QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ending September 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission file number 0-18612
I.R.S. Employer Identification Number 84-1062555
TV COMMUNICATIONS NETWORK, INC. ("TVCN")
(a Colorado Corporation)
10020 E. Girard Avenue, #300
Denver, Colorado 80231
Telephone: (303) 751-2900
Fax: (303) 751-1081
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 and Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 68,469,788 shares of TVCN's Common Stock ($.0005 par value)
were outstanding as of September 30, 2000.
<PAGE>
TV COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 2000
(unaudited) and March 31, 2000. . . . . . . . . . 3
Consolidated Statements of Operations for the Three
and Six months ending September 30, 2000 and 1999
(unaudited) . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flow for the Six months
ending September 30, 2000 and 1999 unaudited). . .6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 8
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . 13
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . 14
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<PAGE>
TV COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 2000
<TABLE>
<CAPTION>
Unaudited Audited
Sept. 30, 2000 Mar. 31,2000
_____________ ____________
<S> <C> <C>
Current Assets:
Cash $ 541,966 $ 1,147,712
Investments 935,840 2,188,477
Accounts Receivable 2,543 6,855
Inventory 73,400 88,017
Notes Receivable 37,550 37,600
Deferred income taxes 119,585 119,585
Other Current Assets 89,814 74,597
____________ ___________
Total Current Assets $ 1,800,698 $ 3,662,843
Property and Equipment-Net $ 627,101 $ 715,945
Property and Equipment, net
Discontinued operations 176,015 207,018
Other Assets:
License Agreements - Net 1,137,243 1,196,726
Deferred income taxes 1,874,525 1,436,652
Loan Origination Fees(Note 3) 512,500
Other assets 80,446 80,504
Reclamation bonds disc.
operations 42,182 42,183
____________ ____________
Total Other Assets $ 4,450,012 $ 2,756,065
Total Assets $ 6,250,710 $ 7,341,871
============ ============
</TABLE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unaudited Audited
Sept. 30, 2000 Mar. 31, 2000
______________ ______________
<S> <C> <C>
Current Liabilities:
Account Payable $ 257,278 $ 182,879
Accounts Payable-discont.
operations 97,741
Accrued Expenses 476,135 465,259
Current portion of
Long-Term Debt 164,470 199,174
Current maturities of Long
Term Discon. 37,500 37,500
Subscribers Deposits 6,305 5,885
______________ ______________
Total Current
Liabilities $ 941,688 $ 988,438
Long-term Liabilities:
Long-term Debt $ 1,156,211 $ 1,128,789
Advances from
Stockholder 58,877 262,620
_____________ ______________
Total Long-Term Liabilities $ 1,215,088 $ 1,391,409
Total Liabilities $ 2,156,776 $ 2,379,847
Stockholders' Equity
Class A preferred stock, $1 par
value; none issued or
outstanding -0- -0-
Class B preferred stock, $1 par
value; 28,813 shares issued and
outstanding 28,813 28,813
Class C preferred stock, $1 par
value; none issued or
outstanding -0- -0-
Class D preferred stock, $1 par
Value; shares outstanding -0- -0-
Common Stock, $.0005 par value;
100,000,000 shares authorized;
68,469,788 outstanding 34,235 34,235
Additional Paid in
Capital 8,518,039 8,518,039
Accumulated (Deficit) <4,487,153> <3,619,063>
_____________ _____________
Total Stockholders'
Equity $ 4,093,934 $ 4,962,024
_____________ _____________
Total Liabilities and Stockholder's
Equity $ 6,250,710 $ 7,341,871
============= =============
</TABLE>
<PAGE>
TV COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
Three Months Ending September 30, 2000 and 1999 (Unaudited)
<TABLE>
<CAPTION>
Unaudited Unaudited
Three Months Ending Three Months Ending
Sept. 30, 2000 Sept. 30, 1999
________________ ______________
Revenue-Operations $ 41,133 $ 61,610
Interest Income $ 23,023 $ 2,282
Total Revenue $ 64,156 $ 63,892
============
============
Operating Expenses:
Salaries and Wages $ 153,826 $ 86,794
Programming Fees 8,472 6,964
Cost of Goods Sold 5,648 -0-
Mine Development -0-
General and
