EXHIBIT INDEX APPEARS ON PAGE U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1998 Commission File Number: 0-17170 TELVUE CORPORATION (Exact name of small business issuer as specified in its charter) DELAWARE 51-0299879 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 16000 Horizon Way, Suite 500 Mt. Laurel, New Jersey 08054 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code:(609) 273-8888 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Number of shares of registrant's common stock outstanding as of May 11, 1998: 23,814,500 shares. Transitional Small Business Disclosure Form: Yes No X ------ ------ This report includes a total of 15 pages. TELVUE CORPORATION INDEX PAGE NO. ----- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets as of March 31, 1998 (unaudited) and as of December 31, 1997 Statements of Operations for the three months ended March 31, 1998 (unaudited) and March 31, 1997 (unaudited) Statements of Cash Flows for the three months ended March 31, 1998 (unaudited) and March 31, 1997 (unaudited) Notes to Financial Statements (unaudited) PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K PART I. Financial Information ITEM I. Financial Statements TELVUE CORPORATION BALANCE SHEETS March 31, December 31, 1998 1997 ------------- ----------- ASSETS (Unaudited) * CURRENT ASSETS Cash and cash equivalents $ 202,206 $ 445,368 Accounts receivable - trade 945,438 922,737 Other receivables 4,703 5,281 Prepaid income taxes 13,000 - Deferred tax asset 403,987 477,987 Other current assets 29,246 10,898 ----------- ----------- TOTAL CURRENT ASSETS 1,598,580 1,862,271 PROPERTY AND EQUIPMENT Machinery and equipment 4,621,001 4,534,168 Less accumulated depreciation 2,856,492 2,639,651 ----------- ----------- 1,764,509 1,894,517 DEFERRED TAXES, net 2,027,450 2,027,450 SECURITY DEPOSITS 9,300 9,300 ----------- ----------- $ 5,399,839 $5,793,538 =========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Notes payable-majority stockholder-current $ 1,800,000 $ 1,800,000 Accounts payable - trade 332,954 422,527 Accounts payable - equipment 50,193 1,324 Accrued expenses 199,722 192,305 Accrued dividends 105,561 - Income taxes payable - 12,000 Deferred trunk credit 132,550 164,200 ----------- ----------- TOTAL CURRENT LIABILITIES 2,620,980 2,592,356 NOTES PAYABLE - MAJORITY STOCKHOLDER 1,969,712 2,519,712 ACCRUED INTEREST - MAJORITY STOCKHOLDER 2,327,925 2,187,721 REDEEMABLE CONVERTIBLE PREFERRED STOCK, $1 par value, 6,900,000 shares authorized, 3,518,694 shares issued and outstanding 3,518,694 3,518,694 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIT Common stock, $.01 par value, 100,000,000 shares authorized, 23,814,500 shares issued and outstanding 238,145 238,145 Additional paid-in capital 1,516,335 1,516,335 Accumulated deficit (6,791,952) (6,779,425) ----------- ----------- (5,037,472) (5,024,945) ----------- ----------- $ 5,399,839 $ 5,793,538 =========== =========== * Derived from audited financial statements. The accompanying unaudited notes are an integral part of these statements. TELVUE CORPORATION STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, ---------------------------- 1998 1997 ---- ---- REVENUES $ 1,601,353 $ 1,542,844 OPERATING EXPENSES Service 754,015 771,324 Selling and marketing 169,781 134,532 General and administrative 160,654 162,245 Depreciation 216,841 197,976 ----------- ----------- 1,301,291 1,266,077 ----------- ----------- OPERATING INCOME 300,062 276,767 OTHER INCOME (EXPENSE) Interest income 7,176 10,409 Interest expense (140,204) (127,904) ----------- ----------- (133,028) (117,495) ----------- ----------- INCOME BEFORE INCOME TAXES 167,034 159,272 (INCOME TAX) INCOME TAX BENEFIT (74,000) 1,070,000 --------- ----------- NET INCOME 93,034 1,229,272 DIVIDENDS ON REDEEMABLE CONVERTIBLE PREFERRED STOCK (105,561) (89,569) ------------ ------------ NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ (12,527) $ 1,139,703 ============ ============ NET INCOME (LOSS) PER COMMON SHARE BASIC ($.00) $.05 ============ ============ DILUTED ($.00) $.02 ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 23,814,500 23,794,500 =========== =========== The accompanying unaudited notes are an integral part of these statements. TELVUE CORPORATION STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, ---------------------------- 1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 93,034 $ 1,229,272 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 216,841 197,976 Deferred taxes 74,000 (1,070,000) Changes in assets and liabilities: Decrease (increase) in - Accounts receivable - trade (22,701) 5,244 Other receivable 578 284,767 Prepaid income taxes (13,000) - Other current assets (18,348) (6,746) Security