- converted $1.5 million aggregate principal amount of those notes and warrants
to purchase 239,250 shares of common stock, into 137,237 shares of the Series
B preferred stock; and

- purchased 45,746 shares of Series B preferred stock for $.5 million.

The State of Michigan Retirement System purchased 731,930 shares of the Series B
preferred stock for $8.0 million and the Benefit Capital Management Corporation
purchased 274,474 shares of the Series B preferred stock for $3.0 million. In
connection with the sale of the Series B preferred stock, we entered into
various agreements with certain holders of our capital stock. Pursuant to these
agreements, we granted demand and piggy-back registration rights to various
holders of shares of common stock and to holders of the shares of common stock
issuable upon the conversion of the Series B preferred stock and any additional
shares of common stock acquired as a result of a stock dividend, stock split or
other distribution in respect of the Series B preferred stock. Various holders
of common stock and Series B preferred stock also obtained rights of first
refusal with respect to proposed sales of stock by PNV.net or by various holders
of shares of common stock pursuant to these agreements. The holders of our
outstanding shares of common stock and Series B preferred stock also had certain
co-sale rights pursuant to these agreements.

ACQUISITION OF GREENLIGHT TECHNOLOGIES, INC.

From November 1995 to November 1996, GreenLight Technologies, Inc., of which
James Green owned 50% of the capital stock, and Lewis Tatham, also an employee
of PNV.net, owned the remaining 50% of the capital stock, provided certain
software programming consulting services to PNV.net relating to our software
pursuant to a software development agreement. Pursuant to the provisions of this
agreement, during this period, we paid Greenlight Technologies an aggregate of
approximately $49,800 in fees. In November 1996, pursuant to a technology
transfer agreement, Greenlight Technologies, Mr. Green and Mr. Tatham
transferred and assigned to us certain software relating to our software
developed by them, including rights in software developed pursuant to the
software development agreement, in consideration of our payment to each
individual of a $100,000 annual salary as long as he is employed by us and the
grant to each of them of an option to purchase 37,878 shares of common stock.
Each option has an exercise price of $1.25 per share and vests in five annual
cumulative increments of 20% each commencing on the date of grant so long as
employment continues.

1997 PRIVATE EQUITY INVESTMENT

In August 1997, we issued an aggregate of 2,328,543 shares of Series C preferred
stock for $18.6 million, of which (i) Henry L. Hillman, Elsie Hilliard Hillman
and C.G. Grefenstette, Trustees, purchased 812,500 shares of Series C preferred
stock for $6.5 million, (ii) funds managed by Patricof purchased 125,000 shares
of Series C preferred stock for $1.0 million, (iii) Benefit Capital Management
Corporation purchased 125,000 shares of Series C preferred stock for $1.0
million and (iv) the State of Michigan Retirement System purchased 125,000
shares of Series C preferred stock for $1.0 million. In connection

65
<PAGE> 66

with the sale of the Series C preferred stock, we entered into certain
amendments to the agreements with various holders of our capital stock that we
had entered into in connection with the sale of the Series A preferred stock and
the Series B preferred stock. Pursuant to these amendments, we granted demand
and piggy-back registration rights to holders of the shares of common stock
issuable upon the conversion of the Series C preferred stock and any additional
shares of common stock acquired as a result of a stock dividend, stock split, or
other distribution in respect of the Series C preferred stock. These amendments
also provided holders of Series C preferred stock rights of first refusal with
respect to proposed sales of stock by PNV.net or by various holders of shares of
common stock. The holders of the Series C preferred stock also had certain
co-sale rights pursuant to these amendments.

1999 PRIVATE EQUITY INVESTMENT

In September 1999, we sold an aggregate of 3,000,000 shares of Series D
preferred stock for $31.5 million, of which ABRY Broadcast Partners III, L.P.
purchased 1,904,762 shares of Series D preferred stock for $20.0 million,
Halpern Denny Fund II, L.P. purchased 619,048 shares of Series D preferred stock
for $6.5 million and Cummins Engine Company, Inc. purchased 476,190 shares of
Series D preferred stock for $5.0 million.

In connection with the closing of the sale of the Series D preferred stock, we
entered into certain amendments to the agreements with various holders of our
capital stock that we had entered into in connection with the sale of our Series
A, Series B and the Series C preferred stock. Pursuant to these amendments, we
granted registration rights to holders of the shares of common stock issuable
upon the conversion of the Series D preferred stock. We also granted
registration rights to Volpe Brown Whelan & Company, LLC the placement agent for
the Series D preferred stock, to which we issued a warrant to purchase 60,000
shares of common stock for $10.50 per share. These amendments also provide
holders of Series D preferred stock rights of first refusal with respect to
proposed sales of stock by PNV.net or by various holders of common stock. The
holders of the Series D preferred also have certain co-sale rights.

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<PAGE> 67

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1). FINANCIAL STATEMENTS

The following financial statements of PNV.net, Inc. are included in Item 8 of
this Annual Report on Form 10-K:

Independent Auditors' Report

Balance Sheets as of June 30, 1998 and 1999

Statements of Operations for the years ended June 30, 1997, 1998 and 1999

Statements of Changes in Stockholders' Deficiency for the years ended June 30,
1997, 1998 and 1999

Statements of Cash Flows for the years ended June 30, 1997, 1998 and 1999

Notes to Financial Statements

(a)(2). FINANCIAL STATEMENT SCHEDULES

Financial statement schedules have been omitted since the required information
is not present, or not present in amounts sufficient to require submission of
the schedule, or because the information is included in the financial statements
or notes thereto.

(a)(3). LIST OF EXHIBITS (INCLUDING MANAGEMENT CONTRACTS OR COMPENSATORY PLANS
OR ARRANGEMENTS REQUIRED TO BE FILED)

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
3.1* -- Amended and Restated Certificate of Incorporation, dated
October 30, 1995 (as currently in effect, as amended in
Exhibits 3.2, 3.3, 3.4, 3.5 and 3.5.1).
3.2* -- Certificate of Amendment of the Certificate of
Incorporation, dated November 12, 1996.
3.3* -- Certificate of Amendment of the Certificate of
Incorporation, dated August 22, 1997.
3.4** -- Certificate of Amendment to Certificate of Incorporation,
dated June 4, 1999.
3.5** -- Certificate of Amendment to Certificate of Incorporation,
dated July 29, 1999.
3.5.1** -- Certificate of Amendment to Certificate of Incorporation,
dated September 15, 1999.
3.6** -- Certificate of Amendment Relating to the Series A Preferred
Stock, dated September 15, 1999.
3.7** -- Certificate of Amendment to Certificate of Designations,
Preferences and Rights of Series B 7% Cumulative Convertible
Preferred Stock, dated September 15, 1999.
3.8** -- Certificate of Amendment to Certificate of Designations,
Preferences and Rights of Series C 7% Cumulative Convertible
Preferred Stock, dated September 15, 1999.
3.8.1** -- Certificate of Designations, Preferences and Rights of
Series D 7% Cumulative Convertible Preferred Stock, dated
September 15, 1999.
3.9** -- Amended and Restated By-laws
4.1* -- Indenture, dated as of May 27, 1998, by and between the
Company and State Street Bank and Trust Company, as trustee.
4.2*** -- Warrant Agreement, dated as of May 27, 1998, by and between
the Company and State Street Bank and Trust Company, as
warrant agent.
4.3*** -- Warrant Registration Rights Agreement, dated as of May 27,
1998, by and between the Company and Donaldson, Lufkin &
Jenrette Securities Corporation.
</TABLE>

67
<PAGE> 68

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
10.1** -- Fleet Service Agreement, dated as of February 1, 1999, by
and between the Company and Trucks For You.
10.2* -- Fleet Service Agreement, dated as of February 1, 1998, by
and between the Company and Carroll Fulmer & Co., Inc.
10.3* -- Fleet Service Agreement, dated as of March 1, 1998, by and
between the Company and Contract Freighters, Inc.
10.4* -- Fleet Service Agreement, dated as of March 11, 1998, by and
between the Company and Lake City Express.
10.5* -- Fleet Service Agreement, dated as of April 1, 1998, by and
between the Company and Top Gun Transport, Inc.
10.6* -- Cable Television and Telephone Service Agreement, dated as
of August 14, 1995, by and between the Company and AMBEST.
10.7* -- Cable Television and Telephone Service Agreement, dated as
of July 11, 1996, by and between the Company and
Professional Transportation Partners, LLC.
10.8* -- Cable Television and Telephone Service Agreement, dated as
of March 18, 1997, by and between the Company and North
America Truck Stop Network.
10.9* -- Cable Television and Telephone Service Agreement, dated as
of October 28, 1995, by and between the Company and Travel
Ports of America, Inc.
10.10* -- Cable Television and Telephone Service Agreement, dated as
of February 15, 1996, by and between the Company and Pilot
Corporation.
10.11* -- Cable Television and Telephone Service Agreement, dated as
of February 7, 1997, by and between the Company and All
American Plazas, Inc.
10.12* -- Cable Television and Telephone Service Agreement, dated as
of September 12, 1997, by and between the Company and Petro
Stopping Centers, L.P.
10.13*+ -- Cable Television and Telephone Service Agreement, dated
March 12, 1998 by and between the Company and TA Operating
Corporation d/b/a Travel Centers of America.
10.14** -- Lease, dated as of July 20, 1992, by and between CB
Institutional Fund VI and Arden Technologies, Inc., as
amended March 29, 1996 and April 5, 1996, as assigned to the
Company pursuant to Assignment of Lease, dated October 16,
1995, by and between the Company and Arden Technologies,
Inc.
10.15** -- Sublease Agreement and Consent to Sublease, dated as of June
1, 1998, by and between the Company and Security World
International, Inc.
10.16* -- Lease, dated August 11, 1997, between Unipower Corporation
and the Company.
10.17* -- Software Development Agreement, dated November 22, 1995,
between the Company and GreenLight Technologies, Inc.
10.18* -- Technology Transfer and Development Agreement, dated as of
November 4, 1996, by and among GreenLight, Inc., Jody Green,
Lewis Tatham and the Company.
10.19* -- Customer Agreement, dated December 17, 1997, by and between
the Company and Echostar Satellite Corporation.
10.20* -- Compensation Plan.
10.21* -- Stock Option Plan.
10.21.1** -- Severance Program.
10.21.2* -- Securities Purchase Agreement Subordinated Notes, Series A
Preferred Stock and Common Stock, dated as of November 2,
1995, by and among the Company and the Purchasers named
therein.
</TABLE>

68
<PAGE> 69

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
10.21.3* -- Letter Agreement, dated as of May 18, 1998, by and among the
Company and certain holders of the Company's Series A
Preferred Stock.
10.21.4* -- Securities Restriction Agreement, dated as of November 2,
1995, by and among the Company and the Investors named
therein.
10.21.5* -- Stock Purchase Agreement Series B 7% Cumulative Convertible
Preferred Stock, dated as of November 13, 1996, by and among
the Company and the Purchasers named therein.
10.21.6* -- Securities Restriction Agreement, dated as of November 13,
1996, by and among the Company and the Investors named
therein.
10.21.7* -- Amended and Restated Securityholders' Agreement and Exchange
Agreement, dated as of November 13, 1996, by and among the
Company and the Investors named therein.
10.22* -- Registration Rights Agreement, dated as of November 13,
1996, by and among the Company and the Investors named
therein.
10.22.1* -- Stock Purchase Agreement Series C 7% Cumulative Convertible
Preferred Stock, dated as of August 22, 1997, by and among
the Company and the Purchasers named therein.
10.22.2* -- Amendment to Securities Restriction Agreement, dated as of
August 22, 1997, by and among the Company and the Investors
named therein.
10.22.3* -- Amendment to Amended and Restated Securityholders' Agreement
and Exchange Agreement, dated as of August 22, 1997, by and
among the Company and the Investors named therein.
10.23* -- Amendment to Registration Rights Agreement, dated as of
August 22, 1997, by and among the Company and the Investors
named therein.
10.24* -- Letter Agreement, dated as of May 20, 1998, by and among the
Company and certain parties to the Registration Rights
Agreement, dated as of November 13, 1996, as amended.
10.25* -- Pledge, Escrow and Disbursement Agreement, dated as of May
27, 1998, by and between the Company and State Street Bank
and Trust Company, as trustee and escrow agent.
10.26* -- Warrant, dated as of August 22, 1997, granted to Alex. Brown
& Sons Incorporated.
10.27* -- Warrant, dated as of August 22, 1997, granted to Alex. Brown
& Sons Incorporated.
10.28*+ -- Warrant, dated March 12, 1998.
10.29*+ -- Letter Agreement, dated as of May 18, 1998, by and between
the Company and a holder of warrants to purchase shares of
the Company's common stock.
10.30* -- Form of AT&T Contract Tariff Order Form, by and between the
Company and AT&T.
10.31** -- Master Agreement to Lease Equipment, dated as of August 21,
1998, by and between the Company and Cisco Systems Capital
Corporation.
10.32****+ -- Telecom Service Agreement, dated as of January 27, 1999, by
and between the Company and TA Operating Corporation.
10.33** -- Amendment to AT&T Contract Tariff Order Form, dated as of
February 19, 1999, by and between the Company and AT&T.
10.34** -- Pay Telephone Telecommunications Service Agreement, dated as
of February 24, 1999 by and between the Company and CfL,
LLC, as amended by Letter Agreement, dated as of February
24, 1999.
10.35**** -- Employment Agreement, dated as of March 1, 1999, by and
between the Company and Robert P. May.
10.36**** -- Joinder to Stock Purchase Agreement and Related Documents,
dated as of March 1, 1999 by Robert P May.
</TABLE>

69
<PAGE> 70

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
10.37**** -- Nonqualified Stock Option Award Agreement, dated as of March
3, 1999, by and between the Company and Robert P. May.
10.38**** -- Letter Agreement, dated as of March 3, 1999 by and between
the Company and Robert P. May.
10.39****+ -- Warrant, dated as of March 12, 1999.
10.40** -- Marketing and Advertising Agreement, dated as of April 28,
1999, by and between the Company and Volvo Trucks North
America, Inc.
10.41** -- Letter Agreement, dated May 12, 1999 by and between the
Company and Volpe Brown Whelan & Company, LLC.
10.42** -- Employment Agreement, dated as of May 24, 1999, by and
between the Company and Steven Yevoli.
10.43** -- Nonqualified Stock Option Award Agreement, dated as of May
24, 1999, by and between the Company and Steven Yevoli.
10.44** -- Agreement of Lease, dated as of July 26, 1999, by and
between the Company and Eleven Penn Plaza LLC.
10.45** -- Employment Agreement, dated as of June 21, 1999, by and
between the Company and Mark Cleveland.
10.46** -- Nonqualified Stock Option Award Agreement, dated as of June
23, 1999, by and between the Company and Mark Cleveland.
10.47**++ -- Second Amendment to Cable Television and Telephone Service
Agreement, dated as of June 28, 1999, by and between the
Company and Pilot Corporation.
10.48**++ -- Pre-Paid Phone Card Agreement, dated as of July 16, 1999, by
and between the Company and Transcommunications
Incorporated.
10.49** -- Fleet Services Agreement, dated as of August 19, 1999, by
and between the Company and US Xpress, Inc.
10.50**++ -- Warrant, dated as of August 30, 1999.
10.51** -- Series D 7% Cumulative Convertible Preferred Stock Purchase
Agreement, dated as of August 27, 1999, by and among the
Company and the Investors named therein.
10.52** -- Amendment to Registration Rights Agreement, dated as of
September 16, 1999, by and among the Company and the
investors named therein.
10.52.1 -- Amendment to Securities Restriction Agreement, dated as of
September 16, 1999, by and among the Company and the
Investors named therein.
10.52.2 -- Amendment to Amended and Restated Securityholders' Agreement
and Exchange Agreement, dated as of September 16, 1999, by
and among the Company and the Investors named therein.
10.53** -- Warrant, dated as of September 16, 1999, granted to Volpe
Brown Whelan & Company, LLC.
24.1 -- Power of Attorney (included as part of the signature page of
this Annual Report on Form 10-K).
27.1** -- Financial Data Schedule.
</TABLE>

- ---------------------------

* Incorporated by reference to the Registration Statement on Form S-4
(Registration No. 333-59889) filed with the Securities and Exchange
Commission on July 24, 1998, as amended.