Administrative 616,825 263,336
Depreciation and
Amortization 111,555 76,956
Interest $ 31,572 $ 1,200
___________ ___________
Total Expenses $ 927,898 $ 435,250
___________ ___________
Operating Income(loss) $ <863,742> $<371,358>
Estimated Income Tax -0-
___________ ___________
Gain On Sale of Assets -0-
___________ ___________
Income (loss) before <863,742> <371,358>
income tax
Income Tax Expense- Deferred $ <298,926>
___________ ___________
Net (loss) income from
Continuing $ <564,816>
Gain from discontinued
operation $ <9,163> $ <17,120>
___________ ___________
Net Loss <573,979> <354,238>
Weighted Average Common
Shares Outstanding 50,835,954
Loss Per Share <.01>
=========== ============
<PAGE>
<PAGE>
<CAPTION>
TV COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Six Months Ending Sept. 30, 2000 and 1999 (Unaudited)
<S> <C> <C>
Six Months Ending Six Months Ending
Sept. 30, 2000 Sept. 30, 1999
______________ ______________
Revenue - Operations $ 420,250 $ 226,360
Interest Income 59,426 58,420
Total Revenue $ 479,676 $ 284,780
============== ==============
Operating Expenses: Profit
Salaries and Wages $ 242,005 $ 194,176
Programming Fees 12,902 16,635
Cost of Goods Sold 32,898 -0-
Mine Development -0- -0-
General and Administrative 1,160,161 595,734
Depreciation and Amortization 216,450 218,977
Interest 68,654 60,879
______________ _____________
Total Expenses 1,733,070 1,086,402
Operating Income (Loss) $ <1,253,394> $ <801,622>
______________ _____________
Gain on Sale of Assets $ $ 244,290
______________ _____________
Income Loss Before Income Taxes$ <1,253,394> $ <557,332>
Income Tax Expense- Deferred <413,743>
______________ _____________
Net (loss) income from continuing $<839,651>
Loss from discontinued operation <28,440> <7,978>
______________ _____________
Net Loss $ <868,091> $ <565,310>
Weighted Average Common Shares
Outstanding 50,835,954
Net Income Per Weighted
Common Share$ $ $ <.01>
============== =============
</TABLE>
<PAGE>
TV COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
Six Months Ending September 30, 2000 and 1999 (Unaudited)
Six Months Ending Six Months Ending
Sept. 30, 2000 Sept. 30, 1999
________________ _______________
Cash Flow From Operating
Activities $ <868,091> $ <565,310>
Net Income (loss)
Adjustment to reconcile net
income (loss) to net cash
used in operating activities:
Depreciation and
Amortization 216,450 218,977
Change in certain assets
and liabilities:
Gain on Sale of Real
Estate <244,290>
Accounts Receivable 4,312 22,474
Taxes Payable -0-
Inventory 14,617 -0-
Prepaid Expenses(Note 3) <512,500> -0-
Accounts Payable <23,342> <166,655>
Accrued Expenses 10,876 <419,566>
Subscriber Deposits 420 <61>
Deferred Taxes <437,873> -0-
Other Assets <15,159> <3,000>
______________ _____________
Cash flows used in
operating Activities $ <1,610,290> $ <1,127,917>
______________ _____________
Cash Flows From Investing Activities:
Net Investing
Activity $ 1,252,637 $ 302,463
Proceeds From Sale
of Real Estate 578,584
Property & Equipment
Purchases <96,603> 346,457
Investments
Property & Equipment
Notes Receivable 52 <378>
Other <62,711>
______________ _____________
Cash Flows provided by investing
activities: $ 1,156,086 $ 1,164,415
______________ _____________
Cash Flows From Financing Activities:
Payments of Stockholder
Advances $ <203,743> $ 72,975
Long-term Debt <7,282> <305,057>
License Agreements 59,483 <77>
______________ _____________
Cash flows used in financing
Activities $ <151,542 $ <232,159>
______________ _____________
Net Increase (decrease)
in Cash <605,746 <195,661>
Cash - Beginning
of Year $ 1,147,712 $ 462,157
______________ _____________
Cash - End of Period $ 541,966 $ 266,496
============== =============
<PAGE>
TV COMMUNICATIONS NETWORK, INC. ("TVCN") AND SUBSIDIARIES
Notes to Financial Statements
Sept. 30, 1999 and 2000 (Unaudited)
Note 1 - Summary of Significant Accounting Policies
The summary of TVCN's significant accounting policies are
incorporated by reference from our amended Annual Report on Form
10-KSB/A, for Fiscal Year ending March 31, 2000, filed October 27,
2000.