deposits - (500) Increase (decrease) in - Accounts payable - trade (89,573) 160,855 Accounts payable - equipment 48,869 (79,921) Accrued expenses 7,417 (2,651) Income taxes payable (12,000) - Deferred trunk credit (31,650) (31,650) Accrued interest - majority stockholder 140,204 127,904 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 393,671 814,550 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (86,833) (101,388) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Debt reduction: Notes payable - majority stockholder (550,000) (650,000) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (243,162) 63,162 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 445,368 668,367 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 202,206 $ 731,529 =========== =========== The accompanying unaudited notes are an integral part of these statements. TELVUE CORPORATION NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION: ---------------------- Summary Financial Information and Results of Operations - -------------------------------------------------------- In the opinion of management, the accompanying unaudited financial statements have been prepared in conformance with generally accepted accounting principles and with the regulations of the Securities and Exchange Commission and contain all adjustments (consisting of only normal recurring adjustments) necessary to make the financial statements not misleading and to present fairly the financial condition as of March 31, 1998, the results of operations for the three months ended March 31, 1998 and 1997 and cash flows for the three months ended March 31, 1998 and 1997. Interim Financial Information - ----------------------------- While management believes that the disclosures presented are adequate to prevent misleading information, these unaudited financial statements must be read in conjunction with the audited financial statements and notes included in the Company's Form 10-KSB report for the fiscal year ended December 31, 1997, as filed with the Securities and Exchange Commission. Prior period financial statements have been reclassified to conform with current quarter presentation. 2. SUPPLEMENTAL CASH FLOW INFORMATION: ----------------------------------- Supplemental disclosures of cash paid during the period- 1998 1997 ---- ---- Income taxes $25,000 $ 0 Interest $ 0 $ 0 Non-cash Investing and Financing Transactions - --------------------------------------------- The Company accrued dividends on its redeemable convertible preferred stock of 105,561 and 89,569 during the three months ended March 31, 1998 and 1997, respectively. During the three months ended March 31, 1998 and 1997, no shares of preferred stock were issued in payment of preferred stock dividends. 3. EARNINGS (LOSS) PER COMMON SHARE: -------------------------------- Earnings (loss) per common share amounts are based upon the weighted average number of common and common equivalent shares outstanding during the year. Common equivalent shares are excluded from the computation in periods in which they have an antidilutive effect. In February 1997, the Financial Accounting Standards Board issued SFAS 128 Earnings per Share ("SFAS 128"), which specifies the computation, presentation, and disclosure requirements for earnings per share ("EPS"). It replaces the presentation of primary and fully diluted EPS with basic and diluted EPS. Basic EPS excludes all dilution. It is based upon the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Company has adopted SFAS 128 as of the fourth quarter of 1997 and has restated all previously reported per share amounts to conform to the new presentation. 4. DIVIDENDS ON REDEEMABLE CONVERTIBLE PREFERRED STOCK: ---------------------------------------------------- As of March 31, 1998, undeclared dividends on outstanding preferred stock amounted to $105,561. 5. CORPORATE INCOME TAXES: ----------------------- The Company uses the asset and liability method of accounting for income taxes in accordance with Financial Accounting Standards Board Statement (SFAS) No. 109, "Accounting for Income Taxes". SFAS 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Differences between financial reporting and tax bases arise most frequently from differences in timing of income and expense recognition. Deferred income tax expense is measured by the change in the net deferred income tax asset or liability during the year. The provisions for income tax benefit (expense) consist of the following components: 1998 1997 ----------- ---------- Deferred Federal $ (59,000) $ (60,000) State (15,000) (15,000) ----------- ---------- (74,000) (75,000) Valuation allowance decrease - 1,145,000 ----------- ---------- $ (74,000) $1,070,000 =========== ========== The Company has a net operating loss carryforward of approximately $4,800,000 on a tax reporting basis. The carryforward will begin to expire in 2004, if not utilized. Differences between the effective income tax rate and the statutory federal income tax rate were primarily the result of the change in the valuation allowance. 