<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACTS OF 1934
Commission File No. 33-9030
MAGNAVISION CORPORATION
(exact name of registrant as specified in its charter)
DELAWARE 22-2741313
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
1725 ROUTE 35, WALL, NEW JERSEY 07719
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (732) 449-1200
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant is not available due to the unavailability of price quotations for
the Registrant's securities.
The number of shares of Registrant's Common Stock outstanding on July 30, 1999
was 1,162,467.
Documents Incorporated by Reference: None.
<PAGE>
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - June 30, 1999 and December 31, 1998
Condensed Consolidated Statements of Operations - Three and Six months ended
June 30, 1999 and 1998.
Condensed Consolidated Statements of Stockholders' Deficiency - Period December
31, 1998 to June 30, 1999.
Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 1999
and 1998.
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Item 3. Qualitative and Quantitative Disclosures about Market Risk.
PART II. Other Information
<PAGE>
ITEM 1. FINANCIAL INFORMATION
MAGNAVISION CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
ASSETS 1999 1998
--------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash 193,510 227,091
Trade Accounts and Other Receivables 242,643 276,203
Notes receivable from customer 674,771 467,000
Shareholder Loans Receivable 38,707 38,707
Prepaid Expenses 1,985 1,986
--------- ---------
Total Current Assets 1,151,616 1,010,987
PROPERTY AND EQUIPMENT
Property and Equipment at Cost 3,119,546 3,077,185
Less: Accumulated Depreciation (1,416,973) (1,122,022)
--------- ---------
Net Property and Equipment 1,702,573 1,955,163
OTHER ASSETS
Notes receivable from customer , net of current portion -- 441,271
Prepaid lease expense 490,232 543,716
Other assets 30,978 --
Deposits 2,339 2,339
--------- ---------
TOTAL ASSETS 3,377,738 3,953,476
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts Payable 113,456 212,390
Accrued Expenses 156,645 169,384
Deferred Revenues 209,988 354,596
Current Portion of Long-Term Debt 979,495 640,642
--------- ---------
Total Current Liabilities 1,459,584 1,377,012
Security Deposits 176,692 172,303
Long-Term Debt, net of current portion 1,214,000 1,899,468
Line of Credit 150,000 --
Commitments and contingencies
Series A Preferred Stock, $1 par value, 9,850,000
shares authorized; issued and outstanding, 5,000,000
shares, net of unamortized discount 4,637,346 4,591,049
SHAREHOLDERS' DEFICIENCY
Series B Preferred Stock, $1 par value , 150,000 shares 131,889 131,889
authorized; issued and outstanding, 131,889 shares.
Common Stock, $0.08 par value - 10,000,000 shares
authorized; issued and outstanding, 1,154,390 shares
at June 30,1999 and December 31, 1998 92,350 92,350
Additional Paid-In Capital 3,880,601 3,880,601
Accumulated Deficit (8,364,724) (8,191,196)
--------- ---------
Total Shareholder's Deficiency (4,259,884) (4,086,356)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY 3,377,738 3,953,476
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
F-1
<PAGE>
MAGNAVISION CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30
1999 1998
-------- --------
<S> <C> <C>
REVENUES
Gross Revenues 1,545,263 960,555
Cost of Sales 491,951 363,860
--------- ---------
GROSS PROFIT 1,053,312 596,695
OPERATING EXPENSES
Salaries 437,873 298,941
Depreciation 294,951 185,000
General and Administrative Expenses 335,266 490,139
--------- ---------
TOTAL OPERATING EXPENSES 1,068,090 974,080
OPERATING LOSS (14,778) (377,385)
OTHER INCOME (expense)
Interest expense (123,187) (74,804)
Interest Income 15,703 15,033
--------- ---------
Total other income (expense) (107,484) (59,771)
LOSS BEFORE PROVISION FOR INCOME TAXES (122,262) (437,156)
PROVISION FOR INCOME TAXES 4,969 4,181
--------- ---------
NET LOSS (127,231) (441,337)
--------- ---------
Preferred Stockholders Dividend Requirement 200,000 200,000
Accretion of preferred stock 46,298 46,298
--------- ---------
Net loss to Common Stockholders (373,529) (687,635)
--------- ---------
