<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
                                   FORM 10-K
                             ---------------------

<TABLE>
<C>               <S>
      [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934.
                  FOR THE FISCAL YEAR ENDED JUNE 30, 2000

                                               OR

      [  ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934.
                  FOR THE TRANSITION PERIOD FROM ____________ TO ____________
</TABLE>

                       COMMISSION FILE NUMBER: 000-28151

                                    PNV INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                   <C>
                      DELAWARE                                           65-0612435
          (State or other jurisdiction of                             (I.R.S. employer
           incorporation or organization)                            identification no.)

               11711 N.W. 39TH STREET                                       33065
               CORAL SPRINGS, FLORIDA                                    (Zip code)
      (Address of principal executive offices)

                  Registrant's telephone number, including area code: (954) 745-7800

                   Securities registered pursuant to Section 12(b) of the Act: NONE

      Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $0.001 PAR VALUE
</TABLE>

     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 [ ]

     Indicate by check mark if the disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ ]

     As of September 22, 2000, the aggregate market value of the voting stock
held by non-affiliates of the registrant was approximately $12,226,838 based
upon the closing sales price of the Common Stock as reported on the Nasdaq
National Market on such date. Shares of Common Stock held by officers, directors
and holders of more than ten percent of the outstanding Common Stock have been
excluded from this calculation because such persons may be deemed to be
affiliates. The determination of affiliate status is not necessarily a
conclusive determination for other purposes.

     On September 22, 2000, the registrant had outstanding 15,997,356 shares of
Common Stock.

                         DOCUMENTS INCORPORATED BY REFERENCE

     The registrant has incorporated by reference into Part III of this Form
10-K portions of its Proxy Statement to be furnished to its stockholders in
connection with its 2000 annual meeting of stockholders scheduled to be held on
November 15, 2000.

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<PAGE>   2

                                    PNV INC.

                                   FORM 10-K
                        FISCAL YEAR ENDED JUNE 30, 2000

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
                                   PART I
ITEM 1.   Business....................................................    1
ITEM 2.   Properties..................................................   30
ITEM 3.   Legal Proceedings...........................................   30
ITEM 4.   Submission of Matters to a Vote of Security Holders.........   31

                                  PART II
ITEM 5.   Market for the Registrant's Common Equity and Related
          Stockholder Matters.........................................   33
ITEM 6.   Selected Financial Data.....................................   34
ITEM 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................   36
ITEM 7A   Quantitative and Qualitative Disclosure about Market Risk...   45
ITEM 8.   Financial Statements and Supplementary Data.................   46
ITEM 9.   Changes In and Disagreements with Accountants on Accounting
          and Financial Disclosure....................................   46

                                  PART III
ITEM 10.  Directors and Executive Officers of the Registrant..........   47
ITEM 11.  Executive Compensation......................................   47
ITEM 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   47
ITEM 13.  Certain Relationships and Related Transactions..............   47

                                  PART IV
ITEM 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K.........................................................   48
</TABLE>

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                                     PART I

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

This report contains forward-looking statements that involve risks and
uncertainties. These statements relate to our future plans, objectives,
expectations and intentions, and the assumptions underlying or relating to any
of these statements. These statements may be identified by the use of words such
as "expect," "anticipate," "estimate," "believe," "intend" and "plan." Our
actual results may differ materially from those discussed in these statements.
Factors that could contribute to such differences include those discussed in
"Risk Factors" and elsewhere in this report.

Although we believe that the expectations reflected in our forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity or performance of achievements. Neither we nor any other person assumes
responsibility for the accuracy and completeness of these statements. We assume
no duty to update any of the forward-looking statements after the date of this
report or to conform these statements to actual results.

ITEM 1. BUSINESS

GENERAL

We are the leading provider of bundled telecommunications, cable television and
Internet access services to truck drivers in the privacy and convenience of
their truck cabs. We also offer telecommunications and Internet access services
to other participants in the trucking community. In addition, through our
trucking industry-focused portal website, we provide online content, services
and applications. Our current customers include drivers, long-haul trucking
fleets, truckstop operators, and trucking industry suppliers and manufacturers.
As of June 30, 2000, we had deployed our private integrated network at 288
truckstops in 43 states through which we offer telecommunications, cable
television and Internet access services to fleets and truck drivers in the
privacy of the truck cab. We also offer comprehensive telecommunications
services to truckstop operators for the public areas inside the truckstop and,
as of June 30, 2000, one or more of these services were available at an
additional 109 truckstops, for a total of 397 truckstops at which we have a
presence.

Based on our current business plan and cash flow projections for our fiscal year
ending June 30, 2001, we anticipate that our available cash resources may not be
sufficient to meet our working capital and capital expenditure requirements for
this period. We are currently working with a consulting firm to develop
strategies for increasing users and subscribers of our services, increasing
revenues, obtaining additional funding and reducing expenses through several
initiatives, together with the development of a comprehensive five-year business
and capital requirements plan. It is likely that our five-year business plan
will result in changes to our operations and business model, the timing and
magnitude of which are currently uncertain.

INDUSTRY BACKGROUND

Trucking Industry.  The trucking industry consists of originating shippers,
end-point receivers, freight haulers, equipment suppliers, truckstop operators,
individual drivers and an extended network of service providers. According to
the American Trucking Association, the estimated truck freight revenue in the
United States for 1997 was $371 billion. According to industry data, the
trucking industry has experienced an increase in intercity ton-miles every year
from 1987 through 1997 and a compound annual average growth rate of
approximately 4.7% over this 10-year period.

Industry data and a survey of approximately 800 truck drivers conducted for us
in December 1998 by a third party research firm indicate that the long-haul
trucking industry is telecommunications intensive. Based on this information, we
believe that long-haul drivers spend over $2.0 billion annually on long distance
services while on the road, excluding data, Internet access and messaging.

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Our target customers are drivers, long-haul trucking fleets, truckstop
operators, advertisers and trucking industry suppliers, as well as other
trucking industry participants.

Drivers.  Based on independent market research commissioned by us in September
1999, we estimate there are between 800,000 to 1,200,000 drivers in the United
States who regularly sleep in their cabs. This September 1999 research and the
December 1998 survey indicate that long-haul truck drivers spend an average of
between 19 and 23 days a month on the road. Industry data indicates that truck
drivers earn an average of approximately $30,000 to $50,000 per year. According
to the December 1998 survey, approximately 21% of long-haul truck drivers have
personal computers in their cab and approximately 30% of long-haul truck drivers
can access the Internet from home. A significant portion of the time a long-haul
truck driver spends on the road is spent at truckstops since:

 - federal regulations prescribe minimum periods that a driver must be off-duty
   during any one day;

 - there frequently are restrictions on the roads and streets on which a
   long-haul truck can travel;

 - many truckstops have fueling agreements with fleet trucking companies that
   require refueling at certain specified truckstops; and

 - many full service truckstops provide a variety of services to long-haul truck
   drivers, including showers, pay telephones, television rooms and stalls for
   parking trucks.

While on the road, drivers need access to telecommunications and entertainment
services. Long-haul drivers must stay in regular contact with customers and
fleet dispatchers to coordinate load pickup, delivery, and routes. Truck drivers
also use telephones for personal communications purposes to stay in touch with
family and friends. Drivers' options for entertainment while on the road are
generally limited to community television and video game rooms at truckstops.
These facilities are typically crowded, afford drivers little programming choice
or privacy, and are uncomfortable. Drivers can purchase satellite television
systems for their cabs, but these systems are still somewhat cumbersome to
install and have higher up front costs and monthly subscription fees than the
PNV cable television offering. We currently have a service offering under
consideration to provide satellite television service in-cab away from the
truckstop and at home.

Truckstop Operators.  According to industry data from 1997, there are
approximately 2,000 truckstops in the United States along the interstate highway
system, of which approximately 1,100 are full-service truckstops that provide
more than just fuel. A large number of truckstops are affiliated with or owned
by chains that maintain centralized control over operations. Full service
truckstops, generally located on major interstate highways, offer a wide range
of services for drivers and fleets including fueling facilities, certified
scales, repair facilities, restaurants, community television and game rooms,
public telephones and showers. These truckstops are the primary location at
which long-haul truck drivers stop to fuel, eat, shower, and park for their rest
periods, overnight stays and layovers. This is due to the range of services that
these truckstops offer, their location and the obvious limitations that a large
truck has in stopping at other venues, including regular gas stations, fast food
restaurants, malls and motels. Therefore, truckstops are the primary location at
which drivers conduct business with fleets and customers, communicate with
family and friends, and seek entertainment. Truckstop operators traditionally
have had to utilize multiple vendors and solutions to address their
telecommunication needs inside the truckstop.

Long-Haul Trucking Fleets.  We believe there are over 750 trucking fleets in our
target market. Fleets must manage uniquely complex information and logistics
issues. In this industry, practically all of a fleet's assets are moving and
destinations are not consistent or, in some cases, even known until the load is
assigned. Fuel taxes must be filed quarterly, by state, for every mile driven in
that state and reconciled with taxes paid at the pump in each state by each
truck. Fleets and drivers must have logbooks updated, cargoes permitted,
manifests maintained, deliveries verified and billing initiated. Fleets have to
manage payroll for a mobile work force and that work force has to access funds
while on the road. This complexity, coupled with the relative lack of in-house
information management resources at the trucking companies, their suppliers and
customers, creates a tremendous opportunity to deliver information, data and
transaction-based services to all participants in this industry. An additional
significant issue facing the
                                        2
<PAGE>   5

long-haul trucking industry is driver turnover. It is estimated that many fleet
trucking companies attempt to reduce costs of $3,000 to $5,000 per driver
associated with annual driver turnover approximating 100% and to mitigate this
driver turnover by seeking ways to improve the quality of life for long-haul
truck drivers on the road.

Trucking Industry Suppliers and Other Participants.  The trucking industry is
served by a wide array of suppliers ranging from large truck manufacturers and
small accessory providers to financial service providers and load brokers. We do
not believe there is currently any comprehensive effective way for drivers,
long-haul trucking fleets, truckstop operators and trucking industry suppliers,
as well as other industry participants, to exchange information and conduct
transactions. For example, drivers looking for information on available loads
and destinations rely primarily on systems that provide information via text
scrolling at public video monitors in truck stops. The information is not
categorized and is not searchable. Some truck manufacturers install on-board
computers that capture significant engine performance information, but still
lack the means for regular or efficient access to this data. We believe that,
increasingly, the Internet will develop into a data communications, commerce and
advertising pipeline for industry suppliers.

PRODUCTS AND SERVICES

We currently offer:

 - in-cab telecommunications and cable television services;

 - Internet access services, including public Internet Kiosks;

 - online content, services and applications on our trucking industry-focused
   portal website;

 - comprehensive telecommunications services including prepaid calling cards and
   public payphones to truckstop operators; and

 - advertising opportunities for industry suppliers and others.

Telecommunications and Cable Television Services.  We provide local and long
distance telephone services and cable television to truck drivers in the privacy
of their cabs. Subscriptions can be purchased from vending machines at
truckstops that dispense cards similar to prepaid phone cards or, in the case of
monthly subscriptions, can be automatically billed to the driver or a credit
card or checking account or automatically deducted from the driver's
compensation if we have a payroll deduction arrangement with the driver's fleet.
Services are sold both individually and in bundled packages. As part of a
subscription, the user obtains a membership card and kit that includes a
telephone, coaxial and telephone cables and an owner's manual for a $20 fee,
which is rebated to the member in the form of future services. A subscriber
accesses our network by plugging the coaxial and telephone cable into a home
plate installed at each parking stall at a truckstop. The subscriber then dials
* and logs on to our network. A computerized voice response prompts the
subscriber to enter the subscriber's membership number. If the subscriber is a
daily or monthly user, the computer prompts the user to enter the subscriber's
daily or monthly card number. If the subscriber is in good standing, service is
activated and the subscriber has access to telephone, cable television and
Internet services.

We market long distance services primarily to individual drivers and fleet
operators. In addition, we recently began marketing local telephone services to
fleets. Users purchase the minutes by charging a credit card, debiting a
checking account, through direct billing or using a "cash card" purchased from
our vending machine at the truckstop. We also have a payment plan that allows
fleet drivers to purchase long distance minutes for personal use through payroll
deductions. The multi-purpose prepaid cash card, the value of which can be
applied to the purchase of any of our services. Beginning in May 2000, all
vending machine cards may be used as a cash card.

The basic cable television service at most truckstops currently features 13
basic channels, including ABC, CBS, NBC, Fox and our Drivers' Entertainment
Network, as well as CNN Headline News, ESPN and The Weather Channel. We also
offer a premium cable service, which currently includes the 13 basic
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channels, plus five premium channels, which currently consist of Showtime,
Showtime Extreme, Showtime 2, TNT and Playboy.

Internet Service Provider and Portal Content, Services and Applications.  We are
an Internet service provider offering Internet access to truck drivers from the
privacy and convenience of their truck cabs or from any other location they
desire. We launched our Internet access service in July 1999 and began charging
a monthly service fee in November 1999. The service allows drivers at our
locations to access the Internet via a local call from their truck cabs. In
October 1999, we launched our portal website and through this we are providing
content, services and applications focused toward the trucking community,
including drivers and their families, industry suppliers and manufacturers,
truckstop operators and trucking fleets.

Our portal services and features include:

 - Email -- a free service to keep drivers better connected with family, friends
   and other professional truck drivers. Also included is a service that allows
   drivers to create and send personalized cards to family and friends called
   PNV Greeting Cards.

 - ProMiles -- we make available the Internet's premier routing, mapping and
   trip planning tool designed specifically for professional truck drivers. Also
   included is a complete state-by-state listing of current diesel fuel prices
   and real-time traffic information, including video images of many state
   highways.

 - Logbook -- an electronic version of a paper-based system to record mileage,
   freight, taxes, tolls, etc., which is required to be tracked by every
   professional long haul truck driver.

 - Chat -- a real-time interactive community focusing on issues common to the
   trucking industry.

 - News and Information -- PNV.com presents a wide range of news and information
   relevant to the lives of trucking professional, including: industry news and
   editorials, weather, national news, sports, editorials on health, and
   enhanced professional wrestling and NASCAR information.

 - PNV Services -- complete listing and information about all the latest PNV
   services. This includes the monthly cable TV listings, location listings for
   all truckstops offering PNV services, and detailed information about pricing
   packages and services available from PNV.

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<PAGE>   7

The following table sets forth certain current pricing and content information
regarding the in-cab telecommunications, entertainment and Internet access
services that we currently sell to individual truck drivers:

<TABLE>
<CAPTION>
     BASIC DAILY         DAILY PREMIUM      BASIC MONTHLY     PREMIUM MONTHLY    INTERNET ACCESS SERVICE
     -----------         -------------      -------------     ---------------    -----------------------
<S>                     <C>                <C>                <C>                <C>
- $5 per 24 Hrs.        - $5 per 24 Hrs.   - $20 per 30       - $30 per 30       - $10 per month for
                                             days               days               members on any
- 13 basic              - 5 premium                                                monthly plan
  channels                channels         - 13 basic         - 13 basic
                                             channels           channels and 5   - $15 per month for
- Telephone access      - Telephone                             premium            members on daily plan
                          access           - 15 minutes         channels
- No long distance                           long distance                       - Unlimited Internet
  minutes               - Must be            included         - 30 minutes         access on network;
                          purchased in                          long distance      800 toll connection
- Can be purchased        conjunction      - Can be             included           for off-network use
  through vending         with basic or      purchased
  machines or cash        monthly            through          - Can be           - Can be purchased
  card                                       vending            purchased          through vending
                        - Can be             machines, cash     through            machines, cash card
                          purchased          card or            vending            or monthly
                          through            monthly            machines, cash     subscription through
                          vending            subscription       card or            checking account,
                          machines or        through            monthly            credit card, payroll
                          cash card          checking           subscription       deduction or home
                                             account,           through            billing
                                             credit card,       checking
                                             payroll            account,
                                             deduction or       credit card,
                                             home billing       payroll
                                                                deduction or
                                                                home billing
</TABLE>

We also offer these in-cab telecommunications, cable television and Internet
access services to fleets and drivers whose fleets have a payroll deduction
arrangement with us. The following table sets forth certain current pricing and
content information regarding these services:

<TABLE>
<CAPTION>
    FLEET FUNDED PROGRAM            DRIVER FUNDED PROGRAM        FLEET/DRIVER FUNDED PROGRAM
    --------------------            ---------------------        ---------------------------
<S>                             <C>                             <C>
- Fleet pays $25 per month      - Driver pays $25 per month     - Fleet pays $5 per month per
  per driver for telephone        via payroll deduction for       driver for telephone
  access; free 800# calls; 60     telephone access; free 800#     access; and free 800#
  minutes of long distance;       calls; and 60 minutes of        calls.
  and premium cable               long distance.
  television.                                                   - Driver can pay $25 per
                                - On network unlimited            month for premium cable
- On network unlimited            Internet access for an          television package and $10
  Internet access for an          additional $10 per month        per month for unlimited
  additional $10 per month        per driver; off- network        Internet access on network;
  per driver; off-network use     use available with long         off-network use available
  available with long             distance toll charges.          with long distance toll
  distance toll charges.                                          charges.
                                                                - For every driver who signs
                                                                  up for cable television
                                                                  and/or Internet access
                                                                  upgrade, fleet receives $5
                                                                  per driver per month
                                                                  rebate.
</TABLE>

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Telecommunication Services to Truckstop Operators.  In March 1999, we
implemented a program to offer a comprehensive telecommunications solution to
truckstop operators. Under this program, we offer truckstop operators prepaid
phone cards, in-stop public phone operations, in-bound and out-bound long
distance, control over dial-around compensation for fleets and in-stop public
Internet access through kiosks. In March 1999, we entered into a four-year
contract with Travel Centers of America, or TA, the largest truckstop operator
in the United States, to provide a total communications solution, including
prepaid phone cards, public phone operations, and public Internet kiosks to
approximately 120 truckstops. We also have a contract with another large
truckstop operator of more than 100 sites to provide public Internet kiosks on
an exclusive basis and prepaid phone cards on a non-exclusive basis. We intend
to continue to offer other truckstop operators our comprehensive
telecommunications services.

Advertising.  We have developed or are developing the following advertising
media specifically designed to allow suppliers to the trucking industry to
efficiently reach individual drivers and others:

 - Trucking Industry-Focused Portal Website -- our trucking industry portal
   website offers advertisers a medium to reach drivers and other industry
   participants. We have a strategic alliance with America Online that we
   believe will increase our opportunity to reach the broader Internet audience
   and may attract new advertising revenues. In addition to web banner
   advertising, we offer strategic sponsorships for specific services and
   content areas.

 - Public Internet Kiosks -- 225 deployed at a number of truckstop locations as
   of June 30, 2000, which offer in-stop advertising opportunities.

 - Connect! -- our monthly entertainment programming guide and lifestyle
   magazine. We currently distribute 120,000 copies of Connect! monthly at
   truckstop locations around the country free of charge.

 - Drivers' Entertainment Network  -- our cable television channel. Drivers'
   Entertainment Network currently features country music programming on a
   two-hour video loop on which we offer advertising spots.

PLANNED SERVICES AND PRODUCTS

We believe that the Internet will become the dominant platform for information
exchange and delivery as well as the primary medium for transactions in the
trucking industry. We believe the continued development of our trucking
industry-focused portal website will allow us to deliver various customized
information, driver and fleet tools, commerce and advertising services and
solutions to the trucking industry. We have recently introduced or plan to
introduce during the remainder of 2000 the following offerings:

 - PNV Personal Banker -- The first online banking service targeted at
   professional drivers that enables members to conduct all of their banking
   business online, including bill payment and fund transfers. The banking
   service, developed in conjunction with National Interbank, includes
   high-interest savings accounts and low-cost checking accounts. With the
   banking service, truckers can purchase goods and services online, on the road
   and at home with their PNV co-branded credit and debit cards.

 - PNV JobFinder -- An online driver recruitment and retention tool designed to
   match professional drivers with trucking company fleets efficiently,
   conveniently and cost effectively. The JobFinder service was designed to
   deliver qualified drivers to fleets based on a list of criteria. Driver
   profiles are securely maintained and only delivered to fleets which they have
   pre-approved.

 - PNV Fleet Administration -- An administration, monitoring and business tool
   designed specifically for participating trucking fleet managers. This tool
   will allow the fleet manager to monitor and update their drivers' accounts,
   see if their drivers are connected to our network, and then contact them
   directly, through several communications methods, including email.

 - PNV Truckshop -- An online marketplace for professional truck drivers.

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 - PNV Classifieds -- A trucking classified database designed to offer
   professional truck drivers and other industry participants access to
   information on new and used trucks, trailers, parts and accessories.

We plan to further expand our trucking industry-focused portal website. We
expect the key features and applications to include the following: enhanced
"door-to-door" trip planning, real-time traffic information, enroute fuel
pricing information, load posting and matching, online education, comprehensive
industry wage data and statistics, shipper and broker ratings and credit
reports, games and business-to-business and business-to-consumer electronic
commerce.

SALES, MARKETING AND CUSTOMER SERVICE

We offer our services to each of our customer groups through a combination of
our direct sales force, consisting of 97 full-time employees as of June 30,
2000, fleet sales force, retail distribution channels and telemarketing. We
support our sales activities with advertising in industry publications, our
website, our public Internet access kiosks, in-stop merchandising and point of
sale materials, special promotions and other activities. We have also developed
a comprehensive customer support program.

Individual Drivers.  We offer our services to individual drivers through a
combination of direct and indirect sales and marketing channels at each
truckstop at which we provide our service. We have installed vending machines at
all of the truckstops at which we have deployed our network. Drivers can
purchase monthly and daily subscriptions from these machines. To support our
vending machines, we deploy point of sale brochures, banners and other displays
throughout the truckstop. We also advertise in our own Connect! magazine, as
well as our Drivers' Entertainment Network and our voice response system. From
time to time we engage in special promotions and events in coordination with
truckstop operators. We employ a field sales force that regularly visits our
truckstop locations to ensure that our materials are displayed and merchandised.
We currently maintain sales personnel at 60 to 90 of our largest truckstop
locations to speak with drivers and offer them monthly subscription plans. The
field sales force also supports subscription drives at fleet terminals. When a
fleet agrees to allow payroll deduction for our services, members of the field
sales force spend several days at the fleet terminal setting up displays and
meeting with drivers. We also have an in-house customer service and
telemarketing group that sells subscriptions to users who call us at the numbers
provided on brochures and other advertising materials. In addition, we will be
conducting on-going cross-selling promotions, which will be utilized to promote
our ISP and our portal's services and features. These promotions will be
supported by marketing, print, online and point-of-purchase campaigns.

Truckstop Operators.  We market our services to truckstop operators through
relationship account managers. Our marketing efforts with the truckstop
operators fall into two broad categories. First, we attempt to gain access to
the truckstop parking lot to install our network to provide in-cab telephone,
cable television and Internet access services for the drivers and fleets. Since
we already have contracts with many of the largest truckstops, we now focus most
of these efforts on account and relationship management. We have entered into
agreements with certain large truckstop chains that provide such truckstops with
incentives to market our products and services.

We also market our comprehensive telecommunications solution to the truckstop
operator. For the larger truckstop operators, we use our existing relationships
to gain access to their top-level executives. Our top management is very
involved in developing comprehensive telecommunications agreements with
truckstop partners. We supplement our direct sales efforts with advertising in
trade publications and participation in industry trade shows.

Fleets.  Our fleet sales force markets our telecommunications, cable television
and Internet access services to fleets. Our fleet sales force targets fleets
with 100 or more trucks. Our fleet sales force emphasizes long-term partnerships
and the fact that we have developed our network to meet the needs of the fleet.
Specifically, we focus on the retention improvements that our network can
deliver by enhancing drivers' lifestyle with telecommunications, cable
television and Internet access services, as well as in-bound telephone access.
As we continue to enhance our portal website, the availability and benefits of
driver and fleet business applications will become an important part of our
marketing effort to the fleets. The efforts
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<PAGE>   10

of our fleet sales force are supported through periodic advertising in trade
journals targeted at fleet management, direct mail campaigns and attendance at
key industry tradeshows and events.

Our research indicates that there are a large number of fleet trucking companies
with less than 100 trucks. This segment represents a substantial but highly
fragmented sector of the fleet market. We primarily communicate with these fleet
owners with telemarketing, advertising and direct mail and expect to also market
to them through the Internet.

We have established a program with TA pursuant to which we jointly market our
products and services to large fleets.

Industry Suppliers.  The primary service currently targeted at trucking industry
suppliers and other participants is advertising media. We market our advertising
media through a direct sales force that calls on potential advertisers and their
advertising agencies. We also are offering our advertising services as a part of
a broader strategic relationship with industry suppliers, including PACCAR. To
sell these services, we utilize advertising campaigns in industry publications
and participate in trade shows.

Marketing of Internet Services and Solutions.  Our trucking industry portal
website, www.pnv.com, and our Internet access service are supported via a
comprehensive multi-media marketing campaign, which includes print advertising,
online advertising, direct marketing, collateral materials at truckstops and
advertising on the Driver's Entertainment Network. We also support these
services with a traveling classroom with seven Internet learning stations, that
we refer to as our Technology Tour Roadshow, which we use to teach truck drivers
how to use computers and the Internet to improve their daily work efficiency and
lifestyle. We market our portal as the electronic gathering place where industry
players can obtain information, communicate and transact business. We
continually tailor aspects of the campaign to each market and emphasize the
features applicable to that market via direct marketing, print, cable
television, intercept programs, extensive point-of-purchase and online
advertising. We will continue to develop and support unique marketing
initiatives, which generate exposure and drive usage, such as the PNV Miles
Rewards Program in which users who visit PNV.com can click on site links and
earn PNV Miles which qualify them for the $1,000 cash weekly drawings as well as
a chance to win a fully loaded Class 8 truck. We also continue to place
advertising in our Connect! Magazine, as well as on our Drivers' Entertainment
Network, our voice response system and to use significant point of sale
placements in truck stops to support the portal and the ISP. In addition, we are
conducting special events and promotions at the truckstops.