6. NOTES PAYABLE AND ACCRUED INTEREST - MAJORITY STOCKHOLDER: ---------------------------------------------------------- As of March 31, 1998, the Company had various outstanding notes due to the majority stockholder in the aggregate principal amount of $3,769,712 and accrued interest due on these notes in the aggregate amount of $2,327,925. Effective as of March 31, 1998, the Company obtained from the majority stockholder an extension to January 1, 2000, of his prior agreement not to demand repayment of his loans or the accrued interest on the loans. The Company has decided to voluntarily make, and the majority stockholder has agreed to accept, monthly payments against loan principal in the amount of $150,000 through December 31, 1998. The Company may make monthly principal payments in excess of $150,000 when, in the opinion of management, the Company has excess cash that is not needed to fund operations. The Company made principal payments of $550,000 during the three months ended March 31, 1998. The Company has classified twelve payments of $150,000 each as a current liability on the balance sheet. 7. COMMITMENTS AND CONTINGENCIES ----------------------------- In April 1996, a former employee filed suit against the Company and its majority stockholder, James T. Shelley vs. TelVue Corporation and H.F. Lenfest, with the Superior Court of Burlington County, New Jersey, Civil Action Number 01368-96. The complaint alleges breach of contract, breach of implied covenant of good faith and fair dealing detrimental reliance and unjust enrichment. The suit seeks damages for an unspecified amount for compensation and compensatory damages. Based upon correspondence from Mr. Shelley's attorneys prior to filing the suit, the Company's legal counsel believes that Mr. Shelley is seeking actual damages of approximately $400,000 for commissions, unpaid salary, stock options and other benefits. The Company believes the employee's claims are without merit and continues to vigorously defend the suit brought against the Company. The Company has received notice from a cable operating company customer asserting its right to be indemnified against claims of patent infringement made to the cable operator by a third party. The third party has alleged to the cable operator that portions of the cable operator's pay-per-view operations infringe one or more patents held by such party. No notice of alleged infringement has been received by the Company from such third party. The Company has retained independent patent counsel to review the third party patents and the alleged infringement. The Company is unable at this time to determine if it has liability under the indemnity provisions of the contracts with the cable operator or the amount of such liability if it exists. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION TelVue Corporation (the "Company") is a marketing and service company primarily selling automatic number identification ("ANI") telecommunications services to the cable television industry for the automated ordering of pay-per-view features and events (the "Service"). The Company provides the Service through equipment it purchases. The Company also leases trunk telephone lines from local and long distance telephone companies to connect present cable television subscribers to the Company's National Point of Presence ("National POP") for ordering the Service from their local cable television systems. The Company also leases data circuits from local and long distance telephone companies to link the POPS to the cable systems' billing vendors. The Company had income before income taxes of $167,034 for the quarter ended March 31, 1998, compared $159,272 for the quarter ended March 31, 1997. The Company experienced a decrease in the average monthly buy rate from 24.2% for the quarter ended March 31, 1997 to 19.5% for the quarter ended March 31, 1998. The drop in the buy rate caused the pay-per-view buy revenue to decrease $67,578 for the quarter ended March 31, 1998. This is a result of a cable industry wide drop in pay-per-view buy rates. Although the pay-per- view buy revenue decreased, the Company still had an overall increase in service revenue of $58,509 for the quarter ended March 31, 1998 when compared to the quarter ended March 31, 1997. The growth in service revenue is partially attributable to the Company serving approximately 