Net Loss per Common Share Basic: (0.32) ($0.60)
Weighted Average Shares use to Compute net loss per share:
Basic 1,154,390 1,154,317
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
Three months ended June 30
1999 1998
-------- ---------
<S> <C> <C>
REVENUES
Gross Revenues 669,308 426,465
Cost of Sales 206,233 144,120
--------- ----------
GROSS PROFIT 463,075 282,345
OPERATING EXPENSES
Salaries 244,000 159,566
Depreciation 162,925 92,700
General and Administrative Expenses 149,744 262,679
--------- ----------
TOTAL OPERATING EXPENSES 556,669 514,945
OPERATING LOSS (93,594) (232,600)
OTHER INCOME (expense)
Interest expense (62,230) (36,041)
Interest Income 11,703 7,501
--------- ----------
Total other income (expense) (50,527) (28,540)
LOSS BEFORE PROVISION FOR INCOME TAXES (144,121) (261,140)
PROVISION FOR INCOME TAXES 0 15
--------- ----------
NET LOSS (144,121) (261,155)
--------- ----------
Preferred Stockholders Dividend Requirement 100,000 100,000
Accretion of preferred stock 23,149 23,149
--------- ----------
Net loss to Common Stockholders (267,270) (384,304)
--------- ----------
Net Loss per Common Share Basic: ($0.23) ($0.33)
Weighted Average Shares use to Compute net loss per share:
Basic 1,154,390 1, 154,390
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
F-3
<PAGE>
MAGNAVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
For the period December 31, 1998 to June 30,1999
(UNAUDITED)
<TABLE>
<CAPTION>
Series B Common Common
Preferred Stock Stock Stock
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balance, December 31,1998 131,889 131,889 1,154,390 92,350
Accretion of Preferred Stock
Net loss
------- ------- --------- ------
Balance, June 30, 1999 131,889 131,889 1,154,390 92,350
<CAPTION>
Additional
Paid in Accumulated Total
Capital Deficit Equity
<S> <C> <C> <C>
Balance, December 31,1998 3,880,601 (8,191,196) (4,086,356)
Accretion of Preferred Stock (46,297) (46,297)
Net loss (127,231) (127,231)
--------- --------- ---------
Balance, June 30, 1999 3,880,601 (8,364,724) (4,259,884)
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
F-4
<PAGE>
MAGNAVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss (127,231) (441,337)
Adjustments to Reconcile Net Loss to Net Cash provided by (used in) operating activities
Depreciation and amortization 294,951 185,000
Amortization of deferred financing cost -- 31,118
Amortization of channel lease prepayments 53,484 53,484
Changes in Assets and Liabilities:
Decrease(Increase) in Trade Accounts and
Other Receivables 33,560 64,132
Decrease in prepaid expenses 1 --
Increase in Deposits -- 789
Decrease in Accounts Payable (98,934) (39,113)
Decrease in Accrued expenses (12,739) --
Increase in other assets (30,978) --
Payment of note receivable from customer 233,500 --
Incerase in Security Depsits Payable 4,389 --
Increase in Deferred Revenues (144,608) 348,473
------- -------
Net cash provided by operating activities 205,395 202,546
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (42,361) (425,006)
------- -------
Net cash used in investing activities (42,361) (425,006)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of Long term debt (346,615) (1,009)
Proceeds from Issuance of Common Stock -- 3,760
Proceeds from Issuance BSB Line of Credit 150,000 --
Proceeds from Issuance Access Capital Line of Credit -- 179,710
------- -------
Net cash (used in) provided by financing activities (196,615) 182,461
Net decrease in cash (33,581) (39,999)
------- -------
Cash beginning of period 227,091 141,546
Cash end of period 193,510 101,547
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
F-5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
1. Summary of Significant Accounting Policies:
The accompanying condensed consolidated financial statements include the
accounts of Magnavision Corporation ("the Parent") and its wholly owned
subsidiaries, (collectively the "Company"), the most significant of which are
Magnavision Corporation (New Jersey), Magnavision Private Cable, Inc. and
Magnavision Wireless Cable, Inc. In the opinion of management, all adjustments
necessary for a fair presentation of financial statements have been included.