The accompanying unaudited consolidated financial statements
include the accounts of TVCN, and its wholly-owned subsidiaries.
All material and inter-company accounts and transactions have
been eliminated in consolidation.
Note 2 - Interim Unaudited Financial Statements
Information with respect to September 30, 2000, and September
30, 1999, and the periods then ended in the opinion of management,
reflect all adjustments (which include only normal recurring
adjustments)necessary for the fair presentation of our operations.
The results of operations for the three and six months ending
September 30, 2000, and September 30, 1999, are not necessarily
indicative of the results of the entire fiscal year.
The preparation of the interim report is based on the same
accounting standards, and the statements are in conformity with
Generally Accepted Accounting Principles (GAAP). Management
believes there are no material misstatements.
Earnings Per Share
Net income per common share is based on the weighted
average number of 68,469,788, and 50,835,954 common shares
outstanding for 2000 and 1999, respectively.
Note 3 - Loan Origination Fees
Reema International Corp., entered into an agreement with a
private recommended lender, the identity of which remains
confidential pursuant to a request for confidentiality TVCN
filed with the U.S. Securities and Exchange Commission's
Office of the Secretary. The agreement provides that the
recommended lender has made a non-binding commitment to
provide additional funding of $150 million for Reema's
Project in Trinidad, Latin America.
Since the occurrence of these events and transactions during
fiscal year 2000, Reema has continued to identify potential
recommended lenders for financing the gas-to-liquids plant.
Although no loans have closed, Reema has procured non-binding
agreements from several potential recommended sources. In order
to obtain these non-binding agreements, TVCN has paid a total of
$512,500 to potential finders (none of which is an affiliate of
TVCN or any of its affiliates) as loan origination or finder fees.
ITEM 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Wireless Cable TV ("WCTV") Operations
Historically, Wireless Cable stations have been limited to a
one-way transmission; broadcasting cable TV programming over the
air to potential subscribers. However, in October, 1998, the FCC
changed its rules so that it allowed the use of the channels for
two-way communications. Using the concept of "cellular phone" or
"cellular communications", the frequencies can now be used for
two way communications connecting customers directly with long-
distance telephone networks, circumventing local telephone lines.
As a result, long-distance telecommunications companies such
as Sprint and MCI Worldcom began to acquire WCTV companies.
Based upon the foregoing, we believe that this might be an
opportune time to sell our Wireless Cable TV stations, licenses
and rights and interest in the BTAs. TVCN has approximately 1.1
million households in its markets. No agreements have been signed
or negotiated, but discussions continue. It is impossible to
predict the outcome of such discussions, or the amount that may be
generated, if any, from the possible sale of such assets. But our
observation of the market transactions and our discussions lead us
to believe that we have the ability to sell these assets.
Reema International Corp.