1,100,000 more full-time cable subscribers during the quarter ended March 31, 1998. The service revenue increase is also a result of an increase in National POP feature revenue of $75,462, as a result of both new and existing customers using more optional features. The Company had an increase in PPV+ revenue of $76,116 for the quarter ended March 31, 1998. The PPV+ revenue increased as a result of offering more promotions and having more new and previously existing customers using the PPV+ Service. The Company had net income of $93,034 for the quarter ended March 31, 1998. Included in net income is income tax of $74,000 for the quarter ended March 31, 1998 compared to an income tax benefit of $1,070,000 for the quarter ended March 31, 1997. The Company's income before income taxes is $167,034 for the quarter ended March 31, 1998. In 1997, the Company reduced its deferred tax asset valuation allowance since the Company believes that it will benefit from the full utilization of its net operating losses. As of December 31, 1997, the valuation allowance was reduced to zero and, as a result, there will be no further reduction of the valuation allowance in 1998 and no further resulting tax benefit. As of March 31, 1998, the Company's net operating loss carryforward is approximately $4,800,000 on a tax reporting basis (see Note 5 to the financial statements). Service expenses for the quarter ended March 31, 1998, decreased $17,309 from the comparable 1997 period. The decrease in service expenses is partially attributable to a decrease in 800 number database expenses of $9,693 as a result of an FCC rate restructuring and a decrease in data link expense of $16,785 primarily as a result of customers consolidating their billing centers. These decreases are partially offset by increases in other service expense categories. As of March 31, 1998, the Company was serving approximately 9,800,000 full-time cable subscribers and 1,300,000 part-time subscribers on the National POP compared to approximately 8,700,000 full-time cable subscribers and 1,600,000 part-time subscribers served as of March 31, 1997. The part- time subscribers did not significantly contribute to the revenue or service expenses for the quarters ended March 31, 1998 and 1997. The Company's operations had required a substantial purchase of equipment by the Company. During the quarter ended March 31, 1998, the Company purchased $86,833 of equipment compared to $101,388 purchased during the quarter ended March 31, 1997. Depreciation accounted for 17% of total operating expenses for the quarter ended March 31, 1998, compared to 16% for the quarter ended March 31, 1997. For the quarter ended March 31, 1998, selling and marketing expenses increased 26% as a result of an increase of approximately $10,000 in advertising expense, $6,000 in promotional expenses, and an increase of approximately $10,000 in travel and entertainment expenses. General and administrative expenses decreased $1,591 during the quarter ended March 31, 1998. The Company's software is "Year 2000 Compliant" for its pay-per-view ANI ordering as well as software used for administrative purposes. As a result, the Company does not anticipate any material effect on its operating results or financial condition arising from Year 2000 compliance issues. Total liabilities decreased $381,172 and total assets decreased $393,699 for the quarter ended March 31, 1998. The decrease in total liabilities was primarily a result of a decrease in notes payable - majority stockholder of $550,000 due to debt repayment. Partially offsetting the debt repayment is an increase in accrued interest of $140,204 on outstanding loans from Mr. H.F. Lenfest, the majority stockholder and Chairman of the Board of Directors of the Company ("Mr. Lenfest"), and an increase in accrued dividends on preferred stock of $105,561. The decrease in assets is attributable to a decrease in cash of $243,162 as a result of debt repayment and a decrease in current deferred tax asset of $74,000 (see above and Note 5 to the financial statements). The Company's days for sales in accounts receivable is 52 days for the quarter ended March 31, 1998, compared to 53 days for the quarter ended March 31, 1997. The Company believes the decrease of 1 day is not material. The Company does not offer incentives/discounts to its customers, nor has it changed its credit terms with its customers. The Company had positive cash flow from operations of $393,671 during the quarter ended March 31, 1998. Ignoring changes in operating assets and liabilities that result from timing issues, and considering only adjustments to reconcile net loss to net cash provided by operating activities, the Company would have positive cash