<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): July 1, 1998
ONEPOINT COMMUNICATIONS CORP.
(Exact name of registrant as specified in its charter)
Delaware 36-4225811
(State or other jurisdiction (IRS Employer ID No.)
of incorporation of organization)
2201 Waukegan Road, Suite E-200 60015
Bannockburn, Illinois (Zip code)
(Address of principal executive offices)
847-374-3700
(Registrant's telephone number including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 1, 1998 and August 10, 1998, OnePoint Communications - Illinois,
LLC, a wholly-owned subsidiary of the Registrant, completed closings acquiring
certain assets of Preferred Entertainment, Inc., a subsidiary of People's Choice
- - TV Corp. ("PCTV"), related to providing video programming services to
subscribers located in multiple dwelling units in Chicago, Illinois. The total
consideration for the assets was $12.3 million, with a total of 27,820 MDU
passings in 159 properties.
Payment of the consideration was a $0.5 million cash deposit paid to PCTV
prior to execution of the agreement, $10.6 million in cash at the initial
closing and $1.2 million in cash at the second closing. Of the cash amount at
the initial closing, $2.9 million was deposited into an escrow account, pending
final assignment of certain licenses. A final closing is anticipated to be held
on or about October 1, 1998 for less than 1,000 passings. The amount of
consideration was the result of negotiations between the parties, based in part
on the number of MDU passings. Prior to the acquisition there was no
relationship between the Registrant and PCTV. The Registrant financed the
acquisition with a portion of the proceeds from its offering in May 1998 of
Units comprised of $175.0 million of 14.5% Senior Notes due 2008 and warrants to
purchase 111,125 shares of its common stock.
Through these transactions, the Registrant acquired right-of-entry
agreements to provide video programming services to subscribers located in
multiple dwelling units, transmission, distribution and reception equipment to
deliver the video programming, as well as certain licenses to transmit microwave
signals between properties. Assumed liabilities related to obligations under
acquired contracts and permits, as well as certain deposits and advance payments
by subscribers. The Registrant intends to use the acquired equipment in
substantially the same manner as used by the seller, as part of an upgraded and
expanded wireless network in the Chicago market.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The undersigned registrant hereby submits the Financial Statements for the
PCTV operations acquired referred to in Section 2.
a. Financial Statements
Statements of Assets and Liabilities of Preferred Entertainment, Inc.
to be sold as of December 31, 1997 and 1996, Statements of Revenues
and Expenses for the years ended December 31, 1997 and 1996, notes to
the financial statements, and the report of Arthur Andersen, LLP are
presented on pages 3 through 10.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To People's Choice TV Corp.:
We have audited the accompanying statements of certain assets and liabilities of
Preferred Entertainment, Inc. as of December 31, 1997 and 1996 and the
statements of related revenues and expenses for the years ended December 31,
1997 and 1996. These financial statements are the responsibility of People's
Choice TV Corp.'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.
The statements have been prepared pursuant to the Asset Purchase and Sale
Agreement described in Note 2 between People's Choice TV Corp. and OnePoint
Communications LLC dated June 8, 1998 and is not intended to be a complete
presentation of People's Choice TV Corp.'s or Preferred Entertainment, Inc.'s
assets, liabilities, revenues and expenses.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets and liabilities of Preferred Entertainment,
Inc. as of December 31, 1997 and 1996 pursuant to the Asset Purchase and Sale
Agreement referred to in Note 2 and the related revenues and expenses for the
years ending December 31, 1997 and 1996 in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Stamford, Connecticut,
June 15, 1998
<PAGE>
PEOPLE'S CHOICE TV CORP.