Reema International Corp. (Reema) is a wholly-owned
subsidiary of TVCN. It was incorporated in 1993 to explore for
and develop business opportunities in the oil and gas industry.
Specifically, Reema is in the business of developing projects
designed to convert natural gas into transportation fuels. This
process is better known as Gas-To-Liquids ("GTL"). For more
information, see TVCN's 1999 Annual Report, as amended, on Form
10-KSB/A for the period ended March 31, 2000, as filed on October
27, 2000.
Through Reema, TVCN signed an agreement with the government
of Trinidad and Tobago, Latin America, for the purpose of
constructing and operating a Gas-To-Liquids plant in Trinidad.
The proposed plant is expected to convert about 100 million cubic
feet per day of natural gas into approximately 10,000 barrels per
day of diesel, jet fuel, naphtha and other specialty products.
The capital cost of the plant is estimated at $300 million. We
are discussing with various financial institutions obtaining the
necessary financing for the plant. We are also discussing with
different entities the possibility of entering into a partnership
agreement for the purpose of financing and implementing the
proposed Gas-To-Liquids plant.
Reema International Corp., entered into an agreement with a
private recommended lender, the identity of which remains
confidential pursuant to a request for confidentiality TVCN
filed with the U.S. Securities and Exchange Commission's
Office of the Secretary. The agreement provides that the
recommended lender has made a non-binding commitment to
provide additional funding of $150 million for Reema's
Project in Trinidad, Latin America.
On May 18, 2000, TVCN announced that the same entity had
agreed to provide the first $150 million for Reema's
proposed Project in Trinidad. The Project entails the
construction and operation of a Gas-To-Liquids ("GTL")
Plant.
The recommended lender is entirely independent of Reema
International, TVCN and any affiliate thereof. As of the date of
this document, the proposed loan has not closed and there can be
no assurance that the proposed loan will in fact close. The
proposed loan is for a twenty-year period and carries an interest
rate tied to the London Inter Banking Operation Rate. TVCN paid
all of the costs and expenses associated with procuring this
proposed loan including two separate loan origination fees of
$150,000 each.
According to the US Environmental Protection Agency, one of
the major causes of pollution in most cities around the
world is the content of sulfur, aromatics and other
contaminants found in the products generated from crude oil.
On August 27, 1998, UPI reported that "California has become
the first state to declare that soot emitted in (crude-oil
based) diesel exhaust is a cancer threat that requires new
controls." In 1998, The California Air Resources Board
"voted unanimously to declare 40 chemicals found in (such)
diesel exhaust as toxic air pollutants." Early in May,
2000, the Federal National Toxicology Program added diesel
exhaust particulates to its list of chemicals that are
"reasonably anticipated to be a human carcinogen. Cancerous
tumors have been found in rats after exposure to (crude-oil
based) diesel exhaust." In contrast, Reema's proposed Gas-
to-Liquids plant is expected to produce sulfur-free and
aromatics-free products.
The original, non-binding commitment contained the specific
arrangements regarding compensation to the proposed lender
as follows:
Total Amount of Funding - $150,000,000 USD.
Funding Schedule - Total proceeds of the loan will be placed
in a "High Yield Investment" program in a major European
Bank. The project will be funded at the rate of $3,750,000
per month for Forty (40) months, by way of irrevocable pay-
orders lodged with a designated Disbursing Bank. The
recommended lender will provide collateral to the Investment
Account Bank.
Interest - Beginning Forty-one (41) months after the first
disbursement of funds and thereafter for the Twenty (20)
year term, the Borrower will be obligated to pay Interest
quarterly at a rate not to exceed one (1) year LIBOR plus
1and 1/2 % adjusted annually. These interest payments will be
based on the amount actually disbursed to the Borrower or
its assigns, plus unpaid accrued interest, before deduction
of the recommended lender's fee.