Customer Service.  To retain customers, encourage more usage and promote the
purchase of additional services, we have developed a comprehensive customer
support program. To gauge customer satisfaction and to identify potential new
services, we regularly conduct customer satisfaction and market research; either
through interviews at the truckstops or through telephone surveys. We have used
independent third party research firms to conduct more comprehensive studies
while our staff performs smaller scale surveys. These surveys have consistently
shown a high degree of satisfaction, among the users of our services.

Another key component of our retention and promotion efforts is the in-house
customer service team. This group is comprised of representatives that staff our
customer service center 24 hours per day, with prime-time call periods staffed
at higher levels than other periods. This group is trained to handle all
inquiries from customers including basic technical issues with a smaller subset
of the group also trained in telemarketing. Among the programs that the customer
service team supports is a "welcome call" program whereby new customers are
automatically forwarded to a representative on their first or second activation
to insure that the user understands service features and functionality and to
gather basic information on the customer which can be used for future marketing.

NETWORK BUILDOUT; TRUCKSTOP RELATIONSHIPS AND CONTRACTS

As of June 30, 2000, our private integrated network has been installed at 288
truckstops in 43 states with installations at 67 sites during the twelve months
ending June 30, 2000. In addition, as of June 30, 2000, one or more of the
telecommunications services that we offer truckstop operators for the public
areas

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inside the truckstop were available at an additional 109 truckstops. We intend
to slow the buildout of our network significantly during our fiscal year ending
June 30, 2001 to conserve our available cash.

We have contracted with truckstop chains, independent truckstop owners and
associations of truckstop owners to provide our services over our network. As of
June 30, 2000, we have long-term contracts with the operators of almost 500
truckstops to install our network. These operators include three of the four
largest full-service truckstop chains in the United States, TA, Petro Stopping
Centers, Inc., and Pilot Corporation. In May, we entered into an agreement with
Williams TravelCenters, a leading truckstop operator, to offer our services over
our network. We also have entered into contracts with the three largest
associations representing more than 300 additional independent truckstops that
have agreed to permit us to offer our services to their members. The truckstops
represented by associations generally consist of smaller truckstop chains
generally having less than 10 truckstops. These associations act as purchasing
agents for their members. We have entered into contracts with these associations
in order to gain access to and establish a relationship with numerous
independently-owned truckstops. These associations do not have authority to
legally bind their members. Therefore, while each association has granted us the
right to provide cable television and telephone services to its members, this
contractual provision is not binding on each member. Prior to installing our
network at an association member's truckstop, we enter into a contract with the
association member granting us the right to install our network at the member's
truckstops.

While most independent truckstop owners who own a single truckstop execute a
standard contract, the contracts executed by truckstop chains that operate
multiple truckstops vary significantly. We offer a standard contract to the
truckstop owners and associations generally consisting of a term ranging from
five to ten years with an automatic five year renewal. Pursuant to the terms of
the standard contract, generally we are granted the right to provide
telecommunications and cable television services to all of the owners'
truckstops for a mutually agreed upon period of time which, if we achieve our
contractual buildout milestones, generally extends for 10 years. We generally
pay commissions to truckstop owners/operators based upon a percentage of our
revenues which, depending on the particular product, has ranged between 10% and
50%, less specified costs on a negotiated basis. We have entered into a contract
with one major truckstop chain that requires us to pay the operator a base
amount for each of the operator's truckstops at which our network is installed
and additional amounts upon meeting certain incentive sales criteria.

We believe that the average truckstop represents a substantial capital
investment for the truckstop operator. Despite the amount of capital invested in
the parking lot, the typical truckstop does not generate any revenue from that
asset, except for a limited number of truckstops which charge for parking. At
the same time, margins on fuel have been under pressure, forcing truckstop
operators to differentiate their truckstops from their competitors and find
other sources of revenue. We believe that our network offers truckstops:

 - an amenity for long-haul truck driver customers;

 - a means for competitive differentiation; and

 - the ability to generate incremental revenue through the revenue and
   profit-sharing provisions of the contracts.

NETWORK AND TECHNOLOGY

  Our Design

The current architecture of our network consists of a PC-based PBX at each
truckstop connected to the host server. The PC-based PBX controls and manages
all interaction with the subscriber, including telephone communications, cable
television activation, Internet access and communications with the host server.
The current architecture of the various components of our network and related
services are described below. In the future, we may modify the configuration of
our network architecture for deployment at smaller truckstop locations. In
addition, we currently have a broadband wireless technology

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in beta testing with respect to telecommunications services offered at
truckstops at which our private integrated network is deployed.

In March 2000, we were awarded certification as a Cisco Powered Network
provider, a designation for network service providers delivering
telecommunications and data services built on Cisco Systems components. Only
about 300 companies worldwide have been awarded this certification.

  Components and Related Items Located at our Headquarters

Host Server.  The host server maintains control of all membership information
and determines individual membership privileges. The PC-based PBX located at the
truckstop communicates via frame relay to the host server each time a member
attempts to log-on to or log-off of our network. The membership number is
checked in the database and specific information about the user, including their
membership expiration date, number of long distance minutes available and voice
mail messages, is downloaded to the site server for subsequent interaction with
and access by the user. We have multiple server redundancy capable of performing
all critical host server functions.

Software.  We developed our software in-house and this software performs
numerous functions including:

 - subscriber log-on entry;

 - subscriber log-on host server validation;

 - membership information maintenance, including membership cards and renewal
   card tracking;

 - log on information communicated to subscribers including expiration date,
   stall number and call back number;

 - wake-up call notification;

 - cable television system control including activation of basic and premium
   channels;

 - outbound call control and tracking;

 - least cost call routing;

 - prepaid long distance call control and tracking including account balance
   maintenance;

 - extension to extension call control and tracking;

 - call detail record storage and reporting;

 - inbound call control and tracking;

 - subscriber location tracking and voice mail services;

 - subscriber voice messaging with broadcast capability; and

 - stall maintenance tracking.

Billable Long Distance Call Management.  We have the advantage of having an
intelligent PC-based PBX switch controlling each call at the place of
origination and can thereby reduce our cost per call. Prepaid calling card
vendors require the user to dial an 800 number, enter their card and access
numbers and then dial the number they wish to dial. Therefore, they are actually
making two calls each time. An inbound call to the calling switch and then an
outbound call from the calling switch to the applicable number. All completed
calls have double costs associated with them. If any calls are busy or not
answered, the calling card company must absorb the costs of the inbound call.

The long distance services that we offer have the equivalent of a prepaid
calling card switch at each site. All call management functions including adding
new minutes, deducting minutes for each call and terminating a call when all
minutes have been used are performed by PC-based PBX. Since call management is
performed locally at each site, the user can simply make long distance calls by
dialing 9,1 + number. The call is originated from the truckstop directly to the
applicable number as a single call.
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Therefore, if there is no answer or the line is busy, the user is not billed and
we do not incur the cost of an incoming call. This feature reduces our cost per
call as compared to typical prepaid phone card vendors.

  Components and Related Items Located at Truckstops

PC-Based PBX.  The PC-based PBX is both the controlling computer and intelligent
PBX. Each telephone extension and outside telephone line is connected and
controlled by the PC-based PBX. The hardware architecture utilizes off-the-shelf
components. Our software controls all aspects of user interaction. Unlike a
standard PBX, once a user picks up their telephone, all interaction with the
user is controlled by our software. Also, unlike a standard PBX system with
computer interfaces, our network is programmable, allowing for upgradability and
flexibility as new capabilities are needed or made available in the future.

Dedicated T-1 Access at Truckstop.  We have installed a T-1 line at each
truckstop in order to obtain additional telecommunications capacity. Each T-1
line offers 24 channels of long distance voice or data capability at a fixed
cost. All 24 channels can be designated as voice channels for a flat monthly fee
or can be designated for data at an additional cost. The ability to designate
between voice or data channels allows flexibility as requirements change. Use of
T-1 lines allows us to bypass the local exchange carrier and associated LEC
access charges and obtain favorable pricing from long distance carriers,
creating a private network.

Frame Relay Network.  We connect each truckstop via frame relay in a hub and
spoke configuration and can increase the bandwidth to each truckstop as traffic
warrants. The frame relay network protocol is Transmit Control Protocol/Internet
Protocol. This speeds up user access to the system and greatly increases system
flexibility. Additionally, we also perform site system monitoring and remote
access over the frame network, greatly enhancing site manageability.

Telephone Wiring.  The telephone jack in each home plate in the truckstop
parking lot connects by twisted pair wiring to a pedestal box in the parking lot
that in turn is connected to the PC-based PBX inside the truckstop. Public pay
phones have been installed at certain truckstops that are connected to our
network. The PC-based PBX is connected to the public network through T-1 lines.
Each truckstop also has local telephone lines which are used to connect all
local calls.

Cable Television Headend and Wiring.  The cable headend system is comprised of a
DBS satellite dish connected to an individual receiver. Other conventional
methods of Off-Air antennas and C-Band technologies are also used in supplying
channels to the user. An encrypted control unit is used to control Pay-Per-View
access. The television plug-in terminal in each home plate is connected through
a single coaxial cable to the pedestal box. The pedestal box is connected
through a single coaxial cable to the cable headend system inside the truckstop.

Internet Access.  We have equipped each truckstop with a modem bank for locally
connecting Internet access calls from the truck cab. This gives us the ability
to offer Internet access at all truckstops. Since connections between the member
and the on site modems are over our private network, no local telephone lines
are used. The user only ties up bandwidth on the frame network when active. Idle
users have no effect on the frame network bandwidth.

Voice Over IP.  We have equipped each site additionally with a voice
compression/decompression capability allowing the transfer of point-to-point
voice calls over the frame relay network. We use industry standard voice
compression allowing near toll quality voice to travel over the network. We use
this system for calls between truckstops and our offices. Subscriber service
calls are transferred over the network and calls to drivers from the voice
mail/driver locator system are routed directly to the driver's telephone rather
than requiring the user to hang up and dial the callback number. There is no
variable cost associated with this type of call. If network bandwidth is
unavailable at the time, including during peak hours, the call can be routed as
a voice call over the T-1. This allows us the ability to build network capacity
based on normal usage patterns instead of adding redundant capacity to handle
peak usage.

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<PAGE>   14

  Fleet Telecommunications Opportunities

By installing a router and PC-based PBX, fleets can connect to our network
allowing direct connections to their drivers when they are connected to our
network.

  Truckstop Headquarters Telecommunications Opportunities

Large truckstop chains can install a router and PC-based PBX, thereby connecting
to our network allowing voice and data communications among their truckstop
locations.

COMPETITION

Overview.  The market to provide telecommunications, cable television and
Internet access and other services to the trucking industry is highly
competitive and fragmented and is affected by the constant introduction of new
products and services by industry participants. Competition is based upon
pricing, the accessibility of services, and the perceived quality and
reliability of the telecommunications, cable television and Internet access and
other services. Our competition includes various providers and carriers of
telecommunications, cable television and Internet access and other services,
many of which are substantially larger than us and which have greater financial,
technical, personnel and marketing resources than we have.

Our ability to compete effectively in the market to provide telecommunications,
cable television and Internet access services to the trucking industry will
depend upon our continued ability to:

 - provide our services at prices competitive with, or lower than, those charged
   by our competitors;

 - establish and maintain our strong relationships in the trucking industry;

 - enhance the brand recognition of our network and our services;

 - provide a broad suite of services which can be bundled to meet the needs of
   the customer at competitive prices; and

 - enter into long-term contracts with truckstop owners and operators to become
   their total communications solution.

Because we provide bundled telecommunications, cable television and Internet
access services, we face competition, with respect to one or more of these
services, from a number of sources.

Telecommunications.  We compete with a large number of providers of
telecommunications services, including public phones, cellular and other
wireless telephones, long distance service providers, calling cards, prepaid
phone cards, collect calls and toll-free numbers. Many of our competitors have
significantly larger capitalization and resources than us, which allow these
companies to achieve economies of scale and lower costs of funds employed. If
any of our competitors were to devote additional resources to the provision of
telecommunications services to our target customer base, there could be a
material adverse effect on our business and the price of our common stock.

In addition, the continuing trend toward consolidation of telecommunications
companies and the formation of strategic alliances within the telecommunications
industry is giving rise to significant new competitors. Many of these combined
entities have, or will have, resources far greater than us. These combined
entities may, now or in the future, be able to provide bundled packages of
telecommunications products, including local and long distance services and data
services and prepaid services in direct competition with the products offered,
or to be offered by us, and may be capable of offering these products sooner and
at more competitive rates. These types of consolidations and strategic alliances
could put us at a competitive disadvantage.

As a result of the 1996 Telecommunications Act, the RBOCs could compete with us
in the long distance telecommunications industry, both outside of their service
territory and, upon satisfaction of certain conditions, within their service
territory. A number of RBOCs have made initial applications for the

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<PAGE>   15

approvals necessary to enter their "in-region" long distance markets, although
to date, all such applications have been denied on the basis that the RBOC has
not satisfied the list of competitive requirements. However, there have recently
been extensive discussions among the PUCs, the FCC, and RBOCs in order to
develop a definitive understanding of these requirements and the specific
criteria to measure their satisfaction. These discussions may lead to one or
more successful RBOC "in-region" applications in the future. We believe that the
RBOCs expect to offset share losses in their local markets by capturing a
significant percentage of the in-region long distance market, especially in the
residential segment where the RBOCs' strong regional brand names and extensive
advertising campaigns may be very successful. This may have an unfavorable
effect on our business.

We also expect increasing competition from Internet telephony service providers
and others using newer and developing technologies. The use of the Internet to
provide telecommunications services, in particular, is a recent development.
This technology promises to substantially reduce the cost of carrying voice
conversations. Existing competitors are likely to continue to develop new
services that they offer to the trucking industry.

We believe that increasing competition in the telecommunications market will
result in significantly lower prices for long distance services. We may not be
able to reduce our prices sufficiently to compete effectively. Our failure to
increase our long-distance sales on a profitable basis could have a material
adverse effect on our financial condition and results of operations.

Our ability to compete effectively will depend partly upon our ability to
develop additional products and services which appeal to truckstop owners and
operators and drivers, as well as fleets. We believe that drivers currently use
public pay phones located at truckstops for a significant number of the calls
they make. We believe that our ability to offer telephone access at a cost
comparable to public phones with the added convenience and privacy of the truck
cab allows us to compete favorably. Cellular and other wireless service remains
unavailable in some remote truckstop locations and, even when cellular or other
wireless service is available, it historically has been expensive due to the
roaming charges that drivers frequently incur when they are away from home. We
believe that the accessibility of our network and our data transmission
capability allows us to compete effectively with cellular and other wireless
carriers. However, we expect competition from cellular and other wireless
telecommunications providers to be dynamic and increasingly more intense as a
result of the entrance of new competitors and the development of new
technologies, products and services, which may reduce the cost of cellular and
other wireless service by eliminating roaming charges and otherwise reducing
prices. At least one of our competitors, HighwayMaster, resells cellular service
to provide both voice and data communications to truck cabs. Our long distance
services, including our prepaid phone cards, compete with those provided by long
distance calling cards, prepaid phone cards and toll-free numbers, including
AT&T and MCI WorldCom, that drivers use to call fleet headquarters and home. We
may compete with other issuers of prepaid phone cards that may distribute cards
at or below our cost. Our contractual arrangements with third parties relating
to the prepaid phone cards that we offer may make it difficult or impossible for
us to reduce our prices for prepaid long distance minutes to compete effectively
on a profitable basis. Our failure to increase our sales of prepaid phone cards
on a profitable basis could have a material adverse effect on our financial
condition and results of operations. We believe that our dedicated long distance
network will allow us to compete successfully with these providers by providing
long distance services at competitive rates.

Qualcomm's OmniTRACS service, a satellite based system, is used primarily for
mobile vehicle location and two-way text messaging. The OmniTRACS service
addresses the trucking fleets' need for real-time mobile text communication. We
believe that our ability to provide communication capabilities and Internet
access over our network will allow us to compete effectively with the OmniTRACS
service.

Cable Television.  The competition for our cable television offerings currently
consists of alternatives located outside the truck cab and primarily in the
truckstop. Community television and game rooms inside the truckstop are the most
readily available entertainment alternatives for truck drivers. These rooms
offer no privacy and limited choices in programming. We believe that a small
number of professional truck drivers have purchased DBS dishes to receive
television programming in their cabs. Cable, DBS and other

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<PAGE>   16

video service providers could seek to compete by offering cable television
programming to truckstops. We believe that our cable television services in the
comfort and convenience of the truck cab at a competitive price will allow us to
compete effectively against these alternatives.

Internet.  The market for the provision of Internet access, content, transaction
processing and commerce solutions is extremely competitive and highly
fragmented. There are no substantial barriers to entry, and we expect that
competition will continue to intensify. Telecommunications carriers, including
RBOCs, Internet Service Providers, network and system integrators, and online
network service providers each offer Internet access. While we believe that our
network infrastructure, bundled services, and established relationships in the
trucking industry distinguish us from these providers, many of these competitors
have greater financial, technical and marketing resources, larger customer bases
and greater name recognition. We believe that Pay-Net, TIMM Communications and
certain other companies also have installed Internet/e-mail kiosks in
truckstops. Our Internet-based transaction processing services also will compete
with established providers of integrated transaction solutions for fleet
operators and their customers, including Ceridian's Comdata and J.B. Hunt
Logistics. Various websites, including www.etrucker.net, www.trucknet.com,
www.mile.com, www.truckingnet.com, www.truckwebusa.com, www.layover.com,
www.truckstop.com, and www.truckinginfo.com also provide content and commerce
solutions to the trucking community. Several of these websites offer specialized
content directed to the trucking community and those who interact with the
industry, as well as "life style" segments that provide truck drivers with
interactive tools and services that permit them to personalize their on-line
experience, including free e-mail, chat rooms, news, weather and games. These
websites also offer tools and applications to assist the trucking community,
including mileage, recruiting, routing and fuel optimization tools. Other
websites offer targeted electronic commerce solutions, such as load posting and
freight matching services, that are very similar to those that we offer. Many of
these websites, which offer content, tools and applications comparable to those
that we offer, have been in existence prior to our launch and have already
achieved market acceptance and established customer and advertising bases. In
the market for advertising revenue, we compete with other online content
providers and traditional forms of media, including newspapers, magazines, radio
and television. We believe that the principal competitive factors in attracting
advertisers include the amount of traffic on our website, brand recognition, the
demographics of our users, our ability to offer targeted audiences and the
overall cost-effectiveness of the advertising media that we offer.

REGULATORY MATTERS

Telecommunications.  Regulation of the telecommunications industry is changing
rapidly. As a provider of telecommunications services nationwide, we are subject
to varying degrees of regulation in each of the jurisdictions in which we
provide our services. Laws and regulations and the interpretation of such laws
and regulations, differ significantly among the jurisdictions in which we
operate. These laws and regulations are, moreover, subject to change as a result
of ongoing regulatory implementation proceedings, subject to review by courts
and otherwise. There can be no assurance that future regulatory, judicial and
legislative charges will not have a material adverse effect on our company, that
regulators and/or third parties will not raise material issues with regard to
our compliance or non-compliance with applicable regulations, and/or that we
will be in compliance with all such laws and regulations at any one point in
time.

We are subject, in our provision of telecommunications services, to the
provisions of the Communications Act of 1934, as amended by the
Telecommunications Act of 1996, the FCC regulations thereunder, as well as the
applicable laws and regulations of the various states administered by state
PUCs. The recent trend for both federal and state regulation of
telecommunications service providers has been in the direction of reduced
regulation. Although this trend facilitates market entry and competition by
multiple providers, it has also given AT&T, the largest international and
domestic long distance carrier in the United States, increased pricing and
market entry flexibility that has permitted it to compete more effectively with
smaller carriers. In addition, the Telecommunications Act of 1996 has opened the
United States market to increased competition from the RBOCs. We cannot be
certain whether future regulatory, judicial and/or legislative changes will
materially affect our business and the price of our common stock.

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On the federal level, we are considered a non-dominant domestic interstate
carrier subject to minimal regulation by the FCC. We are not required to obtain
FCC authority to provide domestic interstate telecommunications services. In
late 1996, the FCC ruled that interexchange carriers are no longer required to
file their tariffs for domestic interstate interexchange services. In August
1997, the FCC affirmed its decision to end tariff filing requirements for
domestic interstate long distance services provided by non-dominant carriers.
The FCC does require that rates be posted on a carrier's website.

In addition to the general requirement that before providing U.S. international
telecommunications services we obtain authority under Section 214 of the
Communications Act and file a tariff containing the rates, terms and conditions
applicable to such international services, we are also subject in our provision
of such U.S. international services to FCC rules requiring, among other things,
the filing of certain carrier-to-carrier contracts, notifications or approvals
of certain foreign carrier investments, approval for assignments of FCC licenses
and transfers of control of certified carriers, and other international service
regulations. We are also subject to a number of reporting requirements including
requirements to report on our international revenue, traffic flows, and use of
international facilities. We have obtained Section 214 international authority,
and we have filed an international tariff with the FCC. Because we have provided
U.S. international service prior to obtaining such Section 214 authorization, we
are subject to sanctions, including fines, other penalties and/or denial or
revocation of our 214 authority. We do not believe that an enforcement action is
likely, and if such action is taken, we do not believe that any such penalties
or fines would be onerous, or that our authorization would be revoked. There can
be no assurance, however, that this will be the case.

The Telecommunications Act was intended to increase competition in the U.S.
telecommunications markets. Among other things, the Telecommunications Act
contains special provisions that eliminate the restrictions on incumbent local
exchange carriers ("ILECs") such as the RBOCs from providing long distance
service. These provisions permit an RBOC to provide certain long distance
services (including international service) outside of its current home region
immediately upon the receipt of any state and/or federal regulatory approvals
otherwise applicable in the provision of long distance service. The provisions
also permit an RBOC to provide certain long distance services (including
international service) within its home region if it satisfies procedural and
substantive requirements, including showing that facilities-based local
competition is present in its market, that it has entered into interconnection
agreements which satisfy a "14-point" checklist of competitive requirements and
that its entry into this market is in the public interest.

A number of RBOCs have made initial applications for the approvals necessary to
enter their "in-region" long distance markets, although to date, all such
applications have been denied on the basis that the RBOC has not satisfied the
list of competitive requirements. However, there have recently been extensive
discussions among the PUCs, the FCC, and RBOCs in order to develop a definitive
understanding of these requirements and the specific criteria to measure their
satisfaction. These discussions may lead to one or more successful RBOC
"in-region" applications in the future. In particular, Bell Atlantic, which
serves the New York metropolitan and mid-Atlantic regions is considered by
industry observers to be the most likely RBOC to be the first to be permitted to
offer "in-region" long distance services.

The Telecommunications Act also addresses a wide range of other
telecommunications issues that may potentially impact our operations by spurring
additional competition in the telecommunications markets. For example, on August
1, 1996, the FCC adopted a Local Competition Order that required ILECs to allow
new competitors to interconnect to the ILEC network, to allow competitors to
lease portions of the ILEC network and offer, at wholesale rates, retail local
services that competitors may resell. The requirements of the Local Competition
Order have withstood challenges in the courts, for the most part. A 1999 Supreme
Court decision seems likely to promote competition for telecommunications
services generally, but it also required the FCC to conduct additional
proceedings. Consequently, there may be future changes to FCC rules that we
cannot predict and which may have adverse effects on our business.

The FCC has also taken steps to spur competition in the international
telecommunications markets in accordance with certain commitments made by the
U.S. under the World Trade Organization Basic

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Telecommunications Agreement which have already resulted in additional
competitors entering the U.S. telecommunications markets. The World Trade
Organization ("WTO") recently concluded an agreement, known as the WTO Basic
Telecommunications Agreement (the "WTO Agreement"). Under the WTO Agreement, the
U.S. and other members of the WTO committed themselves to, among other things,
opening their telecommunications markets to foreign carriers. The FCC has
adopted streamlined procedures for processing market entry applications from
foreign carriers, making it easier for such carriers to compete in the U.S.

The FCC has also significantly revised the universal service subsidy regime.
Beginning on January 1, 1998, interstate telecommunications carriers and certain
other entities became obligated to make FCC-mandated contributions to universal
service funds based upon end-user revenue. These funds subsidize, among other
things, the provision of telecommunications services in certain high cost areas
and to low-income customers. All telecommunications carriers providing
interstate telecommunications services, including us, must contribute to the
universal service support fund. These contributions became due beginning in 1998
for all providers of interstate telecommunications services. Such contributions
are assessed as a percentage of end user telecommunications revenues and are
based on the amount of a carrier's interstate and international revenues. Since
January 1998, this percentage has been in the range of 4 to 5%. Contribution
factors vary quarterly and carriers are billed monthly. On July 30, 1999, the
United States Court of Appeals for the Fifth Circuit released a decision
reviewing the FCC's Universal Service Order. Among other things, the Fifth
Circuit found that the FCC does not have authority to include intrastate
revenues in the calculation of universal service contributions and reversed and
remanded for further reconsideration the FCC's decision to include international
revenues in the contribution base. On September 9, 1999, the FCC filed a motion
for stay of the Fifth Circuit's mandate and, in that motion, reportedly stated
an intent to file a petition for rehearings of the July 30, 1999 opinion. Until
this and certain other proceedings are completed, there can be no assurance as
to how the FCC's USF response will ultimately be implemented or enforced or what
effect it will have on competition within the telecommunications industry or
specifically on our competitive position.

Interstate and international telecommunications carriers are also subject to
access charges imposed by local exchange carriers ("LEC's") for origination and
termination of calls over local telephone lines. Telephone companies' costs of
providing long distance services are greatly affected by the access charges. The
FCC has significantly revised its access charge rules in recent years to permit
LEC's greater pricing flexibility and relaxed regulation of switched and special
access services in those markets where there are other providers of access
services. The most recent pricing flexibility rules, which were adopted August
5, 1999, have not yet been released. These rules would, among other things,
grant certain LECs the ability to file access tariffs on a streamlined basis
with no cost support and to provide volume and term discounts after certain
competitive triggers have been met. The FCC continues to adjust its access
charge rules, and we cannot predict future rates.