STATEMENTS OF CERTAIN ASSETS AND LIABILITIES
OF PREFERRED ENTERTAINMENT, INC. TO BE SOLD
<TABLE>
<CAPTION>
December 31,
ASSETS 1996 1997
---- ----
<S> <C> <C>
Accounts receivable, net $ 439,743 $ 442,849
Prepaid expenses 100,111 77,272
Other assets 141,283 130,900
Investment in wireless system and equipment, net 5,061,576 4,141,398
----------- -----------
$ 5,742,713 $ 4,792,419
=========== ===========
LIABILITIES AND EQUITY
Liabilities:
Accounts payable $ 110,104 $ 97,829
Accrued expenses 232,631 163,289
Subscriber advance payments and deposits 507,629 573,536
----------- -----------
Total 850,364 834,654
----------- -----------
Commitments and contingencies
PCTV equity in operations to be sold 4,892,349 3,957,765
----------- -----------
$ 5,742,713 $ 4,792,419
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
PEOPLE'S CHOICE TV CORP.
STATEMENTS OF REVENUES AND EXPENSES RELATED TO CERTAIN
ASSETS AND LIABILITIES OF PREFERRED ENTERTAINMENT, INC.
TO BE SOLD
<TABLE>
<CAPTION>
For the Years Ended
December 31,
---------------------------------
1996 1997
---- ----
<S> <C> <C>
Revenues $ 4,685,385 $ 5,208,471
Costs and expenses:
Service costs 2,881,774 2,994,226
Selling, general and administrative 2,323,034 1,838,249
Depreciation and amortization 1,138,177 1,722,216
------------- -------------
Total 6,342,985 6,554,691
------------- -------------
Net loss $ (1,657,600) $ (1,346,220)
============= =============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
PEOPLE'S CHOICE TV CORP.
NOTES TO STATEMENTS OF CERTAIN ASSETS AND LIABILITIES
AND RELATED REVENUES AND EXPENSES
OF PREFERRED ENTERTAINMENT, INC.
(1) Company Operations:
People's Choice TV Corp. (the "Company" or "PCTV") was incorporated in
Delaware on April 22, 1993. The Company and its predecessors have been engaged
in wireless communications since 1988.
The Company's strategy is to own, develop and operate wireless
communications systems, and provide wireless cable and high-speed data
communication services in large markets. PCTV's operating and targeted markets
are concentrated in the midwestern and southwestern regions of the United
States. Currently, the Company operates six wireless cable systems located in
Houston, Tucson, Chicago, Phoenix, St. Louis and Detroit. The Company operates a
high-speed data communication service in the Detroit and Phoenix markets. In
addition, the Company controls wireless frequency rights in Indianapolis, Salt
Lake City, and Milwaukee.
On September 8, 1995, PCTV and Preferred Entertainment, Inc. ("PEI") closed
on a merger transaction pursuant to which PCTV acquired each share of PEI common
stock that it did not already own for consideration of approximately $65 million
through a merger in which PEI became an indirect wholly owned subsidiary of
PCTV. The acquisition was accounted for as a purchase transaction and
accordingly, the purchase price was allocated to the fair value of assets
acquired and liabilities assumed. Substantially all of the excess of purchase
price over the net assets acquired has been allocated to frequency rights
acquired from PEI.
The Company offers 44 channels (including 12 off-air VHF/UHF channels) in
the Chicago market, controls the rights to 32 wireless channels, and transmits
at 50 watts from the Sears Tower, the tallest building in Chicago. PCTV leases
approximately 14,000 square feet of office and warehouse space in Chicago. At
December 31, 1997 and 1996, PCTV's Chicago market had approximately 18,100 and
19,000 customers, respectively.
(2) Asset Purchase and Sale Agreement:
On June 8, 1998, PCTV and PEI ("the Sellers") and OnePoint Communications-
Illinois LLC ("OnePoint" or "the Buyer") entered into an Asset Purchase and Sale
Agreement ("the Agreement") to sell certain Assets and Assumed Liabilities as
stipulated in the Agreement. Under the Agreement, PCTV agrees to sell to
OnePoint the Assets and Assumed Liabilities, as defined related to video
programming services to its subscribers at multiple dwelling units (MDUs) in
Chicago, Illinois. The assets sold to OnePoint do not include the MMDS, MDS or
ITFS licenses currently controlled by the Company and certain AML licenses not
related to the MDU segment of the business. OnePoint shall not assume any
Excluded Liabilities, as defined.