Such adjustments consisted only of normal reoccurring items. The condensed
consolidated financial statements for the quarters ending June 30, 1999 and June
30, 1998 are unaudited and should be read in conjunction with the Company's
consolidated annual financial statements and notes thereto for the year ending
December 31, 1998.
Long-Term Debt:
In September 1997, the Company and Access Capital, Inc. agreed to a $1,250,000
three-year revolving line of credit to be used to expand the Company's private
cable business. Interest was payable currently under the line of credit at prime
rate plus five and one-half percent (the contract rate) and all outstanding
amounts were payable in September 2000. The line was secured with the lender by
a pledge of private cable contracts and all other Company assets. In addition
the lender received 138,536 warrants at an exercise price of $2.00 per share to
purchase approximately 4% of the Company's stock on a fully diluted basis. The
warrants contain a put and call option in the event that the Company sells a
significant asset. The put option requires the Company to purchase a percentage
of the lenders' warrants as required by a formula outlined in the amended
agreement. This option can only be exercised upon the sale of a significant
asset of the Company or change of control. Conversely, the call option allows
the Company to purchase all the outstanding warrants at a price set by the
formula stated above. The cost of either the put or call option can not be
determined at this time since it is based upon the value of a sale of a
significant asset which cannot be assured. The agreement with Access Capital,
Inc. has been terminated, however, the warrant and their related terms remain
outstanding.
Subsequent to the fiscal year ended December 31, 1997, the Company had not met
certain non-monetary working capital covenants under the Agreement and the
lender instituted the default interest rate, such rate is two and one-half
percent over the contract rate. The lender had continued to lend funds under the
Agreement. The Company requested a waiver thereof together with a separate
working capital advance.
On July 3, 1998, the Company and BSB Bank and Trust Company entered into an
agreement to refinance the Company's existing credit line and to supply working
capital. Magnavision borrowed the sum of $2.5 million, which bears interest at a
fixed rate of 10% per annum and has a 5-year term. During the 6 months ended
June 30, 1999, the Company made monthly installments of interest, plus 6
consecutive monthly payments of $24,000 of principal, payable in arrears, made
in accordance with the agreed upon schedule starting October 1998 and one
principal payment of $200,000 due June 15, 1999.
<PAGE>
The Company requested that $200,000 of the amount due June 15, 1999 be deferred
until August 1, 1999, at which time the payment was made. For the next 12
months, monthly installments of interest plus 9 consecutive monthly payments of
$30,000 of principal, payable in arrears, will be made in accordance with the
agreed upon schedule and one principal payment of $400,000 due on June 15, 2000.
The loan was utilized to refinance existing debt and the remaining approximately
$1.9 million was used to finance the completion of outstanding contracts for
private cable television service at various locations and to complete the
Fordham University Internet distribution system currently under contract. BSB
Bank & Trust Company also granted the Company a $500,000 line of credit, to be
used for future installations of private cable systems and general corporate
purposes. On June 29, 1999, the Company borrowed $150,000 under the BSB's Line
of Credit for working capital needs. This line of credit is at an interest rate
of prime plus 1.5% payable monthly and will mature in 2 years. In connection
with the above transaction, BSB Bank & Trust Company received 146,176 warrants
to purchase approximately 4% of Magnavision's issued and outstanding capital
stock on a fully diluted basis at an exercise price of $2.00 per share.