Disbursement - In accordance with the loan documents, a
"Fund Control" to insure progress and payment as agreed,
will be required. The Disbursing Bank will act as trustee,
responsible for administration, accounting and adherence to
the project cost breakdown, verifying all inspection reports
and requests for loan disbursements accompanied by
supporting invoices and releases. They will also diligently
maintain recommended lender priority and compliance in
accordance with the "Fund Control" and loan documents.
Repayment of Principal - Principal amount of loan
($150,000,000 USD plus accrued unpaid interest) will be
subject to repayment in the following manner:
The Borrower will provide recommended lender with acceptable
evidence that all phases of
the project complies with any and all Governmental and
regulatory agencies necessary and needed to render the
project lawful and approved. Upon conversion to permanent
financing, the value of the Project will be established by
an independent appraisal through a licensed and certified
appraiser. At all times, the appraised value of the Project
and the Borrower or Borrowing entity must at least equal the
amount disbursed. The Loan will be all due and payable at
the end of Twenty (20) years or can be paid at any time
during the Twenty (20) year period without penalty. (The
loan is not assumable nor may it be assigned without prior
recommended lender approval. In the event of a sale of any
portion of the Project, a pro rata repayment of principal
will be due and payable.) After the third (3) year of
operations a Sinking Fund must be
established, the annual deposits to which must be adequate
to liquidate the principal by the end of the Twenty (20)
year period. The sinking Fund can be established in a Bank
of our choice under the joint administration of the Borrower
and the recommended lender.
Collateral - The recommended lender will provide collateral for
the opening Forty (40) months or until the Borrower no longer has
an active Investment Account. Collateral will be extended as a
result of subsequent loan approvals. Fifteen (15) days prior to
the scheduled return of collateral to the recommended lender, the
Borrower will submit detailed Financial Statements (less than 30
days old), P&L Statements, General Ledger and Owned Inventory
Schedule (w/ opinion letter) to the recommended lender for
recommended lender approval as substitution of collateral.
Typically the collateral will consist of a first lien position on
the land and associated property of the Project, and possibly a
lien on other assets of the Borrower and/or its affiliated
companies, depending on the financial strength of the Company at
that time. The recommended lender's fees for the completion of the
funding will be 2% of the amount funded to the Borrower, payable
as the Borrower receives funds; i.e., as the Borrower is funded
over a period of 40 months, the recommended lender will receive a
total of 2% of the initial $3,750,000 USD and 2% of each
$3,750,000 increment funded thereafter. In addition, 1% will be
payable to the loan broker, and deducted from each increment as it
is funded. In the event that the Company does not find it
necessary to draw down the entire loan of $150,000,000 USD, the 2%
fee on the amount not taken down will be due and payable along
with the first interest payment.
On or about July 13, 2000, in response to Reema's request to
increase the loan amount from $150,000,000 to $300,000,000,
the recommended lender amended the May 2000, agreement. Per
the amendment, the loan amount was increased from
$150,000,000 to $300,000,000 and the retainer amount was
increased from $150,000 to $300,000. On behalf of Reema,
TVCN paid the second portion of the $300,000 retainer fee.
On July 31, 2000, Reema received confirmation of amendment
from the recommended lender that the "Funding Proposal"
dated May 8, 2000, was amended to reflect the Company's
request.
On or about June 5, 2000, Reema signed an agreement with
Parsons Energy and Chemical Group, Inc. to commence the
engineering, design, procurement and construction for the
proposed gas to liquids plant in Trinidad. The agreement
required Reema to pay Parsons a minimum of $394,000 of which
$314,254 has been paid by TVCN. The final payment of
approximately $80,000 is not due under the contract until
Reema receives Parson's report. This report has nto been
received as of September 30, 2000. No future agreements or
renewals have been entered as of September 30, 2000.
Ancillary to the Parsons contract, Reema entered into an
agreement with AIR Products for engineering services. This
contract obligates Reema International to pay AIR $210,000.