The consideration for the Assets and Assumed Liabilities is $444 times the
units of the properties covered by the right of entry agreements included in the
transaction. The Agreement contemplates that there are a maximum of twenty nine
thousand two hundred fifty (29,250) of such units. Payment of the consideration
will be a $500,000 cash deposit paid to PCTV prior to the execution of the
Agreement and a $12,500,000 cash payment upon execution of the Agreement.
Approximately $2.85 million of the consideration will be held in escrow
until transfer of certain AML licenses are approved and the final units of
property sold are confirmed. The Agreement also provides for purchase price
reductions of up to $260,000 for failure to meet service and system standards
specified in the Agreement.
Assets, as defined in the Agreement, constitutes all rights of PCTV and PEI
under certain contracts, AML licenses, AML applications, equipment, Accounts
Receivable, subscribers and customer lists related to the assets, permits, all
data, books and records related to the Assets, inventory and vehicles but
excludes the Excluded Assets, as defined. Excluded Assets include such items as
cash and cash equivalents, video programming contracts, insurance policies,
licenses and contract rights (unless specifically cited in the Agreement), any
tax refunds or claims and Federal Communications Commissions (FCC) frequencies
(unless specifically indicated in the Agreement).
<PAGE>
PEOPLE'S CHOICE TV CORP.
NOTES TO STATEMENTS OF CERTAIN ASSETS AND LIABILITIES
AND RELATED REVENUES AND EXPENSES
OF PREFERRED ENTERTAINMENT, INC.
Assumed Liabilities as defined in the agreement include (i) all obligations
of PCTV assigned to OnePoint for any contract or permit assigned to the Buyer
under the Agreement (ii) all obligations of the Buyer arising out of the Buyers'
ownership of assets sold to the Buyer under the Agreement and (iii) customer
deposits and advances. The accompanying financial statements include an
allocation of accrued programming costs and access fees paid to landlords of
MDUs. Deposits received from MDU customers and the advance payments by
subscribers for video services are also included in liabilities.
Accounts Receivable represents all accounts receivable of PCTV related to
the subscribers being sold as of the closing date. The accompanying financial
statements include a reserve of 3% of such receivables to reflect possible
losses from nonpayment. Customer deposits and advances represent all deposits
and advanced billings related to the subscribers being sold as of the closing
date.
(3) Summary of Significant Accounting Policies:
The accompanying financial statements include the historical cost of the
assets and liabilities of PCTV that have been sold to OnePoint pursuant to the
Agreement and the allocated historical revenues and expenses of such operations
using generally accepted accounting principles.
Subscribers are determined through the use of an equivalent basic unit
(EBU) calculation for customers receiving basic video programming service on a
bulk basis. The number of subscribers on a bulk basis is determined by dividing
the monthly revenue for such bulk subscribers by the weighted-average rate that
single family home (SFH) subscribers pay per month for basic service. This
number is then added to those customers receiving basic video programming
service on an individual basis to arrive at the total subscriber count.
The assets and liabilities included in the financial statements are those
to be assumed by OnePoint pursuant to the Agreement and allocations of certain
assets or liabilities used by PCTV to provide services to the subscribers
covered by the Agreement. The assets assumed by OnePoint pursuant to the
agreement are Accounts Receivable and the investment in the wireless system and
equipment. The liabilities assumed by OnePoint are subscriber advance payments
and deposits. The assets allocated to the operations included in the
accompanying financial statements (prepaid expenses and other assets) are
generally based on the relative subscribers sold to the total subscribers of PEI
at the end of each period presented. The liabilities allocated (accounts payable
and accrued expenses) include programming and franchise taxes and excludes
accrued payroll and related amounts.
Revenue represents the amounts billed to the specific MDU subscribers
covered by the Agreement. Allocations have been made of certain minor revenues,
such as late fees.