** Incorporated by reference to the Registration Statement on Form S-1
(Registration No. 333-87343) filed with the Securities and Exchange
Commission on September 17, 1999.

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<PAGE> 71

*** Incorporated by reference to the Registration Statement on Form S-1
(Registration No. 333-59903) filed with the Securities and Exchange
Commission on July 24, 1998, as amended.

**** Incorporated by reference to the Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on May 17, 1999.

+ Portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to an order for confidential
treatment granted by the Securities and Exchange Commission.

++ Portions of this Exhibit are omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

(b) REPORTS ON FORM 8-K

Inapplicable.

See Item 14(a)(3) above.

(d) FINANCIAL STATEMENT SCHEDULES

See Item 14(a)(2) above.

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

The registrant has not sent to security holders any annual report covering the
registrant's last fiscal year or any proxy material relating to a meeting of
security holders. Copies of such annual report and proxy will be furnished to
the Commission when it is sent to security holders.

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<PAGE> 72

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
PNV.net, Inc.:

We have audited the accompanying balance sheets of PNV.net, Inc. (formerly Park
'N View, Inc.) (the "Company") as of June 30, 1998 and 1999, and the related
statements of operations, changes in common stockholders' deficiency and cash
flows for each of the three years in the period ended June 30, 1999. 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 generally accepted auditing
standards. 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, such financial statements present fairly, in all material
respects, the financial position of the Company as of June 30, 1998 and 1999,
and the results of its operations and its cash flows for each of the three years
in the period ended June 30, 1999 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Certified Public Accountants
Fort Lauderdale, Florida
August 27, 1999

F-1
<PAGE> 73

PNV.NET, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
---------------------------
1998 1999
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................................. $ 19,810,656 $ 4,100,848
Short-term investments..................................... 32,039,916 8,367,324
Restricted investments (Note 5)............................ 9,750,000 10,704,210
Accounts receivable, net of allowance for doubtful accounts
of $5,400 and $25,083 at June 30, 1998 and 1999,
respectively............................................. 184,180 301,503
Inventory.................................................. 362,738 341,208
Prepaid expenses and other................................. 100,877 181,788
------------ ------------
Total current assets..................................... 62,248,367 23,996,881
Property and equipment, Net (Note 3)........................ 18,448,601 32,053,824
Restricted investments (Note 5)............................. 9,513,000
Deferred financing costs.................................... 3,744,366 3,755,927
Other assets................................................ 623,793 1,579,037
------------ ------------

Total.................................................... $ 94,578,127 $ 61,385,669
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable........................................... $ 2,067,113 $ 1,256,994
Accrued expenses........................................... 1,550,888 1,621,271
Accrued interest on senior notes........................... 920,831 1,245,831
Deferred revenue........................................... 205,853 724,850
Current portion of capital lease obligations (Note 4)...... 330,814 294,887
Current portion of long-term debt (Note 5)................. 33,727 25,365
------------ ------------
Total current liabilities................................ 5,109,226 5,169,198
------------ ------------
Obligations under capital leases, less current portion (Note
4)........................................................ 185,174 263,519
------------ ------------
Long-term debt, less current portion (Note 5)............... 70,419,566 70,846,069
------------ ------------
Commitments and Contingencies (Note 4)
Series A Redeemable Preferred Stock and Accrued
Dividends -- Par value $.01 per share; 627,630 shares
authorized; 388,065 shares issued and outstanding ($10.00
per share liquidation preference, including accrued
dividends of $542,538 and $839,493 as of June 30, 1998 and
1999, respectively). (Note 6).............................. 4,301,345 4,609,809
------------ ------------
Series B Cumulative Convertible Preferred Stock and Accrued
Dividends -- Par value $.01 per share; 1,372,370 shares
authorized, issued and outstanding ($10.93 per share
liquidation preference, including accrued dividends of
$1,712,083 and $2,762,083 as of June 30, 1998 and 1999,
respectively). (Note 6).................................... 16,316,432 17,403,860
------------ ------------
Series C Cumulative Convertible Preferred Stock and Accrued
Dividends -- Par value $.01 per share; 3,750,000 shares
authorized, 2,328,543 and 2,351,543 issued and outstanding
as of June 30, 1998 and 1999, respectively, ($8.00 per
share liquidation preference, including accrued dividends
of $1,115,631 and $2,423,904 as of June 30, 1998 and 1999,
respectively). (Note 6).................................... 18,516,147 20,079,630
------------ ------------
Common Stockholders' Deficiency:
Common stock -- par value $.001 per share; 7,000,000 and
12,000,000 shares authorized at June 30, 1998 and 1999,
respectively; 4,318,182 and 4,328,614 shares issued and
outstanding at June 30, 1998 and 1999, respectively........ 4,318 4,328
Additional paid-in capital................................. 1,465,923 13,011,612
Receivable from stockholder (Note 4)....................... -- (145,000)
Deferred stock based compensation.......................... -- (8,345,375)
Accumulated deficit........................................ (21,740,004) (61,511,981)
------------ ------------
Total common stockholders' deficiency.................... (20,269,763) (56,986,416)
------------ ------------
Total.................................................... $ 94,578,127 $ 61,385,669
============ ============
</TABLE>

See notes to financial statements.

F-2
<PAGE> 74

PNV.NET, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------
1997 1998 1999
----------- ------------ ------------
<S> <C> <C> <C>
Net Revenues....................................... $ 888,397 $ 3,503,776 $ 8,452,720
----------- ------------ ------------
Cost of Revenues:
Service cost...................................... 996,260 3,336,176 9,464,192
Service depreciation.............................. 643,316 1,906,732 4,517,850
Equipment cost.................................... 422,557 1,356,085 1,673,190
Advertising....................................... 15,556 -- 61,547
----------- ------------ ------------
Total cost of revenues.......................... 2,077,689 6,598,993 15,716,779
----------- ------------ ------------
Gross margin....................................... (1,189,292) (3,095,217) (7,264,059)
Selling, general and administrative expenses....... 4,431,889 10,378,471 19,546,324
Stock-based compensation........................... -- -- 5,035,315
Write-down of equipment............................ 594,691 35,151 --
----------- ------------ ------------
Loss from operations............................... (6,215,872) (13,508,839) (31,845,698)
Interest expense................................... 157,416 1,030,594 10,514,610
Interest income and other.......................... (328,268) (805,686) (2,588,331)
----------- ------------ ------------
Net loss........................................ (6,045,020) (13,733,747) (39,771,977)
Preferred stock dividends and amortization of
preferred stock issuance costs............... (917,382) (2,792,537) (2,842,603)
Accretion of Series C Preferred shares to fair
value........................................ -- -- (88,420)
----------- ------------ ------------
Net loss attributable to common stockholders.... $(6,962,402) $(16,526,284) $(42,703,000)
=========== ============ ============
Basic and diluted net loss per share............ $ (1.61) $ (3.83) $ (9.89)
=========== ============ ============
Shares used to compute basic and diluted net loss
per share........................................ 4,318,182 4,318,182 4,318,456
=========== ============ ============
</TABLE>

See notes to financial statements.

F-3
<PAGE> 75

PNV.NET, INC.
STATEMENTS OF CHANGES IN
COMMON STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL DEFERRED STOCK RECEIVABLE
------------------ PAID-IN BASED FROM ACCUMULATED
SHARES AMOUNT CAPITAL COMPENSATION STOCKHOLDER DEFICIT TOTAL
--------- ------ ----------- -------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30,
1996................. 4,318,182 $4,318 $ (12,606) -- -- $ (1,961,237) $ (1,969,525)
Dividends accrued for
Series A preferred
stock................ -- -- (190,882) -- -- -- (190,882)
Dividends accrued for
Series B preferred
stock................ -- -- (662,068) -- -- -- (662,068)
Amortization of
preferred stock
issuance cost........ -- -- (64,432) -- -- -- (64,432)
Net loss............... -- -- -- -- -- (6,045,020) (6,045,020)
--------- ------ ----------- ------------ ----------- ------------ ------------
BALANCE, JUNE 30,
1997................. 4,318,182 4,318 (929,988) -- -- (8,006,257) (8,931,927)
Dividends accrued for
Series A preferred
stock................ -- -- (330,286) -- -- -- (330,286)
Dividends accrued for
Series B preferred
stock................ -- -- (1,050,015) -- -- -- (1,050,015)
Dividends accrued for
Series C preferred
stock................ -- -- (1,115,631) -- -- -- (1,115,631)
Amortization of
preferred stock
issuance cost........ -- -- (296,605) -- -- -- (296,605)
Issuance of common
stock warrants....... -- -- 5,188,448 -- -- -- 5,188,488
Net loss............... -- -- -- -- -- (13,733,747) (13,733,747)
--------- ------ ----------- ------------ ----------- ------------ ------------
BALANCE, JUNE 30,
1998................. 4,318,182 4,318 1,465,923 -- -- (21,740,004) (20,269,763)
Dividends accrued for
Series A preferred
stock................ -- -- (296,955) -- -- -- (296,955)
Dividends accrued for
Series B preferred
stock................ -- -- (1,050,000) -- -- -- (1,050,000)
Dividends accrued for
Series C preferred
stock................ -- -- (1,308,273) -- -- -- (1,308,273)
Amortization of
preferred stock
issuance cost........ -- -- (187,375) -- -- -- (187,375)
Issuance of common
stock warrants....... -- -- 789,704 -- -- -- 789,704
Issuance of conversion
feature attached to
Series C preferred
stock................ -- -- 155,648 -- -- -- 155,648
Accretion of Series C
preferred stock to
fair value........... -- -- (88,420) -- -- -- (88,420)
Exercise of stock
options.............. 10,432 10 680 -- -- -- 690
Receivable from
stockholder.......... -- -- -- -- $ (184,000) -- (184,000)
Payment of receivable
from stockholder..... -- -- -- -- 39,000 -- 39,000
Stock options issued
for services......... -- -- 149,990 -- -- -- 149,990
Deferred stock based
compensation......... -- -- 13,380,690 $(13,380,690) -- -- --
Amortization of
deferred stock based
compensation......... -- -- -- 5,035,315 -- -- 5,035,315
Net loss............... -- -- -- -- -- (39,771,977) (39,771,977)
--------- ------ ----------- ------------ ----------- ------------ ------------
BALANCE, JUNE 30,
1999................. 4,328,614 $4,328 $13,011,612 $ (8,345,375) $ (145,000) $(61,511,981) $(56,986,416)
========= ====== =========== ============ =========== ============ ============
</TABLE>

See notes to financial statements.

F-4
<PAGE> 76

PNV.NET, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------
1997 1998 1999
----------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss................................................... $(6,045,020) $(13,733,747) $(39,771,977)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 705,418 2,117,387 5,663,490
Amortization of deferred stock based compensation......... -- -- 5,035,315
Write-down of equipment................................... 594,691 35,151 --
Provision for losses on accounts receivable............... -- -- 19,672
Stock options issued for services......................... -- -- 149,990
Loss on disposal of property and equipment................ 2,150 -- 20,274
Changes in assets and liabilities:
Accounts receivable..................................... 40,864 (172,653) (136,995)
Inventory............................................... (118,127) (102,912) 21,530
Prepaid expenses and other.............................. (21,696) 37,737 (80,911)
Other assets............................................ (3,776) (285,567) (295,531)
Accounts payable........................................ 717,374 950,649 (810,119)
Accrued expenses........................................ 744,622 684,129 70,383
Accrued interest on senior notes........................ -- 920,831 325,000
Deferred revenue........................................ (16,628) 173,924 518,997
----------- ------------ ------------
Net cash used in operating activities................. (3,400,128) (9,375,071) (29,270,882)
----------- ------------ ------------
INVESTING ACTIVITIES:
Proceeds from (purchases) sales of short-term
investments............................................ -- (32,039,916) 23,672,592
Proceeds from sales of restricted investments............. -- -- 9,452,562
Purchases of restricted investments....................... -- (19,263,000) (893,772)
Purchases of property and equipment....................... (6,443,899) (12,596,875) (17,874,247)
----------- ------------ ------------
Net cash (used in) provided by investing activities... (6,443,899) (63,899,791) 14,357,135
----------- ------------ ------------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt and common stock
warrants, net of offering commission................... 1,500,000 72,375,000 --
Proceeds from issuance of preferred stock................. 13,500,000 18,628,344 --
Proceeds from exercise of stock options................... -- -- 690
Payment of stock and debt issuance costs and other........ (509,560) (1,225,705) (373,575)
Payment of obligations under capital leases............... (227,327) (365,412) (428,449)
Deferred financing costs.................................. (143,869) (1,010,700) --
Receivable from stockholder............................... -- -- 39,000
Notes payable............................................. 76,446 (33,403) (33,727)
----------- ------------ ------------
Net cash provided by (used in) financing activities... 14,195,690 88,368,124 (796,061)
----------- ------------ ------------
Net increase (decrease) in cash and cash equivalents....... 4,351,663 15,093,262 (15,709,808)
Cash and cash equivalents, beginning of period............. 365,731 4,717,394 19,810,656
----------- ------------ ------------
Cash and cash equivalents, end of period................... $ 4,717,394 $ 19,810,656 $ 4,100,848
=========== ============ ============
Supplemental cash flow information:
Interest paid............................................ $ 48,987 $ 33,030 $ 9,516,653
=========== ============ ============
Non-Cash financing and investing activities:
Capital lease obligations relating to acquisition of
property and equipment................................. $ 357,932 $ 249,801 $ 470,096
=========== ============ ============
Exchange of promissory notes and accrued interest for
Series B preferred stock............................... $ 1,533,000 -- --
===========
Exchange of promissory notes and accrued interest for
Series A preferred stock............................... $ 3,180,646 -- --
===========
Issuance of common stock warrants......................... -- $ 538,998 $ 789,704
============ ============
Issuance of Series C preferred stock for notes
receivable............................................. -- -- $ 184,000
============
</TABLE>

See notes to financial statements.

F-5
<PAGE> 77

PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS

1. FORMATION OF THE COMPANY AND NATURE OF BUSINESS

PNV.net, Inc. (formerly Park 'N View, Inc.) (the "Company"), a Delaware
corporation, was incorporated on September 18, 1995 and provides cable
television and telephone service to long-haul truck drivers at truckstops
("sites") throughout the country. The Company's name was changed effective July
29, 1999. This change has been reflected in the financial statements. As of June
30, 1999, the Company has 221 sites in operation and has contracts to provide
its service to over 600 sites. The final determination on the number of sites to
be provided with the service will be made by the Company on a site-by-site
basis.

The Company commenced commercial operations as a result of the Securities
Purchase Agreement (the "Agreement") dated November 2, 1995 between the former
partners of Park 'N View, Ltd., the Company's predecessor entity, and an
investor group led by Patricof & Company ("Patricof").

Pursuant to the Agreement, Park 'N View, Ltd. transferred certain of its assets,
intangible assets, contractual rights, and certain liabilities to the Company in
exchange for 2,318,182 shares of common stock issued to the former partners of
Park 'N View, Ltd. These net liabilities were recorded by the Company at the
historical carrying amounts. Patricof was issued 2,000,000 shares of common
stock for $100,000.

The Company has experienced net operating losses since its inception and as of
June 30, 1999 had an accumulated deficit of $61.5 million. Management believes
that the Company must significantly increase the sales of service subscriptions
in order to achieve profitability. Management further believes that a
significant increase in sales of subscriptions is dependent on truck drivers'
perception that the Company's system is installed and operating at a sufficient
number and location of truckstops that potential uses of the system justify the
subscription fee. The Company's future success will depend on achieving market
acceptance in sufficient numbers and at commercially viable subscription rates,
the timely and cost-effective installation of the Company's system at a
significant number of additional truckstops, and obtaining the financing
necessary both to fund operating losses and to install its system in a
sufficient number of locations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of
the accompanying financial statements follows:

Accounting Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents. The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents. The Company's cash and cash equivalents are primarily composed of
bank deposits and overnight funds held by a bank.