On behalf of Reema, TVCN paid AIR $84,000 during fiscal year
2000. As of September 30, 2000, this contract was paid for
in accordance with its terms. Reema has not entered into any
additional contracts or renewals with AIR Products as of
September 30, 2000.
Since the occurrence of these events and transactions and
during fiscal year 2000, Reema has continued to identify
potential recommended lenders for financing the gas to
liquids plant. Although no loans have closed, Reema has
procured non-binding agreements from several potential
recommended lenders. In order to obtain these non-binding
agreements, TVCN has paid a total of $512,500 to potential
finders (none of which is an affiliate of TVCN or any of its
affiliates) as loan origination or finder fees.
During calendar year 2000, to date, Reema has incurred
expenses associated with the gas to liquids project
including legal expenses of $104,638, travel expenses of
$68,434 and administration expenses including labor and
consulting fees of $631,934. TVCN has paid these expenses
on behalf of Reema in addition to the previously mentioned
fees and costs.
Internet Business Opportunities
On February 16, 1996 TVCN incorporated its wholly-owned
subsidiary, Planet Internet Corp. as an Internet Service
Provider. Planet Internet provided internet service to
subscribers. By March 31, 1999, Planet had 836 subscribers, and
was running a negative cash flow of about $40,000 per month. On
May 18, 1999, TVCN signed an agreement to sell certain assets
with the purchaser "BeWell Net Corp." of Parker, CO assuming
certain Liabilities of Planet Internet Corp. The net sale price
was $1,508,640 payable in common stock of BeWell Net.
Accordingly, we received 301,728 shares of the common stock of
BeWell Net valued at $137,170 which reflects the carrying value of
the net assets of Planet Internet while deferring any gain until
realized in the future. The 301,728 shares of BeWell Net
represents 3.85% of the total issued and outstanding shares of
BeWell Net's common stock. BeWell Net is a private company and
has no public trading market for its stock. TVCN continued to
assume certain debt responsibilities of Planet in the amount of
$53,515. The sale was completed in August, 1999, and accounted
for as an investment in BeWell Net stock.
Revenues
The net operating loss for the quarter ended September
30, 2000 was $868,091 as compared to $565,310 for the same period
ending September 30, 1999. The loss is increased to $302,781 due
mainly for Reema's consultants and additional engineering for the
Trinidad Project.
The total revenues for the three and six months period
ending September 30, 2000 were $64,156 and $479,676 respectively,
as compared to 63,892 and 284,780 for the same periods ending
September 30, 1999.
Operating Expenses
Total operating expenses for the three and six months period
ending September 30, 2000, are $927,898 and $1,733,070
respectively as compared to $435,250 and $1,086,402 during the
same periods ending September 30, 1999. The increase in expenses
of $492,648 is summarized as follows:
Increase in Salaries and Wages $ 67,032
Increase in Programming Fees 1,508
Increase in Cost of Goods Sold 5,648
Increase in General & Administrative Expense 353,489
Decrease in Depreciation and Amortization 34,599
Increase in Interest Expense 30,372
______________
Net increase in total expenses $ 492,648
The increase in salaries and wages is a result of TVCN's new
employee, filling the position of general counsel. The increase
in programming fees is due to the rate increase in programming in
both operating systems. The increase in Cost of Goods Sold is due
primarily to JBA Wholesalers which has increased its purchasing of
automobile parts in order to increase inventory. The increase in
General and Administrative Expense is due mainly for Reema's
Consultants and additional engineering for the Trinidad Project.
The decrease in Depreciation and Amortization is a result of
equipment depreciation adjustments due to the purchase of the
Salina BTA. The increase in Interest Expense is due to the
purchase of the Salina BTA. TVCN incurred a $51,487.51
indebtedness to the U.S. Treasury as a result of the acquisition
of this license. As of September 30, 2000, TVCN owed $48,513.31
to the U.S. Treasury.