Service costs and selling, general, and administrative expenses for the
years ended December 31, 1996 and 1997 are generally based upon allocation of
such costs of PEI based upon the relative number of subscribers sold to the
total number of subscribers of PEI. Certain expenses have been specifically
identified as related directly to MDU operations and have been assigned to those
operations included in these financial statements. Also included in selling,
general, and administrative expenses are management fees of $140,562 and
$156,254 for the years ended December 31, 1996 and 1997, respectively. These
management fees represent a portion of the historical allocation of costs by
PCTV to its various subsidiaries. The portion allocated in these financial
statements is based on the relative subscribers sold to the total subscribers of
PEI for each period.
Depreciation and amortization are based upon the specific assets included
in the statements of assets and liabilities to be sold.
Under the terms of the Agreement, the debt of PEI, (which consists of
various capital lease obligations on equipment not being sold to OnePoint and a
bank line of credit) is not being assumed by OnePoint. Accordingly, the
accompanying financial statements do not include any allocation of interest
expense incurred by PEI in 1996 and 1997.
<PAGE>
PEOPLE'S CHOICE TV CORP.
NOTES TO STATEMENTS OF CERTAIN ASSETS AND LIABILITIES
AND RELATED REVENUES AND EXPENSES
OF PREFERRED ENTERTAINMENT, INC.
Use of 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.
PCTV management believes the allocation of revenues and expenses included
in the accompanying financial statements is reasonable.
Long-lived assets--
The Company periodically reviews the carrying value of the investment in
wireless systems and equipment, for each wireless communication system in order
to determine whether an impairment may exist. The Company considers relevant
cash flow, estimated future operating results, trends and other available
information including the fair value of frequency rights owned, in assessing
whether the carrying value of the assets can be recovered. An impairment would
be measured as any deficiency in estimated discounted cash flows of the wireless
communication system to recover the carrying value related to the assets.
Revenue recognition--
Subscription revenues are recognized in the period of service. The Company
charges customers an installation fee that is billed in installments for up to
six months. The Company records installment revenue billed in installments when
received. Customer related acquisition costs, including direct commissions,
exceeded installation revenues in 1996.
System launch expenses--
Administrative and marketing expenses incurred by systems during their
launch period are expensed as incurred.
(4) Investment in Wireless System and Equipment:
The investment in wireless systems and equipment is as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1996 1997
------------------ -----------------
<S> <C> <C>
Right of entry fees $ 36,562 $ 44,287
Headend equipment 754,821 747,503
Systems 965,600 965,600
Installations 4,929,477 5,731,108
Less--accumulated depreciation and amortization (1,624,884) (3,347,100)
----------- -----------
$ 5,061,576 $ 4,141,398
=========== ===========
</TABLE>
Depreciation and amortization is calculated on a straight-line basis over
3-10 years.
<PAGE>
PEOPLE'S CHOICE TV CORP.
NOTES TO STATEMENTS OF CERTAIN ASSETS AND LIABILITIES
AND RELATED REVENUES AND EXPENSES
OF PREFERRED ENTERTAINMENT, INC.
Wireless systems and equipment include the cost of initial customer
installations. These costs include reception equipment on customer premises,
related labor and the excess of direct commission costs over installation
revenues to be realized. The excess of direct commission costs over installation
revenues are deferred and amortized over a three year period, the estimated
useful life of customers. Amortization is accelerated upon the disconnection of
specific customers. Sat-Tel, a subsidiary of PCTV and affiliate of PEI, provided
customer installation and other services to PEI.
(5) Employee Benefits:
The Company maintains a 401(k) employee benefit plan pursuant to which
participants can defer a certain percent of their annual compensation in order
to receive certain benefits upon retirement, death, disability or termination of
employment. For the years ended December 31, 1996 and 1997 PEI incurred expense
of $4,230 and $6,050, respectively, of which $2,661 and $4,223, respectively,
have been allocated to the operations being sold.
(6) Income Taxes:
PCTV and PEI account for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109--Accounting for Income Taxes.
SFAS No. 109 requires, among other things, recognition of future tax benefits,
measured by enacted tax rates, attributable to deductible temporary differences
between financial and income tax basis of assets and liabilities and to net
operating loss carryforwards, to the extent that realization of such benefits is
more likely than not.