Inventory. Consists principally of telephones and components and is stated at
lower of cost (first-in, first-out method) or market.

Property and Equipment. Property and equipment is stated at cost, less
accumulated depreciation. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets, generally three to ten
years. Expenditures for improvements that substantially extend the capacity or
useful life of an asset are capitalized. Routine repairs and maintenance are
expensed as incurred.

The Company currently expenses the costs associated with developing internal use
proprietary software. In March 1998, the American Institute of Certified Public
Accountants (the "AICPA") issued Statement of
F-6
<PAGE> 78
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Position 98-1 ("SOP 98-1"), "Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 establishes that computer
software costs that are incurred in the preliminary project stage should be
expensed as incurred. Once the application development stage criteria is met,
certain costs are required to be capitalized. SOP 98-1 is effective for
financial statements for fiscal years beginning after December 15, 1998.
Adoption of SOP 98-1 is not expected to have a material impact on the Company's
financial position or results of operations.

Leases. The Company capitalizes leases that meet at least one of the following
criteria: (a) the lease transfers ownership of the property by the end of its
lease term; (b) the lease contains a bargain purchase option; (c) the lease term
is equal to 75% or more of its estimated economic life of the leased property or
(d) the present value at the beginning of the lease term of the minimum lease
payments equals or exceeds 90% of the fair value of the leased property. All
other leases are accounted for as operating leases.

Deferred Financing Costs. Costs incurred in connection with obtaining financing
are being amortized based on the interest method over the term of the related
obligations. Amortization of deferred financing costs relating to debt are
amortized to interest expense and amortization of deferred financing costs
relating to preferred stock are amortized to additional paid-in capital.

Revenue Recognition/Deferred Revenue. Initial membership provides a new member
identification within but no access to or usage of the Company's network and
provides a starter kit. To the extent initial membership fees exceed the
incremental direct cost (primarily the cost of the starter kit) of obtaining a
subscriber, such amount is deferred and recognized over the expected membership
life of the customer. An allowance for defective starter kits has been
established based on past experience. The starter kits do not have a warranty
and cannot be returned once the service is activated. Subscription fees charged
by the Company provide the customer with unlimited access to 16 channels of
cable television programming, unlimited local telephone access and 60 minutes of
long distance telephone time. Such fees are apportioned to these services based
on estimated fair value. Revenue is apportioned to the long distance telephone
time based on market rates for such service. The remaining revenue which is not
attributed to the long distance usage is apportioned to the cable television and
local telephone services which are provided throughout the subscription period.
Net revenues apportioned to the cable television and local telephone services
are recognized ratably throughout the period the service is activated. The
revenue related to the long distance telephone time that is provided with each
monthly subscription is deferred and recognized when the service is provided.
The revenue associated with additional long distance telephone time to current
members is recognized as such telephone time is used. Revenue attributable to
unused minutes is deferred. Fees from the daily and premium programs, which
allow access for a 24 hour period, are recognized as revenue when activated.
Advertising revenue, specifically designed commercials, ads or programming
designed to run on our network, is recognized throughout the period the service
is provided. The production costs associated with this advertising are amortized
throughout the period the service is provided. Driver referral program cost
consists of one hour of long distance telephone time and is accrued and expensed
in the month the driver is referred to the Company. Revenues from equipment
sales are derived from the sale by the Company of cable and telephone line
extension kits to truckstops for resale to truck drivers. Net unearned revenue
associated with the Company's subscriptions, long distance, cable service and
advertising is the result of recording revenue as earned when the service is
provided and used. Deferred revenue as of June 30, 1998 and 1999 was $205,853
and $724,850, respectively.

Income Taxes. The provision for income taxes for the Company represents the
amount payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities. The Company provides for deferred
taxes under the liability method. Under such method, deferred taxes are adjusted
for tax rate changes as they occur. Deferred income tax assets and liabilities
are computed annually for differences between the financial reporting and tax
bases of assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are recorded
F-7
<PAGE> 79
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

when necessary to reduce deferred tax assets to the amount that management
believes is more likely than not to be realized.

Long-Lived Assets. Management reviews long-lived assets for possible impairment
whenever events or circumstances indicate that the carrying amount of an asset
may not be recoverable. If there is an indication of impairment, management
prepares an estimate of future cash flows (undiscounted and without interest
charges) expected to result from the use of the asset and its eventual
disposition. If these cash flows are less than the carrying amount of the asset,
an impairment loss is recognized to write down the asset to its estimated fair
value. Assets, if any, which management has committed to a plan to dispose,
whether by sale or abandonment, are reported at the lower of carrying amount or
fair value, less cost to sell. Preparation of estimated expected future cash
flows is inherently subjective and is based on management's best estimate of
assumptions concerning future conditions.

Financial Instruments. The carrying amount for cash, accounts receivable and
accounts payable approximates fair value due to their short-term maturity.
Short-term investments consist of commercial paper that is carried at amortized
cost, which approximates fair value. Restricted investments consist of US
Treasury securities that are actively traded and are carried at fair value, with
unrealized gains and losses included in earnings.

At June 30, 1999, the carrying value and fair value of the Company's long-term
debt approximates $71 million, net of discounts, and $23 million, respectively.
The fair value was based on the quoted market prices for the same or similar
issues or on the current rate offered to the Company for debt of the same
remaining maturities. The Company believes that it is not practical to estimate
a fair value different from the preferred stocks' carrying value as these
securities have numerous features unique to these securities.

Stock-Based Compensation. The Company accounts for its employees stock option
plan in accordance with the intrinsic value method and discloses the pro forma
net loss as required by Statement of Financial Accounting Standard ("SFAS") No.
123 "Accounting for Stock-Based Compensation."

Basic Loss Per Share. Basic loss per share is computed by dividing the net loss
attributable to common stockholders by the number of weighted average common
shares outstanding. The effect of potential common stock would have been
antidilutive and therefore basic loss per share for the Company is equivalent to
diluted loss per share.

Reclassifications. Certain 1997 and 1998 amounts have been reclassified to
conform with the 1999 presentation.

New Accounting Pronouncements. In June 1998, the Financial Accounting Standards
Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including derivative instruments embedded in other
contracts, and for hedging activities. In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral
of the Effective Date of FAS Statement 133," which postponed the adoption of
SFAS No. 133. As such, the Company is not required to adopt SFAS No. 133 until
fiscal year end 2002. The Company has not yet assessed the impact that SFAS No.
133 will have on its financial statements.

The Company currently expenses costs associated with start-up activities. In
April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-up
Activities." This SOP requires that costs incurred to open a new facility,
introduce a new product, commence a new operation or other similar activity, be
expensed as incurred. The Company will adopt SOP 98-5 for fiscal year ending
June 30, 2000. The Company does not believe this SOP will have a material impact
on its financial statements.

F-8
<PAGE> 80
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Site equipment and improvements............................. $16,484,956 $34,592,877
Construction equipment...................................... 150,059 150,058
Computer equipment.......................................... 352,643 760,719
Vehicles.................................................... 451,382 985,014
Furniture, fixtures and other equipment..................... 65,869 75,854
----------- -----------
Subtotal................................................... 17,504,909 36,564,522
Less accumulated depreciation............................... 2,630,706 7,332,654
----------- -----------
Subtotal................................................... 14,874,203 29,231,868
Component equipment......................................... 3,574,398 2,821,956
----------- -----------
Property and equipment, net................................. $18,448,601 $32,053,824
=========== ===========
</TABLE>

Component equipment represents equipment that is awaiting installation at a
site. Upon installation the cost of the related equipment is transferred to site
equipment and improvements and depreciation commences once the site is
operational. Component equipment is temporarily staged at the Company's
warehouse until all equipment for a site is received, certain assembly
operations are complete and the site is ready to accept the equipment for
installation. Component equipment is reclassified to site equipment upon
completion of the site on a FIFO basis for all components.

Depreciation expense was $696,278, $2,008,560 and $4,719,617 for the years ended
June 30, 1997, 1998 and 1999, respectively.

During the year ended June 30, 1997, the Company replaced certain telephone
switches with updated technology. At the time this equipment was taken out of
service there existed a related capital lease obligation of $538,957. The
Company is continuing to make the scheduled capital lease payments and has
written-off the idle equipment, which had a carrying value of $594,691.

4. COMMITMENTS AND CONTINGENCIES

In March 1999, the Company entered into an employment agreement with its Chief
Executive Officer, Robert May. The agreement provides for a minimum annual
compensation of $275,000 and he is eligible for an incentive bonus upon
satisfaction of certain goals and objectives. The Company may terminate Mr.
May's employment at any time pursuant to the agreement. In connection with his
employment agreement, the Company sold to Mr. May 23,000 shares of transferable
Series C 7% Cumulative Convertible Preferred Stock at $8.00 per share, for a
total purchase price of $184,000. In payment for this purchase, Mr. May issued
to the Company two unsecured promissory notes, each for $92,000. One note
accrues interest at 6% per annum with interest and principal due March 2003. The
second note, which is non-interest bearing, is being paid over an eight month
period that began in March 1999. At June 30, 1999, Mr. May's aggregated
indebtedness to the Company was $145,000, which has been recorded as a component
of common stockholders' deficiency.

The Company allocated the $184,000 of proceeds as follows: $28,352 to the Series
C Preferred and $155,648 to the common stock conversion feature based on the
fair value determined as of the closing date using the minimum value method. The
following assumptions were used: zero dividend yield, no volatility, risk free
rate of 5.88%, and expected life of one year. The Company is recognizing
accretion of value on the Series C Preferred to redemption value (fair value)
over the period between the effective date of the employment agreement and the
anticipated conversion date.

F-9
<PAGE> 81
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Mr. May also received from the Company a nonqualified stock option to purchase
567,083 shares of the Company's common stock having an exercise price of $5.00
per share. The options vest at the rate of approximately 2.08% monthly, but
becomes exercisable in full upon a change in control of the Company (as defined
in the employment agreement) or if Mr. May is employed with the Company as of
the first anniversary of the closing of an initial public offering of the
Company's common stock. The Company also agreed that, if certain sales of the
Company's stock in an aggregate amount up to $20,000,000 closed prior to
February 29, 2000, the Company would grant to Mr. May additional options to
purchase shares of the Company's common stock such that, immediately following
any such grant of additional options, Mr. May will hold options to purchase an
aggregate of up to five percent of the common stock (calculated on a fully
diluted basis) outstanding after such sale.

If Mr. May's employment is terminated without cause he will receive six months
base salary and certain additional payments. If a change in control of the
Company occurs and Mr. May's employment is terminated without cause during the
eighteen months following the change in control, the Company will pay Mr. May
eighteen months base salary and certain additional payments. If Mr. May does not
execute a general release of the Company and its representatives from liability
relating to his employment or association with the Company, then Mr. May only
will be entitled to a severance payment of one month of his base salary upon
termination.

In May 1999, the Company entered into an employment agreement with its Vice
President of New Media and E-Business, Steven Yevoli. The agreement provides for
a minimum annual compensation of $135,000 and he is eligible for an incentive
bonus upon satisfaction of certain goals and objectives. The Company may
terminate Mr. Yevoli's employment at any time pursuant to the agreement. In
connection with his employment agreement, the Company granted to Mr. Yevoli a
nonqualified stock option to purchase 80,000 shares of the Company's common
stock at an exercise price of $5.00 per share. The options vest one-fifth on the
date of grant and one-fifth on each anniversary of the date of grant over the
next four years. Also, in connection with his employment agreement, the Company
granted to Mr. Yevoli an additional nonqualified stock option to purchase 25,000
shares of the Company's common stock at an exercise price of $5.00 per share.
The options will vest in 12,500 share increments upon meeting certain
performance achievements and milestones established by the Chief Executive
Officer for the fiscal years ended June 30, 2000 and 2001, respectively.

In June 1999, the Company entered into an employment agreement with its Vice
President of Sales, Mark Cleveland. The agreement provides for a minimum annual
compensation of $160,000 and he is eligible for an incentive bonus upon
satisfaction of certain goals and objectives. The Company may terminate Mr.
Cleveland's employment at any time pursuant to the agreement. In connection with
the employment agreement, the Company granted to Mr. Cleveland a nonqualified
stock option to purchase 80,000 shares of the Company's common stock at an
exercise price of $5.00 per share. The options vest one-fifth on the date of
grant and one-fifth on each anniversary of the date of grant over the next four
years.

Cash compensation expense and stock-based compensation expense under the above
employment agreements were $110,955 and $2,159,024, respectively, for the year
ended June 30, 1999.

F-10
<PAGE> 82
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Company leases routers, T-1 telephone lines, office sites and equipment
maintained at various facilities under operating leases. Capital leases
primarily consist of automobiles. Future minimum lease payments under capital
leases and noncancellable operating leases are as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30: OPERATING CAPITAL
- -------------------- ----------- --------
<S> <C> <C>
2000........................................................ $ 4,318,528 $340,905
2001........................................................ 4,499,982 231,715
2002........................................................ 3,039,262 51,416
2003........................................................ 49,482 --
----------- --------
Total.................................................... $11,907,254 624,036
===========
Imputed interest on capital leases.......................... (65,630)
--------
Present value of capital leases............................. 558,406
Less current portion........................................ 294,887
--------
Long-term portion........................................... $263,519
========
</TABLE>

Rent expense was $149,401, $355,765 and $1,760,963 for the years ended June 30,
1997, 1998 and 1999, respectively.

In July 1999, the Company entered into a five-year operating lease for office
space to be used as its Internet development site. Total future minimum lease
payments under this lease approximate $1,000,000.

5. LONG-TERM DEBT

In May 1998, the Company issued $75 million of 13% Senior Notes (the "Senior
Notes"). The Senior Notes are general senior obligations of the Company and will
rank pari passu with all current and future unsecured senior indebtedness of the
Company. The Senior Notes have a maturity date of May 15, 2008. Interest will be
paid semiannually on May 15 and November 15 to holders of record on the
immediately preceding May 1, and November 1, respectively. The Company placed
$19.2 million of the net proceeds from the Senior Notes in an escrow account.
The escrow account is pledged as security for payment of the first four
scheduled interest payments on the Senior Notes. The current and long-term
amounts in this escrow account are presented as restricted investments in the
accompanying balance sheet.

The Senior Notes are redeemable at the Company's option after May 15, 2003, at
which time the Company will pay a decreasing premium for this redemption until
maturity at May 15, 2008. At any time prior to May 15, 2001, the Company, at its
option, may redeem up to 35% of the then outstanding Senior Notes with the net
proceeds of an initial public equity offering at a redemption price of 113% of
the principal amount and accrued interest. The Senior Notes are mandatorily
redeemable at the option of the holders in the event of a change in control (as
defined) or an asset sale.

The Senior Notes were issued together with 75,000 detachable warrants in the
form of units. Each warrant, when exercised, will entitle the holder to receive
6.73833 shares of common stock at an exercise price of $.01 per share. The
warrants will become exercisable upon the earlier of November 23, 1998, the
effective date of a registration statement related to a registered exchange
offer of the Senior Notes or upon the occurrence of certain other events
(including a change in control, as defined, or default) as specified in the
related agreements and will automatically expire on May 15, 2008. The relative
fair market values for the Senior Notes and warrants were determined by the
negotiations with the purchasers of the units. The agreed upon original issue
discount resulted in an allocation of $70,350,000 of the proceeds to the Senior
Notes and $4,650,000 to the warrants, their deemed fair value.

F-11
<PAGE> 83
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

At June 30, 1998 and 1999, the Company had outstanding $59,092 and $25,365,
respectively, of notes payable relating to the purchase of vehicles. These notes
have an average interest rate of 10.7% and mature on various dates through March
2000.

