AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 26, 1999
________________________________________________________________________________
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): May 26, 1999
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:
Robert S. Townsend, Esq.
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
The Registrant and KPMG LLP have each decided that it is in the best interest
of the Registrant that KPMG LLP, the Registrant's former independent accountants
engaged to audit the Registrant's financial statements, be replaced with an
accountant more suitable to the Registrant's current budgetary needs. This
decision was made for the Registrant by Bruce Bauer, Chief Executive Officer of
the Registrant, and ratified by the Executive Committee of Registrant's Board of
Directors. KPMG LLP's resignation was effective on May 20, 1999. The Registrant
is currently in the process of identifying a successor accountant with the
assistance of KPMG LLP.
As is required by SEC disclosure rules, the Registrant must state any
qualification in KPMG LLP's opinion for either of the last two years. KPMG LLP
did state in its opinion for fiscal years ended December 31, 1998, 1997 and 1996
(included in the Registrant's Annual Report filed with the SEC on March 15, 1999
and filed as Exhibit 1.1 hereto) that certain contingencies described in its
opinion and the uncertainties inherent in the bankruptcy process to which
Registrant was then subject raised substantial doubts about the ability of the
Registrant to continue as a going concern. The following contingencies were
referred to in KPMG LLP's opinion as the basis for its opinion, namely,
Registrant's ability to: (1) formulate an acceptable plan of reorganization that
will be confirmed by the Bankruptcy Court, and be able to fully implement that
plan in compliance with the Settlement Agreement, (2) settle the claims of
unsecured creditors within available cash resources as currently contemplated by
management, (3) develop an appropriate business plan and strategic direction for
the Company's planned future operations after reorganization including
conservation of available capital and working capital as the Company seeks to
further develop and exploit its patent portfolio, (4) confirm the availability
of net operating tax losses after reorganization, and (5) generate adequate
sources of working capital and other liquidity as necessary to meet future
obligations.
Subsequent to the issuance of KPMG LLP's opinion, the contingencies referred
to in KPMG LLP's opinion were resolved as follows: (1) the U.S. Bankruptcy Court
confirmed Registrant's plan of reorganization under Chapter 11 of the Bankruptcy
Act, (2) the Registrant consummated the Settlement Agreement with its senior
secured creditors, as a result of which $38.4 million in principal and accrued
interest of the Registrant's senior secured debt was converted at $5.00 per
share into 7,814,588 shares of Registrant's common stock, clear title to
Registrant's patent portfolio and other assets was returned to the Company, and
the senior secured creditors paid $10.3 million to Registrant, (3) Registrant
began paying allowed claims of unsecured creditors in full and setting aside a
reserve for claims it expects to contest within available cash resources, (4)
Registrant has begun to implement its business plan for developing and
exploiting its patent portfolio, as described in its Annual Report for the year
ended December 31, 1998, and (5) Registrant believes it currently has adequate
working capital to meet its obligations, based on its business plan. Registrant
has not yet taken steps to calculate its available net operating tax losses.
There were no disagreements in the two most recent fiscal years with KPMG LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. The Registrant has authorized KPMG
LLP to respond fully to the inquiries of its successor accountant. There were
no "reportable events" (as defined in Item 304 of regulation S-K) in the
Registrant's two most recent fiscal years.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) 1.1 Opinion of KPMG LLP for the fiscal years ended December 31, 1998,
1997 and 1996
1.2 Letter of KPMG LLP to the Securities and Exchange Commission
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.
Date: May 26, 1999
INTERACTIVE NETWORK, INC.
By: /s/ BRUCE BAUER
----------------------------
Bruce Bauer
President and Chief Executive Officer