PCTV and PEI have net operating loss carryforwards ("NOL's") for financial
and tax reporting purposes. SFAS 109 requires that the tax benefit of financial
reporting NOL's be recorded as an asset to the extent that management assesses
the utilization of such NOL's to be "more likely than not". PCTV and PEI
recorded a valuation allowance against the entire deferred asset attributable to
the NOL's since PCTV and PEI have incurred operating losses since inception.
(7) Commitments and Contingencies:
There are certain claims against the PCTV and PEI which are incidental to
the ordinary course of business. In the opinion of management, the ultimate
resolution of these claims will not have a material effect on the financial
statements of PCTV or PEI.
<PAGE>
(8) Service Costs and Selling, General and Administrative Expenses:
Service costs and selling, general and administrative expenses included in
the accompanying financial statements for the years ended December 31, 1996 and
1997 are comprised of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
Service Costs: 1996 1997
- -------------- ------------------- ------------------
<S> <C> <C>
Programming $1,648,359 $1,777,260
Channel lease and access fees 501,558 591,009
Transmitter site rental 211,169 319,230
Service calls 420,287 176,750
Other 100,401 129,977
---------- ----------
$2,881,774 $2,994,226
========== ==========
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
Selling, General and Administrative 1996 1997
- ----------------------------------- ------------------- ------------------
<S> <C> <C>
Salaries and wages, net $1,000,644 $ 736,638
Payroll taxes 90,908 83,192
Employee health and life, net 99,701 117,728
Rent and occupancy 167,026 173,050
Telephone 143,281 135,848
Billing 93,869 59,780
Management fee 140,562 156,254
Other 587,043 375,759
---------- ----------
$2,323,034 $1,838,249
========== ==========
</TABLE>
b. Pro Forma Financial Information
The following December 31, 1997 unaudited Pro Forma Balance Sheet of the
Registrant reflects the December 31, 1997 Consolidated Balance Sheet
adjusted for (1) the acquisition of the PCTV operations acquired on July 1,
1998 and August 10, 1998, and (2) the estimated cash disbursements
necessary to finance the acquisition.
The following unaudited Pro Forma Statement of Operations for the year
ended December 31, 1997 was prepared from the consolidated financial
statements of the Registrant by adjusting for the acquisition of the PCTV
operations acquired on July 1, 1998 and August 10, 1998, including the
related cash disbursements necessary to finance the acquisition, as if all
of these transactions had occurred on January 1, 1997, respectively. This
is not necessarily indicative of what the performance would have been had
the Registrant actually acquired the PCTV operations on those dates, nor
does it purport to represent future results of operations of the
Registrant.
<PAGE>
ONEPOINT COMMUNICATIONS CORP. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL COMPANY
RESTATED PCTV PRO FORMA PRO
COMPANY OPERATIONS ADJUSTMENTS FORMA
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS (A) (B)
Current Assets:
Cash & cash equivalents $ 5,463 $ - $ 5,463
Accounts receivable, net 32 443 475
Affiliate receivable 113 - 113
Prepaid Expenses 1,131 77 1,208
Total current assets 6,739 520 7,259
Investments in 50% owned unconsolidated subsidiaries 10,061 - 10,061
Property & equipment, net of accumulated depreciation 2,704 4,141 (1,842) (e) 5,003
Other assets 257 131 9,956 (f) 10,344
------------ ------ ------- ----------
Total Assets $19,761 $4,792 $ 8,114 $32,667
============ ====== ======= ==========
</TABLE>
See notes to unaudited pro forma financial information
<PAGE>
ONEPOINT COMMUNICATIONS CORP. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET--CONTINUED
AS OF DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL COMPANY
RESTATED PCTV PRO FORMA PRO
COMPANY OPERATIONS ADJUSTMENTS FORMA
------------- ------------- ------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (A) (B)