Scheduled debt maturities are as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30:
--------------------
<S> <C>
2000........................................................ $ 25,365
2001........................................................ --
2002........................................................ --
2003........................................................ --
2004........................................................ --
Thereafter.................................................. 75,000,000
-----------
Subtotal................................................. 75,025,365
Less debt discount....................................... 4,153,931
-----------
Total.................................................... $70,871,434
===========
</TABLE>

At June 30, 1996, the Company had outstanding $3,000,000 of 8% Subordinated
Promissory Notes ("Notes") due November 1, 2000, with interest payable
semiannually on June 30 and December 31. The Notes were held by Patricof. On
August 5, 1996, Patricof provided the Company with an additional $1,500,000 in
exchange for 8% Subordinated Promissory Notes due November 2, 2000 and 239,250
common stock warrants. On November 13, 1996, the Company completed a private
placement (the "1996 Offering") with certain investors of 1,372,370 shares of
Series B 7% Cumulative Convertible Preferred Stock (the "Series B Preferred")
due November 7, 2003 for a purchase price of $10.93 per share and a total
offering amount of $15,000,000. As payment for 137,237 shares of the Series B
Preferred, Patricof exchanged the $1,500,000 8% Subordinated Promissory Notes
and the 239,250 common stock warrants. In addition, the $3,000,000 in Notes and
related accrued interest of $180,646 were exchanged by Patricof for 318,065
shares of Series A Redeemable Preferred Stock (the "Series A Preferred").

6. PREFERRED STOCK

Series A Redeemable Preferred Stock. On November 13, 1996, in connection with
the 1996 Offering, $3,000,000 in Notes and related accrued interest of $180,646
were exchanged for 318,065 shares of Series A Preferred. In November 1995, in
accordance with the Agreement, 32,210 shares of Series A Preferred were issued
at $10 per share to Patricof. In April 1996, Patricof purchased an additional
37,800 shares of Series A Preferred at $10 per share. The Series A Preferred
provides for an annual dividend of 7%, payable in arrears quarterly in cash or
in kind. Cumulative unpaid dividends in arrears were $542,538 and $839,493 at
June 30, 1998 and 1999, respectively.

The Company is required to redeem, for $10 per share, all of the issued and
outstanding shares of Series A Preferred if any of the following occurs: (a) six
months after the Senior Notes are paid in full, (b) upon the receipt of proceeds
of an initial public offering of not less than $20 million, net of underwriting
expenses ("Qualifying Offer"), (c) in the event the Company consolidates or
merges with or into another entity, or (d) upon sale of the Company's assets.
The Company has the option to redeem shares of Series A Preferred at any time
for $10 per share plus all accrued dividends thereon.

If the Company fails to redeem the Series A Preferred as required, the
stockholders of the Series A Preferred shall be entitled to vote as a separate
class only in respect to any merger, consolidation, sale of assets or creation
of any class or series, other than Series B Preferred and Series C Preferred,
equal to or superior to its Series A Preferred. The stockholders of at least
66.6% of the outstanding Series A Preferred voting as a separate class shall be
entitled to elect two members of the Board of Directors.

F-12
<PAGE> 84
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Series B 7% Cumulative Convertible Preferred Stock. In connection with the 1996
Offering, the Company authorized and issued 1,372,370 shares of Series B
Preferred, par value of $.01 for $10.93 per share and a total offering amount of
$15,000,000.

Commencing on January 31, 1997, the stockholders of the Series B Preferred are
entitled to receive dividends payable in cash at 7% per annum (9% per annum upon
an event of default). An "Event of Default" includes any of the following: (a)
failure by the Company to declare and pay a dividend on the payment due date for
two consecutive quarterly periods, (b) failure by the Company to satisfy its
redemption obligations, (c) default by the Company in the performance or
observance of any obligation or condition with respect to the indebtedness of
the Company, (d) failure to comply with covenants in the governing agreement,
(e) failure by the Company to comply with its obligations upon liquidation,
dissolution or winding up, or (f) insolvency. Cumulative unpaid dividends
accrued were $1,712,083 and $2,762,083 at June 30, 1998 and 1999, respectively.

The Company is required to redeem for $10.93 per share all of the issued and
outstanding shares of Series B Preferred if any of the following occurs: (a) six
months after the Senior Notes are paid in full, (b) upon receipt of a Qualifying
Offer, (c) in the event the Company consolidates or merges with or into another
entity, or (d) upon sale of the Company's assets.

The stockholders of Series B Preferred can convert their shares at any time at
the option of the holder into common stock at a conversion rate of one Series B
Preferred share for 1.37 shares of common stock. Under antidilution provisions,
the conversion price of Series B Preferred will be adjusted upon the Company's
issuance of additional shares of common stock, warrants or rights to purchase
common stock or securities convertible into common stock.

Series B Preferred stockholders are entitled to the number of votes equal to the
number of full shares of common stock into which such shares of Series B
Preferred is then convertible. Stockholders of Series B Preferred and common
stock shall vote together on each matter submitted to stockholders and not by
class or series. Prior to the consummation of a Qualifying Offer, the
stockholders of the Series B Preferred, voting together as a class, shall be
entitled to elect one director. Subsequent to a Qualifying Offer and only so
long as at least 66.6% of the shares of Series B Preferred originally issued
remain outstanding, the holders of a majority of the shares of common stock
issuable upon conversion of the Series B Preferred shall be entitled to nominate
one director. Upon the occurrence of an event of default, the stockholders of
the Series B Preferred, together with the stockholders of Series C Preferred,
have the exclusive right to elect a majority of the board of directors.

Series C 7% Cumulative Convertible Preferred Stock. In August 1997, the Company
entered into a private placement offering (the "1997 Offering") with certain
investors to raise additional working capital through the sale of 2,328,543
shares of Series C 7% Cumulative Convertible Preferred Stock (the "Series C
Preferred") for a purchase price of $8.00 per share and a total offering amount
of $18,628,344. Also, as part of the 1997 Offering, the Company issued a warrant
to the underwriting agent for the purchase of 100,399 shares of common stock
exercisable at $8.00 per share at any time within five years from the date of
this offering.

Commencing on August 22, 1997, the stockholders of the Series C Preferred are
entitled to receive dividends payable in cash at 7% per annum (9% per annum upon
an event of default). An "Event of Default" includes any of the following: (a)
failure by the Company to declare and pay a dividend on the payment due date for
two consecutive quarterly periods, (b) failure by the Company to satisfy its
redemption obligations, (c) default by the Company in the performance or
observance of any obligation or condition with respect to the indebtedness of
the Company, (d) failure to comply with covenants in the governing agreement,
(e) failure by the Company to comply with its obligations upon liquidation,
dissolution or winding up, or (f) insolvency. Cumulative unpaid dividends
accrued were $1,115,631 and $2,423,904 at June 30, 1998 and 1999, respectively.
F-13
<PAGE> 85
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Company is required to redeem for $8.00 per share all of the issued and
outstanding shares of Series C Preferred if any of the following occurs: (a) six
months after the Senior Notes are paid in full, (b) upon receipt of a Qualifying
Offer, (c) in the event the Company consolidates or merges with or into another
entity, or (d) upon sale of the Company's assets.

The stockholders of Series C Preferred can convert their shares at any time at
the option of the holder into common stock at an initial conversion rate of one
Series C Preferred share for one share of common stock. Under antidilution
provisions, the conversion price of Series C Preferred will be adjusted upon the
Company's issuance of additional shares of common stock, warrants or rights to
purchase common stock or securities convertible into common stock.

Series C Preferred stockholders are entitled to the number of votes equal to the
number of full shares of common stock into which such shares of Series C
Preferred is then convertible. Stockholders of Series C Preferred and common
stock shall vote together on each matter submitted to stockholders and not by
class or series. Prior to the consummation of a Qualifying Offer, the
stockholders of the Series C Preferred, voting together as a class, shall be
entitled to elect one director. Subsequent to a Qualifying Offer and only so
long as at least 66.6% of the shares of Series C Preferred originally issued
remain outstanding, the holders of a majority of the shares of common stock
issuable upon conversion of the Series C Preferred shall be entitled to nominate
one director. Upon the occurrence of an event of default, the stockholders of
the Series C Preferred, together with the stockholders of Series B Preferred, as
a class have the exclusive right to elect a majority of the board of directors.

In August 1999, the Company amended its Series B and C Preferred stock
agreements such that upon the completion of the Company's initial public
offering, the Company will issue shares of common stock to the Series B and C
preferred stockholders, valued at the initial public offering price, in payment
of all accrued dividends.

7. RELATED PARTY TRANSACTIONS

A common stockholder of the Company is also a partner in a law firm that
provides legal services to the Company. Fees and expenses paid to the law firm
were $293,647 and $351,970 for the years ended June 30, 1998 and 1999,
respectively. Fees and expenses paid to the law firm for the year ended June 30,
1997 were not significant.

8. STOCK OPTIONS AND WARRANTS

The Company has incentive and non-qualified stock option plans for directors and
key employees and has 1,934,166 shares of common stock reserved for issuance
under the plans. The incentive and non-qualified options become exercisable as
determined by the Board of Directors and have a term of ten years. Generally,
options become exercisable over three to four years.

F-14
<PAGE> 86
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Option activity for the years ended June 30, 1997, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE RANGE OF
NUMBER PRICE EXERCISE
OF SHARES PER SHARE PRICE
--------- --------- -----------
<S> <C> <C> <C>
Granted options:
Granted during the year ended June 30, 1997 and
outstanding at June 30, 1997........................ 409,846 $1.42 $1.00--$3.00
Forfeited.............................................. (500) 1.00 1.00
---------
Outstanding at June 30, 1998........................... 409,346 1.42 1.00 --3.00
Granted................................................ 1,345,969 4.68 .001 --5.00
Exercised.............................................. (10,432) .07 .001 --5.00
Forfeited.............................................. (5,487) 2.96 1.00 --5.00
---------
Outstanding at June 30, 1999........................... 1,739,396 3.95 1.00 --5.00
=========
Vested options:
Exercisable at June 30, 1997........................... 81,969 $1.42 $1.00--$3.00
Vested................................................. 81,869 1.42 1.00 --3.00
Forfeited.............................................. (100) 1.00 1.00
---------
Exercisable at June 30, 1998........................... 163,738 1.42 1.00 --3.00
Vested................................................. 355,639 3.38 .001 --5.00
Exercised.............................................. (10,432) .07 .001 --5.00
Forfeited.............................................. (2,000) 3.00 3.00
---------
Exercisable at June 30, 1999........................... 506,945 2.81 1.00 --5.00
=========
</TABLE>

The following table summarizes information concerning options outstanding as of
June 30, 1999:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS VESTED
----------------------------------------------- ---------------------------------
WEIGHTED AVERAGE
NUMBER OF REMAINING WEIGHTED WEIGHTED
RANGE OF OPTIONS CONTRACTUAL LIFE AVERAGE NUMBER OF AVERAGE EXERCISE
EXERCISE PRICE OUTSTANDING (YEARS) EXERCISE PRICE OPTIONS VESTED PRICE
- -------------- ----------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
$1.00--$1.50 333,646 7.3 $1.07 200,188 $1.07
3.00 --4.00 262,000 9.2 3.02 160,982 3.01
5.00 1,143,750 9.7 5.00 145,775 5.00
--------- -------
1.00 --5.00 1,739,396 9.2 3.95 506,945 2.81
========= =======
</TABLE>

SFAS No. 123 requires entities that account for awards for stock-based
compensation in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", to present pro forma disclosure as
if compensation cost was measured at the date of grant based on the fair value
of the award. No options were granted during the year ended June 30, 1998. The
fair value of the options granted during the years ended June 30, 1997 and 1999
were estimated at the date of grant using the minimum value method with the
following weighted-average assumptions: a risk free interest rate of 6.8% and
5.9%, respectively, no dividend yield and an expected life of six years. The
weighted average grant date fair value per option granted during 1997 and 1999
was $.46 and $3.95, respectively.

The minimum value option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective

F-15
<PAGE> 87
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosure, the estimated fair value of the options is
amortized to expense over the option vesting periods. The Company's net loss
determined in accordance with SFAS No. 123 on a pro forma basis for the years
ended June 30, 1997, 1998 and 1999 would have been as follows:

<TABLE>
<CAPTION>
1997 1998 1999
----------- ------------ ------------
<S> <C> <C> <C>
Net Loss:
As reported................................... $(6,045,020) $(13,733,747) $(39,771,977)
Pro forma..................................... (6,082,726) (13,771,453) (40,404,258)
Loss per share:
As reported................................... (1.61) (3.83) (9.89)
Pro forma..................................... (1.62) (3.84) (10.03)
</TABLE>

The pro forma amount may not be representative of the future effects on reported
net income that will result from the future granting of stock options, since the
pro forma compensation expense is allocated over the periods in which options
become exercisable and new option awards are granted each year.

The Company has granted options to non-employees for consulting services. The
vesting period for these options was immediate. Stock options issued to
non-employees are accounted for in accordance with provisions of SFAS No. 123
and EITF No. 96-18, "Accounting for Equity Instruments That Are Issued to Other
than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services."

At June 30, 1999, the Company had outstanding warrants which allow the holders
to purchase 280,399 and 100,000 shares of common stock at $8 and $9.20 per
share, respectively, and units that include warrants which allow the holders to
purchase 505,375 shares of common stock at $.01 per share.

In connection with options granted to purchase common stock, the Company
recorded deferred stock-based compensation of $13,380,690 for the year ended
June 30, 1999. Such amounts represent, for employee stock options, the
difference between the exercise price and the fair value of the Company's common
stock at the date of grant, and, for non-employees, the deemed fair value of the
option at the date of vesting. The deferred charges for employee options are
being amortized to expense through the Company's fiscal year ending 2003 and the
deferred charges for non-employee options were amortized to expense through the
year ended June 30, 1999. Stock-based compensation expense for employee and non-
employee options of $5,035,315 was recognized for the year ended June 30, 1999
and is a non-cash charge.

9. NET LOSS PER SHARE

The following is a reconciliation of the numerators and denominators used in
computing basic and diluted net loss per share.

<TABLE>
<CAPTION>
JUNE 30,
-----------------------------------------
1997 1998 1999
----------- ------------ ------------
<S> <C> <C> <C>
Net loss (numerator), basic and diluted:......... $(6,962,402) $(16,526,284) $(42,703,000)
=========== ============ ============
Shares (denominator):
Weighted average common shares outstanding,
basic and diluted............................ 4,318,182 4,318,182 4,318,456
=========== ============ ============
Net loss per share, basic and diluted............ $ (1.61) $ (3.83) $ (9.89)
=========== ============ ============
</TABLE>

F-16
<PAGE> 88
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

For the above mentioned periods, the Company had securities outstanding which
could potentially dilute basic earnings per share in the future, but were
excluded in the computation of diluted net loss per share in the periods
presented, as their effect would have been antidilutive. Such outstanding
securities consist of the following:

<TABLE>
<CAPTION>
JUNE 30,
---------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Convertible preferred stock............................... 1,372,370 4,203,543 4,226,543
Outstanding options....................................... 409,846 409,346 1,739,615
Warrants.................................................. -- 785,774 885,774
--------- --------- ---------
Total.................................................. 1,782,216 5,398,663 6,851,932
========= ========= =========
</TABLE>

10. INCOME TAXES

No current income taxes have been provided for any periods presented as the
Company has had net operating losses since inception. The Company had
approximately $52.7 million in net operating loss carryforwards at June 30, 1999
for income tax purposes, with approximately $2 million expiring in 2011, $5.4
million expiring in 2012, $13.2 million expiring in 2013 and $32.1 million
expiring in 2019. Utilization of the net operating loss carryforwards may be
subject to a substantial annual limitation due to the "change in ownership"
provisions of the Internal Revenue Code of 1986. The annual limitation may
result in the expiration of net operating losses before utilization.

Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
and tax credit carryforwards. The Company has not recognized any benefit for its
net deferred tax asset and has offset the net deferred tax asset by a valuation
allowance, as it is more likely than not that this asset will not be realized
prior to its expiration. The tax effects of significant items comprising the
Company's net deferred tax asset as of June 30, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
1998 1999
----------- ------------
<S> <C> <C>
Net deferred tax assets (liabilities):
Net operating loss carryforward............................ $ 6,876,586 $ 17,785,634
Nondeductible lease accrual................................ 88,932 10,057
Bad debt reserve........................................... 2,164 10,584
Vacation accrual........................................... 45,981 94,979
Differences between book and tax basis of property......... (45,771) 39,969
Amortization............................................... (8,821) (25,027)
----------- ------------
6,959,071 17,916,196
----------- ------------
Valuation allowance......................................... (6,959,071) (17,916,196)
----------- ------------
Net deferred taxes......................................... $ -- $ --
=========== ============
</TABLE>

11. LEGAL MATTERS

In July 1998, Lorenzo Ortiz filed a lawsuit against a truckstop chain at which
the Company's network is deployed, as well as a contractor utilized by the
Company in connection with the installation of the Company's network at a
truckstop owned by the chain, in the 11th Judicial District, Webb County, Texas,
seeking unspecified actual and punitive damages allegedly resulting from an
injury suffered by Mr. Ortiz at the truckstop in connection with the
installation. On July 6, 1999, defendant Red Line Contracting, Inc.

F-17
<PAGE> 89
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

filed a third party complaint against the Company seeking indemnity and/or
contribution for the plaintiff's claims. Pursuant to the Company's contract with
the truckstop chain defendant, the Company agreed, among other things, to
indemnify the truckstop chain for claims relating to the installation of the
Company's network. Further, pursuant to the contract, the Company maintains
$1,000,000 of liability insurance on each truckstop at which the Company's
network is deployed and the Company agreed to name the truckstop chain as an
additional insured on the Company's insurance policy. The Company inadvertently
failed to timely name the truckstop chain with respect to this lawsuit and the
insurance carrier is defending the Company under a reservation of its rights.
The truckstop chain has agreed to the Company's assumption of the defense of
this lawsuit. The Company has agreed to indemnify the truckstop chain from any
losses relating to this lawsuit and has secured this obligation with a letter of
credit in the amount of $200,000.

In March 1999, Daniel Ray Claybaugh filed a lawsuit against the Company and a
truckstop chain at which the Company's network is deployed that seeks
unspecified actual damages resulting from an injury suffered by Mr. Claybaugh at
a truckstop in Arizona in the Circuit Court for Knox County, Tennessee. Although
the Company's insurance carrier is providing a defense and indemnification
pursuant to the terms of its policy, it has refused to recognize the truckstop
chain as an additional insured on the policy. In accordance with the Company's
contract with the truckstop owner, the Company has agreed to assume the costs of
defense for the truckstop owner.

In August 1999, Robert T. and Julie McCurry filed a lawsuit against the Company
in Superior Court of Shasta County, California and a truckstop chain at which
the Company's network is deployed that seeks a total of $2,000,000 in actual
damages resulting from an injury suffered by Mr. McCurry. The amount sought
exceeds the limit of the Company's insurance policy. The Company has notified
its insurance carrier of this lawsuit and are unaware of any issues which would
result in the denial of insurance coverage.

The Company has received 20 to 25 additional claims arising from slip and fall
incidents relating to its network. The Company has advised its insurance carrier
of these incidents and the carrier has denied coverage or is reserving its
rights to deny coverage on several of these incidents due to the Company's
alleged failure to provide timely notice of such incidents. The Company's
present understanding of these claims is preliminary. Based upon its
understanding, however, management does not believe that the outcome of any of
these lawsuits or claims will have a material adverse effect on its financial
condition or results of operations.

The Company anticipates that it will be, from time to time, subject to claims
and suits for personal injury arising in the ordinary course of its business.
The Company anticipates that these claims and suits, to the extent for actual
damages, will generally be covered by insurance.

12. BENEFIT PLAN

During fiscal year ended 1999, the Company adopted a 401(k) plan that is
available to substantially all its employees. Participants may contribute, on a
pre-tax basis, between 1% and 15% of their annual compensation. The Company is
not required to contribute to the plan, but has made a discretionary
contribution of $59,430 for the year ended June 30, 1999.

13. EVENTS SUBSEQUENT TO BALANCE SHEET DATE

On August 27, 1999, the Company entered into a definitive purchase agreement for
a private placement offering with certain investors to raise additional working
capital through the sale of 3,000,000 shares of Series D Preferred for a
purchase price of $10.50 per share and a total offering amount of $31,500,000.
The Series D Preferred would automatically convert into 3,000,000 shares of
common stock upon the completion of the initial public offering. Dividends will
accrue from the issuance of the Series D Preferred
F-18
<PAGE> 90
PNV.NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

until conversion at the rate of 7% per annum. The Company will pay accrued
dividends by issuing shares of its common stock valued at the initial public
offering price. Upon closing of the transaction, the Company will issue to the
placement agent a warrant to purchase 60,000 shares of common stock at $10.50
per share which is exercisable for a five year period and pay to the placement
agent 6% of the gross proceeds of the sale of the Series D Preferred which will
be $1.9 million. In accordance with Mr. May's employment agreement, the Company
anticipates that it will grant an option to purchase 130,097 shares of common
stock having an exercise price of $5.00 upon the closing of the sale of the
Company's Series D Preferred Stock.

On August 27, 1999, the Board of Directors, subject to stockholder approval,
approved an additional 250,000 shares of common stock for issuance under the
stock option plan. An aggregate of 2,184,166 shares of common stock is reserved
for issuance under this plan.

The Company anticipates that it will increase its authorized shares of common
stock and preferred stock to 50,000,000 and 8,750,000, respectively, in
contemplation of its initial public offering.

F-19
<PAGE> 91

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on September 29, 1999.

PNV.net, Inc.

By: /s/ ROBERT P. MAY
------------------------------------
Robert P. May
Chief Executive Officer

Each person whose signature appears below hereby constitutes and appoints Robert
P. May and R. Michael Brewer and either of them his true and lawful
attorney-in-fact with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments to this Report on Form 10-K and to cause the same to be filed, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all acts and
things that said attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant in the
capacities indicated on the 29th day of September 1999.

<TABLE>
<CAPTION>
SIGNATURE POSITION
--------- --------
<C> <S>

/s/ ROBERT P. MAY Chief Executive Officer and Director
- ----------------------------------------------------- (Principal Executive Officer)
Robert P. May

/s/ R. MICHAEL BREWER Vice President Finance and Chief Financial
- ----------------------------------------------------- Officer (Principal Financial and Accounting
R. Michael Brewer Officer)

/s/ IAN WILLIAMS Chairman of the Board and Director
- -----------------------------------------------------
Ian Williams

/s/ ROBERT M. CHEFITZ Director
- -----------------------------------------------------
Robert M. Chefitz

/s/ THOMAS P. HIRSCHFELD Director
- -----------------------------------------------------
Thomas P. Hirschfeld

/s/ RICHARD M. JOHNSTON Director
- -----------------------------------------------------
Richard M. Johnston

/s/ DANIEL K. O'CONNELL Director
- -----------------------------------------------------
Daniel K. O'Connell
</TABLE>
<PAGE> 92

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <C> <S>
3.1* -- Amended and Restated Certificate of Incorporation, dated
October 30, 1995 (as currently in effect, as amended in
Exhibits 3.2, 3.3, 3.4, 3.5 and 3.5.1).
3.2* -- Certificate of Amendment of the Certificate of
Incorporation, dated November 12, 1996.
3.3* -- Certificate of Amendment of the Certificate of
Incorporation, dated August 22, 1997.
3.4** -- Certificate of Amendment to Certificate of Incorporation,
dated June 4, 1999.
3.5** -- Certificate of Amendment to Certificate of Incorporation,
dated July 29, 1999.
3.5.1** -- Certificate of Amendment to Certificate of Incorporation,
dated September 15, 1999.
3.6** -- Certificate of Amendment Relating to the Series A Preferred
Stock, dated September 15, 1999.
3.7** -- Certificate of Amendment to Certificate of Designations,
Preferences and Rights of Series B 7% Cumulative Convertible
Preferred Stock, dated September 15, 1999.
3.8** -- Certificate of Amendment to Certificate of Designations,
Preferences and Rights of Series C 7% Cumulative Convertible
Preferred Stock, dated September 15, 1999.
3.8.1** -- Certificate of Designations, Preferences and Rights of
Series D 7% Cumulative Convertible Preferred Stock, dated
September 15, 1999.
3.9** -- Amended and Restated By-laws (as currently in effect).
4.1* -- Indenture, dated as of May 27, 1998, by and between the
Company and State Street Bank and Trust Company, as trustee.
4.2*** -- Warrant Agreement, dated as of May 27, 1998, by and between
the Company and State Street Bank and Trust Company, as
warrant agent.
4.3*** -- Warrant Registration Rights Agreement, dated as of May 27,
1998, by and between the Company and Donaldson, Lufkin &
Jenrette Securities Corporation.
10.1** -- Fleet Service Agreement, dated as of February 1, 1999, by
and between the Company and Trucks For You.
10.2* -- Fleet Service Agreement, dated as of February 1, 1998, by
and between the Company and Carroll Fulmer & Co., Inc.
10.3* -- Fleet Service Agreement, dated as of March 1, 1998, by and
between the Company and Contract Freighters, Inc.
10.4* -- Fleet Service Agreement, dated as of March 11, 1998, by and
between the Company and Lake City Express.
10.5* -- Fleet Service Agreement, dated as of April 1, 1998, by and
between the Company and Top Gun Transport, Inc.
10.6* -- Cable Television and Telephone Service Agreement, dated as
of August 14, 1995, by and between the Company and AMBEST.
10.7* -- Cable Television and Telephone Service Agreement, dated as
of July 11, 1996, by and between the Company and
Professional Transportation Partners, LLC.
10.8* -- Cable Television and Telephone Service Agreement, dated as
of March 18, 1997, by and between the Company and North
America Truck Stop Network.
10.9* -- Cable Television and Telephone Service Agreement, dated as
of October 28, 1995, by and between the Company and Travel
Ports of America, Inc.
10.10* -- Cable Television and Telephone Service Agreement, dated as
of February 15, 1996, by and between the Company and Pilot
Corporation.
10.11* -- Cable Television and Telephone Service Agreement, dated as
of February 7, 1997, by and between the Company and All
American Plazas, Inc.
10.12* -- Cable Television and Telephone Service Agreement, dated as
of September 12, 1997, by and between the Company and Petro
Stopping Centers, L.P.
</TABLE>
<PAGE> 93

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <C> <S>
10.13*+ -- Cable Television and Telephone Service Agreement, dated
March 12, 1998 by and between the Company and TA Operating
Corporation d/b/a Travel Centers of America.
10.14** -- Lease, dated as of July 20, 1992, by and between CB
Institutional Fund VI and Arden Technologies, Inc., as
amended March 29, 1996 and April 5, 1996, as assigned to the
Company pursuant to Assignment of Lease, dated October 16,
1995, by and between the Company and Arden Technologies,
Inc.
10.15** -- Sublease Agreement and Consent to Sublease, dated as of June
1, 1998 and between the Company and Security
10.16* -- Lease, dated August 11, 1997, between Unipower Corporation
and the Company.
10.17* -- Software Development Agreement, dated November 22, 1995,
between the Company and GreenLight Technologies, Inc.
10.18* -- Technology Transfer and Development Agreement, dated as of
November 4, 1996, by and among GreenLight, Inc., Jody Green,
Lewis Tatham and the Company.
10.19* -- Customer Agreement, dated December 17, 1997, by and between
the Company and Echostar Satellite Corporation.
10.20* -- Compensation Plan.
10.21* -- Stock Option Plan.
10.21.1** -- Severance Program.
10.21.2* -- Securities Purchase Agreement Subordinated Notes, Series A
Preferred Stock and Common Stock, dated as of November 2,
1995, by and among the Company and the Purchasers named
therein.
10.21.3* -- Letter Agreement, dated as of May 18, 1998, by and among the
Company and certain holders of the Company's Series A
Preferred Stock.
10.21.4* -- Securities Restriction Agreement, dated as of November 2,
1995, by and among the Company and the Investors named
therein.
10.21.5* -- Stock Purchase Agreement Series B 7% Cumulative Convertible
Preferred Stock, dated as of November 13, 1996, by and among
the Company and the Purchasers named therein.
10.21.6* -- Securities Restriction Agreement, dated as of November 13,
1996, by and among the Company and the Investors named
therein.
10.21.7* -- Amended and Restated Securityholders' Agreement and Exchange
Agreement, dated as of November 13, 1996, by and among the
Company and the Investors named therein.
10.22* -- Registration Rights Agreement, dated as of November 13,
1996, by and among the Company and the Investors named
therein.
10.22.1* -- Stock Purchase Agreement Series C 7% Cumulative Convertible
Preferred Stock, dated as of August 22, 1997, by and among
the Company and the Purchasers named therein.
10.22.2* -- Amendment to Securities Restriction Agreement, dated as of
August 22, 1997, by and among the Company and the Investors
named therein.
10.22.3* -- Amendment to Amended and Restated Securityholders' Agreement
and Exchange Agreement, dated as of August 22, 1997, by and
among the Company and the Investors named therein.
10.23* -- Amendment to Registration Rights Agreement, dated as of
August 22, 1997, by and among the Company and the Investors
named therein.
10.24* -- Letter Agreement, dated as of May 20, 1998, by and among the
Company and certain parties to the Registration Rights
Agreement, dated as of November 13, 1996, as amended.
10.25* -- Pledge, Escrow and Disbursement Agreement, dated as of May
27, 1998, by and between the Company and State Street Bank
and Trust Company, as trustee and escrow agent.
10.26* -- Warrant, dated as of August 22, 1997, granted to Alex. Brown
& Sons Incorporated.
10.27* -- Warrant, dated as of August 22, 1997, granted to Alex. Brown
& Sons Incorporated.
</TABLE>
<PAGE> 94

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <C> <S>
10.28*+ -- Warrant, dated March 12, 1998.
10.29*+ -- Letter Agreement, dated as of May 18, 1998, by and between
the Company and a holder of warrants to purchase shares of
the Company's common stock.
10.30* -- Form of AT&T Contract Tariff Order Form, by and between the
Company and AT&T.
10.31** -- Master Agreement to Lease Equipment, dated as of August 21,
1998, by and between the Company and Cisco Systems Capital
Corporation
10.32****+ -- Telecom Service Agreement, dated as of January 27, 1999, by
TA Operating Corporation.
10.33** -- Amendment to AT&T Contract Tariff Order Form, dated as of
February 19, 1999, by and between the Company and AT&T.
10.34** -- Pay Telephone Telecommunications Service Agreement, dated as
of February 24, 1999 by and between the Company and CfL,
LLC, as amended by Letter Agreement, dated as of February
24, 1999.
10.35**** -- Employment Agreement, dated as of March 1, 1999, by and
between the Company and Robert P. May.
10.36**** -- Joinder to Stock Purchase Agreement and Related Documents,
dated as of March 1, 1999 by Robert P May.
10.37**** -- Nonqualified Stock Option Award Agreement, dated as of March
3, 1999, by and between the Company and Robert P. May.
10.38**** -- Letter Agreement, dated as of March 3, 1999 by and between
the Company and Robert P. May.
10.39****+ -- Warrant, dated as of March 12, 1999.
10.40** -- Marketing and Advertising Agreement, dated as of April 28,
1999, by and between the Company and Volvo Trucks North
America, Inc.
10.41** -- Letter Agreement, dated May 12, 1999, by and between the
Company and Volpe Brown Whelan & Company, LLC.
10.42** -- Employment Agreement, dated as of May 24, 1999, by and
between the Company and Steven Yevoli.
10.43** -- Nonqualified Stock Option Award Agreement, dated as of May
24, 1999, by and between the Company and Steven Yevoli.
10.44** -- Agreement of Lease, dated as of July 26, 1999, by and
between the Company and Eleven Penn Plaza LLC.
10.45** -- Employment Agreement, dated as of June 21, 1999, by and
between the Company and Mark Cleveland.
10.46** -- Nonqualified Stock Option Award Agreement, dated as of June
23, 1999, by and between the Company and Mark Cleveland.
10.47**++ -- Second Amendment to Cable Television and Telephone Service
Agreement, dated as of June 28, 1999, by and between the
Company and Pilot Corporation.
10.48**++ -- Pre-Paid Phone Card Agreement, dated as of July 16, 1999, by
and between the Company and Transcommunications
Incorporated.
10.49** -- Fleet Services Agreement, dated as of August 19, 1999, by
and between the Company and US Xpress, Inc.
10.50**++ -- Warrant, dated as of August 30, 1999.
10.51** -- Series D 7% Cumulative Convertible Preferred Stock Purchase
Agreement, dated as of August 27, 1999, by and among the
Company and the Investors named therein.
10.52** -- Amendment to Registration Rights Agreement, dated as of
September 16, 1999, by and among the Company and the
Investors named therein.
10.52.1 -- Amendment to Securities Restriction Agreement, dated as of
September 16, 1999, by and among the Company and the
Investors named therein.
</TABLE>
<PAGE> 95

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <C> <S>
10.52.2 -- Amendment to Amended and Restated Securityholders' Agreement
and Exchange Agreement, dated as of September 16, 1999, by
and among the Company and the Investors named therein.
10.53** -- Warrant, dated as of September 16, 1999, granted to Volpe
Brown Whelan & Company, LLC.
24.1 -- Power of Attorney (included as part of the signature page of
this Annual Report on Form 10-K).
27.1** -- Financial Data Schedule.
</TABLE>

- ---------------------------

* Incorporated by reference to the Registration Statement on Form S-4
(Registration No. 333-59889) filed with the Securities and Exchange
Commission on July 24, 1998, as amended.
** Incorporated by reference to the Registration Statement on Form S-1
(Registration No. 333-87343) filed with the Securities and Exchange
Commission on September 17, 1999.
*** Incorporated by reference to the Registration Statement on Form S-1
(Registration No. 333-59903) filed with the Securities and Exchange
Commission on July 24, 1998, as amended.
**** Incorporated by reference to the Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on May 17, 1999.
+ Portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to an order for confidential
treatment granted by the Securities and Exchange Commission.
++ Portions of this Exhibit are omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE> 1
EXHIBIT 10.52.1

PNV.NET, INC.