The Telecommunications Act also requires interexchange carriers to compensate
payphone owners when a payphone is used to originate a coinless telephone call.
This rate is currently set at $0.24 per call.

The FCC also imposes requirements for the marketing of telephone services and
for obtaining customer authorization for changes in a customer's primary long
distance carriers. The FCC has recently imposed severe penalties on a number of
carriers for "slamming." Under an order recently issued by the FCC, carriers are
required to take certain additional steps to prevent slamming. The FCC is
continuing to examine its slamming rules.

The state PUCs also regulate telecommunications service providers. Most states
require carriers to obtain authorization, either pursuant to certification, the
fulfillment of tariff requirements or notification requirements, to provide
intrastate telecommunications services, or to be found exempt from regulation,
before commencing such services. Many states also require carriers to file and
maintain detailed tariffs or price lists listing the rates, terms and conditions
under which they provide service. We are currently authorized pursuant to
registration, certification, tariffs, notifications, or on an unregulated basis
to provide intrastate telecommunications services in the 48 contiguous states
and Hawaii.

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The relevant regulatory authorities could find that we provided intrastate long
distance service prior to obtaining necessary authorization. In the event of any
such finding, we may be subject to sanctions, including fines, other penalties
and/or revocation of our authority. We do not believe that any enforcement
action is likely, or that if such action is taken, we do not believe that any
such fines or penalties would be onerous, or that our authorizations would be
revoked. There can be no assurance, however, that this will be the case.

While we believe that our service offerings do not subject us to rules and
regulations governing pay phone providers, competitive local exchange carriers,
operator service providers, and facilities-based providers, there can be no
assurance that all relevant regulatory authorities would agree, since such rules
and regulations are subject to different interpretations, and are subject to
change. In the event that any regulatory authorities were to determine that we
are subject to regulations governing pay phone, CLEC, operator service, or
facilities-based providers, including additional authorization requirements, we
could be subject to sanctions for providing service without appropriate
authorizations or for otherwise failing to comply with applicable regulatory
requirements. While we do not believe that such determinations would result in a
material adverse effect upon us or our operations, there can be no assurance
that this will be the case.

Many states impose various reporting and other requirements. A number of state
PUCs have also adopted rules governing the marketing of telephone services and
obtaining customer authorizations for changes of a customers' primary long
distance carrier, access charges, and also contributions to state universal
funds, among other issues. State PUCs also regulate access charges and other
pricing for telecommunications services within each state. We may also be
required to contribute to universal service funds in some states.

Additionally, many states require prior approval or notification for corporate
actions including transfers of control of certified carriers, transfers of
carrier assets, including customer bases, carrier stock offerings, incurrence by
carriers of significant debt obligations and name changes. The FCC also requires
prior approval or notification under certain circumstances. We recently changed
our name from Park 'N View, Inc. to PNV.net, Inc. to PNV Inc. We are in the
process of notifying the various state PUCs and, where necessary, seeking
approval in connection with, the name change. We cannot be certain that we will
obtain all necessary regulatory approvals in connection with the name change.
Additionally, we may be subject to fines or other sanctions for failure to seek
prior approval, where necessary, for certain of these corporate actions or for
failure to notify the FCC or state PUCs in a timely enough fashion.

States generally retain the right to sanction a carrier and/or to condition,
modify, cancel, terminate or revoke authorization to provide telecommunications
services within the state for failure to comply with these and other state law
and/or rules, regulations and policies of the state regulatory authorities. Any
such penalties, including revocation, termination or suspension of our authority
to provide service would limit our ability to provide telecommunications
services to the long-haul trucking industry and could have a material adverse
effect on our business, financial condition and results of operation.

Cable Television.  Cable television companies are subject to extensive
governmental regulation. We do not believe that we are subject to such
regulations. However, in the event we are required to comply with such
regulations, the expense, potential delay and management distraction potentially
resulting from the compliance process could have a material adverse effect on
our results of operations and financial condition.

Internet.  Both the provision of Internet access service and the provision of
underlying telecommunications services are affected by federal, state and local
regulation. Currently only a small body of laws and regulations directly apply
to access to or commerce on the Internet. Moreover, in an April 1998 report to
Congress, the FCC determined that Internet service providers were not
telecommunications carriers and should consequently not be regulated as such.
However, this report stated that it expected the regulatory status of Internet
service providers in the future to continue to be uncertain. For example, the
report concluded that some services offered over the Internet, including
phone-to-phone Internet protocol telephony, may be functionally
indistinguishable from traditional telecommunications service offerings, and
their non-regulated status may have to be re-examined.
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<PAGE>   20

Due to the Internet's increasing popularity and use, additional laws and
regulations may be adopted at the international, federal, state and local levels
with respect to the Internet, covering issues, which are currently largely
subject to policies set by individual ISPs, such as user privacy, freedom of
expression, pricing, characteristics and quality of products and services,
taxation, advertising, intellectual property rights, information security and
the convergence of traditional telecommunications services with Internet
communications. Moreover, a number of laws and regulations have been proposed
and are currently being considered by federal, state and foreign legislatures
with respect to such issues. The nature of any new laws and regulations and the
manner in which existing and new laws and regulations may be interpreted and
enforced cannot be fully determined. The adoption of any future laws or
regulations might decrease the Internet's growth, decrease demand for our
service, impose taxes or other costly technical requirements or otherwise
increase the cost of doing business or in some other manner have a material
adverse effect on us. In addition, applicability to the Internet of existing
laws governing issues including property ownership, copyrights and other
intellectual property issues, taxation, libel, obscenity and personal privacy is
uncertain. As our services are available over the Internet in multiple states,
and as we facilitate sales by our customers to end users located in such states,
one or more states may seek to assert jurisdiction over various aspects of our
business. Any new legislation or regulation, or the application of laws or
regulations from jurisdictions whose laws may not currently apply to our
business, could have a material adverse effect on us.

The Communications Decency Act of 1996 imposed criminal liability on persons
sending or displaying in a manner available to minors indecent material on an
interactive computer service, including the Internet, and on any entity
knowingly permitting facilities under its control to be used for such
activities. Sections of this Act that, among other things, proposed to impose
criminal penalties on anyone distributing "indecent" material to minors over the
Internet, were held to be unconstitutional by the United States Supreme Court.
Subsequently, the Child Online Protection Act of 1998 prohibited and imposed
criminal penalties and civil liability on anyone engaged in the business of
selling or transferring, by means of the World Wide Web, material that is
harmful to minors without restricting access to such material by persons under
seventeen years of age. The Child Online Protection Act has been challenged by
civil rights organizations in part on the grounds that, like the Communications
Decency Act, it violates the First Amendment. A United States District Court has
preliminarily enjoined enforcement of the law until final resolution of the
case. Numerous states have adopted or are currently considering similar types of
legislation. Such legislation could subject us and/or our customers to potential
liability, which in turn could have an adverse effect on us. The potential
liability could require us to implement measures to reduce our exposure to such
liability. Such measures may require the expenditure of substantial resources or
the discontinuation of some of our product or service offerings. Further, the
costs of defending against any such claims and potential adverse outcomes of
such claims could have a material adverse effect on us. Moreover, we do not
currently have an acceptable use policy in place which would bar unlawful use of
our network. As a result, we are currently at increased risk of liability for
unlawful use of our network.

Even with such a policy in place, we still cannot control the content of
information transferred over our network. The law relating to the liability of
online service providers, private network operators and Internet service
providers for information carried on or disseminated through the facilities of
their networks is continuing to evolve and remains unsettled. In the past, one
federal district court in the northern district of California, where we conduct
business, has ruled that Internet service providers could be found liable for
copyright infringement as a result of information disseminated through their
networks. We cannot assure you that similar claims will not be asserted in the
future. Federal laws have been enacted, however, which provide Internet service
providers with immunity from publisher or speaker liability for information that
is disseminated through their networks when they are acting as mere conduits of
information. A Federal Court of Appeals has recently held that the
Telecommunications Act creates immunity from liability on the part of Internet
service providers for libel claims arising out of information disseminated over
their services by third-party content providers.

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<PAGE>   21

In addition, the Digital Millennium Copyright Act, enacted in 1998, creates a
safe-harbor from copyright infringement liability for Internet service providers
if:

 - the transmission was initiated by or at the direction of a person other than
   us;

 - the transmission or routing is carried out through an automatic technical
   process without selection of the material by us;

 - we do not select the recipients of the material except as an automatic
   response to the request of another person;

 - no copy of the material in the course of intermediate or transient storage is
   maintained on the system in a manner ordinarily accessible to anyone other
   than the recipients nor for a period longer than is reasonably necessary for
   the transmission or routing to occur; and

 - no modification of the transmission's content occurs through our system.

We cannot assure you, however, that the Digital Millennium Copyright Act or any
other legislation will protect us from copyright infringement liability. We
maintain general liability insurance. However, any imposition of liability on us
for alleged negligence, intentional harmful acts, including infringement, or
other liability could have a material adverse effect on us.

Changes in the regulatory structure and environment affecting the Internet
access market, including regulatory changes that directly or indirectly affect
telecommunications costs or increase the likelihood of competition from RBOCs or
other telecommunications companies, could have an adverse effect on our
business. Although the FCC has decided not to allow local telephone companies to
impose per-minute access charges on Internet service providers, and that
decision has been upheld by the reviewing court, further regulatory and
legislative consideration of this issue is likely. In addition, some telephone
companies are seeking relief through state regulatory agencies. Such rules, if
adopted, are likely to have a greater impact on consumer-oriented Internet
access providers than on business-oriented Internet service providers, including
us. Nonetheless, the imposition of access charges would affect our costs of
serving dial-up customers and could have a material adverse effect on us.

PROPRIETARY RIGHTS

We believe that recognition of our products and services is an important
competitive factor in our industry and attempt to protect them with copyrights,
trademarks, trade secret laws, restrictions on disclosure and other methods. We
cannot be certain that these methods will offer sufficient protection.

We may not have entered into proprietary rights agreements with all of our
technical employees. As a result, it may be possible for a third party to copy
or otherwise obtain and use our products, services or technology without
authorization, or to develop similar technology independently.

Accordingly, we have pending applications for United States trademark
registrations for the following: "PNV," "CAB2CAB," "DRIVER CONNECT," "PNV.NET,"
"FLEET CONNECT." "PNV USA" and "PNV CONNECT" and hold trademark registrations
for "YOU CAB. YOUR CABLE. YOUR CALL," "WHERE SMART DRIVERS STAY CONNECTED" and
"PARK 'N VIEW."

We regard our software as proprietary and attempt to protect it as a trade
secret. We hold no patents and have not registered copyrights on our software
technology.

We are currently drafting a patent application on our truck stop home plate for
filing with the United States Patent and Trademark Office. Other products exist
for which possible patent registration is being investigated.

A substantial amount of uncertainty exists concerning the scope of protection
that copyright and trademark laws afford on the Internet.

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<PAGE>   22

EMPLOYEES

As of June 30, 2000, we had 334 employees, including part-time employees, none
of whom are represented by a collective bargaining agreement. These employees do
not include temporary personnel and consultants who we retain from time to time.
We consider our employee relations to be good.

RISK FACTORS

  WE MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.

Based on our current business plan and cash flow projections for our fiscal year
ending June 30, 2001, we currently anticipate that our available cash resources
may not be sufficient to meet our working capital and capital expenditure
requirements for this period. In addition, we have experienced net losses since
inception and, as of June 30, 2000, had an accumulated deficit of $129.3
million. As a result of these losses, working capital deficiencies, our
outstanding debt, our contractual commitments and other liquidity issues as
disclosed in our financial statements for our fiscal year ended June 30, 2000,
there is substantial doubt about our ability to continue as a going concern. See
"Risk Factors," "Management's Discussion and Analysis" and the consolidated
financial statements and footnotes included in this report.

Our ability to continue as a going concern is dependent upon our ability to:

 - generate sufficient cash flow to meet our obligations on a timely basis;

 - obtain additional financing when we need it; and

 - achieve and maintain profitability.

We are currently working with a consulting firm to develop strategies for
increasing users and subscribers of our services, increasing revenues, obtaining
additional funding and reducing expenses through several initiatives, together
with the development of a comprehensive five-year business and capital
requirements plan. Our five-year business plan will likely result in changes to
our operations and business model, the timing and magnitude of which are
currently uncertain. We cannot assure you that our business strategy will be
successful.

  IF WE DO NOT OBTAIN ADDITIONAL CAPITAL FOR DEBT SERVICE AND CONTRACTUAL
  OBLIGATIONS, WE MAY NOT BE ABLE TO REPAY CERTAIN OBLIGATIONS.

In May 1998, we issued 75,000 units consisting of $75.0 million in aggregate
principal amount of 13% Senior Notes due 2008. Interest on these notes accrues
at the rate of 13% per annum and is payable semiannually in arrears on May 15
and November 15 of each year. Our 13% notes mature May 15, 2008. We made our
first four scheduled interest payments from funds in an escrow account.
Beginning with the November 2000 scheduled interest payment, we will be required
to make the interest payments from our available cash. Our cash and cash
equivalents as of August 31, 2000 were approximately $27.0 million. If we make
these payments from our available cash, we will further decrease the resources
available for our operations. Unless we are able to successfully secure
additional financing, we may not make the scheduled payments on the 13% notes. A
default would permit the holders of our 13% notes to accelerate the maturity of
these notes, which we would be unable to pay.

In March 2000, we signed a marketing agreement with America Online, Inc., or
AOL. Under this agreement, we have paid or agreed to pay AOL $8.0 million. Of
this amount, $2.0 million was paid in April 2000 and $1.0 million was paid in
June 2000. Of the remaining $5.0 million owed to AOL, $1.0 million is due in
each of September 2000, December 2000, March 2001, June 2001 and September 2001.
If we make these payments from our available cash, we will further reduce the
resources available for our operations. If we fail to make any scheduled payment
under this agreement, AOL may terminate this contract which could harm our
marketing efforts and our business.

                                       20
<PAGE>   23

  IF WE DO NOT SECURE ADDITIONAL CAPITAL TO FUND OUR BUSINESS WE MAY BE UNABLE
  TO CONTINUE OUR OPERATIONS.

Since inception we have incurred significant losses and negative cash flow, and
as of June 30, 2000 we had an accumulated deficit of $129.3 million. We have not
achieved profitability and expect to incur operating losses and negative cash
flow for the foreseeable future as we continue to build and deploy our network,
offer our services and operate our business. We may require additional financing
in fiscal 2001 to fund our capital requirements. Any needed financing may not be
available on terms acceptable to us, or at all. If we are unable to obtain
sufficient financing, we may be unable to continue our operations.

  WE HAVE NOT BEEN PROFITABLE AND EXPECT FUTURE LOSSES AND NEGATIVE CASH FLOW.

From November 1993 to November 1995, our predecessor, Park 'N View, Ltd.,
developed our network and installed and operated it at one truckstop as a field
test. We began offering services on our network in December 1995 with the
completion of our first site. We deployed our network at 14 truckstops in 1996,
59 truckstops in 1997, 113 truckstops in 1998, 71 truckstops in 1999 and 31 for
the period from January 2000 to June 2000. Consequently, we have a limited
operating history upon which you may evaluate us and we face all of the risks
and uncertainties of early-stage companies. To date, we have not been
profitable. We may never be profitable or, if we become profitable, we may be
unable to sustain profitability. We have recognized limited revenues since our
inception and have incurred substantial costs to build and deploy our network,
offer our services and operate our business. We have incurred net losses of
$129.3 million from our inception through June 30, 2000. To date, our cash flow
from operations has been substantially insufficient to meet our cash
requirements.

  MANY OF OUR COSTS ARE FIXED ON BOTH A LONG-TERM AND SHORT-TERM BASIS AND WE
  MAY NOT BE ABLE TO REDUCE THEM IN A TIMELY MANNER; WE HAVE PLANNED TO REDUCE
  OUR COSTS WHICH MAY HARM OUR ABILITY TO INCREASE OUR REVENUES.

A high percentage of the costs of operating our network are fixed, including our
commitments under our contract with AT&T for T-1 lines and our equipment leases
with Cisco for routers. If our revenues do not increase, we may not be able to
reduce our costs in a timely manner to account for any shortfall in revenues. In
addition, many of our costs are based on our expectations of the future demand
for our services and are relatively fixed in the short-term. We are working with
a consulting firm to develop a number of strategies and to reduce costs through
several initiatives which may result in a reduction in our sales and marketing
expenses. Any such reduction could harm our ability to increase subscribers to
our services and our revenues. If we are unable to increase our revenues from
our current sources and generate revenues from other sources in order to fund
our operating losses and capital expenditures, we may be required to curtail or
cease our operations. We may not be able to sustain our current revenues or
successfully generate additional revenue.

  OUR FAILURE TO INCREASE OUR REVENUES OR GENERATE REVENUE FROM NEW SOURCES
  WOULD PREVENT US FROM ACHIEVING AND MAINTAINING PROFITABILITY.

Currently, our revenues are generated primarily from sales of subscriptions to
the telecommunications and cable television services offered on our network and
to a lesser extent from prepaid phone card operations and resales of long
distance telephone minutes and advertising sales. Our continued ability to
remain in business depends upon, among other things, our ability to increase
revenues from our current sources and generate revenues from additional sources.
If we are unable to increase our revenues from our current sources and generate
revenue from other sources, we may be required to curtail or cease our
operations. We may not be able to sustain our current revenues or successfully
generate additional revenue.

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<PAGE>   24

  OUR CONTINUED NASDAQ NATIONAL MARKET LISTING IS NOT ASSURED.

Our common stock is presently authorized for quotation on the Nasdaq National
Market. We remain subject to all requirements of our listing agreement with
Nasdaq. Among the events which could cause us to have our status as a National
Market Issuer terminated are a failure to maintain a minimum bid price for our
common stock of $1.00 per share.

If we lose our Nasdaq National Market status, our common stock might trade
either as a Nasdaq Small Cap issue or in the over-the-counter market, both of
which are viewed by most investors as less desirable, less liquid marketplaces.
In such event, the market price of the common stock may be adversely impacted
and a shareholder may find it difficult to dispose, or obtain accurate
quotations as to the market value, of our common stock.

  LIMITATIONS IMPOSED BY RESTRICTIVE COVENANTS COULD LIMIT HOW WE CONDUCT
  BUSINESS AND OUR ABILITY TO GENERATE REVENUES AND PROFITS.

The indenture governing our 13% notes contains covenants that restrict our
ability to, among other things:

 - incur additional debt;

 - pay dividends and make other distributions;

 - prepay subordinated indebtedness;

 - repurchase capital stock;

 - make investments and other restricted payments;

 - engage in transactions with affiliates;

 - engage in business other than the provision of telecommunications,
   television, Internet and other related services to the trucking industry;

 - enter into sale and leaseback transactions;

 - create liens;

 - sell assets; and

 - engage in mergers and consolidations and certain other events which could
   cause an event of default.

As a result of these restrictions, we are limited in how we conduct our business
and in our ability to raise additional debt.

  IF WE DO NOT RETAIN OUR CURRENT SUBSCRIBERS OR INCREASE SALES OF SUBSCRIPTIONS
  TO SERVICES OFFERED ON OUR NETWORK, OUR RECURRING REVENUES WILL NOT INCREASE
  AND OUR INCREMENTAL COSTS OF ACQUIRING AND RETAINING CUSTOMERS MAY INCREASE.

Our future success depends upon our ability to significantly increase the number
of subscribers to services currently offered on our network and to generate fees
for Internet access service. The number of our total active subscribers has not
increased significantly since September 1998. Even if truck drivers initially
subscribe to our network, they may not renew their subscriptions. There are many
factors that could cause a subscriber to cancel an ongoing monthly subscription
or fail to purchase a subscription, including dissatisfaction with our network
and the services offered, or with the number and location of the truckstops at
which our network is available, or truck driver turnover. Some drivers have
experienced problems in connecting to our network due to an accumulation of
moisture in the parking lot access points, or home plates. This operational
problem may cause drivers to cancel or decide not to purchase a subscription. In
July 1999, we began offering Internet access service free of charge on a
promotional basis. In November 1999, we began charging separate subscription
fees for this service. During June 2000, we had 5,663 monthly subscribers to
this service, many of whom were also subscribers to our telecommunications and
cable television services. Truck drivers may be unwilling to purchase a
subscription to this service. Many
                                       22
<PAGE>   25

truck drivers may not own a computer for accessing the Internet. If ongoing
monthly subscriptions do not increase, our recurring revenues will not increase,
our incremental costs of acquiring and retaining subscribers may increase and
our business may suffer. We intend to slow significantly the buildout of our
network during our fiscal year ending June 30, 2001. This may negatively impact
any increase in our subscribers and our revenues.

  IF ELECTRONIC COMMERCE TRANSACTIONS ON OUR PORTAL WEBSITE DO NOT DEVELOP, WE
  MAY NOT BE ABLE TO OPERATE OUR PORTAL OR OUR BUSINESS PROFITABLY.

If we are unable to develop and generate revenue from electronic commerce
activities on our portal website, our revenues will not increase as planned. If
we are unable to develop electronic commerce activities on our portal or if
business-to-business electronic commerce within the trucking industry does not
grow or grows more slowly than expected, our portal website and our business may
not achieve or maintain profitability. Many truck drivers may not have a
computer for accessing the Internet from their trucks which may adversely affect
the growth of electronic commerce in the trucking industry and on our portal.

  IF THE INTERNET IS NOT ADOPTED AS AN ADVERTISING MEDIUM OR IF WE CANNOT
  ATTRACT ADVERTISERS, OUR ADVERTISING REVENUES WILL NOT INCREASE AS PLANNED.

We began publishing Connect! in July 1999 and launched our portal in October
1999. If we do not successfully develop content for Connect! and the portal that
attracts a significant number of truck drivers and other trucking industry
participants, it is unlikely that we will be able to attract advertisers. The
growth of Internet advertising requires validation of the Internet as an
effective advertising medium. This validation has yet to fully occur. Acceptance
of the Internet among advertisers will also depend on growth in the commercial
use of the Internet. If we do not generate advertising revenue or if widespread
commercial use of the Internet does not develop, or if the Internet does not
develop as an effective and measurable medium for advertising, our revenues will
not increase as planned and we may not be able to operate our portal website or
business profitably.

  OUR HIGH DEBT LEVEL MAY ADVERSELY AFFECT OUR ABILITY TO OPERATE AND EXPAND OUR
  BUSINESS.

We have a significant amount of debt outstanding. On June 30, 2000, we had $75.0
million of outstanding 13% notes. If we make the scheduled November 2000
interest payment of $4.9 million on our 13% notes from our available cash, this
will further decrease our resources for our operations. We may not be able to
meet our debt service requirements. If we are unable to pay these notes from our
funds or from borrowed funds, we could be prevented from providing our current
and planned services and products or continuing our business. Even if we are
able to meet our debt service obligations, the amount of debt we have could
adversely affect us in a number of ways. For example, we could be required to
dedicate a substantial portion of our cash flow from operations to the payment
of principal and interest on our debt, thereby reducing the funds available for
our operations.

  IF WE DO NOT MEET OUR OBLIGATIONS UNDER CONTRACTS WITH TRUCKSTOP OPERATORS,
  THESE TRUCKSTOP OPERATORS MAY ENTER INTO CONTRACTS WITH OTHER PROVIDERS.

Most of our current revenues are generated from our operations at truckstops. We
expect that the provision of telecommunications, cable television and Internet
access services through our network will continue to be a primary source of
revenue for the foreseeable future. TravelCenters of America owns or operates
over 150 of the truckstops that we have under contract. We also have a contract
with TravelCenters of America to provide a total telecommunications system,
including prepaid phone cards, public phone operations and public Internet
kiosks, to approximately 120 truckstops. We have contracted with truckstop
operators located throughout the United States. While most independent truckstop
owners who own a single truckstop execute a standard contract, the contracts
executed by truckstop chains that operate multiple truckstops vary
significantly. These contracts generally provide that the truckstop chains and
independent truckstop owners may terminate the contracts, and our rights under
the contracts, if we fail in any material respect to perform any of our
obligations under the contracts and fail to remedy the
                                       23
<PAGE>   26

breach within 30 days after we receive notice of the breach. Any failure by us
to meet our contractual obligations that results in the termination of our
contracts could impair our network and the sale of services over our network.

  IF WE DO NOT INCREASE OUR RESALES OF LONG DISTANCE MINUTES, OUR REVENUES MAY
  NOT INCREASE AS CONTEMPLATED BY OUR BUSINESS PLAN AND WE MAY NOT ACHIEVE OR
  MAINTAIN PROFITABILITY.

If we are unable to increase our resales of long distance telephone minutes our
revenues will not increase as planned. We began marketing resold long distance
telephone minutes in February 1999. Since that time we have increased our
monthly sales of resold long distance from $36,000 in February 1999 to $155,000
in June 2000. We believe that increasing competition in the telecommunications
industry will result in significantly lower prices for long distance services.
We may not be able to reduce our prices sufficiently to compete effectively. Our
failure to increase our sales of resold long distance minutes on a profitable
basis could restrict the growth of our revenues and harm our ability to achieve
or maintain profitability.

  OUR CONTRACTS WITH TRUCKING ASSOCIATIONS TO INSTALL OUR NETWORK AT
  APPROXIMATELY 300 MEMBER TRUCKSTOPS ARE NOT LEGALLY BINDING ON THEIR MEMBERS
  AND MAY NOT RESULT IN THE INSTALLATION OF OUR NETWORK AT THESE TRUCKSTOPS.

As of June 30, 2000, we had entered into contracts with the three largest
trucking associations representing more than 300 additional independent
truckstops pursuant to which these associations have agreed to permit us to
offer our services to their members. These associations do not have authority to
legally bind their members. Therefore, while each association has granted us the
right to offer cable television and telephone services to their members, this
contractual provision is not binding on any member. Prior to installation of our
network at an association member's truckstop, we must enter into a contract with
the association member granting us the right to install our network at the
member's truckstops. Accordingly, our contracts with truckstop associations may
not result in our network being installed at additional truckstop locations.