flow from operating activities of $383,875 for the quarter ended March 31, 1998, compared to positive cash flow from operating activities of $357,248 for the quarter ended March 31, 1997. The increase in cash flow for the quarter ended March 31, 1998, is primarily a result of increased revenue and a decrease in service expenses (see above). Since November 2, 1989, the Company has funded its expansion and operating deficit from the $2,500,000 of proceeds from the sale of shares of the Company's Common Stock and Preferred Stock to Mr. Lenfest and from borrowings from Mr. Lenfest. From November 1989 to February 1996, the Company borrowed an aggregate of $6,128,712 from Mr. Lenfest. The interest rates on the loans range from a floating rate based on the prime rate of PNC Bank to a fixed rate of 12% Interest on one of the loans in the principal amount of $1,471,272 as of March 31, 1998, is payable quarterly and, at the option of the Company may be paid by the delivery of shares of the Company's Preferred Stock at the rate of one share of Preferred Stock for each one dollar of accrued interest. Interest due on this loan through December 31, 1997, in the amount of $473,682 has been paid with 473,682 shares of Preferred Stock. In addition, during January 1995, Mr. Lenfest purchased from Science the Company's non-interest bearing note in the amount of $541,000 (the "Prior Science Note"). Effective as of March 31, 1998, the Company obtained from Mr. Lenfest a written agreement stating he will not demand repayment of his loans or the cash payment of accrued interest on the loans through January 1, 2000. The deferring of the interest payments along with the increase in revenue has enabled the Company to accumulate cash. Interest payments would have amounted to $140,204 for the quarter ended March 31, 1998, compared to $127,904 for the quarter ended March 31, 1997. During the fourth quarter of 1997, the Board of Directors of the Company (with Mr. Lenfest not participating) authorized the Company to make monthly principal payments of $150,000 to Mr. Lenfest and, at management's discretion, the Company may make monthly principal payments in excess of $150,000 when the Company has excess cash not needed to fund operations. In addition, the Board also authorized the Company to begin accruing interest on all unpaid interest on all outstanding loans balances due to Mr. Lenfest effective January 1, 1998. Mr. Lenfest has agreed to accept payments of principal through December 31, 1998. During the first quarter of 1998, the Company made principal payments of $550,000 to Mr. Lenfest. The aggregate outstanding loan balances due to Mr. Lenfest as of March 31, 1998 are $3,769,712. The Company believes that increases in accrued interest under the loans from Mr. Lenfest do not have a direct material effect on operations or continued availability of credit. Cash flow from operations is sufficient to fund current operations but is insufficient to fund total debt repayment. The Company believes its suppliers look primarily to the Company's timely payment of outstanding invoices. Historically, the Company has paid all the suppliers it deals with on a timely basis and, therefore, the cash flow from operations has no effect on the Company's availability of credit from key suppliers of goods and services. The payment terms of the Company's equipment and software providers are net 30 days. The Company's ability to fund its operating expenses primarily depends on three factors: the continued expansion of the Company's subscriber base, the cable industry's buy rates, and the continued deferral by Mr. Lenfest of the cash repayment of his loans to the Company. Management believes its present marketing strategies will further increase the customer base, although there can be no assurances that the Company will be able to attract any further customers or that it will retain its current customers. In addition, revenues are affected by the "buy rates" of subscribers connected to the Service. The Company considers the buy rates of its subscribers to be low compared to long term buy rates projected by industry pay-per-view analysts. However, the Company experienced a decrease in the average monthly buy rate from 24.2% for the quarter ended March 31, 1997 to 19.5% for the quarter ended March 31, 1997, as a result of an industry wide drop in buy rates. Hence, there can be no assurance that buys rates will continue to increase or will remain at their current level. The Company remains dependent upon the deferral of principal and interest payments due to Mr. Lenfest to fund operations and capital expenditures from operating cash flow. Mr. Lenfest has agreed not to demand the cash repayment of principal or accrued interest on the outstanding loans through January 1, 2000. Nevertheless, management intends to continue to repay the outstanding principal amount of loans made by Mr. Lenfest from cash not needed for operations. Management believes that the Company will have sufficient funds to continue such repayments and will be able to fund its core business from operating cash flow through December 31, 1998. PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits 3.1 Certificate of Incorporation of the Company (incorporated by reference to the Company's Registration Statement on Form S-8, dated March 30, 1989 (the "Registration Statement")). 