AMENDMENT TO SECURITIES RESTRICTION AGREEMENT

THIS AMENDMENT (the "Amendment") is made as of the 16th day of
September, 1999, by and among PNV.net, Inc., a Delaware corporation (the
"Company"), the investors set forth on Exhibit A attached hereto and made a part
hereof (the "Existing Investors"), the holders of Series B 7% Cumulative
Convertible Preferred Stock set forth on Exhibit B attached hereto and made a
part hereof (the "Investors" or the "Series B Holders"), the holders of shares
of Series C 7% Cumulative Convertible Preferred Stock of the Company set forth
on Exhibit C attached hereto and made a part hereof (the "Series C Holders"),
the holders of Shares of Series D 7% Cumulative Convertible Preferred Stock of
the Company set forth on Exhibit D attached hereto and made a part hereof (the
"Series D Holders"), Alex. Brown & Sons Incorporated as the holder of warrants
to purchase shares of the Company's Common Stock ("Alex. Brown"), and Volpe
Brown Whelan & Company, LLC ("Volpe" and together with the Existing Investors,
the Investors, the Series C Holders, the Series D Holders, Alex. Brown and
Volpe, the "Securityholders").

WHEREAS, the Existing Investors, the Investors, the Series C Holders,
Alex. Brown, and the Company are parties to a Securities Restriction Agreement
dated November 13, 1996, as amended on August 22, 1997 (the "Securities
Restriction Agreement");

WHEREAS, in connection with the Company's (i) offering of Series D 7%
Cumulative Convertible Preferred Stock (the "Series D Stock"), and (ii) the
issuance to Volpe of a warrant (the "Volpe Warrant") to purchase shares of the
Company's Common Stock, the Company has agreed to grant the Series D Holders and
Volpe co-sale rights with respect to shares of the Common Stock of the Company
issuable upon conversion of the Series D Stock and issuable upon exercise of the
Volpe Warrant and the Series D Holders and Volpe have agreed to sell their
shares under certain circumstances; and

WHEREAS, in connection with the sale of the Series D Stock, all parties
to the Securities Restriction Agreement desire to amend the Securities
Restriction Agreement to include the Common Stock issuable upon the conversion
of the Series D Stock and upon exercise of the Volpe Warrant as Securities
thereunder and to amend certain portions of the Securities Restriction Agreement
to reflect the agreement concerning co-sale rights and obligations to sell
Securities in certain circumstances among the Series D Holders, Volpe and the
Company.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend the
Securities Restriction Agreement as follows:

<PAGE> 2

1. Definitions.

(a) The definition of "Series B Qualifying Offering" is hereby
deleted and replaced with the following:

"Series B Qualifying Offering" shall mean that (i) the Company
shall have consummated a firm commitment underwritten public offering of its
Common Stock by a nationally recognized investment banking firm pursuant to an
effective registration under the Securities Act of 1933, as amended, covering
the offering and sale of Common Stock which results in gross proceeds of at
least $20,000,000, (ii) the Common Stock is quoted or listed on either the
NASDAQ Stock Market (National Market), The New York Stock Exchange or the
American Stock Exchange, and (iii) the price at which the Common Stock is sold
in such offering is at least equal to an amount which (x) is 200% of the then
effective conversion price of the Series B Stock or (y) would represent, on an
as converted basis, a compound annual rate of return of 35% based upon the
original issuance price of the Series B Stock.

(b) The definition of "Series C Qualifying Offering" is hereby
deleted and replaced with the following:

"Series C Qualifying Offering" shall mean that (i) the Company
shall have consummated a firm commitment underwritten public offering of its
Common Stock by a nationally recognized investment banking firm pursuant to an
effective resignation under the Securities Act of 1933, as amended, covering the
offering and sale of Common Stock which results in gross proceeds of at least
$20,000,000, (ii) the Common Stock is quoted or listed on either the NASDAQ
Stock Market (National Market), The New York Stock Exchange or the American
Stock Exchange, (iii) the price at which the Common Stock is sold in such
offering is at least equal to an amount which (x) is 200% of the then effective
conversion price of the Series C Stock or (y) would represent, on an as
converted basis, a compound annual rate of return of 35% based upon the original
issuance price of the Series C Stock and (iv) all outstanding shares of the
Company's Series B Stock, Series C Stock and Series D Stock shall have been
converted into shares of the Company's Common Stock in accordance with the
Certificate of Designation relating to the Series B Stock, Series C Stock and
Series D Stock, respectively, and all outstanding shares of the Company's Series
A Stock shall have been redeemed in accordance with the Certificate of
Designation relating to the Company's Series A Stock.

"Series D Qualified Sale" means a Sale or exchange of the then
outstanding shares of Series D Stock and the shares of Common Stock issuable
upon conversion thereof for cash or other securities which is (a) approved by at
least 70% of the directors and (b) the stated consideration is at least equal to
an amount which (i) would represent, on an as converted basis, a

-2-
<PAGE> 3

compound annual rate of return of 35% to the Series D Holders based upon the
original issuance price of the Series D Stock, or (ii) is 200% of the then
conversion price of the Series D Stock.

"Series D Qualifying Offering" shall mean that (i) the Company
shall have consummated a firm commitment underwritten public offering of its
Common Stock by a nationally recognized investment banking firm pursuant to an
effective resignation under the Securities Act of 1933, as amended, covering the
offering and sale of Common Stock which results in gross proceeds of at least
$20,000,000, (ii) the Common Stock is quoted or listed on either the NASDAQ
Stock Market (National Market), the New York Stock Exchange or the American
Stock Exchange, (iii) the price at which the Common Stock is sold in such
offering is at least equal to an amount which (x) is 200% of the then effective
conversion price of the Series D Stock or (y) would represent, on an as
converted basis, a compound annual rate of return of 35% based upon the original
issuance price of the Series D Stock and (iv) all outstanding shares of the
Company's Series B Stock, Series C Stock, and Series D Stock shall have been
converted into shares of the Company's Common Stock in accordance with the
Certificate of Designation relating to the Series B Stock, Series C Stock and
Series D Stock, respectively, and all outstanding shares of the Company's Series
A Stock shall have been redeemed in accordance with the Certificate of
Designation relating to the Company's Series A Stock.

"Series D Securities Purchase Agreement" shall mean that
certain Stock Purchase Agreement, dated as of August 27, 1999, by and among the
Company and each of the Series D Holders.

"Series D Stock" shall mean the Preferred Stock of the Company
designated as Series D 7% Cumulative Convertible Preferred Stock pursuant to the
Certificate of Designation for the Series D Stock.

(d) The first clause of the term "Securities" shall be amended
as follows:

"Securities" shall mean at any time, the shares of then
outstanding Common Stock, Series B Stock, Series C Stock and Series D Stock.

2. Rights of Co-Sale.

(a) Subsection (A) of Section 1 shall be amended to add the
following sentence as the third sentence of the first paragraph:

Prior to a Series D Qualifying Offering and for so long as the
Series D Holders and their Affiliates own of record 50% or more of the
Securities purchased pursuant to the Series D Securities Purchase Agreement, in
the event that a Selling Securityholder desires to sell any or all of the shares
of Common Stock (excluding shares of Common Stock issuable upon conversion of
Series D Stock) owned by such Securityholder and receives a bona fide offer
therefor, such Selling Securityholder shall so notify the Series D Holders and
the Agent in writing.

-3-
<PAGE> 4

(b) The parenthetical in the third sentence of the second
paragraph of Subsection (A) of Section 1 shall be replaced with the following:

(or Series B Stock, Series C Stock or Series D Stock
convertible into such number of shares of Common Stock)

The rights granted and obligations imposed in this Section 1
shall terminate on the first date on which shares of Common Stock are sold in an
offering that constitutes a Series B Qualifying Offering, a Series C Qualifying
Offering and a Series D Qualifying Offering or the date of consummation of a
Sale (except as may result from a transaction or transactions described in
clauses (a), (c) or (d) in the definition of "Sale").

3. Sale of the Company - Obligation to Sell. Section 2 shall be deleted
in its entirety and replaced with the following:

(a) Upon a Series B Qualified Sale, Series C Qualified Sale or
Series D Qualified Sale, each holder of Series B Stock, Series C Stock and/or
Series D Stock (subject to the rights contained in Section 9(c)(viii) of the
Certificate of Designations relating to the Series D Stock), as the case may be,
shall sell, exchange or otherwise transfer his, her or its Securities in
accordance with the terms and conditions of the Series B Qualified Sale, Series
C Qualified Sale or Series D Qualified Sale, as the case may be. Each holder of
Series B Stock, Series C Stock and/or Series D Stock (subject to the rights
contained in Section 9(c)(viii) of the Certificate of Designations relating to
the Series D Stock), as the case may be, shall execute such documents and
perform such acts, including, without limitation, voting his, her or its
Securities, as may be reasonably necessary to consummate the Series B Qualified
Sale, Series C Qualified Sale or Series D Qualified Sale, as the case may be,
including a transfer of his, her or its Securities, as the case may be;
provided, however, that no holder of Series B Stock, Series C Stock or Series D
Stock who is not an officer or director of the Company shall be required to make
any representations or warranties in any such document, other than with respect
to the status of such holder's title to his, her or its shares of Common Stock
and whether or not he, she or it is an accredited investor (as that term is
defined in Rule 501 promulgated by the Securities and Exchange Commission under
the Securities Act).

(b) If the Company either fails to pay in full all of the
obligations of the Company to the holders of the debentures governed by the
terms and conditions of the Indenture, dated as of May 27, 1998 (the
"Indenture"), on or before September 16, 2004, or fails to pay the Purchase
Price (as defined in the Put Agreement, dated as of September 16, 1999 and
attached hereto as Exhibit E (the "Put Agreement")) pursuant to the terms and
subject to the conditions of the Put Agreement, then, subject to any applicable
restrictions of the Indenture, if the holders of at least 60 % of the Series D
Stock (or the holders of at least 60 % of the Common Stock into which such
Series D Stock shall have been converted) (the "Majority Series D Holders")
approve a transaction in which a proposed transferee would acquire in an arms'
length transaction (i)

-4-
<PAGE> 5

equity securities of the Company possessing ordinary voting power to elect a
majority of the Company's Board of Directors pursuant to a merger,
consolidation, recapitalization or otherwise involving the Company, or (ii) all
or substantially all of the assets of the Company (a "Change of Control
Transaction"), then the Company or such Majority Series D Holders will have the
right, upon delivering written notice describing the transaction and the
material terms and conditions thereof in reasonable detail (the "Drag Along
Notice") to each of the other Investors (the "Other Stockholders") and the
Company, to require the Other Stockholders to approve such Change of Control
Transaction in such Other Stockholder's capacity as a stockholder of the Company
and, if applicable, to include in such Change of Control Transaction up to the
same percentage of such Other Stockholder's holdings of each class of capital
stock of the Company as the percentage of each such class being sold by the
Majority Series D Holders. Any such participation by the Other Stockholders will
be on the same terms and subject to the same conditions as are applicable to the
selling Majority Series D Holders. As of the date that the Drag Along Notice is
delivered to each Other Stockholder, the Majority Series D Holders' election to
require such Other Stockholder to participate in the Change of Control
Transaction will be irrevocable and will be deemed to constitute a binding
agreement of the Majority Series D Holders to include in the Change of Control
Transaction the capital stock owned by the Other Stockholders specified in the
Drag Along Notice. The Company and each Other Stockholder will cooperate fully
with the Majority Series D Holders and the proposed transferee in connection
with the Change of Control Transaction, including, without limitation, any
transfer of capital stock pursuant to this Section 2(b). The Company and each
Other Stockholder will execute and deliver all documents and instruments as the
Majority Series D Holders and the proposed transferee reasonably request to
effect the transfer of capital stock pursuant to this Section 2(b), including,
without limitation, appropriate and customary representations and warranties.
Without limiting the foregoing, each Other Stockholder will deliver to the
proposed transferee one or more certificates, properly endorsed for transfer,
that represent the number of shares such Other Stockholder must sell pursuant to
this Section 2(b). The stock certificate or certificates that each Other
Stockholder delivers will be timely delivered free and clear of any and all
liens and encumbrances; and the Majority Series D Holders will instruct the
proposed transferee to remit to the Other Stockholders that portion of the sale
proceeds to which each Other Stockholder is entitled by reason of the transfer
of capital stock.

4. Miscellaneous. Subsection (A) of Section 4 shall be amended to
replace the "and" immediately preceding romanette (v) with a comma and to add
romanette (vi) as follows:

and (vi) Securityholders owning 60 % of the Series D Stock.

5. Investor. Whenever referenced in Section 1 of the Securities
Restriction Agreement, the term "Investor" shall be deleted and replaced with
"Investor, Series C Holders, Series D Holders, Alex. Brown and Volpe, as
applicable" and the term "Investors" shall be replaced with "Investors, the
Series C Holders, the Series D Holders, Alex. Brown and Volpe, as applicable."

6. Termination of the Securities Restriction Agreement. Notwithstanding
any other term or condition of the Securities Restriction Agreement to the
contrary, the

-5-
<PAGE> 6

Securities Restriction Agreement (except for Section 2(b) and Section 4 of the
Securities Restriction Agreement, which shall survive) shall terminate
immediately and be of no further force or effect upon the conversion of the
Series B Stock, the Series C Stock and the Series C Stock into Common Stock.

7. Binding Agreement. The Securities Restriction Agreement, as modified
herein, shall remain in full force and effect as so modified.

8. Counterparts. This Amendment may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The authentic signature
of any party received by facsimile transmission shall constitute a valid and
binding signature of such party.

[The remainder of this page is intentionally left blank.]

-6-
<PAGE> 7

IN WITNESS WHEREOF, the parties have executed this Amendment as of the
16th day of September, 1999.