  OUR TELECOMMUNICATIONS AND CABLE TELEVISION SERVICES COMPETE WITH THOSE
  OFFERED BY MANY WELL-ESTABLISHED COMPETITIVE PROVIDERS.

The market for telecommunications services, particularly long distance
telecommunications services, is highly competitive. Carriers compete principally
on the basis of ease of access, functionality and cost. Our telecommunications
services currently compete with traditional long distance services, with public
phones, cellular and other wireless telephones, calling cards, prepaid phone
cards, as well as collect call and toll-free number services. We believe that
drivers currently use public phones located at truckstops for a significant
number of the calls they make and we may not successfully attract drivers who
predominantly use these public phones. Moreover, we face particular constraints
in our ability to keep our prices competitive for our prepaid phone cards.
Specifically, our contractual arrangements with third parties relating to the
prepaid phone cards that we offer may make it difficult or impossible for us to
reduce our prices for prepaid long distance minutes to compete effectively on a
profitable basis. Finally, competitive pressures on companies like ours in the
long distance telecommunications sector, in particular, also seems likely to
increase with the entry of one or more Regional Bell Operating Companies into
their own home long distance markets, which appears imminent. Competition in the
markets for cable and other video services is becoming increasingly more
competitive. While our competition today largely consists of alternatives
located outside the truck cab and primarily in the truckstop (e.g., community
television and game rooms inside the truckstop), we believe that some
professional truck drivers have purchased direct broadcast satellite dishes to
receive television programming in their cabs. Cable, direct broadcast satellite,
and other video service providers to such users as residential apartment
buildings could seek to compete by offering cable television programming to
truckstops. We may not be able to compete successfully against these providers,
most of which will have access to greater resources and provide more programming
than our network. Some of our competitors, including those arising from the
consolidation of or strategic alliances between telecommunications and/or cable
television companies are well established companies

                                       24
<PAGE>   27

with significantly greater financial, marketing and programming resources than
we have. Our failure to compete successfully with these and future competitors,
including those arising from the emergence or increased utilization of new and
developing technologies, could have a material adverse effect on our financial
condition and results of operation.

  COMPETITION FOR OUR INTERNET ACCESS SERVICES IS LIKELY TO INCREASE IN THE
  FUTURE AND MAY PRECLUDE US FROM OFFERING THESE SERVICES ON A PROFITABLE BASIS.

The market for providing Internet access is extremely competitive and highly
fragmented. There are no substantial barriers to entry, and we expect that
competition will continue to intensify. We may not be able to compete
successfully against current or future Internet service providers, many of whom
may have financial resources greater than ours. Increased competition could
cause us to increase the sales and marketing expenses related to our Internet
access services as well as cause our users to obtain Internet access from other
sources. We may not be able to offset the effects of these increased costs
through an increase in the number of subscribers to our Internet access service
and we may not have the resources to continue to compete successfully as an
Internet service provider. We believe that new competitors, including large
computer hardware and software, media, and telecommunications companies, will
continue to enter the Internet access market. As consumer awareness of the
Internet grows, existing competitors are likely to further increase their
emphasis on their Internet access services, resulting in even greater
competition. In addition, telecommunications companies may be able to offer
customers reduced communications costs in connection with these services,
reducing the overall cost of their Internet access solutions and significantly
increasing pricing pressures on our Internet access services. The ability of our
competitors to acquire other Internet service providers, to enter into strategic
alliances or joint ventures or to bundle other services and products with
Internet access could also put us at a significant competitive disadvantage. We
recently commenced the deployment of public Internet kiosks in the truckstops of
two major chains. There is at least one company that has installed
Internet/e-mail kiosks in a number of truckstops.

  COMPETITION FOR OUR CURRENT AND PLANNED INTERNET PRODUCTS AND SERVICES IS
  LIKELY TO INCREASE IN THE FUTURE AND MAY PREVENT US FROM ESTABLISHING CUSTOMER
  AND ADVERTISING BASES FROM WHICH TO GENERATE REVENUES AS PLANNED.

Competition for Internet products and services and electronic commerce is
intense. We expect that competition will continue to intensify. Barriers to
entry are minimal, and competitors can launch new websites at a relatively low
cost. Various websites currently exist that provide content and commerce
solutions to the trucking community. Several of these websites have market
acceptance, established customer and advertising bases and offer a greater
variety of content and applications than our portal may initially offer. Our
competitors may develop new Internet products or services that are superior to,
or have greater market acceptance than, our products and services.

  WE ARE DEPENDENT ON THIRD PARTIES FOR THE PUBLIC PHONE AND PREPAID PHONE CARD
  OPERATIONS WE OFFER AND, IF THESE THIRD PARTIES DISCONTINUE DOING BUSINESS
  WITH US, WE MAY NOT BE ABLE TO MAINTAIN THESE OPERATIONS IF WE ARE UNABLE TO
  FIND ADEQUATE REPLACEMENTS.

We are currently dependent on third parties for the public phone and a portion
of the prepaid phone card operations that we offer truckstops. We are obligated
to provide public phone operations in the truckstops of one major chain. We have
contracted with a third party to provide these operations and do not intend to
provide this service directly. This third party's failure to provide public
phone operations would result in our breach of our contract with the truckstop
chain. Our system is currently unable to provide all of the components necessary
for prepaid phone card operations. Although we believe that other third parties
could provide these services for us or, over time, we could develop the systems
so that we could provide these services, any inability to rely on third party
systems without disruption prior to such development would eliminate our ability
to offer prepaid phone card operations to truckstops.

                                       25
<PAGE>   28

  WE DEPEND ON THIRD PARTIES TO SUPPLY US WITH PROGRAMMING AND EQUIPMENT AND, IF
  THESE THIRD PARTIES DISCONTINUE DOING BUSINESS WITH US, OUR ABILITY TO PROVIDE
  COMPETITIVE TELECOMMUNICATIONS AND CABLE TELEVISION SERVICES MAY SUFFER IF WE
  ARE UNABLE TO FIND ADEQUATE REPLACEMENTS.

We purchase our satellite equipment, headend equipment, telephone switching
equipment, computer hardware and cable programming from outside suppliers and do
not have purchase agreements with any supplier. We presently purchase our
satellite equipment and computer hardware from a sole supplier and we believe
that limited alternative sources for these items exist. If we were required to
purchase alternative telephone switching equipment from another source, it would
require the reprogramming of some of our software or if we were required to
purchase any alternative equipment from another source, it could require that we
modify and redesign our network in certain respects which, in each case, could
result in service delays and expense to us. In addition, we purchase the cable
programming offered on our network from Echostar. Although we believe that
limited alternative sources for cable programming exist, utilizing an
alternative source could require retrofitting certain equipment at each
truckstop site and could result in an interruption in our ability to offer cable
television services through our network for a limited period of time. If we are
unable to obtain any of the foregoing equipment, particularly telephone
switching equipment, or cable programming, our ability to buildout and operate
our network and expand our business in a timely fashion could suffer. We depend
on a few third-party suppliers of hardware components. Currently, we acquire
routers used to provide our networking services from only one source. From time
to time, we have experienced delayed delivery from some suppliers. If we are
unable to develop alternative sources of supply, if required, we could
experience delays and increased costs in expanding our network infrastructure.

  SECURITY BREACHES OF OUR NETWORK AND INAPPROPRIATE USE BY INTERNET USERS COULD
  DISRUPT OUR SERVICE AND PREVENT US FROM INCREASING OUR SUBSCRIBER BASE AND
  DISRUPT TRANSACTIONS ON OUR NETWORK.

The future success of our business will depend on the security of our network
and, in part, on the security of the network infrastructures of our third-party
providers, over which we have no control. Despite the implementation of security
measures, our infrastructure is vulnerable to computer viruses or similar
disruptive problems. Computer viruses or problems caused by third parties,
including the sending of excessive volumes of unsolicited bulk e-mail or "spam,"
could lead to interruptions, delays, or cessation in service to our subscribers.
Third parties could also potentially jeopardize the security of confidential
information stored in our computer systems or our subscribers' computer systems
by their inappropriate use of the Internet, which could cause losses to us or
our subscribers or deter persons from subscribing to our services. Inappropriate
use of the Internet includes attempting to gain unauthorized access to
information or systems, commonly known as "cracking" or "hacking." Although we
intend to continue to implement security measures to prevent this, "hackers"
have circumvented security measures adopted by others in the past, and may be
able to circumvent our security measures in the future. To alleviate problems
caused by computer viruses or other inappropriate uses or security breaches, we
may have to interrupt, delay, or cease service to our subscribers, which could
result in cancellations of subscriptions, failures to renew subscriptions or
reduced sales of subscriptions. In addition, we expect that our subscribers will
increasingly use the Internet for commercial transactions in the future. Any
network malfunction or security breach could cause these transactions to be
delayed, not completed at all, or completed with compromised security.
Subscribers or others may assert claims of liability against us as a result of
any failure by us to prevent these network malfunctions and security breaches.
Until more comprehensive security technologies are developed, the security and
privacy concerns of existing and potential subscribers may inhibit the growth of
the Internet service industry in general and our subscriber base and revenues in
particular.

                                       26
<PAGE>   29

  WE MAY INCUR SUBSTANTIAL EXPENSES OR DISCONTINUE CERTAIN SERVICES IF WE ARE
  FOUND LIABLE FOR INFORMATION DISSEMINATED ON OUR NETWORK OR IF WE MUST
  IMPLEMENT MEASURES TO REDUCE OUR EXPOSURE TO THESE LIABILITIES.

Since the law relating to liability of Internet service providers for
information carried on or disseminated through their networks is not settled,
even with the defenses available in Section 223 of the Communications Decency
Act of 1996 and the recent enactment of the Digital Millennium Copyright Acts,
we may be subject to such liability. A number of lawsuits have sought to impose
liability for defamatory speech, indecent materials and infringement of
copyrighted materials. The United States Supreme Court has let stand a lower
court ruling that an Internet service provider was protected from liability for
material posted on its system by a provision of the Communications Decency Act.
However, the findings in that case may not apply in other circumstances. Other
courts have held that online service providers and Internet service providers
may be subject to damages for copying or distributing copyrighted materials.
Provisions of the Communications Decency Act that imposed criminal penalties for
using an interactive computer service for transmitting obscene or indecent
communications have been found unconstitutional by the United States Supreme
Court. However, the Child Online Protection Act requires limits on access to
pornography and other material deemed "harmful to minors." This legislation
imposes criminal penalties and civil liability. Numerous states have adopted or
are adopting similar types of legislation. We may be subject to claims relating
to content that is published on or downloaded from our site. We also could be
subject to liability for content that is accessible from our website through
links to other websites or that is posted by users in chat rooms or bulletin
boards. Potential liability imposed on Internet service providers like us for
material carried on or disseminated through our network could require us to
implement measures to reduce our exposure to that liability . These measures may
require us to spend substantial resources or discontinue certain service
offerings. We do not have errors and omissions insurance that would cover claims
relating to these risks. The imposition of liability could expose us to
significant costs and cause our business to suffer.

  WE MUST ADAPT TO TECHNOLOGY TRENDS AND EVOLVING CUSTOMER NEEDS OR WE WILL NOT
  BE COMPETITIVE.

The services that we offer through our network are characterized by evolving
technology, changes in customer needs, rapidly growing competition and frequent
new product and service introductions. Our future success will depend, in part,
on our ability to:

 - effectively use and offer leading technologies;

 - continue to develop our technical expertise;

 - enhance our current networking services;

 - develop new products and services that meet changing customer needs;

 - advertise and market our services; and

 - influence and respond to emerging industry standards and other technological
   changes.

We must accomplish these tasks in a timely and cost-effective manner. New
technologies, such as broadband wireless, or industry standards may replace or
provide lower cost alternatives to our existing products and services or could
render our existing products and services noncompetitive and adversely affect
their marketability. We also believe that our ability to compete successfully
depends on the continued compatibility and interoperability of our services with
products and architectures offered by other vendors. Although we intend to
support emerging standards in the market for the Internet and other network
connectivity, new industry standards could emerge, and we may not be able to
conform to these new standards in a timely fashion and maintain a competitive
position in the market. Our pursuit of necessary technological advances and
maintenance of technological compatibility may require substantial time and
expense.

                                       27
<PAGE>   30

  BECAUSE WE DO NOT HAVE REMOTE BACK-UP FACILITIES, THE FAILURE OF OUR COMPUTER
  AND COMMUNICATIONS HARDWARE SYSTEMS COULD RESULT IN CUSTOMER DISSATISFACTION
  AND REDUCED USE OF OUR NETWORK.

We depend on the efficient and uninterrupted operation of our computer and
communications hardware systems in Coral Springs, Florida. However, we do not
have remote back-up facilities for our computer systems. Interruptions could
result from natural disasters, technical failures, including power loss, the
failure of telecommunications equipment and systems and similar events. Any
interruptions in the delivery of our services could result in customer
dissatisfaction and which in turn could adversely affect usage of our network
and our revenues.

  OUR FAILURE TO COMPLY WITH THE BURDENSOME GOVERNMENT REGULATIONS OF THE
  TELECOMMUNICATIONS INDUSTRY OR CHANGES IN THESE REGULATIONS COULD RESULT IN
  OUR INABILITY TO PROVIDE CERTAIN SERVICES AND COULD DECREASE OUR REVENUES AND
  INCREASE OUR COSTS.

Regulation of the telecommunications industry is changing rapidly. As a provider
of telecommunications services nationwide, we are subject to varying degrees of
regulation in each of the jurisdictions in which we provide our services. Laws
and regulations, and the interpretation of such laws and regulations, differ
significantly among the jurisdictions in which we operate. These laws and
regulations are, moreover, subject to changes as a result of ongoing regulatory
implementation proceedings, subject to review by courts and otherwise. This is
particularly true in regard to Internet services, which, while not heavily
regulated at this time, are the subject of intense debate over the degree that
they should be regulated in the future, if at all. There can be no assurance
that future regulatory, judicial and legislative changes will not have a
material adverse effect on the company, that regulators and/or third parties
will not raise material issues with regard to our compliance or non-compliance
with applicable regulations, and/or that we will be in compliance with all such
laws and regulations at any one point in time. Regulatory considerations that
affect and may limit our business include:

 - certification, tariffing and other market entry requirements;

 - requirements to obtain prior approval from or notify the FCC and state public
   utility commissions of certain corporate actions including transfers of
   control of certificated carriers, transfers of carrier assets including
   customer bases, carrier stock offerings, the incurrence by carriers of
   significant indebtedness and name changes; and

 - universal service and other ongoing filing and, in some cases, contribution
   requirements.

Delay or failure in complying with applicable regulations could result in
sanctions, including fines or other penalties, and our authorizations being
conditioned, modified, canceled, terminated or revoked, which would limit or
eliminate our ability to provide telecommunications services. Conditions,
modifications, cancellations, termination or revocation could result in a
significant loss of revenues and may cause our business to suffer. We may be
subject to sanctions, including fines, penalties, and/or revocation of our
existing authorizations for our provision of telecommunications services in
certain jurisdictions prior to our having obtained necessary regulatory
authorization. We may also be subject to fines or other sanctions for failure to
seek prior approval, where necessary, for certain corporate actions, and/or
failure to notify the FCC and/or state public utility commissions in a timely
enough fashion.

  IF WE BECOME SUBJECT TO GOVERNMENTAL REGULATION OF CABLE TELEVISION COMPANIES,
  WE COULD INCUR SIGNIFICANT COSTS AND THE CONTINUED BUILDOUT OF OUR NETWORK
  COULD BE DELAYED.

Cable television companies are subject to extensive governmental regulation.
Because our cable system equipment is installed exclusively on private property,
we do not believe that we are subject to such regulations. Were we to be
required to comply with such regulations, however, our business may suffer due
to greatly increased expense, potential delay or prevention of the continued
buildout of our network and management distraction.

                                       28
<PAGE>   31

  OUR INTERNET ACCESS SERVICE MAY BECOME REGULATED BY THE FEDERAL COMMUNICATIONS
  COMMISSION OR OTHER GOVERNMENT AGENCIES WHICH COULD DECREASE OUR REVENUES AND
  INCREASE OUR COSTS.

Internet service providers are not currently regulated like telecommunications
service providers by the Federal Communications Commission or any other United
States governmental agency. Nevertheless, Internet-related regulatory policies
are continuing to develop, primarily as determined by the industry itself, and
it is possible that we could be exposed to direct governmental regulation in the
future. For example, in its April 10, 1998 Report to Congress, while reaffirming
that Internet service providers should be classified as "information service
providers" rather than regulated "telecommunications providers" under the terms
of the Telecommunications Act of 1996, the FCC stated its intention to consider
whether to regulate voice and fax telephony services provided over the Internet
as "telecommunications" even though Internet access itself would not be
regulated. We cannot predict whether in the future the FCC will modify its
current policies against regulation of Internet service providers. Moreover, a
number of state commissions have initiated proceedings relating to the
regulation of, and adopted laws impacting, certain Internet-related services.
Others could do the same in the future. Due to the increasing popularity and use
of the Internet, it is possible that additional laws and regulations may be
adopted with respect to the Internet, covering issues such as content, privacy,
access to some types of content by minors, pricing, bulk e-mail or "spam,"
encryption standards, consumer protection, electronic commerce, taxation,
copyright infringement, and other intellectual property issues. Internet service
providers are, of course, subject to certain regulations applicable to
businesses generally. We cannot predict the impact, if any, that any future
regulatory changes or developments may have on our business, financial
condition, and results of operations. Changes in the regulatory environment
relating to the Internet services industry, including regulatory changes that
directly or indirectly affect telecommunications costs or increase the
likelihood or scope of competition from regional telephone companies or others,
could increase our costs and make it difficult for us to compete effectively.

  THE PROVISIONS OF OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW
  THAT HINDER A CHANGE IN CONTROL COULD NEGATIVELY AFFECT OUR COMMON STOCK
  PRICE, DISCOURAGE BIDS FOR OUR COMPANY OR REDUCE ANY PREMIUMS THAT COULD BE
  PAID TO OUR STOCKHOLDERS.

Provisions of our certificate of incorporation and bylaws may discourage, delay
or make more difficult changes in control that are not approved by our board of
directors or prevent the removal of incumbent directors. The existence of these
provisions may have a negative impact on the price of the common stock and may
discourage third-party bidders from making a bid for our company or may reduce
any premiums paid to stockholders for their common stock. In addition, our 13%
notes are redeemable on changes in our control and the removal of directors
under certain circumstances, which may have a similar effect. In particular,
these provisions prohibit stockholder action by written consent, require advance
notice for nomination of directors and for stockholders proposals and allow only
the chairman of the board or a majority of the directors to all a special
stockholders' meeting. We have 8,750,000 shares of preferred stock authorized,
none of which is currently designated. As a result, our board of directors may
designate and issue preferred stock without stockholder approval. Furthermore,
as a Delaware corporation, we are subject to Section 203 of the Delaware General
Corporation Law. In general, this law prevents a person who becomes the owner of
15% or more of the corporation's outstanding voting stock from engaging in
specified business combinations for three years unless specified conditions are
satisfied.

  OUR STOCK PRICE HAS BEEN AND WILL BE VOLATILE.

The stock market has experienced extreme price and volume fluctuations. The
market prices of the securities of Internet-related and technology companies
have been especially volatile. The trading prices of many Internet-related and
technology companies' stocks have reached historical highs within the last 52
weeks and have reflected relative valuations substantially above historical
levels. During the same period, these companies' market prices have also been
highly volatile and have recorded lows well below their historical highs. Since
our initial public offering in November 1999, we have suffered significant
declines in the market price of our common stock and low trading volumes. The
trading price of our common stock

                                       29
<PAGE>   32

may fluctuate in the future. In the past, companies that have experienced
volatility in the market price of their stock have been the object of securities
class action litigation. If we were the object of securities class action
litigation, it could result in substantial costs and a diversion of our
management's attention and resources.

  FUTURE SALES OF OUR COMMON STOCK MAY NEGATIVELY AFFECT OUR STOCK PRICE.

We have a large number of shares of common stock outstanding and available for
resale beginning at various points in time in the future. The market price of
our common stock could decline as a result of sales of a large number of shares
of our common stock in the market, or the perception that such sales could
occur. These sales also might make it more difficult for us to sell equity
securities in the future at a price that we think is appropriate, or at all.

  WE MAY NOT HAVE IDENTIFIED ALL THE RISKS AND UNCERTAINTIES THAT WE MAY FACE.

The risks described in this section or elsewhere in this report are not the only
ones that we may face. Although this report includes the material risks that we
are aware of at this time, additional risks that are not yet identified or that
we currently think are immaterial may materially adversely affect our business,
results of operations and financial condition in the future.

ITEM 2.  PROPERTIES

We are headquartered in Coral Springs, Florida, where we lease an approximately
28,000 square foot facility in which our administrative offices and warehouse
facility are located. This lease extends to August 2002. We also lease an
approximately 11,650 square foot facility in Ft. Lauderdale which previously
served as our headquarters and warehouse facilities prior to our move to our
Coral Springs facility. This lease extends to June 2001. We have sublet a
portion of the Ft. Lauderdale facility to a third party. In addition, we entered
into a lease, extending to June 2004, for approximately 5,500 square feet of
office space in New York, New York in which our media and Internet product
development staff are located. Recently, we have entered into a lease for
approximately 3,517 square foot facility in Bentwood, TN in which our
advertising staff is located. See note 4 of notes to financial statements for
information about our commitments under these real estate leases.

ITEM 3.  LEGAL PROCEEDINGS

Under our contracts with truckstops relating to the deployment of our network,
we have agreed to indemnify the truckstops against any losses in connection with
our network. In addition, under most of these contracts, we, as well as the
truckstops, have agreed to maintain liability insurance coverage of $1.0 million
for each truckstop at which our network is deployed and to name each other as an
additional insured under the policy. Our insurance does not cover punitive
damages.

In July 1999, Robert T. and Julie McCurry filed a lawsuit against us in Superior
Court of Shasta County, California and a truckstop chain at which our network is
deployed that seeks a total of $2.0 million in actual damages resulting from an
injury suffered by Mr. McCurry. The amount sought exceeds the limit of our
insurance policy. We have notified our insurance carrier of this lawsuit and are
unaware of any issues which would result in the denial of insurance coverage.

We also have received 30 to 35 additional claims arising from slip and fall
incidents relating to our network. We have advised our insurance carrier of
these incidents and the carrier has denied coverage or is reserving its rights
to deny coverage on several of these incidents due to our alleged failure to
provide timely notice of such incidents. Our present understanding of these
claims is preliminary.

Due to the inherent uncertainty as to the outcome of these claims, or whether
such claims will be covered by insurance, we cannot estimate the amount of loss,
if any, that will result from the resolution of these matters.

                                       30
<PAGE>   33

We have been in the past, and we anticipate that we will be in the future,
subject to claims and suits for personal injury arising in the ordinary course
of our business. We anticipate that these future claims and suits, to the extent
for actual damages, will generally be covered by insurance.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the fourth
quarter of the year ended June 30, 2000.

EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below is information relating to our executive officers as of
September 1, 2000:

<TABLE>
<CAPTION>
      NAME                          AGE                            POSITION
      ----                          ---                            --------
      <S>                           <C>   <C>
      Robert P. May...............  51    President, Chief Executive Officer and Director
      Ian Williams................  51    Chairman of the Board and Director
      Jeffrey T. Hendrickson......  55    Executive Vice President and Chief Operating Officer
      Casey L. Gunnell............  53    Chief Financial Officer
      Anthony W. Allen............  39    Vice President -- Operations and Secretary
      Bill J. Buzbee..............  55    Vice President -- Industry Relations and Retail Sales
      Mark Cleveland..............  37    Vice President -- Strategic Business Development and Fleet
                                          Sales
      James D. Green..............  42    Vice President -- Product Development
      Yves Roland Maynard.........  39    Vice President -- Engineering
      Steve Yevoli................  30    Vice President -- New Media and E-Business
</TABLE>

Robert P. May has served as our Chief Executive Officer since March 1999 and as
President since April 2000. Prior to joining PNV, from March 1998 to February
1999, Mr. May was a private investor. From October 1996 to February 1998, Mr.
May served as Chief Operating Officer of Cablevision Systems Corporation. In
this position he oversaw several key transactions including the successful
integration of the New York-area cable systems of Tele-Communications, Inc. From
April 1995 to September 1996, Mr. May served as Chief Operating Officer of Towne
Air Freight, a regional airfreight trucking company. From 1993 to October 1995,
Mr. May also served as a Chief Executive Officer of Intelligent Electronics'
Intelogistics Division, a distributor of desktop hardware and related
outsourcing services. From 1973 to 1993, Mr. May was employed by Federal Express
Corporation where he served in a variety of senior management positions. Mr. May
attended Curry College and Boston College.

Ian Williams, a founder of PNV, has served as our Chairman of the Board since
August 1998 and as a director of PNV since its incorporation in September 1995.
From September 1995 to March 1999, Mr. Williams served as our Chief Executive
Officer. From September 1995 to July 1998, Mr. Williams served as our President.
From March 1993 to September 1995, Mr. Williams served as President of Park 'N
View, Ltd., the predecessor of PNV. Prior to joining Park 'N View, Ltd., from
1991 to March 1993, Mr. Williams served as President of Arden Technologies,
Inc., a manufacturer and distributor of wireless cable transmitters. Mr.
Williams' responsibilities at Arden, as well as other previous employers,
included the design of numerous satellite master antenna television systems,
multi-channel low-power television systems, FM rebroadcast and distribution
systems and wireless television broadcast systems and the installation of
low-power television and cable systems throughout Canada, the Arctic, and over
30 other countries throughout the world. Mr. Williams holds a diploma from West
Gloucestershire College of Education in the United Kingdom.