<S> <C> <C> <C> <C> <C>
Current Liabilities:
Accounts payable and accrued expense $ 2,796 $261 (261) (f) $ 2,796
Subscriber advances & deposits - 574 574
Accrued interest payable 12 - 12
------------- ------------- ------------- -----------
Total current liabilities 2,808 835 (261) 3,382
Long-term debt affiliate - - -
Notes payable, noncurrent - - 12,332 (f) 12,332
Stockholders' equity:
Common stock, $0.01 par value, 2,000,000
shares authorized, 1,000,000 shares issued and
outstanding at June 30, 1998 and December
31, 1997, respectively 10 - 10
Preferred stock, $1.00 par value, 35,000
shares authorized, 35,000 shares issued and
outstanding at June 30, 1998 and December
31, 1997, respectively 35 - 35
Additional capital 35,035 - 35,035
Accumulated (deficit) equity (18,127) - (18,127)
------------- ------------- ------------- -----------
Total stockholders' equity 16,953 - 16,953
------------- ------------- ------------- -----------
Total liabilities & stockholders' equity $ 19,761 $835 $12,332 $ 32,667
============= ============= ============= ===========
</TABLE>
See notes to unaudited pro forma financial information
<PAGE>
ONEPOINT COMMUNICATIONS CORP. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL COMPANY
RESTATED PCTV PRO FORMA PRO
COMPANY OPERATIONS ADJUSTMENTS FORMA
------------- ------------ ------------- -------------
(C) (D)
<S> <C> <C> <C> <C> <C>
Revenue $ 43 $ 5,208 $ 5,251
Cost of Revenue 82 2,994 3,076
------------- ------------ -------------
Gross Margin (40) 2,214 2,174
Expenses:
Selling, general & administrative 12,788 1,838 14,626
Depreciation & amortization 235 1,722 (820) (g) 1,137
------------- ------------ -------------
Loss from operations (13,063) (1,346) (13,589)
Other income (loss)
Interest income 72 - 72
Interest expense (11) - (11)
Miscellaneous (17) - (17)
------------- ------------ -------------
Loss before losses in investments in -
unconsolidated subsidiaries (13,020) (1,346) (13,546)
Losses in equity of investments in unconsolidated
subsidiaries 3,071 - 3,071
------------- ------------ -------------
Net loss before taxes (16,091) (1,346) (16,617)
Provisions for income tax - -
------------- ------------ ------------- -------------
Net loss $ (16,091) $ (1,346) $ 820 $ (16,617)
============= ============ ============= =============
Net income (loss) per common share, basic $ (16.09) $ (16.62)
------------- -------------
Weighted average common share 1,000,000 1,000,000
============= =============
</TABLE>
See notes to unaudited pro forma financial information
<PAGE>
ONEPOINT COMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(A) Represents the historical unaudited restated consolidated balance sheet of
OnePoint Communications Corp. as of December 31, 1997.
(B) Represents the historical audited statement of certain assets and
liabilities of People's Choice TV Corp. to be sold as of December 31, 1997.
(C) Represents the historical unaudited statement of operations of OnePoint
Communication Corp. for the year ended December 31, 1997.
(D) Represents the historical audited statement of operations of People's
Choice TV Corp. to be sold for the year ended December 31, 1997.
(E) Adjust purchased property and equipment to appraised value of $2,299.
(F) Allocation and purchase price as of December 31, 1997:
<TABLE>
<CAPTION>
Assets
Purchased Other Assets
--------------------------------
<S> <C> <C>
Accounts receivable $ 443 $ 0
Prepaid expense 77
Property & equipment 2,299
MDU Access Rights 5,400 5,400
Goodwill 4,687 4,687
Liabilities (574) 0
--------------------------------
$12,332 $10,087
</TABLE>
(G) Represents adjustment to record depreciation expense for acquired property
and equipment over 10 years and to record amortization expense for the
acquired intangible assets over 15 years.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 17, 1998
ONEPOINT COMMUNICATIONS CORP.
(Registrant)
By: /s/John D. Stavig
-----------------
Name: John D. Stavig
Title: Chief Financial Officer