PNV.NET, INC.

By: /s/
--------------------------------------
Robert P. May, Chief Executive Officer

BT ALEX. BROWN & SONS INCORPORATED

By: /s/
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------

VOLPE BROWN WHELAN & COMPANY, LLC

By: /s/
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------

-7-
<PAGE> 8

EXHIBIT A

PARK'N VIEW GENERAL PARTNER, INC.

By: /s/
------------------------------
Name:
Title:

/s/
- ---------------------------------------
Ian Williams

/s/
- ---------------------------------------
Sam Hashman

/s/
- ---------------------------------------
MPN Partners, Ltd.

NELGO INVESTMIENTS

By: /s/
------------------------------
Name:
Title:

/s/
- ---------------------------------------
Mark Wodlinger

/s/
- ---------------------------------------
Marilyn Wodlinger

-8-
<PAGE> 9

EXHIBIT A

BEATRICE M. WODLINGER TRUST

By: /s/
- ---------------------------------------
Joe B. Cox, Trustee

/s/
- ---------------------------------------
Peter Carlisi IV

/s/
- ---------------------------------------
Barry A. Spath

HOWARD FISCHER ASSOCIATES INTERNATIONAL, INC.

By: /s/
- ---------------------------------------
Howard M. Fischer, President

-9-
<PAGE> 10

EXHIBIT A

APA EXCELSIOR IV, L.P.

By: A.PA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)

By: PATRICOF & CO. MANAGERS, INC.
(Its General partner)

By: /s/
--------------------------
Name:
Title:

COUTTS & CO. (CAYMAIN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.

By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR

By: /s/
--------------------------
Name:
Title:

THE P/A FUND, L.P.

By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)

By: /s/
--------------------------
Name:
Title:

/s/
- ----------------------------------
Michael Willner

-10-
<PAGE> 11

EXHIBIT B

STATE OF MICHIGAN RETIREMENT SYSTEM

By: /s/
-------------------------
Name:
Title:

BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298

By: /s/
-------------------------
Name:
Title:

CSK VENTURE CAPITAL CO., LTD., as
Investment Manager for CSK-1(A) Investment Fund

By: /s/
-------------------------
Name:
Title:

CREDIT SUISSE (GUERNSEY) LIMITED, as
Trustee of Dynamic Growth Fund II

By: /s/
-------------------------
Name:
Title:

-11-
<PAGE> 12

EXHIBIT B

APA EXCELSIOR IV, L.P.

By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)

By: PATRJCOF & CO. MANAGERS, INC.
(Its General Partner)

By: /s/
--------------------------
Name:
Title:

COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.

By: PATRICOF & CO. VENTURES, INC.,
INVESTMENT ADVISOR

By: /s/
--------------------------
Name:
Title:

THE P/A FUND, L.P.

By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)

By: /s/
--------------------------
Name:
Title:

/s/
- ----------------------------------
Michael Willner

-12-
<PAGE> 13

EXHIBIT C

VENHILL LIMITED PARTNERSHIP

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

JULIET CHALLENGER, INC.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

HENRY L. HILLMAN, ELSIE HILLIARD
HILLMAN AND C. G. GREFENSTETTE,
TRUSTEES OF THE HENRY L. HILLMAN
TRUST U/A DATED 11/18/85

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

C.G. GREFENSTETTE AND THOMAS G.
BIGLEY, TRUSTEES U/A/T DATED 8/28/68
FOR JULIET LEA HILLMAN

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

C.G. GREFENSTETTE AND THOMAS G.
BIGLEY, TRUSTEES U/A/T DATED 8/28/68
FOR AUDREY HILLIARD HILLMAN

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

-13-
<PAGE> 14

C.G. GREFENSTETTE AND THOMAS G.
BIGLEY, TRUSTEES U/A/T DATED 8/28/68
FOR HENRY LEA HILLMAN, JR.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

C.G. GREFENSTETTE AND THOMAS G.
BIGLEY, TRUSTEES U/A/T DATED 8/28/68
FOR WILLIAM TALBOTT HILLMAN

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

WINFIELD CAPITAL CORP.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

ABS EMPLOYEES' VENTURE FUND LIMITED
PARTNERSHIP

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
Franklin Antonio

ARUNDEL HOLDINGS, LLC

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
E. Reid Curley

-14-
<PAGE> 15

GALEN COLE FAMILY FOUNDATION

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
Michael J. DelCollo and
Louise DelCollo JT WROS

/s/
--------------------------------------
Gail G. Dougherty

/s/
--------------------------------------
Michael K. Farr

THE HILLMAN COMPANY

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
Kelly E. Green

RICHARD HEFTEL AS TRUSTEE OF THE
RICHARD HEFTEL LIVING TRUST DATED
01/09/96

By: /s/
----------------------------------
Richard Heftel, Trustee

/s/
--------------------------------------
Leon Kaplan and
Mary Buckley Kaplan JT WROS

/s/
--------------------------------------
Robert Klein and/or Myriam Gluck,
as Tenants-by-Entirety

-15-
<PAGE> 16

/s/
--------------------------------------
Gerald Korman & Wendy S. Korman,
as Tenants-by-Entirety

/s/
--------------------------------------
James C. McMillan

/s/
--------------------------------------
Alan Meltzer

SPIEGEL ENTERPRISES

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

TAMPSCO PARTNERSHIP XII

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

FOUNDATION PARTNERS FUND, G.P.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

TENNYSON PRIVATE PLACEMENT
OPPORTUNITY FUND, LLC

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

-16-
<PAGE> 17

/s/
--------------------------------------
J. Allen Dougherty TTEE UTD 12/22/97
FBO Peter Wetherill I

TRI VENTURES

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

BENEFIT CAPITAL MANAGEMENT
CORPORATION, AS INVESTMENT MANAGER
FOR THE PRUDENTIAL INSURANCE CO. OF
AMERICA SEPARATE ACCOUNT NO.
VCA-GA-5298

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

STATE TREASURER OF THE STATE OF MICHIGAN, CUSTODIAN OF THE MICHIGAN PUBLIC
SCHOOL EMPLOYEES' RETIREMENT SYSTEM, STATE EMPLOYEES' RETIREMENT SYSTEM,
MICHIGAN STATE POLICE RETIREMENT SYSTEM AND MICHIGAN JUDGES RETIREMENT SYSTEM

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

APA EXCELSIOR IV, L.P.

By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)

By: PATRICOF & CO. MANAGERS,
INC. (Its General Partner)

By: /s/
------------------------------
Name:
-----------------------------
Title:
----------------------------

-17-
<PAGE> 18

COUTTS & CO. (CAYMAN) LTD., CUSTODIAN
FOR APA EXCELSIOR IV/OFFSHORE, L.P.

By: PATRICOF & CO. VENTURES, INC.
INVESTMENT ADVISOR

By: /s/
------------------------------
Name:
-----------------------------
Title:
----------------------------

THE P/A FUND, L.P.

By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)

By: /s/
------------------------------
Name:
-----------------------------
Title:
----------------------------

/s/
--------------------------------------
Robert May

-18-
<PAGE> 19

EXHIBIT D

ABRY BROADCAST PARTNERS III, L.P.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

CUMMINS ENGINE COMPANY, INC.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

HALPERN DENNY FUND II, L.P.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

-19-
<PAGE> 20

EXHIBIT E

FORM OF PUT AGREEMENT

082699
PUT AGREEMENT

This Put Agreement (the "Agreement") is made as of this ____ day of
September, 1999, by and between PNV.net, Inc., a Delaware corporation (the
"Company"), and the holders of the Company's Series D 7% Cumulative Convertible
Preferred Stock named on Exhibit A hereto (the "Holders").

In connection with the closing of the transactions contemplated by the
Series D 7% Cumulative Convertible Preferred Stock Purchase Agreement, dated as
of August 27, 1999 (the "Stock Purchase Agreement"), by and among the Company
and the Holders, the Company has agreed to grant to the Holders an option to
sell the shares of the Company's Series D 7% Cumulative Convertible Preferred
Stock (the "Series D Stock") purchased by such Holders (or the shares of Common
Stock into which such shares of Series D Stock may have been converted) (such
shares of Series D Stock and the shares of Common Stock into which such shares
of Series D Stock may have been converted collectively referred to herein as the
"Shares") upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration for, among other things, the execution
of the Stock Purchase Agreement, the parties hereto agree as follows:

1. Grant of Put. Subject to the terms and conditions of this Section 1
and Section 4 hereof, the Company hereby irrevocably grants and issues to the
Holders the right and option beginning September ___, 2004, and continuing until
October ___, 2004 (as may be modified pursuant to this Section 1, the "Put
Period") to sell to the Company (the Holders' right and option is hereinafter
referred to as the "Put") all or any portion of the Shares then held by the
Holders at a purchase price per Share equal to the Purchase Price (as calculated
pursuant to Section 3(a) hereof). Notwithstanding any other term or condition of
this Agreement to the contrary, the Holders may exercise the Put only if, on or
before the fifth anniversary of the Original Issue Date (as defined in the
Certificate of Designations relating to the Series D Stock (the "Series D
Certificate of Designations")), (i) the Company shall not have redeemed the
Series D Stock held by the Holders pursuant to the terms and conditions of
Section 7 of the Series D Certificate of Designations, or (ii) the Company shall
not have consummated a Qualifying Offering (as defined in the Series D
Certificate of Designations); provided, however, that the Holders shall have no
right to exercise this Put unless the Company shall have previously paid in full
all of the obligations of the Company to the holders of the debentures governed
by the terms and conditions of the Indenture, dated as of May 27, 1998.

2. Exercise of Put. Subject to the provisions of Section 3 hereof,
during the Put Period, any Holder may exercise its Put and sell to the Company,
and the Company agrees to purchase from such Holder, all or any portion of the
Shares then held by such Holder. Such Holder will exercise the Put by written
notice (the "Put Notice") to the Company specifying the number of Shares as to
which such Put is exercised.

3. Payment and Delivery of Shares.

(a) The purchase price per Share for any Shares purchased
pursuant to the provisions of this Agreement (the "Purchase Price") will be
equal to the fair market value per Share (determined on a going concern basis as
between a willing buyer and a willing seller and taking into account all
relevant factors determinative of value, except that no discount shall be
applied for minority position or the illiquidity of the Shares), as of the fifth
anniversary of the Original Issue Date, as determined by the vote of 66 2/3% of
the Company's Board of Directors and

-20-
<PAGE> 21

approved by the Holders of not less than a majority of the Shares for which
Holders have exercised the Put as of the end of the Put Period, or if the Board
of Directors cannot reach such agreement (or if not so approved by the Holders),
as determined by a qualified independent investment banker appointed by the vote
of 66 2/3% of the Company's Board of Directors, such banker to be approved by
the Holders of not less than a majority of the Shares for which Holders have
exercised the Put as of the end of the Put Period. The Company shall pay all
expenses of determining fair market value, including those in connection with
any such investment banker.

(b) Subject to Section 3(c) below, the Company will pay the
Purchase Price for each Share put by the Holders and purchased by the Company in
exchange for the delivery to the Company of a stock certificate or certificates
representing the total number of Shares being put and purchased, duly endorsed
in blank by the Holders thereof or having attached thereto a stock power duly
executed by the Holders thereof in proper form for transfer.

(c) Promptly after the final determination of the Purchase
Price pursuant to Section 3(a) above, the Company shall send written notice
specifying the Purchase Price to any Holder which delivered a Put Notice. Each
such Holder shall notify the Company in writing, within ten (10) days of receipt
of such notice, either accepting such Purchase Price or withdrawing the Put
Notice. Any Holder which withdraws a Put Notice shall retain its ownership of
the Shares covered by such Put Notice. For any Holder electing to accept the
Purchase Price, the Company shall pay the full amount of the Purchase Price in
cash or by wire transfer or certified, cashier's or other check reasonably
acceptable to the Holder within sixty (60) days immediately after the end of the
Put Period or, if later, thirty (30) days immediately after the determination of
the Purchase Price pursuant to Section 3(a) above, which in any event shall be
no later than one hundred eighty (180) days immediately after the Put Notice was
delivered.

(d) In the event that any payment to be made by the Company is
prohibited by applicable provisions of corporate law or by any other applicable
law, then such payment will be immediately made by the Company at the next
earliest time, and to the extent possible, when compliance with said law may be
effected, and the Company agrees that it will execute all such documents and
take all such other steps as may be necessary to expedite and effectuate to the
extent possible such compliance. Nothing in this Section 3(d) shall be deemed to
supersede or otherwise affect the rights of the Holders pursuant to the
Securities Restriction Agreement, dated as of November 13, 1996, as amended.

4. Miscellaneous.

(a) This Agreement may not be amended, terminated or otherwise
modified unless evidenced in writing and signed by the Company and the Holders
of 60 % of the Shares. This Agreement constitutes the entire understanding
between the Company and the Holders concerning all matters relating to this
Agreement and is binding upon and will inure to the benefit of all of the
parties hereto and their respective heirs, legal representatives, successors and
assigns.

(b) All notices under this Agreement will be given in writing,
by registered or certified mail, postage prepaid, or by a nationally recognized
reputable overnight courier or facsimile addressed to the parties at their
respective addresses set forth in Exhibit A hereto or at such other address as
may be designated in writing by the parties to one another. Any notice addressed
or mailed as specified herein will be deemed to have been given three (3) days
after such notice has been deposited in the United States mails, one day after
such notice has been deposited with an overnight courier or upon receipt if sent
by facsimile.

(c) This Agreement will be governed and construed in
accordance with the laws of the State of Delaware without respect to the
conflict of laws or the choice of laws.

(d) This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

-21-
<PAGE> 22

(The remainder of this page is intentionally left blank.)

-22-
<PAGE> 23

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

PNV.NET, INC.

By:
--------------------------------------
Robert P. May, Chief Executive Officer

CUMMINS ENGINE COMPANY, INC.

By:
--------------------------------------
Name:
-------------------------------------
Title:
-----------------------------------

-23-
<PAGE> 24

EXHIBIT A

Exhibit A to Put Agreement, dated as of September ___, 1999.

Names and addresses of Holders of Series D Stock

ABRY Broadcast Partners III, L.P.
c/o ABRY Partners Incorporated
18 Newbury Street
Boston, Massachusetts 02116
Fax: (617) 859-8797

Halpern Denny Fund II, L.P.
500 Boylston Street
Boston, MA 02116
Fax: (617) 536 -8535

Cummins Engine Company, Inc.
500 Jackson Street
Columbus, Indiana 47201
Atten: Kent Finkbiner
Fax: (812) 377-1309

-24-

<PAGE> 1
EXHIBIT 10.52.2

PNV.NET, INC.

AMENDMENT TO AMENDED AND RESTATED SECURITYHOLDERS'
AGREEMENT AND EXCHANGE AGREEMENT

THIS AMENDMENT (the "Amendment") is made as of the 16th day of
September, 1999, by and among PNV.net, Inc., a Delaware corporation (the
"Corporation"), the Original Investors (the "Original Investors") and the
Patricof Investors (the "Patricof Investors") set forth on Exhibit A attached
hereto and made a part hereof, the holders of Series B Stock of the Corporation
set forth on Exhibit B attached hereto and made a part hereof (the "Series B
Holders"), the holders of shares of Series C Stock of the Corporation set forth
on Exhibit C attached hereto and made a part hereof (the "Series C Holders" and,
together with the Original Investors, the Series B Investors and the Patricof
Investors, the "Existing Investors"), the holders of shares of Series D Stock
(defined below) of the Corporation set forth on Exhibit D attached hereto and
made a part hereof (the "Series D Holders"), Alex. Brown & Sons Incorporated as
the holder of warrants to purchase shares of the Corporation's Common Stock
("Alex. Brown"), and Volpe Brown Whelan & Corporation, LLC ("Volpe", and
together with the Existing Investors, the Series D Holders and Alex. Brown, the
"Investors").