Jeffrey T. Hendrickson has served as our Chief Operating Officer since July
2000, responsible for managing network based services, fleet and retail sales,
industry relations and overall service quality initiatives. From February 1999
to July 2000 Mr. Hendrickson served as Executive Vice President and Chief
Operating Officer of USa-to-z, an Internet, supersite aggregator with a branded
network of over 2,000 B-to-B vertical portals. Mr. Hendrickson also served as
interim COO at Simpli.com, Inc., a software developer of cognitive search engine
technology where he helped the company secure financing and refine

                                       31
<PAGE>   34

its business model. From April 1997 to February 1999 Mr. Hendrickson was
Executive Vice President and General Manager at Budget Rent-A-Car. In this
capacity, he was responsible for the company's North American rental operations,
a $1.3 billion enterprise. From November 1994 to April 1997 Mr. Hendrickson was
Senior Vice President at Brink's, Inc. where he held worldwide responsibility
for Brink's Air Courier Services and Brink's ATM services. Mr. Hendrickson holds
a BA degree in history/political science from Hartwick College and received an
MBA at the University of New Hampshire.

Casey L . Gunnell has served as CFO since March 2000. Prior to joining PNV, from
July 1999 to March 2000, Mr. Gunnell served as President, JWH Management, Inc.
In this position, he oversaw the family office for a high wealth individual.
From April 1998 to July 1999, Mr. Gunnell was an independent financial and
management advisor to several companies in various industries. From April 1997
to April 1998, Mr. Gunnell served as Senior Vice President and Chief Financial
Officer for AutoNation USA Incorporated (formerly a wholly owned subsidiary of
Republic Industries, Inc. now AutoNation, Inc.), a national used vehicle
superstore retail business. From August 1978 to April 1997, Mr. Gunnell was
employed by JM Family Enterprises, Inc., a region distributor of Toyota vehicles
in the Southeast. Mr. Gunnell held various management and finance positions, his
last of which was Executive Vice President and Chief Financial Officer. Mr.
Gunnell holds a B.B.A. in Accounting from Florida Atlantic University. Mr.
Gunnell received his Florida CPA in 1974.

Anthony W. Allen has served as our Vice President -- Operations since March 1997
and Secretary since our incorporation in September 1995. Prior to joining PNV,
from 1993 to August 1997, Mr. Allen served as Director of Marketing for Arden
Technologies, Inc., a manufacturer and distributor of wireless cable
transmitters. From September 1995 to March 1997, Arden Technologies, Inc.
contracted with us to provide Mr. Allen's services to PNV. From 1990 to 1993, he
served as Director & General Manager of International Microwave Distribution
Systems, Ltd. in Barbados, where he was responsible for the international
distribution and installation of wireless cable products. From 1988 to 1990, he
served as Regional Sales Manager for Southfields Coachworks Ltd., located in the
United Kingdom, a manufacturer of semi-trailers and heavy truck bodywork. Mr.
Allen holds a diploma in mechanical engineering from Harper Adams in the United
Kingdom.

Bill J. Buzbee has served as our Vice President -- Industry Relations and Retail
Sales since May 2000, Vice President -- Business Development from October 1997
to May 2000 and Vice President -- Marketing and Sales from April 1995 to October
1997. Prior to joining PNV, from October 1993 to April 1995, he served as
Manager of Fuel/Ancillary Sales for National Auto/Truckstops Corp., a truckstop
operator. From 1989 to 1993 and from 1972 to 1984, Mr. Buzbee worked for
Truckstops of America and served in various capacities, including general
manager of several truckstop facilities. Mr. Buzbee worked for a Petro Stopping
Center franchisee from 1984 to 1986. Mr. Buzbee attended State Community College
in Columbia, Tennessee and David Lipscomb University in Nashville, Tennessee.

Mark A. Cleveland has served as our Vice President -- Strategic Business
Development and Fleet Sales since May 2000 and Vice President -- Sales from June
1999 to May 2000. Prior to joining PNV, from April 1990 to April 1999, Mr.
Cleveland served as Vice President of Jubitz Fleet Services, a division of
Jubitz Corporation, a company that provides a variety of services to fleets.
From July 1997 to April 1999, Mr. Cleveland also served as the Vice President of
Network Development for SmartStop Inc., a company, partially-owned by Jubitz
Fleet Services, that marketed prepaid phone cards and public access telephone
services in truckstops. From July 1984 to August 1989, Mr. Cleveland was the
President of Horizon Satellite Systems, Inc., a retail and commercial satellite
communications services provider, and he was elected to the board of directors
of the Satellite Broadcasting and Communications Association. From September
1989 to March 1999, Mr. Cleveland was a sales and marketing consultant. From
June 1986 to June 1989, Mr. Cleveland was a founder and Vice President of ONTOP
Software Systems, a developer of business operating software products in
Portland, Oregon. Mr. Cleveland attended the University of Oregon.

                                       32
<PAGE>   35

James D. Green has served as our Vice President -- Product Development since
November 1996. Prior to joining PNV, Mr. Green served as President of GreenLight
Technologies, Inc., a software development company specializing in frequency
marketing and transaction processing services for truckstops and trucking
companies from its formation in March 1994 to November 1996. GreenLight
performed certain software programming consulting services for us. See the
section entitled "Certain Transactions." From 1984 to February 1994, Mr. Green
worked for Comdata Corporation as Senior Product Manager responsible for all
transportation card based products. Mr. Green worked as Product Manager for
Financial Institutional Services Inc. from 1982 to 1984 and as consultant for
Computer Sciences Corporation from 1980 to 1982. Mr. Green holds a B.S. in
Business Administration from The Evergreen State College in Olympia, Washington.

Yves Roland Maynard has served as our Vice President -- Engineering since
September 1995 and as Vice President -- Engineering of our predecessor, Park 'N
View, Ltd., from 1993 to August 1995. Mr. Maynard was an owner and served as
Vice President of Glocom Engineering from 1990 to 1993, and of Glocom
Engineering Ltd./Canada from 1987 to 1990. In this capacity he was responsible
for the engineering and installation of microwave distribution systems. His
experience at Glocom includes the design and manufacture of microwave and cable
and off-air television systems, transmitters and associated components. He has
designed, installed and managed projects in Canada, the United States and the
Caribbean. Mr. Maynard holds a degree in Industrial Electronics from Red River
Community College in Winnipeg, Manitoba.

Steven Yevoli has served as our Vice President -- New Media/E-Business since May
1999. Prior to joining PNV, from May 1998 to May 1999, Mr. Yevoli served as
Director of Cablevision Systems Corporation's E-commerce Division. In this
position, he was responsible for the electronic commerce operations of various
entities, including Madison Square Garden and Radio City Music Hall. From
September 1996 to April 1998, Mr. Yevoli served as one of the five original
members of Cablevision System's New Media Team. In this position, he assisted in
launching one of the country's first cable modem services, Optimum Online. From
October 1997 to June 1998, for Cablevision Systems, Mr. Yevoli also assisted in
the development and launch EZSeek.com, a portal in Long Island, NY. From
September 1995 to September 1996, Mr. Yevoli served as Director of New Media of
Rainbow Interactive, the first interactive group of Rainbow Media, a subsidiary
of Cablevision Systems. From September 1993 to August 1995, Mr. Yevoli served as
Vice President -- Music Division of Sabbeth Industries, in which position he was
responsible for distribution of overruns and out-of-stock music to foreign
markets. Mr. Yevoli holds a B.S. in Business from Ithaca College.

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The common stock is traded on the Nasdaq National Market under the symbol
"PNVN." The following table sets forth the high and low closing sale prices for
the common stock for the periods indicated, as reported by the Nasdaq National
Market.

<TABLE>
<CAPTION>
                                                                     HIGH     LOW
                                                                    ------   -----
      <S>                                                           <C>      <C>
      Fiscal Year Ended June 30, 2000
        Second fiscal Quarter (from November 23, 1999)............  $15.50   $7.63
        Third fiscal Quarter......................................  $ 8.56   $4.13
        Fourth fiscal Quarter.....................................  $ 4.44   $1.38
</TABLE>

As of August 31, 2000 there were 74 stockholders of record of the common stock,
although there are a larger number of beneficial owners.

                                       33
<PAGE>   36

DIVIDENDS

We have never declared or paid cash dividends on our common stock. We intend to
retain all future earnings to finance future growth and, therefore, do not
anticipate paying any cash dividends in the foreseeable future.

SALES OF REGISTERED AND UNREGISTERED SECURITIES AND USE OF PROCEEDS

In the three months ended June 30, 2000, we did not issue any unregistered
securities.

On November 30, 1999, we completed an initial public offering of our common
stock. The managing underwriters in this offering were CIBC World Markets, Allen
& Company Incorporated, Volpe Brown Whelan & Company and William Blair &
Company. The shares of common stock sold in the offering were registered under
the Securities Act of 1933, as amended, under a registration statement on Form
S-1 (the "Registration Statement") (File No. 333-87343) that was declared
effective by the SEC on November 23, 1999. Pursuant to the Registration
Statement, 3,750,000 shares of common stock were sold at a price to the public
of $17.00 per share. The aggregate offering price of the initial public offering
to the public was $63.8 million. In connection with this offering, we paid an
aggregate of $4.5 million in underwriting discounts to the underwriters.
Additional related expenses incurred by us through March 31, 2000 were
approximately $1.8 million. The net proceeds to us from the initial public
offering, after deducting underwriting discounts and commissions and other
offering expenses, were approximately $57.5 million.

Of the net proceeds, through June 30, 2000, we have used $4.9 million to redeem
our Series A preferred stock and $12.9 million for working capital and capital
expenditures. Pending use, the balance of the net proceeds are invested in
short-term, investment grade interest-bearing securities.

Other than amounts paid in connection with the redemption of the Series A
preferred stock held by entities affiliated with Patricof & Co. Ventures, Inc.,
with which one of our directors are affiliated and which, as of June 30, 2000
beneficially owns approximately 15% of PNV's outstanding common stock, none of
the net proceeds of our initial public offering were paid directly or indirectly
to any director or officer or their associates, any person owning 10% or more of
any class of our equity securities of PNV, or any affiliate.

ITEM 6.  SELECTED FINANCIAL DATA

This section presents selected historical financial data of PNV. You should read
carefully the financial statements included in this Report on Form 10-K. The
selected data in this section is not intended to replace the financial
statements and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

PNV derived the statement of operations data for the Successor for the years
ended June 30, 1998, 1999 and 2000 and the balance sheet data as of June 30,
1999 and 2000 from audited financial statements contained elsewhere in this Form
10-K. PNV derived the statement of operations data for the Predecessor for the
period from January 1, 1995 to November 2, 1995, and for the Successor for the
period from September 18, 1995 (Successor's date of incorporation) to June 30,
1996 and for the Successor as of

                                       34
<PAGE>   37

June 30, 1996 and 1997 from the audited financial information of the Predecessor
and the Successor that is not included herein.

<TABLE>
<CAPTION>
                             PREDECESSOR(1)                              SUCCESSOR(1)
                             --------------   -------------------------------------------------------------------
                                               PERIOD FROM
                              PERIOD FROM     SEPTEMBER 18,
                               JANUARY 1,     1995 (DATE OF
                                1995 TO       INCORPORATION)                  YEAR ENDED JUNE 30,
                              NOVEMBER 2,      TO JUNE 30,     --------------------------------------------------
                                  1995             1996           1997         1998         1999         2000
                             --------------   --------------   ----------   ----------   ----------   -----------
                                                      (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                          <C>              <C>              <C>          <C>          <C>          <C>
STATEMENT OF OPERATIONS
  DATA:
 Net revenues..............      $  --           $   150       $      888   $    3,504   $    8,453   $    17,489
 Cost of revenues..........         --               437            2,077        6,599       15,717        32,790
                                                 -------       ----------   ----------   ----------   -----------
 Gross margin..............         --              (287)          (1,189)      (3,095)      (7,264)      (15,301)
 Selling, general and
   administrative
   expenses................        476             1,576            4,432       10,379       19,546        37,804
 Stock-based
   compensation............         --                --               --           --        5,035         6,877
 Write down of equipment...         --                --              595           35           --            --
                                 -----           -------       ----------   ----------   ----------   -----------
 Loss from operations......       (476)           (1,863)          (6,216)     (13,509)     (31,845)      (59,982)
 Interest expense..........         --               103              157        1,031       10,515        10,564
 Interest income and
   other...................         --                (5)            (328)        (806)      (2,588)       (2,758)
                                 -----           -------       ----------   ----------   ----------   -----------
 Net loss..................      $(476)          $(1,961)      $   (6,045)  $  (13,734)  $  (39,772)  $   (67,788)
                                 =====           =======       ==========   ==========   ==========   ===========
 Net loss attributable to
   common stockholders.....         --           $(1,983)      $   (6,962)  $  (16,526)  $  (42,703)  $   (87,054)
 Net loss per share (basic
   and diluted)............         --                --       $    (1.61)  $    (3.83)  $    (9.89)  $     (7.88)
 Shares used to compute
   basic and diluted net
   loss per share..........         --                --        4,318,182    4,318,182    4,318,456    11,044,001
</TABLE>

<TABLE>
<CAPTION>
                                                                         SUCCESSOR(1)
                                                       -------------------------------------------------
                                                                        AS OF JUNE 30,
                                                       -------------------------------------------------
                                                        1996      1997       1998       1999      2000
                                                       -------   -------   --------   --------   -------
                                                               (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                    <C>       <C>       <C>        <C>        <C>
BALANCE SHEET DATA:
 Cash and cash equivalents...........................  $   366   $ 4,717   $ 19,811   $  4,101   $ 3,114
 Working capital.....................................      (82)    2,814     57,139     18,828    30,201
 Total assets........................................    2,898    12,939     94,578     61,386    88,444
 Total long-term debt and long-term portion of
   capital leases....................................    3,388       425     70,605     71,110    71,744
 Total redeemable preferred stock....................      721    19,131     39,134     42,093        --
 Partnership deficiency/common stockholders'
   (deficiency) equity...............................   (1,970)   (8,932)   (20,270)   (56,986)    7,275
</TABLE>

---------------------------

(1) In November 1995, our Predecessor, Park 'N View, Ltd., transferred certain
    of its assets, contractual rights and liabilities to PNV in exchange for
    2,318,182 shares of common stock issued to the former partners of Park 'N
    View, Ltd. The net liabilities transferred were recorded by PNV at Park 'N
    View, Ltd.'s historical carrying amount of $84,446. The financial
    information identified herein as for the "Predecessor" is for Park 'N View,
    Ltd. for the period from January 1, 1995 to November 2, 1995, the date the
    net liabilities were transferred to PNV. The financial information
    identified herein as for the "Successor" is for PNV as of and for the period
    ended June 30, 1996 and for the years ended June 30, 1997, 1998, 1999 and
    2000.

                                       35
<PAGE>   38

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

You should read the following discussion together with the financial statements
and other financial information included in this Annual Report on Form 10-K.
This report contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those indicated in
the forward-looking statements. Our fiscal year ends on June 30 and is named for
the year in which it ends.

OVERVIEW

  Background

From November 1993 to November 1995, our predecessor, Park 'N View, Ltd.
developed our private integrated network and installed and operated it at one
truckstop as a field test. There were no revenues or significant selling
expenses generated by Park 'N View, Ltd. during this period. Following the
formation of PNV in September 1995, and the transfer to PNV of the business and
net liabilities of Park 'N View, Ltd., we began the buildout of our private
integrated network utilizing principally proceeds from sales of our securities
and began offering services on our private integrated network in December 1995
with the completion of our first site. As of June 30, 2000 our private
integrated network was deployed at 288 truckstops. In addition, as of June 30,
2000 one or more of the telecommunications services that we offer truckstop
operators for the public areas inside the truckstop were available at an
additional 109 truckstops. As of June 30, 2000 we also had deployed 273 prepaid
phone card machines and 225 public Internet kiosks. Since inception, we have
incurred significant losses and negative cash flow, and as of June 30, 2000, we
had an accumulated deficit of $129.3 million.

During the third and fourth quarters of fiscal 1999 and the first and second
quarters of fiscal 2000, we granted options to purchase our common stock to
employees and consultants at exercise prices which we have determined were below
the deemed fair market value of our common stock on the grant dates for
financial reporting purposes. As a result of these option grants, for stock
options granted to employees in fiscal 1999, we recorded total deferred stock
compensation expense of $13.4 million which is being expensed over the vesting
period of the options and recognized stock-based compensation expense of
approximately $5.0 million. For stock options granted to employees in fiscal
2000, we recorded deferred compensation expense of $2.4 million, which will be
amortized over the vesting period of the options.

We recognize the value of warrants issued to PACCAR Inc. in November 1999 as
selling, general and administrative expenses. We are determining the value of
these warrants using the Black-Scholes option pricing model. The vesting of
these warrants depends on PACCAR's purchase of $1.0 million of our advertising
services in each of two years following the date we issued the warrant. The
unvested portion of the warrants will be remeasured each quarter and if
different from the fair value in determining the deferred marketing expense that
we recorded in the prior quarter will be reflected as an additional charge or
credit to expense at that time. Accordingly, the higher our stock price is at
the time of remeasurement, the more significant will be the deferred marketing
expense that we will be required to record and the portion of this amount to be
recognized as selling, general and administrative expenses. At the time the
warrants vest, the fair value of the vested portion will be remeasured for a
final time and will not continue to be remeasured in subsequent periods. The
deferred marketing expense recorded for the PACCAR warrants at June 30, 2000 was
$.1 million, which we intend to amortize over the term of the PACCAR commitment
and recognize as selling, general and administrative expenses.

In March 2000, we signed an agreement with America Online, Inc., or AOL, under
which our content and services for the trucking and logistics industry will be
available across several AOL brands for the 26-month term of the agreement.
Under this agreement, we have paid AOL $3.0 million. Of the remaining $5.0
million owed to AOL, $1.0 million is due in each of September 2000, December
2000, March 2001, June 2001 and September 2001. The entire $8.0 million amount
will be amortized on a straight line basis over the 26-month term of the
agreement and will be recognized as selling, general and administrative
expenses. Our agreement with AOL also provides us with the use of AOL's sales
and

                                       36
<PAGE>   39

marketing resources to generate advertising revenue for our portal website. We
will pay AOL a commission on any such revenue.

In April 2000, we also issued to AOL a warrant to purchase 287,590 shares of our
common stock at an exercise price of $6.6875 per share. This warrant became
exercisable in full in May 2000. We intend to recognize the value of this
warrant as selling, general and administrative expenses. The value of this
warrant was determined using the Black-Scholes option pricing model to be
approximately $1.2 million. We have recorded this amount as deferred marketing
expense which we intend to amortize on a straight-line basis over the 26-month
term of our agreement with AOL.

In September 1999, we sold 3,000,000 shares of our Series D convertible
preferred stock for $10.50 per share. We determined that the purchase price was
below the deemed fair market value of the Series D preferred stock for financial
reporting purposes. As a result, we have recorded the deemed fair market value
of the Series D preferred stock as paid-in capital and the difference between
the purchase price and deemed fair market value as a dividend.

In connection with the initial public offering of our common stock completed in
November 1999, our outstanding convertible preferred stock automatically
converted into common stock. As a result of this conversion, we recognized
unamortized preferred stock issuance costs of $3.6 million as additional paid in
capital.

We had approximately $112.0 million in net operating loss carryforwards at June
30, 2000 for income tax purposes. Utilization of the net operating loss
carryforwards may be subject to a substantial annual limitation due to the
"change in ownership" provisions of the Internal Revenue Code of 1986. The
annual limitation may result in the expiration of net operating losses before
utilization of the losses.

Certain fiscal 1998 and 1999 amounts have been reclassified to conform to the
fiscal 2000 presentation.

  Net Revenues

For fiscal 2000, our revenues were generated from sales to truck drivers of
monthly subscriptions and daily memberships to the telecommunications, cable
television and Internet access services offered through our network, as well as
advertising sales, prepaid phone card operations, resale of long distance
telephone minutes and usage fees from our public Internet kiosks.

The following table sets forth the number of monthly and daily subscribers to
our network during the last month in each of our eight most recent fiscal
quarters.

<TABLE>
<CAPTION>
      PERIOD                    MONTHLY SUBSCRIBERS   DAILY SUBSCRIBERS   ISP SUBSCRIBERS ONLY   TOTAL SUBSCRIBERS
      ------                    -------------------   -----------------   --------------------   -----------------
      <S>                       <C>                   <C>                 <C>                    <C>
      September 1998..........        19,207                8,925                   --                28,132
      December 1998...........        21,997               11,203                   --                33,200
      March 1999..............        21,632               14,136                   --                35,768
      June 1999...............        21,317               13,829                   --                35,146
      September 1999..........        24,803               10,456                   --                35,259
      December 1999...........        27,317                7,688                  729                35,734
      March 2000..............        32,295                9,211                1,576                43,082
      June 2000...............        30,645                9,026                2,596                42,267
</TABLE>

We began to offer Internet access service on our network in July 1999. We
initially offered this service free of charge on a promotional basis. In
November 1999, we began to charge separate fees for monthly subscriptions and
daily memberships to this service. We launched our portal website in October
1999 and through this portal website we provide content for the trucking
community, including drivers and their families, industry suppliers and
manufacturers, truckstop operators and trucking fleets. During June 2000, we had
5,663 monthly subscribers to our Internet access service, many of whom were also
subscribers to our telecommunications and cable television services.

                                       37
<PAGE>   40

Because a substantial number of our subscriptions have historically been sold
through vending machines and due to the deployment of our network over a
four-year period, our subscriptions have not followed the typical pattern
exhibited by a mature subscriber-based business with recurring and automatically
renewing subscriptions. In addition to monthly subscriptions purchased at
vending machines located at truckstops where our network is deployed, our
monthly subscribers consist of the following categories:

 - Drivers whose subscription fees are automatically charged to their credit
   cards or deducted from their checking accounts, until cancelled, or directly
   billed in advance under a program we refer to as the "power plan program;"

 - Fleet drivers whose subscription fees are automatically deducted from their
   compensation, until cancelled, under our payroll deduction program in which
   their fleets participate. As of June 30, 2000, 63 fleets were participating;
   and

 - Fleet drivers whose subscription fees are paid by their fleets. We have
   contracts with nine fleets under which they have agreed to pay ongoing
   monthly subscription fees over varying periods of time.

The following table sets forth our monthly subscribers by category during the
last month in each of our eight most recent quarters:

<TABLE>
<CAPTION>
PERIOD                                   POWER PLAN   PAYROLL DEDUCTION   FLEET FUNDED   VENDING MACHINE
------                                   ----------   -----------------   ------------   ---------------
<S>                                      <C>          <C>                 <C>            <C>
September 1998.........................    11,723             307            2,566            4,611
December 1998..........................    13,606             506            2,974            4,911
March 1999.............................    13,594             330            2,818            4,890
June 1999..............................    11,988           2,000            3,200            4,129
September 1999.........................    11,443           4,159            3,259            5,942
December 1999..........................    10,862           6,860            3,172            6,423
March 2000.............................    12,951           6,812            4,166            8,366
June 2000..............................    11,109           6,848            3,053            9,635
</TABLE>

Prior to the commencement of our power plan program in October 1997, all of our
monthly subscriptions were purchased at vending machines at truckstops at which
our network was deployed. Currently, all purchases of daily subscriptions are
limited to vending machines at these truckstops.

We market our telecommunications, cable television and Internet access services
directly, and indirectly through fleets, to long-haul truck drivers. We also
jointly market our services directly to drivers with some truckstop chains.
Subscribers first purchase a membership card and starter kit for $20. Drivers
then sign-up under an ongoing monthly subscription program or, alternatively,
purchase a $20 or $30 monthly card or a $5 daily card from vending machines at
the truckstop. Monthly subscribers receive a number of free long distance
telephone minutes depending on the package of services purchased. Our sales to
truck drivers at our vending machines are cash transactions completed at the
point of sale. Under the power plan program, a subscriber's monthly subscription
is automatically renewed and the monthly fee is automatically deducted from or
charged to the subscriber's checking account, credit card or billed in advance.
Under the payroll deduction program, a subscriber's monthly subscription is
automatically renewed and the monthly fee is automatically deducted from the
subscriber's fleet compensation. Subscribers under the power plan or payroll
deduction programs may cancel their subscriptions at any time.

We also offer a $10 cash card located at truckstops where our network is
deployed. This card serves as an additional method of payment for the purchase
of long distance telephone minutes over our network and Internet Service
Provider. A truck driver generally pays for long distance telephone minutes with
our cash card or the driver's credit card. Truck drivers may also pay for these
minutes through payroll deductions. Starting in May 2000, vending machine cards
may also be used as cash cards and applied to the purchase of any of our
services.

We generally recognize revenue in the period earned. Pre-paid revenues are
recorded as deferred revenue until earned. Monthly subscription fees are
recorded as revenue ratably over the subscription period.

                                       38
<PAGE>   41

During the fourth quarter of fiscal 1999, we also began to generate revenue from
our prepaid phone card operations in one major truckstop chain and sales of
advertising principally in Connect!. In July 1999, we began to offer Internet
access service on our network free of charge on a promotional basis. In November
1999, we charged separate fees for monthly and daily subscriptions to this
service. We have contracted with two truckstop chains to provide one or more of
the following services: a total communications solution to truckstop owners and
operators consisting of public phone and prepaid phone card operations as well
as public Internet kiosks. In addition, since January 2000, we have generated
revenues from sales of advertising on our portal website.

  Cost of Revenues

Our fixed operating expenses currently consist principally of:

 - amortization and depreciation of the capitalized costs of our network,
   prepaid phone card machines and increased switching capacity to accommodate
   our public phone operations;

 - cable programming, which we purchase on a per parking stall basis;

 - T-1 lines, local telephone lines and routers for our frame relay, which are
   installed at each truckstop at which our network is deployed;

 - commissions paid to one truckstop chain under a contract we entered into in
   the first quarter of fiscal 2000, and

 - long distance telephone time under a contract with AT&T.

Our variable operating expenses consist principally of purchases of long
distance and other telephone services, repairs and maintenance of our network,
commissions paid to truckstop operators under our contracts with them for
services through our network, publication of our Connect magazine, payments to
the provider of certain components of our prepaid phone card operations,
development of our portal, incentive payments to one truckstop chain relating to
subscription sales quotas and the starter kit equipment.