Liquidity and Capital Resources
TVCN initially financed its growth through private loans and
private financing. We will finance our future growth primarily
from the sale of assets and possibly through further private
financing, of which there can be no assurance of success.
To date, we have not engaged in any debt financing, with the
exception of the BTA's funding through the FCC, and the purchase
of the internet equipment which was assigned and transferred to
BeWell Net as part of the sale of Planet Internet. The lease
underlying such equipment has also be transferred to and assumed
by BeWell.
The sales of the Denver, Colorado (in 1993) Washington, D.C.
(in 1993) and Detroit, Michigan (in 1994) systems for
approximately $17.5 million with a resulting gain of $15.5
million, the sale of the Rome, Georgia
station in 1997, for $2.0 million, and the sale of other assets
have been adequately covering TVCN's costs and expenses along with
allowing TVCN develop other wireless cable TV markets in the
United States and explore other business opportunities
domestically and
internationally.
Currently, TVCN has $1,156,211 in long term debt which is
primarily for the purchase the Basic Trade Area rights purchased
during the FCC BTA Auction, and for equipment purchases.
TVCN's current assets and liabilities are $1,800,698 and
$941,688, respectively. TVCN's cash position is such that
management anticipates no difficulty in its ability to meet its
current obligations. TVCN currently has investments of $69,182
in government securities.
Accounts Receivable and Payable
In connection with the sale of the Detroit system, all
payments and notes underlying the sale have been paid to TVCN.
Thus the slight decrease in notes receivable as of June 30, 2000
is due to the further reduction of note payments.
The decrease in assets is due primarily to the sale of
certain assets in the previous fiscal year and the decrease in
liabilities is the result of the sale those same assets.
Advance from Stockholders
The president of TVCN advanced loans to the Company in its
early years. As of September 30, 2000, the outstanding balance
remaining due and owing to him on account of these loans totaled
$58,877.
Mr. Duwaik bought 81,200 shares from the open market in May,
June, July and August, 2000. The cost of these transactions was
paid by TVCN and totaled $138,700.00. The Company paid this amount
to reduce the balance of the funds owed to him. These transactions
are reported by Mr. Duwaik to the Securities and Exchange
Commission on Forms 4 at the conclusion of each month in which the
trades were executed.
Income Taxes
Management believes that it has available tax planning
strategies to enable it to take advantage of its Net Operating
Loss carry-forwards. (see: TVCN's March 31, 2000, Amended Form 10-
KSB, filed October 27, 2000, at Item 6. Management's Discussion
and Analysis at "Business Development Stratgies.") If TVCN is
able to sell its wireless cable stations and licenses and its
rights and interests in its Basic Trading Areas, then TVCN could
apply its Net Operating Loss carry-forwards against income
realized from such sales. Management has held discussions and
negotiations with a variety of companies interested in these
assets. However, no agreements or contracts have been received
from any potential purchaser and none have been drafted on behalf
of TVCN. As a result, there can be no assurance that we will
succeed in selling any of our wireless cable assets. TVCN can
only benefit from these deferred tax assets by applying them to
offset income. All of the Net operating Loss carry-forwards will
have expired in 2014.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
In connection with its past investment in mining
operations, TVCN filed a law suit against Ray Naylor, et al. The
case is still pending. Other than said case, and except as noted
under the heading Frederick Case Settlement, as detailed in
TVCN's 2000 Form 10-KSB, as amended, for the period ended March
31, 2000 TVCN knows of no material litigation pending, threatened
or contemplated, or unsatisfied judgment against it, or any
proceedings in which TVCN is a party. TVCN knows of no material
legal actions pending or threatened or judgments entered against
any officers or directors of TVCN in their capacity as such in
connection with any matter involving TVCN or the business.
ITEM 2. Changes in Securities
There have been no changes in TVCN's securities
since January 4, 2000.