3. NON-QUALIFIED STOCK OPTION PLAN:
During the first quarter of 1999 Magnavision adopted a non-qualified stock
option plan (the "Plan"). Under the Plan, options to purchase an aggregate of
not more than 349,986 shares of common stock may be granted from time to time to
key employees, including officers, advisors, and independent consultants or to
any other persons. Under the Exchange Agreement and when the Plan was complete,
options were also to be granted to employees under the Plan. Also under a letter
agreement the President and C.E.O. was to receive 150,000 options at an exercise
price of $1.00. As of January 19, 1999, the compensation committee awarded or
caused to be issued 223,974 options including: 150,000 options to Robert
Hoffman, 43,974 options issued pursuant to the Company's obligation under the
Exchange Agreement at an exercise price of $2.00 per share and awarded 30,000
options to various employees at an exercise price of $2.00 per option.
The Company accounts for stock options issued to employees under A.P.B. No. 25
"Accounting for Stock Issued to Employee," as permitted by FAS No. 123 under
which no compensation cost has been recognized for the options granted as they
were issued above market value.
4. PREFERRED STOCK DIVIDENDS:
On June 30, 1999, the Company was in arrears on dividends to its preferred
stockholders. The Company must pay all dividends $857,778 in arrears to
preferred stockholders before paying any dividends to common stockholders. Also,
the dividends in arrears are due upon mandatory redemption of the preferred
stock due December 31, 2002, or earlier upon certain events.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
All of the Company's current revenues are derived from its private cable
operations. The wireless channel capacity operations have not commenced,
therefore, no revenue has been derived from the wireless operation.
The Registrant and its wholly owned subsidiary, Magnavision Private Cable, Inc.,
began service in February 1992 to various colleges and senior living centers
facilities in the New York/New Jersey area utilizing direct satellite
technology. This involves the use of antennas, which are installed at the
facility and then separately wired on a room-by-room basis. As of June 30, 1999,
the Company has long-term agreements with 42 facilities under which it is
currently providing service to students and patients through outlets in rooms
and common areas at such institutional facilities. The majority of the
facilities using the Company's private cable service are in New Jersey and New
York, but the Company's market area currently reaches from North Carolina to
Massachusetts and west to Wisconsin.
The Company also has an Agreement with Fordham University pursuant to which the
Company agreed to service approximately 3,000 students with a data delivery
system using the existing cable television distribution system located at
certain facilities.
Many colleges and senior living centers in the United States do not have cable
television, but the current trend is for these institutions to install cable
television. Management believes that this trend, coupled with the fact that the
Company can offer cable services normally not provided by the traditional wired
cable companies, should result in significant subscriber expansion in the
future. Each installation is comprised of a number of billing outlets. A billing
outlet represents a hookup for a television. The Company collects revenue from
each television on-line. For the most part, the colleges are on a nine-month
billing cycle starting in September and ending in June of the subsequent year.
The nursing homes and hospitals are on a 12-month billing cycle.
Six Months Ending June 30, 1999 Compared to Six Months Ending June 30, 1998
For the six months ending June 30, 1999 gross profit increased $456,617 over the
six months ending June 30, 1998. The increase was primarily a result of
increased outlets on line in September 1998, and the revenue from the Fordham
University Service Contract.
Total operating expenses increased $94,010 in the six months ending June 30,
1999 when compared to the six months ending June 30, 1998. Depreciation
increased $109,951 and represented depreciation for increased property and
equipment. Salaries increased $138,932, primarily due to the addition of the
president's salary in 1999 and the payment of bonuses to certain employees.
General and administrative expense decreased by $154,873 due mostly to reduced
consulting fees in 1999.
Interest expense increased $48,383 from the six months ending June 30, 1999 when
compared to the six months ending June 30, 1998. This increase is due to the
increase of long-term debt for BSB Bank and Trust Company's loan.
<PAGE>
Second Quarter 1999 Compared to Second Quarter 1998
For the second quarter 1999, gross profit increased $180,730 over the second
quarter of 1998. The increase was a result of the television outlets that went
on line in September 1998 and the revenue from the Fordham University service
contract.