Under our contracts with most truckstop operators, commission expenses are
generally:

 - 35% of revenues, after deducting promotions and sales tax of approximately
   $5.12 per subscription, from sales from on-site vending machines for the
   first five years and 40% for the second five years; and

 - with regard to subscriptions under our power plan program and payroll
   deduction programs, 35% of revenues, after deducting promotions and sales tax
   of approximately $8.60 per subscription, for the first month and 10% of
   revenues thereafter.

The contracts further provide that we will pay an additional commission to
truckstop operators equal to 10% of their revenues from subscription sales to
fleets pro rata based on the number of their stalls. In addition, under our
contract with one truckstop chain, our commissions payable is a fixed amount
plus an incentive payment that is determined based on its satisfaction of
monthly subscription sales quotas for each truckstop.

  Selling Expenses

We market our network to drivers through a direct sales force and currently
intend to continue to maximize and expand this sales force. We currently
maintain additional sales personnel at 60 to 90 of our largest truckstop
locations. Our sales force also sells to fleet drivers through a fleet sales
program or to the fleet driver individual through this truckstop. We also have a
sales force that sells our advertising media. Selling expenses have therefore
consisted principally of salaries, benefits, travel and marketing expenses. In
addition, we have marketed subscriptions through point-of-sale merchandising
materials and, at larger sites, through field sales representatives. We added
approximately 48 persons to our sales and marketing staff during fiscal 2000.
Our current business plan for our fiscal year ending June 30, 2001 calls for us
to add approximately 42 additional staff during fiscal 2001 to complete the
sales and marketing team.
                                       39
<PAGE>   42

  General and Administrative Expenses

We significantly increased the size of our management team during fiscal 1999
and 2000 and the number of our employees increased to 334 as of June 30, 2000
from 215 as of June 30, 1999, which resulted in an increase in general and
administrative expenses. Our current business plan for our fiscal year ending
June 30, 2001 calls for general and administrative expenses to remain at the
same level as the three months ended June 30, 2000.

RESULTS OF OPERATIONS

  Year Ended June 30, 2000 Compared to Year Ended June 30, 1999

Net Revenues.  Our net revenues increased 106% to $17.5 million for the fiscal
year 2000 from $8.5 million for fiscal year 1999. The increase in revenues for
fiscal year 2000 was primarily attributable to new revenues derived from
advertising and prepaid phone card operations, as well as, to a lesser extent,
additional subscription revenues and the resale of long distance telephone
minutes.

Cost of Revenues.  Cost of revenues, excluding service depreciation, increased
130% to $25.8 million for fiscal year 2000 from $11.2 million for fiscal year
1999. The increase in cost of revenues, excluding service depreciation, for
fiscal 2000 was principally due to costs associated with the increases in the
number of truckstops at which our network was deployed and in sales volume and
with respect to fiscal 2000, the costs of T-1 lines and routing equipment both
of which we added to our network beginning in the three months ended December
31, 1998. The number of truckstops at which our network is deployed increased
30% to 288 as of June 30, 2000 from 230 sites as of June 30, 1999.

Service costs (which includes commissions payable to truckstops, cable
programming, T-1 lines, local telephone lines, long distance minutes purchased
for resale, routing equipment leases, prepaid phone card operations and site
repairs) increased 119% to $20.8 million for fiscal 2000 from $9.5 million for
fiscal 1999. In particular, the cost of T-1 lines and local telephone lines and
purchased long distance minutes increased 138% to $9.5 million for fiscal year
2000 from $4.0 million for fiscal year 1999. For fiscal 2000, the cost increases
were due to increases in the number of truckstops at which our network is
deployed, long distance telephone minutes included with subscriptions, long
distance minutes included with prepaid phone cards and the addition of T-1 lines
which we added to our network in the three months ended December 31, 1998. The
increases in service costs were also due to increases in sales volume,
commissions due to the truckstops related to our prepaid phone card operations
which we began to offer in April 1999 and routing equipment leases which we also
added to our network in the three months ended December 31, 1998. Included in
service cost is approximately $.5 million associated with the replacement
connectors installed in our parking lot access points to enhance connectivity
quality and the distribution of replacement cables to current subscribers. The
distribution of replacement cables to prior subscribers was recognized as
selling, general and administrative expenses.

Service depreciation increased $2.5 million to $7.0 million for fiscal year 2000
from $4.5 million for fiscal year 1999. These increases in service depreciation
reflect the additional buildout of our network.

Advertising expense is principally associated with advertising revenue generated
from Connect!, our monthly cable television guide and lifestyle magazine. Costs
associated with Connect! for fiscal year 1999 were categorized as marketing
expenses and included in selling, general and administrative expenses.
Advertising expense in cost of revenues for fiscal year 2000 was $2.2 million.

Gross Margin.  Gross margin was a negative $15.3 million for fiscal year 2000
compared to a negative $7.3 million for fiscal year 1999.

Selling Expense.  Selling expense increased 117% to $18.8 million for fiscal
year 2000 from $8.7 million for fiscal year 1999. The increase was primarily
attributable to an increase in salaries, travel, including per diem, and
marketing expenses. Salaries increased 71% to $6.9 million for fiscal year 2000
from $4.0 million in fiscal year 1999. Travel expenses for fiscal year 2000
increased 31% to $1.7 million from $1.3 million from fiscal year 1999. Marketing
expenses increased 217% to $9.7 million for fiscal year 2000

                                       40
<PAGE>   43

from $3.0 million for fiscal year 1999. The increase in salary and travel
expenses reflects additional costs associated with personnel to expand our sales
and marketing programs. The cost of cables that were distributed to prior
subscribers during the six months ended June 30, 2000 were categorized as
marketing expenses. These new cables are required to connect to replacement
connectors installed in our parking lot access points to enhance connectivity
quality. This expense was approximately $1.2 million for fiscal year 2000. The
cost of cables distributed to current subscribers is included in cost of sales.
Also categorized as marketing expense was the proportional amortization of the
warrants granted to PACCAR, Inc. of $.6 million and the combination of warrants
granted to AOL and the marketing fee required under the AOL Marketing Agreement
was $1.2 million.

General and Administrative Expenses.  General and administrative expenses
increased 75% to $19.0 million for fiscal year 2000 from $10.8 million for 1999.
The increase was primarily attributable to an increase in salaries and travel.
Salaries, increased 113% to $11.0 for fiscal year 2000 from $5.1 million for
fiscal year 1999. Salaries primarily increased due to additional personnel
related to the creation and maintenance of our portal website and the
development of additional service offerings and to a lesser extent, salaries
increased because of additional personnel in other departments within the
Company and a severance accrual to a former officer. Travel expense increased
75% to $1.9 million for fiscal year 2000 from $1.1 million for fiscal year 1999.

Stock Based Compensation Expense.  During fiscal year 2000 and fiscal year 1999,
we granted options to purchase our common stock to employees and consultants at
the exercise prices below the deemed fair market value of our common stock on
the grant dates for financial reporting purposes. As a result, for fiscal year
2000 and fiscal year 1999, we recorded additional deferred stock-based
compensation of $2.4 million and $13.4 million, respectively. In addition, we
recognized stock-based compensation expense of $6.9 million and $5.0 million for
fiscal year 2000 and fiscal year 1999, respectively, for these options and the
options granted in the third and fourth quarters of fiscal 1999 and first and
second quarters of fiscal 2000.

Interest Expense (Income) and Other-Net.  Interest expense (income) and
other -- net decreased to $7.8 million, for fiscal year 2000 from $7.9 million
of interest income and other -- net for fiscal year 1999. The changes in net
interest expense for fiscal year 2000 compared to fiscal year 1999 is primarily
attributable to the change in interest income over those periods that was earned
on cash proceeds from various equity offerings.

Net Loss.  Net loss increased 70% to $67.8 million for fiscal year 2000 from
$39.8 million for fiscal year 1999. We expect to incur significant net losses
and experience substantial negative cash flows for the foreseeable future.

  Year Ended June 30, 1999 Compared to Year Ended June 30, 1998

Net Revenues.  Our net revenues increased 143% to $8.5 million for fiscal 1999,
from $3.5 million for fiscal year 1998. Service revenues increased 148% to $8.2
million for fiscal 1999 from $3.3 million for fiscal 1998. The increase in
revenues for fiscal year 1999 was primarily due to increases in sales of
subscriptions to our network and to a lesser extent, sales of long distance
time.

Cost of Revenues.  Cost of revenues, excluding service depreciation, increased
138% to $11.2 million for fiscal year 1999 from $4.7 million for fiscal year
1998. This increase was principally due to costs associated with the increase in
the number of sites of our network, the costs associated with the increase in
sales volume and routing equipment leases incurred in connection with upgrading
our network. Service costs (which includes commission payable to truckstops,
cable programming, leased telephone lines and purchased long distance minutes,
starter kits, freight, site repairs and routing equipment leases incurred in
connection with the upgrading the cost of phone lines and purchased long
distance minutes) increased 188% to $9.5 million for fiscal year 1999 from $3.3
million for fiscal year 1998. This increase was due to the increase in the
number of sites, long distance telephone minutes included with memberships and
the addition of T-1 lines, which began to be installed at our sites in the three
month period ended December 31, 1998. Service depreciation increased $2.6
million to $4.5 million for fiscal year 1999 from
                                       41
<PAGE>   44

$1.9 million for fiscal year 1998. This increase in service depreciation
reflects the additional buildout of our network. As we increase the number of
truckstops at which our network is deployed, we believe that cost of revenues
will increase significantly. Fixed costs are a significant portion of the cost
of revenues and as the number of new sites increase, fixed costs will continue
to increase.

Selling Expense.  Selling expense increased 67% to $8.7 million for fiscal year
1999 from $5.2 million for fiscal year 1998. This increase was primarily
attributable to an increase in salaries, travel and marketing expenses. Salaries
increased 43% to $4.0 million for fiscal year 1999 from $2.8 million for fiscal
year 1998. Travel and per diem expenses increased 18% to $1.3 million for fiscal
1999 from $1.1 million for fiscal 1998. Marketing expenses increased 173% to
$3.0 million for fiscal year 1999 from $1.1 million for fiscal year 1998. This
increase in salaries and travel reflects the additional sales personnel needed
for new sites. This increase in marketing expenses reflects additional marketing
efforts to increase our subscriptions to services offered on our network.

General and Administrative Expenses.  General and administrative expenses
increased 108% to $10.8 million for fiscal year 1999 from $5.2 million for
fiscal year 1998. The increase was primarily attributable to an increase in
salaries, travel and professional fees. Salaries increased 122% to $5.1 million
for fiscal year 1999 from $2.3 million for fiscal year 1998. Travel and per diem
expenses increased 175% to $1.1 million for fiscal year 1999 from $.4 million
for fiscal year 1998. Professional fees increased 25% to $.5 million for fiscal
year 1999 from $.4 million for fiscal year 1998.

Stock-Based Compensation Expense.  During the third and fourth quarters of
fiscal year 1999, we granted options to purchase our common stock to employees
and consultants at exercise prices which we have determined were below the
deemed fair market value of our common stock on the grant dates for financial
reporting purposes. As a result of these options, we recorded total deferred
stock compensation expense of $13.4 million which is being amortized over the
vesting period of the options, generally three to four years, in accordance with
APB 25 and recognized stock-based compensation expense of approximately $5.0
million in fiscal 1999.

Interest Expense (Income) and Other-Net.  Interest expense (income) and
other -- net increased to $7.9 million for fiscal year 1999 from $.2 million of
interest expense and other -- net for fiscal year 1998. The additional net
interest expense for fiscal year 1999 compared to fiscal year 1998 is primarily
attributable to the interest expense on our 13% notes in the aggregate principal
amount of $75.0 million issued in May 1998.

Net Loss.  Our net loss increased 191% to $39.8 million for fiscal year 1999
from $13.7 million for fiscal year 1998. We expect to incur significant net
losses and negative cash flow from operations for the foreseeable future.

                                       42
<PAGE>   45

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited quarterly results of operations
data for the eight quarters ended June 30, 2000. Our management believes that
this information has been prepared substantially on the same basis as the
audited financial statements appearing elsewhere herein, and all necessary
adjustments, consisting only of normal recurring adjustments, have been included
in the amounts stated below to present fairly the unaudited quarterly results of
operations. The quarterly data should be read in conjunction with our audited
financial statements and notes to financial statements appearing elsewhere
herein. The operating results for any quarter are not necessarily indicative of
the operating results for any future period.
<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                       ----------------------------------------------------------------------------------------
                                       SEPTEMBER 30,   DECEMBER 31,    MARCH 31,      JUNE 30,     SEPTEMBER 30,   DECEMBER 31,
                                           1998            1998          1999           1999           1999            1999
                                       -------------   ------------   -----------   ------------   -------------   ------------
      <S>                              <C>             <C>            <C>           <C>            <C>             <C>
      STATEMENT OF OPERATIONS DATA:
      Net revenues..................    $ 1,723,787    $ 1,985,412    $ 2,287,604   $  2,455,917   $  3,380,691    $  3,829,295
      Cost of revenues:
       Service cost.................      1,513,006      2,300,751      2,713,624      2,936,811      4,060,467       4,338,472
       Service depreciation.........        822,652      1,047,954      1,259,697      1,387,547      1,470,793       1,652,415
       Equipment cost...............        367,241        579,471        434,064        292,414        426,658         590,094
       Advertising..................          4,399         10,325         27,510         19,313        369,215         561,996
                                        -----------    -----------    -----------   ------------   ------------    ------------
        Total cost of revenues......      2,707,298      3,938,501      4,434,895      4,636,085      6,327,133       7,142,977
                                        -----------    -----------    -----------   ------------   ------------    ------------
        Gross margin................       (983,511)    (1,953,089)    (2,147,291)    (2,180,168)    (2,946,442)     (3,313,682)
      Selling, general and
       administrative expenses......      3,602,680      5,338,719      4,587,833      6,017,092      6,885,842       7,475,310
      Stock-based compensation......             --             --        250,000      4,785,315      2,022,443       2,621,679
      Write-down of equipment.......             --             --             --             --             --              --
                                        -----------    -----------    -----------   ------------   ------------    ------------
      Loss from operations..........     (4,586,191)    (7,291,808)    (6,985,124)   (12,982,575)   (11,854,727)    (13,410,671)
      Interest expense..............      2,644,737      2,596,997      2,678,414      2,594,462      2,652,054       2,646,842
      Interest income and Other.....       (749,246)      (797,106)      (461,296)      (580,683)      (183,825)       (668,096)
                                        -----------    -----------    -----------   ------------   ------------    ------------
        Net loss....................     (6,481,682)    (9,091,699)    (9,202,242)   (14,996,354)   (14,322,956)    (15,389,417)
      Preferred stock dividends and
       amortization of preferred
       stock issuance costs.........       (691,704)      (714,281)      (728,513)      (708,105)      (813,692)     (5,012,660)
      Accretion of Series C
       Preferred shares to fair
       value........................             --             --             --        (88,420)    (3,187,521)    (10,252,392)
                                        -----------    -----------    -----------   ------------   ------------    ------------
        Net loss attributable to
          common stockholders.......    $(7,173,386)   $(9,805,980)   $(9,930,755)  $(15,792,879)  $(18,324,169)   $(30,654,469)
                                        ===========    ===========    ===========   ============   ============    ============

<CAPTION>
                                          THREE MONTHS ENDED
                                      ---------------------------
                                       MARCH 31,       JUNE 30,
                                          2000           2000
                                      ------------   ------------
      <S>                             <C>            <C>
      STATEMENT OF OPERATIONS DATA:
      Net revenues..................  $  4,722,296   $  5,557,039
      Cost of revenues:
       Service cost.................     5,744,524      6,693,073
       Service depreciation.........     1,831,755      2,079,328
       Equipment cost...............       697,506      1,011,377
       Advertising..................       578,072        684,541
                                      ------------   ------------
        Total cost of revenues......     8,851,857     10,468,319
                                      ------------   ------------
        Gross margin................    (4,129,561)    (4,911,280)
      Selling, general and
       administrative expenses......    10,367,518     13,074,842
      Stock-based compensation......     1,708,018        524,966
      Write-down of equipment.......            --             --
                                      ------------   ------------
      Loss from operations..........   (16,205,097)   (18,511,088)
      Interest expense..............     2,658,059      2,607,820
      Interest income and Other.....      (784,567)    (1,121,898)
                                      ------------   ------------
        Net loss....................   (18,078,589)   (19,997,010)
      Preferred stock dividends and
       amortization of preferred
       stock issuance costs.........            --             --
      Accretion of Series C
       Preferred shares to fair
       value........................            --             --
                                      ------------   ------------
        Net loss attributable to
          common stockholders.......  $(18,078,589)  $(19,997,010)
                                      ============   ============
</TABLE>

                                       43
<PAGE>   46

LIQUIDITY AND CAPITAL RESOURCES

We completed our initial public offering of our common stock in November 1999.
The net proceeds to us from this offering after deducting underwriting discounts
and commissions and other offering expenses were $57.5 million. Since our
incorporation in September 1995, and prior to our initial public offering, we
satisfied our cash requirements through the proceeds of sales of common stock,
sales of preferred stock, certain debt securities and 13% notes which we sold
together with warrants to purchase 505,375 shares of our common stock. To date,
we have raised $204.0 million in debt and equity capital. At June 30, 2000, we
had $36.7 million in cash and cash equivalents. This amount has been further
reduced during the first quarter of the year ending June 30, 2001 as we funded
our operating losses.

Net cash used in operating activities was $51.1 million and $29.3 million for
fiscal year 2000 and 1999, respectively. The $21.8 million increase in net cash
used in operating activities fiscal year 2000 compared to fiscal year 1999
primarily resulted from an increase in the net loss of $28.0 million to $67.8
million for fiscal year 2000 compared to a net loss of $39.8 million for fiscal
year 1999. For fiscal year 2000 our net loss was partially offset by an increase
in non-cash expenditures for depreciation, amortization, warrants issued for
services and stock option compensation expense of $6.8 to $17.6 for fiscal 2000
from $10.8 for fiscal year 1999. For fiscal year 2000, the accounts receivable
increase of $.3 million from fiscal 1999 reflects partially an increase in
revenue from sources having payment terms of 30-60 days. These revenue sources
include advertising and monthly subscription sales under our payroll deduction
program, fleet-funded subscription sales and home billing. In the past, a larger
portion of our revenue was generated from sales of subscriptions under our power
plan program and vending machine sales, both of which are cash sales.

Net cash (used in) provided by investing activities was $(31.6) million and
$14.4 million for fiscal year 2000 and 1999, respectively. The $46.0 million
increase in net cash used in investing activities for fiscal year 2000 compared
to fiscal year 1999 resulted from the increase in net purchases of short-term
investments in the amount of $(25.2) million for fiscal year 2000 following our
receipt of proceeds from our Series D preferred stock offering in September 1999
and our initial public common stock offering in November 1999. This increase was
partially offset by a decrease in capital expenditures of $.8 million to $17.1
million for fiscal year 2000 from $17.9 million for fiscal year 1999. The
decrease in capital expenditures was principally the result of a decrease in the
number of truckstops at which we installed our network to approximately 67
truckstops during fiscal year 2000 compared to 112 installations during fiscal
1999, offset by additional capital expenditures of approximately $3.4 million
for kiosks and prepaid phone card machines.

Net cash provided by (used in) financing activities was $81.7 million and $(.8)
million for fiscal year 2000 and 1999, respectively. The $82.5 million increase
in net cash provided by financing activities for fiscal year 2000 compared to
fiscal 1999 resulted primarily from our Series D Preferred Stock offering and
the initial public common stock offering during fiscal year 2000.

For fiscal year 2000, our working capital increased $11.4 million from June 30,
1999. The increase was primarily attributable to an increase in short term
investments of $25.2 million which resulted from the receipt of proceeds from
our Series D preferred stock offering and our initial public common stock
offering.

We currently estimate that our capital expenditures for fiscal year 2001 will
range between $2.0 and $2.5 million, principally for the deployment of our
network and services at truckstops and equipment for internal use.

Our capital commitments consist primarily of requirements under our co-marketing
agreement with AOL, capital leases, commissions payable to one truckstop chain,
noncancelable leases of routers for our frame really and contracts for T-1 lines
and for long distance and other telephone services. At June 30, 2000, our
minimum commitments under capital leases and noncancelable operating leases with
terms in excess of one year, including commitments under the contracts relating
to our purchase of T-1 lines and long distance services and the routers for our
frame relay, totaled $5.6 million, $5.2 million, $4.9 million and

                                       44
<PAGE>   47

$3.4, for the four years ending June 30, 2001 through 2004, respectively. See
note 4 of notes to financial statements. These amounts do not include our
obligations to AOL.

We are required to make semiannual interest payments on our 13% notes in May and
November of each year. The 13% notes mature in May 2008. We have made the first
four interest payments from funds and securities in an escrow account
established in connection with and from the proceeds of our sale of these notes.
Beginning with the November 2000 scheduled interest payment, we will be required
to make these interest payments from our available cash. During fiscal year
2001, these payments will total $9,750,000. If we make these payments and the
payments due under our co-marketing agreement with AOL from our available cash,
we will further reduce the remaining resources for our operations.

Our cash and short-term investments as of June 30, 2000 was approximately $36.7
million available for working capital.

Based on our current business plan and cash flow projections for our fiscal year
ending June 30, 2001, we anticipate that our available cash resources may not be
sufficient to meet our cash requirements for this period. Our financing
requirements will depend on numerous factors, including the growth of our
revenues, if any, the rate of such growth and our expenditures, including our
payments to our note holders and AOL. Subsequent to year end June 30, 2000, we
engaged the services of a consulting firm to assist management in developing
strategies for increasing users of our services, increasing revenues, obtaining
additional funding and reducing expenses through several initiatives along with
the development of a five-year comprehensive business and capital requirement
plan. It is likely that our five-year business plan will result in changes to
our operations and business model, the timing and magnitude of which are
currently uncertain. If additional funds are raised through the issuance of
equity securities, our stockholders may experience significant dilution. The
indenture governing our 13% notes substantially restricts our ability to obtain
additional debt financing. Furthermore, there can be no assurance that
additional financing will be available when needed or that, if available, such
financing will include terms favorable to our stockholders or us. If our efforts
to meet our funding requirements are not successful, not completed on a timely
basis as the business plan requires or falls short of our complete needs, we
expect that we may experience insufficient liquidity, which may require us to
curtail or cease our operations. We could also breach payment obligations to
third parties including the holders of our 13% notes or AOL, or otherwise fail
to satisfy business obligations of our company. Please see "Risk Factors" above
and note 1 of notes to financial statements.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion contains forward-looking statements that are subject to risks and
uncertainties. Actual results could vary materially as a result of a number of
factors including those set forth in the section entitled "Risk Factors." We do
not use any derivative financial instruments for hedging, speculative or trading
purposes.

As of June 30, 2000, we had short-term investments of approximately $33.6
million. Substantially all of the short-term investments consisted of highly
liquid investments with remaining maturities at the date of purchase of less
than one year. These investments are subject to interest rate risk and will
decrease in value if market interest rates increase. A hypothetical increase or
decrease in market interest rates by 10 percent from the June 30, 2000 rates
would cause the fair value of these investments to decline by an insignificant
amount. We have the ability to hold these investments until maturity and,
therefore, we do not expect our operating results, cash flows or the value of
these investments to be affected to any significant degree by the effect of a
sudden change in market interest rates. Declines in interest rates over time
will, however, reduce our interest income.

We own equity investments in the amount of $2.0 million at June 30, 2000. A
hypothetical 10% change in fair value of these equity securities would result in
a $200,000 impact on our statement of operations.

                                       45
<PAGE>   48

At June 30, 2000, we had fixed interest rate debt of $75.0 million. A
hypothetical increase or decrease in market interest rates by 10% from the June
30, 2000 rates would not have a material impact on the fair market value of this
debt. We do not hedge any interest rate exposure.

All of our revenues are realized currently in U.S. dollars. In addition, we do
not maintain any asset or cash account balances in currencies other than the
United States dollar. Therefore, we do not believe that we currently have any
significant direct foreign currency exchange rate risk.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements of the registrant are set forth on pages F-1 through
F-19 of this Annual Report on Form 10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                       46
<PAGE>   49

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this Item with respect to directors may be found in the
section captioned "Proposal 1 -- Election of Directors" appearing in the
definitive Proxy Statement to be delivered to stockholders in connection with
our Annual Meeting of Stockholders scheduled to be held in November 2000.
Information required by this Item with respect to compliance with Section 16(a)
of the Securities Exchange Act may be found in the section captioned "Section
16(a) Beneficial Ownership Reporting Compliance" appearing in the definitive
Proxy Statement to be delivered to stockholders in connection with our Annual
Meeting of Stockholders scheduled to be held in November 2000. Such information
is incorporated herein by reference. Pursuant to Item 401(b) of Regulation S-K,
our executive officers are reported in Part I of this report.

ITEM 11.  EXECUTIVE COMPENSATION

Information required by this Item may be found in the section captioned
"Executive Compensation" appearing in the definitive Proxy Statement to be
delivered to stockholders in connection with our Annual Meeting of Stockholders
scheduled to be held in November 2000. Such information is incorporated herein
by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information with respect to this Item may be found in the section captioned
"Security Ownership of Principal Stockholders and Management" appearing in the
definitive Proxy Statement to be delivered to stockholders in connection with
our Annual Meeting of Stockholders scheduled to be held in November 2000. Such
information is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to this Item may be found in the section captioned
"Certain Relationships and Related Transactions" appearing in the definitive
Proxy Statement to be delivered to stockholders in connection with our Annual
Meeting of Stockholders scheduled to be held in November 2000. Such information
is incorporated herein by reference.

                                       47
<PAGE>   50

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1). FINANCIAL STATEMENTS

The following financial statements of PNV Inc. are included in Item 8 of this
Annual Report on Form 10-K:

 Independent Auditors' Report

 Balance Sheets as of June 30, 1999 and 2000

 Statements of Operations for the years ended June 30, 1998, 1999 and 2000

 Statements of Changes in Stockholders' (Deficiency) Equity for the years ended
 June 30, 1998, 1999 and 2000

 Statements of Cash Flows for the years ended June 30, 1998, 1999 and 2000

 Notes to Financial Statements

(a)(2). FINANCIAL STATEMENT SCHEDULES

Financial statement schedules have been omitted since the required information
is not present, or not present in amounts sufficient to require submission of
the schedule, or because the information is included in the financial statements
or notes thereto.

