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As filed with the Securities and Exchange Commission on December 9, 1998
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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): December 8, 1998
INTERACTIVE NETWORK, INC.
(Exact Name of Registrant as Specified in Its Charter)
California
(State or Other Jurisdiction of Incorporation)
0-19579 94-3025019
(Commission File Number) (I.R.S. Employer Identification No.)
1161 Old County Road, Belmont, Ca 94002
(Address of Principal Executive Offices) (Zip Code)
(650) 508-8793
(Registrant's Telephone Number, Including Area Code)
With a copy to:
Marshall L. Small, Esq.
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
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Item 5. OTHER EVENTS.
On December 8, 1998, the Registrant issued a press release, a copy of
which is attached hereto as Exhibit 1.1 and incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
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1.1 Press Release issued by the Registrant dated December 8, 1998.
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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 hereunto duly authorized.
INTERACTIVE NETWORK, INC.
Date: December 9, 1998 By: /s/ BRUCE BAUER
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Bruce Bauer
President and Chief Executive Officer
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EXHIBIT 1.1
PRESS RELEASE
Belmont, CA. December 8, 1998. Interactive Network, Inc. announced today
that it was shortly planning to file a plan of reorganization under its Chapter
11 bankruptcy proceeding, originally filed September 14, 1998, pursuant to a
Settlement Agreement entered into in July 1998, ending protracted litigation
with its major secured creditors/investors. The plan of reorganization
contemplates payment to all the Company's creditors in full on their allowed
claims, and the conversion by the Company's secured creditors/investors (TCI,
NBC, Motorola and Sprint) of approximately $39,000,000 in debt (including
accrued interest) into approximately 7,800,000 shares of the Company's Common
Stock, and the release by the secured creditors of their liens on the Company's
assets, including its patent portfolio. The Company intends to contest certain
creditors' claims, including an unsecured claim of $3,394,000 asserted by its
former Chief Executive Officer, David Lockton, based on an alleged deferred
compensation arrangement. The Company may also assert claims against Mr.
Lockton, based on what it believes are his mismanagement, breaches of fiduciary
duty and failure to satisfy a contractual condition to his receipt of
compensation.
In September, 1998, Mr. Lockton proposed a plan to the Company's board of
directors to take the Company private by offering its current shareholders
10-15% of a new company he planned to organize, valuing the Company's current
patent portfolio for that purpose at $5,000,000. Earlier in sworn deposition
testimony, Mr. Lockton had testified that if the secured creditors had been
allowed to take control of the Company's patent portfolio for $25,000,000 that
would be tantamount to "stealing" the Company's patent portfolio. The Company's
board of directors has refused to consider Mr. Lockton's "going private" plan,
and intends to vigorously exploit the Company's patent portfolio once its
Chapter 11 proceeding is concluded, which is expected to occur in January 1999.
At that time, the Company will receive $10,000,000 in cash pursuant to the
Settlement Agreement with its secured creditors/investors, approximately 70% of
which it anticipates will be required to pay its unsecured creditors (and less
if the Company is successful in resisting Mr. Lockton's claim for deferred
compensation). While the Company has valued its patent portfolio (which
constitutes the largest part of its present assets) at $40,000,000 for purposes
of the Chapter 11 proceedings, the Company makes no representation as to what
the patent portfolio may in fact be worth when the Company is free to exploit
it. The Company has in the recent past received and continues to receive
indications of interest in its patent portfolio from responsible businesses,
including Cable and Wireless Communications and Two Way TV, that it intends to
pursue actively once its Chapter 11 proceeding is concluded.
David Lockton has advised the Company that he and certain other
shareholders that he claims together hold 5% of the company's Common Stock,
intend to call a special shareholders' meeting to be held on December 30, 1998,
for which he intends to solicit proxies to replace the current board of
directors. Under S.E.C. regulations the Company may not solicit proxies for a
shareholders' meeting until it is in a position to send an annual report,
including updated financial statements, to its shareholders. Mr. Lockton, while
he was Chief Executive Officer, did not keep the Company's books and records up
to date and failed to continue the services of its outside auditors. Current
management has requested its former outside auditors to again become its
auditors (subject to approval by the Bankruptcy Court), and hopes to have
updated financial statements available to send to its shareholders early in
1999, looking to a shareholders' meeting to elect directors sometimes in March
1999. The Company is seeking action in the courts to fix the date of its
shareholders' meeting in March 1999, rather than the date sought by Mr.
Lockton. Accordingly, shareholders are requested not to send any proxies to Mr.
Lockton until the Company announces the date of its special shareholders'
meeting fixed by the Court, and has an opportunity to send its own proxy
material to shareholders. At that time, the Company would expect to add
nominees to its own slate of directors in addition to and/or in replacement of
one or more of its current directors. In addition, the Company intends to put
in place an Advisory Board, made up of several independent analysts who are
expert in the area of intellectual property and technology transfer as related
to the Company's patent portfolio, to assist the
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Company in developing the opportunities the Company believes may be available to
it in the internet, telecommunications and entertainment industries.
This news release contains forward-looking statements regarding future
events and performance of the Company that involve risks and uncertainties that
could cause actual results to differ materially.
The Company's shareholder relations message center telephone number is
1-650-620-9731.
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