Total operating expenses increased $41,724 in the second quarter of 1999 when
compared to the second quarter 1998. Depreciation accounted for $70,225 and
related to increased property and equipment. Salaries increased $84,434 with the
inclusion of the president's salary and bonuses paid to certain employees; and
general and administrative expenses were $112,935 less due to the reduced
professional fees, somewhat offset by the legal fees incurred in 1999 defending
the Company concerning Cacomm, Inc. vs.
Magnavision Corporation complaint.
Interest expense increased $26,189 in the second quarter of 1999 when compared
to the second quarter of 1998. The increase is due to the increase in debt for
the BSB Bank and Trust Company's Loan.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ending June 30, 1999 total cash decreased by $33,581. The net
cash used in operating activities was $205,395 and is primarily due to the
repayment of the note receivable from a customer.
Cash used in investing activities for the six months ended June 30, 1999 was
$42,361 and was related to the purchases of cable equipment to increase the
outlet count.
Cash flow used in financing activities was $196,615 for the six-month period
ending June 30, 1999 which represented $150,000 of proceeds received from BSB's
Line of Credit offset by payment of $346,615 made under long-term debt
agreements.
For the six months ending June 30, 1998, total cash decreased by $39,999. The
cash from operating activities was $202,546 mainly due to an increase in
deferred revenues for the data system built at Fordham somewhat offset by
operating losses.
Cash used in investing activities was $425,006 and was used to purchase cable
television and equipment to increase the outlet count and data system equipment
for Fordham.
Cash flows from financing activities were $182,461 and primarily represent
proceeds from the credit line.
Since the inception of its cable service in 1992, the Company has experienced
operating losses and negative cash flows. In addition, at June 30, 1999 the
Company had a shareholder deficit and working capital deficiency.
<PAGE>
The Company's capital commitments at June 30, 1999 include capital to construct
Facilities at the Department of Education of the Archdiocese of New York (the
"Archdiocese") and capital to place private cable systems on line at
institutions the Company has contracts with. The Company has not commenced
operation of a wireless system, and will require substantial funding to do so.
The Company intends to borrow the funds under its line of credit to complete the
projects it has contracted.
The Company is exploring various strategic alternatives relating to its Channel
Lease Agreement with the Archdiocese including potential strategic alliances,
joint ventures or a sale or other disposition of the Company's rights under such
agreement. Also, management believes that the continued expansion of the
Company's private cable operations should produce positive cash flows in the
future. However, no assurances can be given that the Company will successfully
accomplish any strategic alternative related to the Channel Lease Agreement, or
expand the private cable operations to produce positive cash flows, on a timely
basis or at all.
YEAR 2000
The Year 2000 issue concerns the potential inability of information systems and
technology based operating systems to properly recognize and process
date-sensitive information beyond December 31, 1999. Systems that do not
properly recognize such information could generate erroneous data or fail.
The Company has begun to implement steps in an attempt to ensure its Year 2000
readiness. The Company created awareness of the Year 2000 problem by developing
an overall strategy. The Company then assessed the Year 2000 impact on the
Company, identifying core business areas, processes and systems, ("systems"),
identifying the systems that are not Year 2000 compliant. This also includes
developing contingency plans for all critical systems. The final step involves
converted or replaced platforms, applications, databases, utilities, and
contingency plans as necessary.
Based on the review to date, the Company estimates the cost to resolve the Year
2000 issue are minimal. In the event that the renovation, validation or
implementation phases require expenditures not currently foreseen or
anticipated, the costs to resolve the Year 2000 issues will increase.
The Company is developing contingency plans for its worst case scenarios as part
of the validation phase. At this time, the Company believes that the most
critical systems are its signal delivery and reception systems. The Company
believes that the failure of these critical systems because of Year 2000 issues
is unknown. The Company also believes that a failure of its important, but less
critical, environmental controls system, sales and marketing support system and
internal information system, is remote.
<PAGE>
We also are involved in limited contingency planning. In the event that
undetected Year 2000 issues arise, the plans will be used to attempt to reduce
the potential system problems. Our internal financial and sales and support
system contingency plan includes making back-up copies of the data and systems.