WHEREAS, the Existing Investors, Alex. Brown, and the Corporation are
parties to an Amended and Restated Securityholders' Agreement and Exchange
Agreement dated as of November 13, 1996, as amended on August 22, 1997 (the
"Securityholders' Agreement");

WHEREAS, in connection with the Corporation's offering of Series D 7%
Cumulative Convertible Preferred Stock (the "Series D Stock"), the Corporation
has agreed to grant the Series D Holders certain rights of first refusal; and

WHEREAS, in connection with the sale of the Series D Stock, all parties
to the Securityholders' Agreement desire to amend the Securityholders' Agreement
to include the Series D Holders and Volpe as Investors (as defined in the
Securityholders' Agreement) and to amend certain portions of the
Securityholders' Agreement to reflect the agreement concerning rights of first
refusal among the Series D Holders and the Corporation.

<PAGE> 2

1. Definitions.

(a) The following terms shall be added to Section 1 of the
Securityholders' Agreement:

"Series D Stock" shall mean the Preferred Stock of the
Corporation designated as Series D 7% Cumulative Convertible Preferred Stock
pursuant to the Certificate of Designation of the Series D Stock.

2. Rights of First Refusal. Section 4(a) shall be deleted in its
entirety and replaced with the following:

The Corporation shall not issue or sell any shares of Common
Stock, Preferred Stock or other securities directly or
indirectly convertible into or exercisable or exchangeable for
shares of Common Stock, other than any such issuance or sale
(i) pursuant to a Series B Qualifying Offering, a Series C
Qualifying Offering or a Series D Qualifying Offering, (ii)
pursuant to a stock option plan approved by the Board of
Directors, (iii) as a form of consideration in connection with
mergers or acquisitions where the Corporation is the surviving
entity or (iv) where the aggregate gross proceeds are less
than $500,000 in any single transaction, provided that the
sale price per share is not less than the then applicable fair
market value of such shares, as determined in good faith by
the Corporation's Board of Directors, and, provided further,
that the aggregate gross proceeds of all such transactions
shall not exceed $1,500,000 (the securities issued in such
transactions being referred to as the "Newly Issued
Securities") unless prior to the issuance or sale of such
Newly Issued Securities each Investor shall have been given
the opportunity (such opportunity being herein referred to as
the "Preemptive Right") to purchase (on the same terms as such
Newly Issued Securities are proposed to be sold) the same
proportion of such Newly Issued Securities being issued or
offered for sale by the Corporation as (x) the number of
shares of Common Stock (calculated on a fully diluted basis)
held by such Investor on the day preceding the date of the
Preemptive Notice (as defined herein) bears to (y) the total
number of shares of Common Stock (calculated on a fully
diluted basis) outstanding on that day. A "Series B Qualifying
Offering" means (i) the Corporation shall have consummated a
firm commitment underwritten public offering of its Common
Stock by a nationally recognized investment banking firm
pursuant to an effective registration under the Securities Act
covering the offering and sale of Common Stock which results
in gross proceeds of at least $20,000,000, (ii) the Common
Stock is quoted or listed on either the NASDAQ Stock Market
(National Market), the New York Stock Exchange or the American
Stock Exchange, and (iii) the price at which the Common Stock
is sold in such offering is at least equal to the lesser of an
amount which (x) is 200% of the then effective conversion
price of the Series B Stock or (y) would represent, on an as
converted basis, a compound

-2-
<PAGE> 3

annual rate of return of 35% based upon the original issuance
price of the Series B Stock. A "Series C Qualifying Offering"
means (i) the Corporation shall have consummated a firm
commitment underwritten public offering of its Common Stock by
a nationally recognized investment banking firm pursuant to an
effective registration under the Securities Act covering the
offering and sale of Common Stock which results in gross
proceeds of at least $20,000,000, (ii) the Common Stock is
quoted or listed on either the NASDAQ Stock Market (National
Market), the New York Stock Exchange or the American Stock
Exchange, (iii) the price at which the Common Stock is sold in
such offering is at least equal to the lesser of an amount
which (x) is 200% of the then effective conversion price of
the Series C Stock or (y) would represent, on an as converted
basis, a compound annual rate of return of 35% based upon the
original issuance price of the Series C Stock and (iv) all
outstanding shares of the Corporation's Series C Stock shall
have been converted into shares of the Corporation's Common
Stock in accordance with the respective Certificate of
Designation relating to the Series C Stock and all outstanding
shares of the Corporation's Series A Stock shall have been
redeemed in accordance with the Certificate of Designation
relating to the Corporation's Series A Stock. A "Series D
Qualifying Offering" means (i) the Corporation shall have
consummated a firm commitment underwritten public offering of
its Common Stock by a nationally recognized investment banking
firm pursuant to an effective registration under the
Securities Act covering the offering and sale of Common Stock
which results in gross proceeds of at least $20,000,000, (ii)
the Common Stock is quoted or listed on either the NASDAQ
Stock Market (National Market), the New York Stock Exchange or
the American Stock Exchange, (iii) the price at which the
Common Stock is sold in such offering is at least equal to the
lesser of an amount which (x) is 200% of the then effective
conversion price of the Series D Stock or (y) would represent,
on an as converted basis, a compound annual rate of return of
35% based upon the original issuance price of the Series D
Stock and (iv) all outstanding shares of the Corporation's
Series D Stock shall have been converted into shares of the
Corporation's Common Stock in accordance with the respective
Certificate of Designation relating to the Series D Stock and
all outstanding shares of the Corporation's Series A Stock
shall have been redeemed in accordance with the Certificate of
Designation relating to the Corporation's Series A Stock.

3. Board of Directors Matters.

(a) The first two sentences of Section 5(a) shall be deleted
in their entirety and replaced with the following:

The Board shall consist of not more than nine (9) members of
which two members shall be designated by the Patricof
Investors as provided herein, one member shall be designated
by the New Investors and two members shall be designated by
the Original Investors. It is contemplated that one (1)
additional

-3-
<PAGE> 4

director shall be designated by the mutual agreement of the
Board of Directors, the Series B Holders and the Series C
Holders. In the event that the Corporation shall not have
consummated a Series D Qualifying Offering on or before March
31, 2000, then the holders of the Series D Stock shall have
the right to designate one (1) member of the Corporation's
Board of Directors as provided in the Certificate of
Designations relating to the Series D Stock until the
Corporation consummates such a Series D Qualifying Offering.

(b) The following shall be inserted at the end of Section
5(a):

At any time that the holders do not have the right to
designate one member of the Corporation's Board of Directors,
one representative designated by the holders of Series D Stock
(the "Series D Observer") will have the right to attend all
meetings (including telephonic meetings) of the Corporation's
Board of Directors (and any committee thereof) and participate
in a nonvoting capacity and, in this respect, the Corporation
will give the Series D Observer copies of all notices, written
consents and other materials provided to directors in
preparation for or as a part of such meetings or otherwise at
such times and in such manner as such notices, written
consents and materials are provided to the Board of Directors.
The Corporation shall give written notice of any action by
written consent in lieu of a meeting of the Corporation's
Board of Directors to the Series D Observer prior to the
effective date of such consent, describing in reasonable
detail the nature and substance of such action.

The Corporation shall reimburse all members of the Board (and,
unless the holders of the Series D Stock shall have designated
a member of the Board, the Series D Observer) for all
reasonable out-of-pocket travel and related expenses incurred
by such Board members (or the Series D Observer, as the case
may be) in attending Board meetings and meetings of committees
of the Board on which they serve.

4. Amendments and Governing Law. Section 8 shall be deleted in
its entirety and replaced with the following:

This Agreement may be amended, modified and supplemented, and
compliance with any term, covenant, agreement, or condition
contained herein may be waived either generally or in
particular instances, and either retroactively or
prospectively, only by a written instrument executed by the
Corporation and Investors who hold 66 2/3% of each class of
the Securities (except in the case of the holders of the
Series D Preferred Stock, in which case such holders of 60%);
provided, however, that any provision of this Agreement that
would materially adversely affect any particular Investors
without similarly affecting all Investors

-4-
<PAGE> 5

shall not be valid unless consented to in writing by such
particular Investors. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
New York applicable to contracts made and to be performed in
that state without giving any effect to any choice or conflict
of law provision or rule (whether in the State of New York or
any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.

5. Application to Subsequent Investors. Romanette (ii) of Section
9 shall be deleted in its entirety and replaced with the following:

(ii) any Person who after the date hereof, shall
become a holder of any shares of any Common Stock, Series A
Stock, Series B Stock, Series C Stock and/or Series D Stock
(such Person's acceptance of such shares to be deemed to
constitute his, her or its agreement to be bound hereby) and
such Person's heirs, legal representatives, successors and
assigns.

6. Termination of the Securityholders' Agreement. Notwithstanding
any other term or condition of the Securityholders' Agreement to the contrary,
the Securityholders' Agreement shall terminate immediately and be of no further
force or effect upon the conversion of the Series B Stock, the Series C Stock
and the Series D Stock into Common Stock.

7. Binding Agreement. The Securityholders' Agreement as modified
herein, shall remain in full force and effect as so modified.

8. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. The authentic
signature of any party received by facsimile transmission shall constitute a
valid and binding signature of such party.

(The remainder of this page is intentionally left blank.)

-5-
<PAGE> 6

IN WITNESS WHEREOF, the parties have executed this Amendment as of the
16th day of September, 1999.

PNV.NET, INC.

By: /s/
--------------------------------------
Robert P. May, Chief Executive Officer

BT ALEX. BROWN & SONS INCORPORATED

By: /s/
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------

VOLPE BROWN WHELAN & COMPANY, LLC

By: /s/
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------

-6-
<PAGE> 7

EXHIBIT A

PARK'N VIEW GENERAL PARTNER, INC.

By: /s/
------------------------------
Name:
Title:

/s/
- ---------------------------------------
Ian Williams

/s/
- ---------------------------------------
Sam Hashman

/s/
- ---------------------------------------
MPN Partners, Ltd.

NELGO INVESTMENTS

By: /s/
------------------------------
Name:
Title:

-7-
<PAGE> 8

EXHIBIT A

APA EXCELSIOR IV, L.P.

By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)

By: PATRICOF & CO. MANAGERS, INC.
(Its General partner)

By: /s/
--------------------------
Name:
Title:

COUTTS & CO. (CAYMAIN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.

By: PATRICOF & CO. VENTURES, INC., INVESTMENT ADVISOR

By: /s/
--------------------------
Name:
Title:

THE P/A FUND, L.P.

By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)

By: /s/
--------------------------
Name:
Title:

/s/
- ----------------------------------
Michael Willner

-8-
<PAGE> 9

EXHIBIT A

/s/
- ----------------------------------
Mark Wodlinger

/s/
- ----------------------------------
Marilyn Wodlinger

BEATRICE M. WODLINGER TRUST

By: /s/
------------------------------
Joe B. Cox, Trustee

-9-
<PAGE> 10

EXHIBIT B

STATE OF MICHIGAN RETIREMENT SYSTEM

By: /s/
-------------------------
Name:
Title:

BENEFIT CAPITAL MANAGEMENT CORPORATION,
as Investment Manager for The Prudential Insurance Co.
of America, Separate Account No. VCA-GA-5298

By: /s/
-------------------------
Name:
Title:

CSK VENTURE CAPITAL CO., LTD., as
Investment Manager for CSK-1(A) Investment Fund

By: /s/
-------------------------
Name:
Title:

CREDIT SUISSE (GUERNSEY) LIMITED, as
Trustee of Dynamic Growth Fund II

By: /s/
-------------------------
Name:
Title:

-10-
<PAGE> 11

EXHIBIT B

APA EXCELSIOR IV, L.P.

By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)

By: PATRJCOF & CO. MANAGERS, INC.
(Its General Partner)

By: /s/
--------------------------
Name:
Title:

COUTTS & CO. (CAYMAN) LTD., CUSTODIAN FOR
APA EXCELSIOR IV/OFFSHORE, L.P.

By: PATRICOF & CO. VENTURES, INC.,
INVESTMENT ADVISOR

By: /s/
--------------------------
Name:
Title:

THE P/A FUND, L.P.

By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)

By: /s/
--------------------------
Name:
Title:

/s/
- ----------------------------------
Michael Willner

-11-
<PAGE> 12

EXHIBIT C

VENHILL LIMITED PARTNERSHIP

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

JULIET CHALLENGER, INC.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

HENRY L. HILLMAN, ELSIE HILLIARD
HILLMAN AND C. G. GREFENSTETTE,
TRUSTEES OF THE HENRY L. HILLMAN
TRUST U/A DATED 11/18/85

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

C.G. GREFENSTETTE AND THOMAS G.
BIGLEY, TRUSTEES U/A/T DATED 8/28/68
FOR JULIET LEA HILLMAN

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

C.G. GREFENSTETTE AND THOMAS G.
BIGLEY, TRUSTEES U/A/T DATED 8/28/68
FOR AUDREY HILLIARD HILLMAN

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

-12-
<PAGE> 13

C.G. GREFENSTETTE AND THOMAS G.
BIGLEY, TRUSTEES U/A/T DATED 8/28/68
FOR HENRY LEA HILLMAN, JR.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

C.G. GREFENSTETTE AND THOMAS G.
BIGLEY, TRUSTEES U/A/T DATED 8/28/68
FOR WILLIAM TALBOTT HILLMAN

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

WINFIELD CAPITAL CORP.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

ABS EMPLOYEES' VENTURE FUND LIMITED
PARTNERSHIP

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
Franklin Antonio

ARUNDEL HOLDINGS, LLC

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
E. Reid Curley

-13-
<PAGE> 14

GALEN COLE FAMILY FOUNDATION

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
Michael J. DelCollo and
Louise DelCollo JT WROS

/s/
--------------------------------------
Gail G. Dougherty

/s/
--------------------------------------
Michael K. Farr

THE HILLMAN COMPANY

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
Kelly E. Green

RICHARD HEFTEL AS TRUSTEE OF THE
RICHARD HEFTEL LIVING TRUST DATED
01/09/96

By: /s/
----------------------------------
Richard Heftel, Trustee

/s/
--------------------------------------
Leon Kaplan and
Mary Buckley Kaplan JT WROS

/s/
--------------------------------------
Robert Klein and/or Myriam Gluck,
as Tenants-by-Entirety

-14-
<PAGE> 15

/s/
--------------------------------------
Gerald Korman & Wendy S. Korman,
as Tenants-by-Entirety

/s/
--------------------------------------
James C. McMillan

/s/
--------------------------------------
Alan Meltzer

SPIEGEL ENTERPRISES

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

TAMPSCO PARTNERSHIP XII

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

FOUNDATION PARTNERS FUND, G.P.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

TENNYSON PRIVATE PLACEMENT
OPPORTUNITY FUND, LLC

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
J. Allen Dougherty TTEE UTD 12/22/97
FBO Peter Wetherill I

-15-
<PAGE> 16

TRI VENTURES

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

BENEFIT CAPITAL MANAGEMENT
CORPORATION, AS INVESTMENT MANAGER
FOR THE PRUDENTIAL INSURANCE CO. OF
AMERICA SEPARATE ACCOUNT NO.
VCA-GA-5298

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

APA EXCELSIOR IV, L.P.

By: APA EXCELSIOR IV PARTNERS, L.P.
(Its General Partner)

By: PATRICOF & CO. MANAGERS,
INC. (Its General Partner)

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

-16-
<PAGE> 17

COUTTS & CO. (CAYMAN) LTD., CUSTODIAN
FOR APA EXCELSIOR IV/OFFSHORE, L.P.

By: PATRICOF & CO. VENTURES, INC.
INVESTMENT ADVISOR

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

THE P/A FUND, L.P.

By: APA PENNSYLVANIA PARTNERS, L.P.
(Its General Partner)

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

/s/
--------------------------------------
Robert May

-17-
<PAGE> 18

EXHIBIT D

Holders of Shares of Series D Preferred Stock

ABRY BROADCAST PARTNERS III, L.P.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

CUMMINS ENGINE COMPANY, INC.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

HALPERN DENNY FUND II, L.P.

By: /s/
----------------------------------
Name:
---------------------------------
Title:
--------------------------------

-18-