ITEM 3. Default Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security
Holders
None.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibits (previously filed with the Commission and incorporated
by this reference)
Exhibits
3.1.1 Copy of Certificate of Incorporation of the corporation
(incorporated by reference to the Exhibits filed with the
Registration Statement dated September 28, 1987, File No. 33-
16113-D).
3.1.2 Copy of Amendment No. 1 to the Certificate of Incorporation
(incorporated by reference to the 10 KSB for the period ended
March 31, 1989, File No. 33-16113-D.)
3.1.3 Copy of Amendment No. 2 to the certificate of Incorporation
(incorporated by reference to the 10 KSB for the period ended
March 31, 1995. File No. 0-18612)
3.2 Copy of By Laws of the corporation (incorporated by
reference to the Exhibits filed with the Registration Statement
dated September 28, 1987, file No. 33-16113-D)
10. Material Contracts.
10.1 Memorandum of Understanding dated December 17, 1997 between
The National Gas Company of Trinidad and Tobago Limited and Reema
International Corp. (incorporated by reference to the Exhibits
filed with the Form 10-K-SB Amendment No. 2 for the period ended
March 31, 1999. (File No. 0-18612)(This document was filed January
7, 2000)).
10.2 Acquisition Agreement dated May 18, 1999 between BeWell Net
Corporation ("Buyer") and TV Communications Network, Inc./Planet
Internet Corporation ("Seller"). (incorporated by reference from
the Form 10-KSB Amendment No. 1 for Fiscal Year ended March 31,
1999 filed, on October 12, 1999. File No. 0-18612).
10.3.i April 18, 2000 letter of Agreement among First National
Group and Reema Int'l Corp. outlining terms pursuant to which
First National will broker transaction procuring financing for GTL
plant. (incorporated by reference to the Form 10-KSB Amendment No.
1 for Fiscal Year ended March 31, 2000 filed, on October 26, 2000.
File No. 0-18612).
10.3.ii May 8, 2000 non-binding letter of commitment to provide
$150,000,000 in financing by [***] to Reema International, Corp.
10.3.iii July 13, 2000 amended non-binding commitment raising
finding proposal from $150,000,000 to $300,00,000 among [***] and
Reema Int'l Corp.
10.3.iv July 28, 2000 non-binding commitment confirmation from
[***]to Reema Int'l Corp.
21. Subsidiaries of the Registrant. (incorporated by reference
from the Form 10-KSB Amendment No. 1 for Fiscal Year ended March
31, 1999 filed, on October 12, 1999. File No. 0-18612).
99. Additional Exhibits
99.1(P) Copy of a report by Houlihan Valuation Advisors titled
"Valuation of a 10,000,000 Shares Block of Restricted Common Stock
of TV Communications Network, Inc. as of March 25, 1998."
(incorporated by reference to the exhibits filed with the Form
10KSB Amendment No. 2 for the period ended March 31, 1999. (File
No. 0-18612) This document was filed on January 7, 2000).
[***] Name and address are deleted to preserve confidentiality,
based upon the Company's October 27, 2000, Application for
Confidential Treatment pursuant to 17 C.F.R. 240.24b-2. The non-
disclosed information has been filed with the Office of the
Secretary for the U.S. Securities and Exchange Commission as part
of the Company's request for Confidential Treatment.
Reports filed on Forms 8-K (previously filed with the Commission
and incorporated by this reference).
Form 8-K filed September 1, 2000, (Item 5).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TV COMMUNICATIONS NETWORK, INC. ("TVCN")
/s/OMAR A. DUWAIK
Omar A. Duwaik, President,
CEO & Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the date indicated:
/S/OMAR A. DUWAIK /S/KENNETH D. ROZNOY
Omar A. Duwaik, President, Kenneth D. Roznoy,
CEO & Director Vice President & Director
/S/ JACKIE PORTER
Jackie Porter
Controller
Date: November 14, 2000