With respect to the third-party signal delivery system, the company uses more
than two vendors and believes it will be able to offer limited programs in the
event of a failure of one vendor system. Also the company will continue to
contact the vendors in order to obtain certification of the Year 2000 readiness.
However, if such a failure were to occur in the case of the signal delivery and
reception system; the Company does not anticipate that it will be able to
provide timely alternative or replacement systems for these critical systems.
This is primarily due to the reliance by the Company on third party vendors for
providing key components of such systems. The Company has sought assurances from
its vendors that their products and services will be Year 2000 compliant, and
has not received such assurances from all of its vendors.
However, if such vendors of the signal delivery system are not Year 2000
compliant and their systems fail, the Company's business, financial condition
and results of operations may be adversely impacted.
INFLATION
Management believes that inflation and changing prices will have a minimal
effect on operations.
The above should be read in conjunction with the Company's unaudited condensed
consolidated financial statements included elsewhere herein.
Certain statements under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward- looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements of the
Company, or industry results expressed or implied by such forward-looking
statements. Such factors include among others, general economic and business
conditions, which will, among other things, impact demand for the Company's
services; changes in public taste, trends and demographic changes; competition
from other SMATV and/or cable companies, which may affect the Company's ability
to generate revenues; political, social and economic conditions and laws, rules
and regulations, which may affect the Company's results of operations; timely
completion of construction projects for new systems; changes in business
strategy or development plans; the significant indebtedness of the Company;
quality of management; availability of qualified personnel; changes in, or the
failure to comply with, government regulations; and other factors.
<PAGE>
Item 3. Qualitative and Quantitative Disclosures about Market Risk. The Company
has none.
PART II OTHER INFORMATION
Item 1. Litigation
CACOMM, INC vs. MAGNAVISION CORPORATION ETAL.
Reference was made in the Company's March 31, 1999, 10-K . On or about June 1,
1999, the Company was informed that the complaint filed in the court of Chancery
of the State of Delaware entitled Cacomm, Inc. vs. Magnavision Corporation et.al
filed on May 13, 1999, was dismissed by Cacomm, Inc.
PATRICK MASTRORILLI vs. MAGNAVISION CORPORATION
On June 21, 1999, the Company received a complaint filed in the Superior Court
of New Jersey Loan Division in an action entitled Patrick Mastrorilli vs.
Magnavision Corporation. This litigation relates to a former director and
officer's claim for future commissions due him on contracts and renewals placed
by him. The company is reviewing this action.
Item 2. Election of a Director
On June 3, 1999, the Board of Directors approved the election of Cacomm Inc.'s
appointee, Brian Mastrorilli, to the Board. Mr. Mastrorilli has been Vice
President of Technical Operations at Magnavision since April 1991. He was also a
Director of Cacomm Inc. until May 1999, when he resigned to become a Director of
Magnavision.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
No Reports on Form 8-K were filed by the Company during the Quarter
ending June 30, 1999.
Pursuant to the Requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 16, 1999. -----------/S/-------------
Jeffrey Haertlein
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 193,510
<SECURITIES> 0
<RECEIVABLES> 917,414
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,151,616
<PP&E> 3,119,546
<DEPRECIATION> (1,416,973)
<TOTAL-ASSETS> 3,377,738
<CURRENT-LIABILITIES> 1,459,584
<BONDS> 0
4,637,346
131,889
<COMMON> (4,391,773)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,377,738
<SALES> 1,545,263
<TOTAL-REVENUES> 1,545,263
<CGS> 491,951
<TOTAL-COSTS> 491,951
<OTHER-EXPENSES> 1,068,090
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 123,187
<INCOME-PRETAX> (122,262)
<INCOME-TAX> 4,969
<INCOME-CONTINUING> (127,231)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (373,529)
<EPS-BASIC> (0.32)
<EPS-DILUTED> 0
</TABLE>