3.2 Bylaws of the Company (incorporated by reference to the Company's Registration Statement). 3.3 Certificate of Amendment of Certificate of Incorporation of the Company, dated April 11, 1990 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, (the "1991 Form 10-K")). 3.4 Certificate of Amendment of Certificate of Incorporation of the Company, dated March 15, 1991 (incorporated by reference to the 1991 Form 10-K). 3.5 Form of copy of Amendment of Certificate of Incorporation of the Company, filed September 25, 1995 (incorporated by reference to the Company's Form 10-QSB for the period ended September 30, 1995, (the September 30, 1995 Form 10-QSB)). 4.1 Incentive Stock Option Plan (incorporated by reference to the Company's Registration Statement). 4.2 Form of Stock Option Agreement (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, (the "1989 Form 10-K")). 4.3 Warrant Agreement, dated March 15, 1991, between the Company and H.F. Lenfest (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, (the "1990 Form 10-K")). 4.4 Certificate of Designation of Class A Preferred Stock (incorporated by reference to the June 30, 1990 Form 10-Q). 10.1 Distributorship Agreement, dated November 2, 1989, between the Company and Science (incorporated by reference to the 1989 Form 10-K). 10.2 Stock Purchase Agreement, dated November 2, 1989, between the Company and H.F. Lenfest (incorporated by reference to the Company's Report on Form 8-K, dated November 15, 1989, (the "1989 Form 8-K")). 10.3 Shareholders' Agreement, dated November 2, 1989, among the Company and certain of its stockholders (incorporated by reference to the Company's 1989 Form 8-K). 10.4 Option Agreement, dated November 2, 1989, among the Company and certain of its stockholders (incorporated by reference to the 1989 Form 8-K). 10.5 Form of Credit Agreement between the Company and H.F. Lenfest (incorporated by reference to the 1990 Form 10-K). 10.7 Form of Line of Credit Agreement between the Company and H.F. Lenfest (incorporated by reference to the 1990 Form 10-K). 10.8 Subordinated Promissory Note, dated November 15, 1994 the principal amount of $541,000 payable to Science Dynamics Corporation (incorporated by reference to the 1994 Form 10-KSB). 10.10 Letter Agreement dated November 8, 1990 between Science Dynamics Corporation and H.F. Lenfest (incorporated by reference to the Company's Report on Form 8-K for November 16, 1990). 10.11 Loan Agreement dated December 24, 1991, between the Company and H.F. Lenfest (incorporated by reference to the 1991 Form 10-K). 10.12 Lease Agreement for office space and the First Amendment to Lease dated March 30, 1994, between the Company and Bloom Associates (incorporated by reference to the 1994 Form 10-KSB). 10.13 Letter effective as of March 31, 1998, from H.F. Lenfest, waiving the repayment of loans and accrued interest until January 1, 2000. 11. Statement re: Computation of Per Share Earnings (see the Company's March 31, 1998 Financial Statements included herein). 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. TELVUE CORPORATION Dated: 5/12/98 By: /s/Frank J. Carcione -------------------------------------------- Frank J. Carcione, (Chief Executive Officer) Dated: 5/12/98 By: /s/Irene A. DeZwaan ------------------------------------------- Irene A. DeZwaan, Treasurer (Controller) EXHIBIT INDEX 10.13 Letter effective as of March 31, 1998, from H.F. Lenfest, waiving the repayment of loans and accrued interest until January 1, 2000. As of March 31, 1998 Frank Carcione President TelVue Corporation 16000 Horizon Way, Suite 500 Mt. Laurel, NJ 08054 Dear Frank, At your request, this will continue our prior agreement. Namely, absent any default under the terms of my loans to TelVue or any other obligations of TelVue to any other person, including, without limitation, any voluntary or involuntary bankruptcy or insolvency proceedings by or against TelVue, I agree not to demand repayment of the loans or payment in cash of the accrued interest prior to January 1, 2000. Very truly yours, \s\H F Lenfest -------------------- H.F. (Gerry) Lenfest