(a)(3).LIST OF EXHIBITS (INCLUDING MANAGEMENT CONTRACTS OR COMPENSATORY PLANS OR
       ARRANGEMENTS REQUIRED TO BE FILED)

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------                                  -----------
<C>           <C>  <S>
 3.1*          --  Amended and Restated Certificate of Incorporation.
 3.2*          --  Amended and Restated By-laws.
 4.1**         --  Indenture, dated as of May 27, 1998, by and between the
                   Company and State Street Bank and Trust Company, as trustee.
 4.2****       --  Warrant Agreement, dated as of May 27, 1998, by and between
                   the Company and State Street Bank and Trust Company, as
                   warrant agent.
 4.3****       --  Warrant Registration Rights Agreement, dated as of May 27,
                   1998, by and between the Company and Donaldson, Lufkin &
                   Jenrette Securities Corporation.
10.1*          --  Fleet Service Agreement, dated as of February 1, 1999, by
                   and between the Company and Trucks For You.
10.2**         --  Fleet Service Agreement, dated as of February 1, 1998, by
                   and between the Company and Carroll Fulmer & Co., Inc.
10.3**         --  Fleet Service Agreement, dated as of March 1, 1998, by and
                   between the Company and Contract Freighters, Inc.
10.4**         --  Fleet Service Agreement, dated as of March 11, 1998, by and
                   between the Company and Lake City Express.
10.5**         --  Fleet Service Agreement, dated as of April 1, 1998, by and
                   between the Company and Top Gun Transport, Inc.
10.6**         --  Cable Television and Telephone Service Agreement, dated as
                   of August 14, 1995, by and between the Company and AMBEST.
10.7**         --  Cable Television and Telephone Service Agreement, dated as
                   of July 11, 1996, by and between the Company and
                   Professional Transportation Partners, LLC.
</TABLE>

                                       48
<PAGE>   51

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------                                  -----------
<C>           <C>  <S>
10.8**         --  Cable Television and Telephone Service Agreement, dated as
                   of March 18, 1997, by and between the Company and North
                   America Truck Stop Network.
10.9**         --  Cable Television and Telephone Service Agreement, dated as
                   of October 28, 1995, by and between the Company and Travel
                   Ports of America, Inc.
10.10**        --  Cable Television and Telephone Service Agreement, dated as
                   of February 15, 1996, by and between the Company and Pilot
                   Corporation.
10.11**        --  Cable Television and Telephone Service Agreement, dated as
                   of February 7, 1997, by and between the Company and All
                   American Plazas, Inc.
10.12**        --  Cable Television and Telephone Service Agreement, dated as
                   of September 12, 1997, by and between the Company and Petro
                   Stopping Centers, L.P.
10.13**+       --  Cable Television and Telephone Service Agreement, dated
                   March 12, 1998 by and between the Company and TA Operating
                   Corporation d/b/a Travel Centers of America.
10.14*         --  Lease, dated as of July 20, 1992, by and between CB
                   Institutional Fund VI and Arden Technologies, Inc., as
                   amended March 29, 1996 and April 5, 1996, as assigned to the
                   Company pursuant to Assignment of Lease, dated October 16,
                   1995, by and between the Company and Arden Technologies,
                   Inc.
10.15*         --  Sublease Agreement and Consent to Sublease, dated as of June
                   1, 1998, by and between the Company and Security World
                   International, Inc.
10.16**        --  Lease, dated August 11, 1997, between Unipower Corporation
                   and the Company.
10.17**        --  Software Development Agreement, dated November 22, 1995,
                   between the Company and GreenLight Technologies, Inc.
10.18**        --  Technology Transfer and Development Agreement, dated as of
                   November 4, 1996, by and among GreenLight, Inc., Jody Green,
                   Lewis Tatham and the Company.
10.19**        --  Customer Agreement, dated December 17, 1997, by and between
                   the Company and Echostar Satellite Corporation.
10.20**        --  Compensation Plan.
10.21*         --  Stock Option Plan.
10.21.1*       --  Severance Program.
10.22**        --  Pledge, Escrow and Disbursement Agreement, dated as of May
                   27, 1998, by and between the Company and State Street Bank
                   and Trust Company, as trustee and escrow agent.
10.23**        --  Warrant, dated as of August 22, 1997, granted to Alex. Brown
                   & Sons Incorporated.
10.24**        --  Warrant, dated as of August 22, 1997, granted to Alex. Brown
                   & Sons Incorporated.
10.25**+       --  Warrant, dated March 12, 1998.
10.26**+       --  Letter Agreement, dated as of May 18, 1998, by and between
                   the Company and a holder of warrants to purchase shares of
                   the Company's common stock.
10.27*         --  Master Agreement to Lease Equipment, dated as of August 21,
                   1998, by and between the Company and Cisco Systems Capital
                   Corporation.
10.28***+      --  Telecom Service Agreement, dated as of January 27, 1999, by
                   and between the Company and TA Operating Corporation.
10.29*         --  Pay Telephone Telecommunications Service Agreement, dated as
                   of February 24, 1999 by and between the Company and CfL,
                   LLC, as amended by Letter Agreement, dated as of February
                   24, 1999.
10.30***       --  Employment Agreement, dated as of March 1, 1999, by and
                   between the Company and Robert P. May.
</TABLE>

                                       49
<PAGE>   52

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------                                  -----------
<C>           <C>  <S>
10.31***       --  Joinder to Stock Purchase Agreement and Related Documents,
                   dated as of March 1, 1999 by Robert P May.
10.32***       --  Nonqualified Stock Option Award Agreement, dated as of March
                   3, 1999, by and between the Company and Robert P. May.
10.33***       --  Letter Agreement, dated as of March 3, 1999 by and between
                   the Company and Robert P. May.
10.34***+      --  Warrant, dated as of March 12, 1999.
10.35*         --  Marketing and Advertising Agreement, dated as of April 28,
                   1999, by and between the Company and Volvo Trucks North
                   America, Inc.
10.36*         --  Letter Agreement, dated May 12, 1999 by and between the
                   Company and Volpe Brown Whelan & Company, LLC.
10.37*         --  Employment Agreement, dated as of May 24, 1999, by and
                   between the Company and Steven Yevoli.
10.38*         --  Nonqualified Stock Option Award Agreement, dated as of May
                   24, 1999, by and between the Company and Steven Yevoli.
10.39*         --  Agreement of Lease, dated as of July 26, 1999, by and
                   between the Company and Eleven Penn Plaza LLC.
10.40*         --  Employment Agreement, dated as of June 21, 1999, by and
                   between the Company and Mark Cleveland.
10.41*         --  Nonqualified Stock Option Award Agreement, dated as of June
                   23, 1999, by and between the Company and Mark Cleveland.
10.42*+        --  Second Amendment to Cable Television and Telephone Service
                   Agreement, dated as of June 28, 1999, by and between the
                   Company and Pilot Corporation.
10.43*+        --  Pre-Paid Phone Card Agreement, dated as of July 16, 1999, by
                   and between the Company and Transcommunications
                   Incorporated.
10.44*         --  Fleet Services Agreement, dated as of August 19, 1999, by
                   and between the Company and US Xpress, Inc.
10.45*****     --  Letter Agreement dated November 18, 1999 by and between the
                   Company and PACCAR.com, a division of PACCAR, Inc.
10.46******    --  Interactive Service Agreement dated March 15, 2000 by and
                   between PNV Inc. and American Online, Inc.
10.47******    --  Warrant to purchase 287,599 shares of common stock dated as
                   of March 15, 2000, issued to American Online, Inc.
10.48          --  Cable Television and Telephone Service Agreement dated March
                   31, 2000 by and between PNV, Inc. and Williams
                   TravelCenters, Inc.
10.49          --  Promissory Note dated May 30, 2000 made by Mark Cleveland
                   payable to the Company.
10.50++        --  Form of AT&T Contract Tariff Order by and between the
                   Company and AT&T.
10.51          --  Letter Agreement dated April 17, 2000 by and between the
                   Company and Casey Gunnell.
10.52          --  Letter Agreement dated August 1, 2000 by and between the
                   Company and Jeffrey T. Hendrickson.
23.1           --  Consent of Deloitte & Touche LLP.
24.1           --  Power of Attorney (included on signature page).
27.1           --  Financial Data Schedule.
</TABLE>

                                       50
<PAGE>   53

---------------------------

     * Incorporated by reference to the Registration Statement on Form S-1
       (Registration No. 333-78343) filed with the Securities and Exchange
       Commission on September 17, 1999, as amended.

    ** Incorporated by reference to the Registration Statement on Form S-4
       (Registration No. 333-59889) filed with the Securities and Exchange
       Commission on July 24, 1998.

   *** Incorporated by reference to the Quarterly Report on Form 10-Q filed with
       the Securities and Exchange Commission on May 17, 1999.

  **** Incorporated by reference to the Registration Statement on Form S-1
       (Registration No. 333-59903) filed with the Securities and Exchange
       Commission on July 24, 1998, as amended.

 ***** Incorporated by reference to the Quarterly Report on Form 10-Q filed with
       the Securities and Exchange Commission on February 14, 2000.

****** Incorporated by reference to the Quarterly Report on Form 10-Q filed with
       the Securities and Exchange Commission on May 15, 2000.

     + Portions of this Exhibit have been omitted and filed separately with the
       Securities and Exchange Commission pursuant to an order for confidential
       treatment granted by the Securities and Exchange Commission.

    ++ Portions of this Exhibit are omitted and filed separately with the
       Securities and Exchange Commission pursuant to a request for confidential
       treatment.

(b) REPORTS ON FORM 8-K

Inapplicable.

(c) EXHIBITS

See Item 14(a)(3) above.

(d) FINANCIAL STATEMENT SCHEDULES

See Item 14(a)(2) above.

                                       51
<PAGE>   54

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and
 Stockholders of PNV Inc.
 Coral Springs, Florida

We have audited the accompanying balance sheets of PNV Inc. (the Company) as of
June 30, 2000 and 1999, and the related statements of operations, changes in
common stockholders' (deficiency) equity, and cash flows for each of the three
years in the period ended June 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of June 30, 2000 and 1999,
and the results of its operations and its cash flows for each of the three years
in the period ended June 30, 2000 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's recurring losses from operations raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

DELOITTE & TOUCHE LLP
Certified Public Accountants

Fort Lauderdale, Florida
September 25, 2000

                                       F-1
<PAGE>   55

                                    PNV INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        JUNE 30,
                                                              ----------------------------
                                                                  1999           2000
                                                              ------------   -------------
<S>                                                           <C>            <C>
                                          ASSETS
Current Assets:
 Cash and cash equivalents..................................  $  4,100,848   $   3,114,067
 Short-term investments.....................................     8,367,324      33,551,941
 Restricted investments (Note 5)............................    10,704,210              --
 Accounts receivable, net of allowance for doubtful accounts
   of $25,083 and 194,534 at June 30, 1999 and 2000,
   respectively.............................................       301,503         571,472
 Inventory..................................................       341,208         813,789
 Prepaid expenses and other.................................       181,788       1,574,979
                                                              ------------   -------------
   Total current assets.....................................    23,996,881      39,626,248
Property and equipment, net (Note 3)........................    32,053,824      42,279,726
Deferred financing costs....................................     3,755,927       3,375,213
Other assets................................................     1,579,037       3,162,378
                                                              ------------   -------------

   Total....................................................  $ 61,385,669   $  88,443,565
                                                              ============   =============
                    LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
Current Liabilities:
 Accounts payable...........................................  $  1,256,994   $   2,521,014
 Accrued expenses...........................................     1,621,271       4,208,344
 Accrued interest on senior notes...........................     1,245,831       1,245,831
 Deferred revenue...........................................       724,850       1,039,757
 Current portion of capital lease obligations (Note 4)......       294,887         410,077
 Current portion of long-term debt (Note 5).................        25,365              --
                                                              ------------   -------------
   Total current liabilities................................     5,169,198       9,425,023
                                                              ------------   -------------
Obligations under capital leases, less current portion (Note
  4)........................................................       263,519         440,557
                                                              ------------   -------------
Long-term debt, less current portion (Note 5)...............    70,846,069      71,303,253
                                                              ------------   -------------
Commitments and Contingencies (Note 4)
Series A Redeemable Preferred Stock -- Par value $.01 per
  share; 627,630 shares authorized and 388,065 issued and
  outstanding as of June 30, 1999; no shares authorized,
  issued or outstanding as of June 30, 2000 (Note 6)........     4,609,809              --
                                                              ------------   -------------
Series B 7% Cumulative Convertible Preferred Stock -- Par
  value $.01 per share; 1,372,370 authorized, issued and
  outstanding as of June 30, 1999; no shares authorized,
  issued or outstanding as of June 30, 2000 (Note 6)........    17,403,860              --
                                                              ------------   -------------
Series C 7% Cumulative Convertible Preferred Stock -- Par
  value $.01 per share; 3,750,000 shares authorized,
  2,351,543 issued and outstanding as of June 30, 1999; no
  shares authorized, issued or outstanding as of June 30,
  2000 (Note 6).............................................    20,079,630              --
                                                              ------------   -------------
Common Stockholders' (Deficiency) Equity:
 Common stock -- par value $.001 per share; 12,000,000 and
   50,000,000 shares authorized at June 30, 1999 and 2000,
   respectively; 4,328,614 and 15,997,356 shares issued and
   outstanding at June 30, 1999 and 2000, respectively......         4,328          15,997
 Additional paid-in capital.................................    13,011,612     139,491,870
 Deferred stock-based compensation and marketing related
   expenses.................................................    (8,345,375)     (2,779,410)
 Receivable from stockholders (Note 7)......................      (145,000)       (153,772)
 Accumulated deficit........................................   (61,511,981)   (129,299,953)
                                                              ------------   -------------
   Total common stockholders' (deficiency) equity...........   (56,986,416)      7,274,732
                                                              ------------   -------------
   Total....................................................  $ 61,385,669   $  88,443,565
                                                              ============   =============
</TABLE>

                       See notes to financial statements.

                                       F-2
<PAGE>   56

                                    PNV INC.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                YEAR ENDED JUNE 30,
                                                     ------------------------------------------
                                                         1998           1999           2000
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
Net revenues......................................   $  3,503,776   $  8,452,720   $ 17,489,321
                                                     ------------   ------------   ------------
Cost of revenues:
 Service cost.....................................      3,336,176      9,464,192     20,836,536
 Service depreciation.............................      1,906,732      4,517,850      7,034,291
 Equipment cost...................................      1,356,085      1,673,190      2,725,635
 Advertising......................................             --         61,547      2,193,824
                                                     ------------   ------------   ------------
   Total cost of revenues.........................      6,598,993     15,716,779     32,790,286
                                                     ------------   ------------   ------------
Gross margin......................................     (3,095,217)    (7,264,059)   (15,300,965)
Selling, general and administrative expenses
  (exclusive of non-cash stock compensation
  expense shown below)............................     10,378,471     19,546,324     37,803,512
Stock-based compensation..........................             --      5,035,315      6,877,106
Write-down of equipment...........................         35,151             --             --
                                                     ------------   ------------   ------------
Loss from operations..............................    (13,508,839)   (31,845,698)   (59,981,583)
Interest expense..................................      1,030,594     10,514,610     10,564,775
Interest income and other.........................       (805,686)    (2,588,331)    (2,758,386)
                                                     ------------   ------------   ------------
   Net loss.......................................    (13,733,747)   (39,771,977)   (67,787,972)
   Preferred stock dividends and amortization of
      preferred stock issuance costs..............     (2,792,537)    (2,842,603)    (5,826,364)
   Accretion of preferred shares to fair value....             --        (88,420)   (13,439,913)
                                                     ------------   ------------   ------------
   Net loss attributable to common stockholders...   $(16,526,284)  $(42,703,000)  $(87,054,249)
                                                     ============   ============   ============
Basic and diluted net loss per share..............   $      (3.83)  $      (9.89)  $      (7.88)
                                                     ============   ============   ============
Shares used to compute basic and diluted net loss
  per share.......................................      4,318,182      4,318,456     11,044,001
                                                     ============   ============   ============
</TABLE>

                       See notes to financial statements.

                                       F-3
<PAGE>   57

                                    PNV INC.
                            STATEMENTS OF CHANGES IN
                    COMMON STOCKHOLDERS' (DEFICIENCY) EQUITY
                    YEARS ENDED JUNE 30, 1998, 1999 AND 2000

<TABLE>
<CAPTION>
                                                                DEFERRED STOCK
                                                                     BASED
                               COMMON STOCK      ADDITIONAL    COMPENSATION AND     RECEIVABLE
                            ------------------     PAID-IN     MARKETING RELATED       FROM       ACCUMULATED
                             SHARES     AMOUNT     CAPITAL         EXPENSES        STOCKHOLDERS     DEFICIT         TOTAL
                            ---------   ------   -----------   -----------------   ------------   ------------   ------------
<S>                         <C>         <C>      <C>           <C>                 <C>            <C>            <C>
BALANCE, JUNE 30, 1997....  4,318,182   $4,318   $  (929,988)              --              --     $(8,006,257)   $ (8,931,927)
Dividends accrued for
  Series A preferred
  stock...................         --      --       (330,286)              --              --              --        (330,286)
Dividends accrued for
  Series B preferred
  stock...................         --      --     (1,050,015)              --              --              --      (1,050,015)
Dividends accrued for
  Series C preferred
  stock...................         --      --     (1,115,631)              --              --              --      (1,115,631)
Amortization of preferred
  stock issuance cost.....         --      --       (296,605)              --              --              --        (296,605)
Issuance of common stock
  warrants................         --      --      5,188,448               --              --              --       5,188,448
Net loss..................         --      --             --               --              --     (13,733,747)    (13,733,747)
                            ---------   ------   -----------     ------------       ---------     ------------   ------------
BALANCE, JUNE 30, 1998....  4,318,182   4,318      1,465,923               --              --     (21,740,004)    (20,269,763)
Dividends accrued for
  Series A preferred
  stock...................         --      --       (296,955)              --              --              --        (296,955)
Dividends accrued for
  Series B preferred
  stock...................         --      --     (1,050,000)              --              --              --      (1,050,000)
Dividends accrued for
  Series C preferred
  stock...................         --      --     (1,308,273)              --              --              --      (1,308,273)
Amortization of preferred
  stock issuance cost.....         --      --       (187,375)              --              --              --        (187,375)
Issuance of common stock
  warrants................         --      --        789,704               --              --              --         789,704
Issuance of conversion
  feature attached to
  Series C preferred
  stock...................         --      --        155,648               --              --              --         155,648
Accretion of Series C
  preferred stock to fair
  value...................         --      --        (88,420)              --              --              --         (88,420)
Exercise of stock
  options.................     10,432      10            680               --              --              --             690
Receivable from
  stockholder.............         --      --             --               --        (184,000)             --        (184,000)
Payment of receivable from
  stockholder.............         --      --             --               --          39,000              --          39,000
Stock options issued for
  services................         --      --        149,990               --              --              --         149,990
Deferred stock based
  compensation............         --      --     13,380,690      (13,380,690)             --              --              --
Amortization of deferred
  stock based
  compensation............         --      --             --        5,035,315              --              --       5,035,315
Net loss..................         --      --             --               --              --     (39,771,977)    (39,771,977)
                            ---------   ------   -----------     ------------       ---------     ------------   ------------
BALANCE, JUNE 30, 1999....  4,328,614   $4,328   $13,011,612     $ (8,345,375)      $(145,000)    $(61,511,981)  $(56,986,416)
                            ---------   ------   -----------     ------------       ---------     ------------   ------------
</TABLE>

                                                                     (Continued)
                                       F-4
<PAGE>   58

                                    PNV INC.
                            STATEMENTS OF CHANGES IN
                    COMMON STOCKHOLDERS' (DEFICIENCY) EQUITY

<TABLE>
<CAPTION>
                                                                  DEFERRED STOCK
                                                                       BASED
                               COMMON STOCK        ADDITIONAL    COMPENSATION AND     RECEIVABLE
                           --------------------     PAID-IN      MARKETING RELATED       FROM        ACCUMULATED
                             SHARES     AMOUNT      CAPITAL          EXPENSES        STOCKHOLDERS      DEFICIT         TOTAL
                           ----------   -------   ------------   -----------------   ------------   -------------   ------------
<S>                        <C>          <C>       <C>            <C>                 <C>            <C>             <C>
BALANCE, JUNE 30, 1999...   4,328,614   $ 4,328   $ 13,011,612      $(8,345,375)      $(145,000)    $ (61,511,981)  $(56,986,416)
Conversion of common
  stock for warrants.....      20,625        21       (573,681)              --              --                --       (573,660)
Stock options issued for
  services...............          --        --        163,252               --              --                --        163,252
Issuance of common stock
  warrants...............          --        --        625,690               --              --                --        625,690
Dividends accrued for
  Series A preferred
  stock..................          --        --       (139,289)              --              --                --       (139,289)
Dividends accrued for
  Series B preferred
  stock..................          --        --       (437,500)              --              --                --       (437,500)
Dividends accrued for
  Series C preferred
  stock..................          --        --       (548,690)              --              --                --       (548,690)
Dividends accrued for
  Series D preferred
  stock..................          --        --       (459,375)              --              --                --       (459,375)
Amortization of preferred
  issuance cost..........          --        --     (3,667,855)              --              --                --     (3,667,855)
Accretion of Series C
  preferred stock to fair
  value..................          --        --        (67,228)              --              --                --        (67,228)
Exercise of stock
  options................      89,084        89         94,539               --         (54,302)               --         40,326
Warrants exercised.......     192,450       192         41,811               --              --                --         42,003
Amortization of
  conversion feature for
  Series D...............          --        --    (13,372,685)              --              --                --    (13,372,685)
Issuance of conversion
  feature attached to
  Series D preferred
  stock..................          --        --     13,372,685               --              --                --     13,372,685
Amortization of deferred
  stock based
  compensation...........          --        --             --        7,323,482              --                --      7,323,482
Cancellation of stock
  options................          --        --     (2,597,499)       1,674,641              --                --       (922,858)
Payment of receivable
  from stockholder.......          --        --             --               --          45,530                --         45,530
Deferred stock based
  compensation...........          --        --      2,656,991       (2,307,970)             --                --        349,021
Shares issued for Series
  B preferred stock......   1,875,000     1,875     14,998,125               --              --                --     15,000,000
Shares issued for
  dividends Series B
  preferred stock........     188,217       188      3,199,395               --              --                --      3,199,583
Shares issued for Series
  C preferred stock......   2,351,543     2,352     18,809,992               --              --                --     18,812,344
Shares issued for
  dividends Series C
  preferred stock........     174,800       175      2,972,419               --              --                --      2,972,594
Shares issued for Series
  D preferred stock......   3,000,000     3,000     31,497,000               --              --                --     31,500,000
Dividends accrued for
  Series D preferred
  stock..................      27,023        27        459,348               --              --                --        459,375
Issuance of common stock,
  net of issuance costs
  of $6,202,287..........   3,750,000     3,750     57,543,963               --              --                --     57,547,713
Warrants issued..........          --        --      1,908,850               --              --                --      1,908,850
Deferred Marketing
  Cost...................          --        --             --       (1,124,188)             --                --     (1,124,188)
Net loss.................          --        --             --               --              --       (67,787,972)   (67,787,972)
                           ----------   -------   ------------      -----------       ---------     -------------   ------------
BALANCE, JUNE 30, 2000...  15,997,356   $15,997   $139,491,870      $(2,779,410)      $(153,772)    $(129,299,953)  $  7,274,732
                           ==========   =======   ============      ===========       =========     =============   ============
</TABLE>

                       See notes to financial statements

                                       F-5
<PAGE>   59

                                    PNV INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                         YEAR ENDED JUNE 30,
                                                              ------------------------------------------
                                                                  1998           1999           2000
                                                              ------------   ------------   ------------
<S>                                                           <C>            <C>            <C>
OPERATING ACTIVITIES:
Net loss....................................................  $(13,733,747)  $(39,771,977)  $(67,787,972)
Adjustments to reconcile net loss to net cash used in
  operating activities:
 Depreciation and amortization..............................     2,117,387      5,663,490     10,524,205
 Amortization of deferred stock based compensation..........            --      5,035,315      6,877,105
 Write-down of equipment....................................        35,151             --             --
 Provision for losses on accounts receivable................            --         19,672        169,451
 Provisions for inventory...................................            --             --         10,000
 Stock options issued for services..........................            --        149,990        163,252
 Loss (gain) on disposal of property and equipment..........            --         20,274         11,249
 Changes in assets and liabilities:
   Accounts receivable......................................      (172,653)      (136,995)      (439,420)
   Inventory................................................      (102,912)        21,530       (482,581)
   Prepaid expenses and other...............................        37,737        (80,911)    (1,393,191)
   Other assets.............................................      (285,567)      (295,531)    (2,918,444)
   Accounts payable.........................................       950,649       (810,119)     1,264,020
   Accrued expenses.........................................       684,129         70,383      2,587,073
   Accrued interest on senior notes.........................       920,831        325,000             --
   Deferred revenue.........................................       173,924        518,997        314,907
                                                              ------------   ------------   ------------
    Net cash used in operating activities...................    (9,375,071)   (29,270,882)   (51,100,346)
                                                              ------------   ------------   ------------
INVESTING ACTIVITIES:
 Proceeds from (purchases) sales of short-term
   investments..............................................   (32,039,916)    23,672,592    (25,184,617)
 Proceeds from sales of restricted investments..............            --      9,452,562      9,750,000
 Sales (purchases) of restricted investments................   (19,263,000)      (893,772)       954,210
 Purchases of property and equipment........................   (12,596,875)   (17,874,247)   (17,079,216)
                                                              ------------   ------------   ------------
    Net cash (used in) provided by investing activities.....   (63,899,791)    14,357,135    (31,559,623)
                                                              ------------   ------------   ------------
FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt and common stock
   warrants, net of offering commission.....................    72,375,000             --             --
 Proceeds from issuance of preferred stock..................    18,628,344             --     31,500,000
 Proceeds from issuance of common stock.....................            --             --     63,750,000
 Proceeds from exercise of stock options....................            --            690         82,329
 Payment of stock and debt issuance costs...................    (1,225,705)      (373,575)    (8,299,286)
 Redemption of preferred stock..............................            --             --     (4,859,432)
 Payment of obligations under capital leases................      (365,412)      (428,449)      (528,058)
 Deferred financing costs...................................    (1,010,700)            --             --
 Receivable from stockholder................................            --         39,000         53,000
 Notes payable..............................................       (33,403)       (33,727)       (25,365)
                                                              ------------   ------------   ------------
    Net cash provided by (used in) financing activities.....    88,368,124       (796,061)    81,673,188
                                                              ------------   ------------   ------------
Net increase (decrease) in cash and cash equivalents........    15,093,262    (15,709,808)      (986,781)
Cash and cash equivalents, beginning of period..............     4,717,394     19,810,656      4,100,848
                                                              ------------   ------------   ------------
Cash and cash equivalents, end of period....................  $ 19,810,656   $  4,100,848   $  3,114,067
                                                              ============   ============   ============
Supplemental cash flow information:
 Interest paid..............................................  $     33,030   $  9,516,653   $  9,822,252
                                                              ============   ============   ============
Non-Cash financing and investing activities:
 Capital lease obligations relating to acquisition of
   property and equipment...................................  $    249,801   $    470,096   $    820,283
                                                              ============   ============   ============
 Issuance of common stock warrants..........................  $    538,998   $    789,704   $  2,534,566
                                                              ============   ============   ============
 Issuance of Series C preferred stock for notes
   receivable...............................................            --   $    184,000             --
                                                                             ============
 Conversion of Series B preferred stock and accrued
   dividends to common stock................................            --             --   $ 18,199,583
                                                                                            ============
 Conversion of Series C preferred stock and accrued
   dividends to common stock................................            --             --   $ 21,784,938
                                                                                            ============
 Conversion of Series D preferred stock and accrued
   dividends to common stock................................            --             --   $ 31,959,375
                                                                                            ============
 Cashless exercise of common stock warrants.................            --             --   $    573,660
                                                                                            ============
 Issuance of conversion features attached to Series D
   preferred stock..........................................            --             --   $ 13,372,685
                                                                                            ============
</TABLE>

                       See notes to financial statements.

                                       F-6
<PAGE>   60

                                    PNV INC.
                         NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS, GOING CONCERN AND MANAGEMENT PLANS

Nature of Business.  PNV Inc. (formerly Park 'N View, Inc.) (the "Company"), a
Delaware corporation, was incorporated on September 18, 1995 and provides
bundled telecommunications, cable television and internet access services over
its private integrated network to long-haul truck drivers at truckstops
("sites") throughout the country. The Company also provides telecommunications
and internet access services to other participants in the trucking community.
The Company's name was changed effective November 1999. As of June 30, 2000, the
Company's private integrated network was deployed at 288 sites. In addition, as
of June 30, 2000, one or more of the telecommunications services that we offer
truckstop operators for the public areas inside the truckstop were available at
an additional 109 sites.

Going Concern.  The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
experienced net operating losses since inception and as of June 30, 2000 had an
accumulated deficit of $129.3 million. The Company has prepared a business plan
and cash flow projections for fiscal year ending June 30, 2001 that indicates
additional financing will be required during fiscal year 2001 to fund its
current business plan. Unless the Company is able to successfully secure
additional financing, the Company may not make the scheduled payments on the 13%
Senior Notes. A default would permit the holders of the 13% Senior Notes to
accelerate maturity, which the Company would be unable to pay. These conditions,
among others, may indicate that the Company may be unable to continue as a going
concern for a reasonable period of time. The financial statements do not include
any adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going concern.
Management of the Company is taking several actions in its attempts to alleviate
this situation.

Management Plans.  Management believes that the Company must significantly
increase users and subscribers of its services, increase revenue, reduce overall
expenses and obtain additional funding in order to reach breakeven and achieve
profitability. The Company's future success will depend on achieving market
acceptance in sufficient numbers and at commercially viable subscription rates,
the timely and cost-effective installation of the Company's system at
truckstops, effectively reducing operating expenses and obtaining the financing
necessary both to fund operating losses and to install its system in additional
locations.

Subsequent to fiscal year June 30, 2000, the Company engaged the services of a
consulting firm to assist management with several initiatives including the
development of a five-year comprehensive business and capital plan. Completion
of the plan is anticipated for early second quarter of fiscal year 2001. It is
likely that the five-year business plan will result in changes to operations and
the business model, the timing and magnitude of which are currently uncertain.
The Company believes that it has several alternatives available to obtain the
required capital, including additional private placement financing and strategic
partnership investments. The indenture governing the Company's 13% senior notes
substantially restricts the Company's ability to obtain additional debt
financing and may require some form of note holder concessions or restructuring.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of
the accompanying financial statements follows:

Accounting Estimates.  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
                                       F-7
<PAGE>   61
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Cash and Cash Equivalents.  The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents. The Company's cash and cash equivalents are primarily composed of
bank deposits and overnight funds held by a bank.

Inventory.  Inventory consists principally of telephones and components and is
stated at lower of cost (first-in, first-out method) or market.

Property and Equipment.  Property and equipment is stated at cost, less
accumulated depreciation. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets, generally three to ten
years. Expenditures for improvements that substantially extend the capacity or
useful life of an asset are capitalized. Routine repairs and maintenance are
expensed as incurred.

Leases.  The Company capitalizes leases that meet at least one of the following
criteria: (a) the lease transfers ownership of the property by the end of its
lease term; (b) the lease contains a bargain purchase option; (c) the lease term
is equal to 75% or more of its estimated economic life of the leased property or
(d) the present value at the beginning of the lease term of the minimum lease
payments equals or exceeds 90% of the fair value of the leased property. All
other leases are accounted for as operating leases.

Deferred Financing Costs.  Costs incurred in connection with obtaining financing
are being amortized based on the interest method over the term of the related
obligations. Amortization of deferred financing costs relating to debt are
amortized to interest expense and amortization of deferred financing costs
relating to preferred stock are amortized to additional paid-in capital.

Revenue Recognition/Deferred Revenue.  Initial membership provides a new member
identification within, but no access to or usage of, the Company's network and
provides a starter kit. The starter kits do not have a warranty and cannot be
returned once the service is activated. Subscription fees charged by the Company
provide the customer with unlimited access up to 19 channels of cable television
programming, unlimited local telephone access and, depending on the monthly
subscription purchased anywhere, from 15-60 minutes of long distance telephone
time. Such fees are apportioned to these services based on estimated fair value.
Revenue is apportioned to the long distance telephone time based on market rates
for such service. The remaining revenue which is not attributed to the long
distance usage is apportioned to the cable television and local telephone
services which are provided throughout the subscription period. Net revenues
apportioned to the cable television and local telephone services are recognized
ratably throughout the period the service is activated. The revenue related to
the long distance telephone time that is provided with each monthly subscription
is deferred and recognized when the service is provided. The revenue associated
with additional long distance telephone time to current members is recognized as
such telephone time is used. Revenue attributable to unused minutes is deferred.
Fees from the daily and premium programs, which allow access for a 24 hour
period, are recognized as revenue when activated. Advertising revenue,
specifically designed commercials, ads or programming designed to run on the
Company's network, is recognized throughout the period the service is provided.
The production costs associated with such advertising are amortized throughout
the period the service is provided. Driver referral program cost which consists
of one hour of long distance telephone time is accrued and expensed in the month
the driver is referred to the Company. Revenues from equipment sales are derived
from the sale by the Company of cable and telephone line extension kits to
truckstops for resale to truck drivers. Net unearned revenue associated with the
Company's subscriptions, long distance, cable service and advertising is
recorded as earned when the service is provided and used. Deferred revenue as of
June 30, 1999 and 2000 was $724,850 and $1,039,757, respectively.

Income Taxes.  The provision for income taxes represents the amount payable or
refundable for the period plus or minus the change during the period in deferred
tax assets and liabilities. The Company provides for deferred taxes under the
liability method. Under such method, deferred taxes are adjusted for tax rate
changes as they occur. Deferred income tax assets and liabilities are computed
annually for differences between the financial reporting and tax bases of assets
and liabilities that will result in taxable or
                                       F-8
<PAGE>   62
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are recorded when necessary to reduce deferred tax assets
to the amount that management believes is more likely than not to be realized.

Long-Lived Assets.  Management reviews long-lived assets for possible impairment
whenever events or circumstances indicate that the carrying amount of an asset
may not be recoverable. If there is an indication of impairment, management
prepares an estimate of future cash flows (undiscounted and without interest
charges) expected to result from the use of the asset and its eventual
disposition. If these cash flows are less than the carrying amount of the asset,
an impairment loss is recognized to write down the asset to its estimated fair
value. Assets, if any, which management has committed to a plan to dispose,
whether by sale or abandonment, are reported at the lower of carrying amount or
fair value, less cost to sell. Preparation of estimated expected future cash
flows is inherently subjective and is based on management's best estimate of
assumptions concerning future conditions.

Financial Instruments.  The carrying amount for cash, accounts receivable and
accounts payable approximates fair value due to their short-term maturity.
Short-term investments consist primarily of commercial paper that is carried at
amortized cost, which approximates fair value. Short-term investments also
include highly liquid debt and equity securities that are carried at fair value.
Restricted investments consist of US Treasury securities that are actively
traded and are carried at fair value, with unrealized gains and losses included
in earnings.

At June 30, 1999 and 2000, the carrying value of the Company's long-term debt
approximates $70.9 million and $71.3 million, respectively. The fair value at
June 30, 1999 and 2000 of the Company's long-term debt was approximately $23.0
million, net of discounts. The fair value was based on the most recent quoted
market prices for these issues. The Company believes that it is not practical to
estimate a fair value different from the preferred stocks' carrying value as
these securities have numerous features unique to these securities.

Stock-Based Compensation.  The Company accounts for its employees stock option
plan in accordance with the intrinsic value method and discloses the pro forma
net loss as required by Statement of Financial Accounting Standard ("SFAS") No.
123, "Accounting for Stock-Based Compensation." The Company has granted options
to non-employees for consulting services. The vesting period for these options
was immediate. Stock options issued to non-employees are accounted for in
accordance with provisions of SFAS No. 123 and EITF No. 96-18, "Accounting for
Equity Instruments That Are Issued to Other than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services."

Basic Loss Per Share.  Basic loss per share is computed by dividing the net loss
attributable to common stockholders by the number of weighted average common
shares outstanding. The effect of potential common stock would have been
antidilutive and therefore basic loss per share for the Company is equivalent to
diluted loss per share.

Reclassifications.  Certain 1998 and 1999 amounts have been reclassified to
conform with the 2000 presentation.

New Accounting Pronouncements.  In June 1998, the Financial Accounting Standards
Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including derivative instruments embedded in other
contracts, and for hedging activities. In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral
of the Effective Date of FASB Statement No. 133," which postponed the adoption
of SFAS No. 133. In June 2000, FASB issued SFAS No. 138 which amended SFAS No.
133 and provided additional guidance. The Company has assessed the impact of
SFAS No. 133, as amended, and has determined that its adoption will not have a
material impact on its

                                       F-9
<PAGE>   63
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

financial statements. The Company will adopt SFAS No. 133, as amended, in the
first quarter of fiscal year 2001.

3. PROPERTY AND EQUIPMENT

Property and equipment at June 30 consisted of the following:

<TABLE>
<CAPTION>
                                                                           1999          2000
                                                                        -----------   -----------
      <S>                                                               <C>           <C>
      Site equipment and improvements.............................      $34,592,877   $48,254,049
      Construction equipment......................................          150,058            --
      Computer equipment..........................................          760,719     2,505,245
      Vehicles....................................................          985,014     2,054,042
      Website development costs...................................               --       341,350
      Furniture, fixtures and other equipment.....................           75,854       556,706
                                                                        -----------   -----------
       Subtotal...................................................       36,564,522    53,711,392
      Less accumulated depreciation...............................        7,332,654    14,698,353
                                                                        -----------   -----------
       Subtotal...................................................       29,231,868    39,013,039
      Component equipment.........................................        2,821,956     3,266,687
                                                                        -----------   -----------
      Property and equipment, net.................................      $32,053,824   $42,279,726
                                                                        ===========   ===========
</TABLE>

Component equipment represents equipment that is awaiting installation at a
site. Upon installation the cost of the related equipment is transferred to site
equipment and improvements and depreciation commences once the site is
operational. Component equipment is temporarily staged at the Company's
warehouse until all equipment for a site is received, certain assembly
operations are complete and the site is ready to accept the equipment for
installation. Component equipment is reclassified to site equipment upon
completion of the site on a FIFO basis for all components.

Costs incurred during the development stage of the Company's website are
capitalized in accordance with EITF No. 00-2 "Accounting for Website Development
Costs." Such costs are amortized over three years.

Depreciation expense was $2,008,560, $4,719,617 and $7,527,356 for the years
ended June 30, 1998, 1999, and 2000 respectively.

4. COMMITMENTS AND CONTINGENCIES

In March 2000, the Company signed an agreement with America Online, Inc., or
AOL, under which the Company's content and services for the trucking and
logistics industry available on the Company's trucking industry portal website
will be available across several AOL brands for the 26-month term of the
agreement. Under this agreement, the Company has paid or will pay AOL $8.0
million. Of this amount, $2.0 million was paid in April 2000 and $1 million was
paid in June 2000. Of the remaining $5.0 million owed to AOL, $1.0 million is
due in each of September 2000, December 2000, March 2001, June 2001 and
September 2001. The entire $8.0 million amount will be amortized on a straight
line basis over the 26-month term of the agreement and will be recognized as
selling, general and administrative expenses. The agreement with AOL also
provides for the use of AOL's sales and marketing resources to generate
advertising revenue for the Company's portal website. The Company will pay AOL a
commission on any such revenue.

The Company has entered into agreements with four officers to provide payments
if terminated without cause or a change in control. The aggregate amount of the
agreements is approximately $1.0 million.

                                      F-10
<PAGE>   64
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Company leases routers, T-1 telephone lines, office sites and equipment
maintained at various facilities under operating leases. Capital leases
primarily consist of automobiles. Future minimum lease payments under
noncancellable operating leases and capital leases are as follows:

<TABLE>
<CAPTION>
      YEAR ENDING JUNE 30:                                               OPERATING     CAPITAL
      --------------------                                              -----------   ----------
      <S>                                                               <C>           <C>
      2001........................................................      $ 5,053,096   $  497,664
      2002........................................................        4,895,676      324,739
      2003........................................................        4,729,110      185,090
      2004........................................................        3,375,158           --
      2005........................................................          147,424           --
      Thereafter..................................................            4,783           --
                                                                        -----------   ----------
         Total....................................................      $18,205,247    1,007,493
                                                                        ===========
      Imputed interest on capital leases..........................                      (156,859)
                                                                                      ----------
      Present value of capital leases.............................                       850,634
      Less current portion........................................                       410,077
                                                                                      ----------
      Long-term portion...........................................                    $  440,557
                                                                                      ==========
</TABLE>

The Company has a three year purchase commitment with AT&T for long distance and
other telephone services having a value at the Company's discounted rate of
$340,800 for fiscal year 2001 and fiscal year 2002. In fiscal year 2003 the
amount is $227,300.

Rent expense was $355,765, $1,760,963 and $4,875,708 for the years ended June
30, 1998, 1999 and 2000, respectively.

5. LONG-TERM DEBT

In May 1998, the Company issued $75.0 million of 13% Senior Notes (the "Senior
Notes"). The Senior Notes are general senior obligations of the Company and will
rank pari passu with all current and future unsecured senior indebtedness of the
Company. The Senior Notes have a maturity date of May 15, 2008. Interest will be
paid semiannually on May 15 and November 15 to holders of record on the
immediately preceding May 1, and November 1, respectively. The Company placed
$19.2 million of the net proceeds from the Senior Notes in an escrow account.
The escrow account is pledged as security for payment of the first four
scheduled interest payments on the Senior Notes. The amounts in this escrow
account are presented as restricted investments in the accompanying balance
sheets. The Company made its last payment from the Company's restricted
investment account on May 15, 2000.

The Senior Notes are redeemable at the Company's option after May 15, 2003, at
which time the Company will pay a decreasing premium for this redemption until
maturity at May 15, 2008. The Senior Notes are mandatorily redeemable at the
option of the holders in the event of a change in control (as defined) or an
asset sale.

The Senior Notes were issued together with 75,000 detachable warrants in the
form of units. Each warrant, when exercised, will entitle the holder to receive
6.73833 shares of common stock at an exercise price of $.01 per share. The
warrants will become exercisable upon the earlier of November 23, 1998, the
effective date of a registration statement related to a registered exchange
offer of the Senior Notes or upon the occurrence of certain other events
(including a change in control, as defined, or default) as specified in the
related agreements and will automatically expire on May 15, 2008. The relative
fair market values for the Senior Notes and warrants were determined by the
negotiations with the purchasers of the units. The agreed upon original issue
discount resulted in an allocation of $70,350,000 of the proceeds to the Senior
Notes and $4,650,000 to the warrants, their deemed fair value.

                                      F-11
<PAGE>   65
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

At June 30, 1999, the Company had outstanding $25,365 of notes payable relating
to the purchase of vehicles. These notes had an average interest rate of 10.7%
and matured on various dates through fiscal year end June 30, 2000.

Scheduled debt maturities are as follows:

<TABLE>
<CAPTION>
      YEAR ENDING JUNE 30:
      --------------------
      <S>                                                           <C>
      2001........................................................           --
      2002........................................................           --
      2003........................................................           --
      2004........................................................           --
      2005........................................................           --
      Thereafter..................................................  $75,000,000
                                                                    -----------
         Subtotal.................................................   75,000,000
         Less debt discount.......................................    3,696,747
                                                                    -----------
         Total....................................................  $71,303,253
                                                                    ===========
</TABLE>

6. PREFERRED STOCK

Series A Redeemable Preferred Stock.  The Series A Preferred provided for an
annual dividend of 7%, payable in arrears quarterly in cash or in kind.
Cumulative unpaid dividends in arrears were $839,493 at June 30, 1999. On
November 23, 1999, the effective date of the Company's initial public offering,
the Series A Preferred, together with accrued unpaid dividends, was redeemed for
$4.9 million in cash.

Series B 7% Cumulative Convertible Preferred Stock.  In connection with a 1996
private placement (the "1996 Offering"), the Company authorized and issued
1,372,370 shares of Series B Preferred, par value of $.01 for $10.93 per share
and a total offering amount of $15.0 million. On November 23, 1999, the
effective date of the Company's initial public offering, the Series B Preferred,
together with accrued unpaid dividends, was converted into common stock of the
Company.

Series C 7% Cumulative Convertible Preferred Stock.  In August 1997, the Company
entered into a private placement offering (the "1997 Offering") with certain
investors to raise additional working capital through the sale of 2,351,543
shares of Series C 7% Cumulative Convertible Preferred Stock (the "Series C
Preferred") for a purchase price of $8.00 per share and a total offering amount
of $18,812,344. Also, as part of the 1997 Offering, the Company issued a warrant
to the underwriting agent for the purchase of 100,399 shares of common stock
exercisable at $8.00 per share at any time within five years from the date of
this offering. On November 23, 1999, the effective date of the Company's initial
public offering, the Series C Preferred, together with accrued unpaid dividends,
was converted into common stock of the Company.

Series D 7% Cumulative Convertible Preferred Stock.  On August 27, 1999, the
Company entered into a definitive purchase agreement for a private placement
offering with certain investors to raise additional working capital through the
sale of 3,000,000 shares of Series D Preferred for a purchase price of $10.50
per share and a total offering amount of $31.5 million. The Series D Preferred
would automatically convert into 3,000,000 shares of common stock upon the
completion of the initial public offering. Dividends will accrue from the
issuance of the Series D Preferred until conversion at the rate of 7% per annum.
The Company will pay accrued dividends by issuing shares of its common stock
valued at the offering price on initial public offering. Upon closing of the
transaction, the Company issued to the placement agent a warrant to purchase
60,000 shares of common stock at $10.50 per share which is exercisable for a
five year period and paid the placement agent 6% of the gross proceeds of the
sale of the Series D Preferred which is approximately $1.9 million. In
accordance with Mr. May's employment

                                      F-12
<PAGE>   66
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

agreement, the Company granted options to purchase 130,097 shares of common
stock having an exercise price of $5.00 as a result of the closing of the sale
of the Company's Series D Preferred Stock. On November 23, 1999, the effective
date of the Company's initial public offering, the Series D Preferred, together
with accrued unpaid dividends, was converted into common stock of the Company.

In November 1999, the Company completed its Initial Public offering. The Company
issued 3,750,000 shares of common stock at $17.00 per share for net proceeds to
the Company of $57,547,713 after underwriting discounts and offering expenses.
As part of the IPO, the Company redeemed for cash all of the outstanding Series
A Redeemable Preferred Stocks and related accrued dividends in the amount of
$4.9 million. The Company's preferred stockholders also converted Series B, C
and D Preferred and related accrued dividends into shares of common stock in the
amount 2,063,217, 2,526,423, and 3,027,023 respectively. The unamortized
preferred stock issuance costs of $3.6 million has been charged to additional
paid in capital.

The Company has authorized shares of preferred stock of 8,750,000. As of June
30, 2000, no shares were issued or outstanding.

7. RELATED PARTY TRANSACTIONS

In March 1999, the Company entered into an employment agreement with its Chief
Executive Officer, Robert May. The agreement provides for a minimum annual
compensation of $275,000 and a possible incentive bonus upon satisfaction of
certain goals and objectives. The Company may terminate Mr. May's employment at
any time pursuant to the agreement.

In connection with his employment agreement, the Company sold to Mr. May 23,000
shares of transferable Series C 7% Cumulative Convertible Preferred Stock at
$8.00 per share, for a total purchase price of $184,000. In payment for this
purchase, Mr. May issued to the Company two unsecured promissory notes, each for
$92,000. One note accrues interest at 6% per annum with interest and principal
due March 2003. The second note, which is non-interest bearing, was paid as of
September 30, 1999. At June 30, 2000, Mr. May's aggregated indebtedness to the
Company was $99,470, which has been recorded as a component of common
stockholders' (deficiency) equity.

Mr. May received from the Company a nonqualified stock option to purchase
567,083 shares of the Company's common stock having an exercise price of $5.00
per share. The options vest at the rate of approximately 2.08% monthly, but
becomes exercisable in full upon a change in control of the Company (as defined
in the employment agreement) or if Mr. May is employed with the Company as of
the first anniversary of the closing of the initial public offering of the
Company's common stock. The Company also agreed that, if certain sales of the
Company's stock in an aggregate amount up to $20,000,000 closed prior to
February 29, 2000, the Company would grant to Mr. May additional options to
purchase shares of the Company's common stock such that, immediately following
any such grant of additional options, Mr. May will hold options to purchase an
aggregate of up to five percent of the common stock (calculated on a fully
diluted basis) outstanding after such sale. In accordance with Mr. May's
employment agreement, the Company granted options to purchase 130,097 shares of
common stock having an exercise price of $5.00 upon the closing of the sale of
the Company's Series D Preferred Stock.

Stock-based compensation expense under Mr. May's employment agreement was
$4,603,200 for the year ended June 30, 2000.

A common stockholder of the Company is also a partner in a law firm that
provides legal services to the Company. Fees and expenses paid to the law firm
were $293,647, $351,970 and $830,123 for the years ended June 30, 1998, 1999 and
2000 respectively.

                                      F-13
<PAGE>   67
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Included in Receivables from Stockholders is a note issued to a former officer
for the exercise of stock options in the amount of $54,302. The note accrues 7%
interest compounded per year and matures in July 2001.

Included in Prepaid Expenses and Other is a 7% per annum interest bearing note
receivable from an officer of the Company in the amount of $135,000. This note
matures at the earlier of the sale of the officer's home or December 31, 2000,
whichever occurs first.

8. STOCK OPTIONS AND WARRANTS

The Company has incentive and non-qualified stock option plans for directors and
key employees and has 2,184,166 shares of common stock reserved for issuance
under the plans. The incentive and non-qualified options become exercisable as
determined by the Board of Directors and have a term of ten years. Generally,
options become exercisable over three to four years.

Option activity for the years ended June 30, 1998, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                           WEIGHTED
                                                                            AVERAGE
                                                                           EXERCISE      RANGE OF
                                                                NUMBER       PRICE       EXERCISE
                                                               OF SHARES   PER SHARE      PRICE
                                                               ---------   ---------   ------------
      <S>                                                      <C>         <C>         <C>
      Granted Options:
       Granted during the year ended June 30, 1997 and
          Outstanding at June 30, 1997.......................    409,846    $1.42     $1.00--$ 3.00
       Forfeited.............................................       (500)    1.00              1.00
                                                               ---------
       Outstanding at June 30, 1998..........................    409,346     1.42      1.00  --3.00
       Granted...............................................  1,345,969     4.68      .001  --5.00
       Exercised.............................................    (10,432)     .07      .001  --5.00
       Forfeited.............................................     (5,487)    2.96      1.00  --5.00
                                                               ---------
       Outstanding at June 30, 1999..........................  1,739,396     3.95      1.00  --5.00
       Granted...............................................    547,070     4.80       .01 --10.50
       Exercised.............................................    (89,084)    1.06       .01  --5.00
       Forfeited.............................................   (235,467)    6.12       .01  --8.50
                                                               ---------
       Outstanding options at June 30, 2000..................  1,961,915     4.29       .01 --10.50
                                                               =========
      Exercisable options:
       Exercisable at June 30, 1997..........................     81,969    $1.42     $1.00--$ 3.00
       Vested................................................     81,869     1.42      1.00  --3.00
       Forfeited.............................................       (100)    1.00              1.00
                                                               ---------
       Exercisable at June 30, 1998..........................    163,738     1.42      1.00  --3.00
       Vested................................................    355,639     3.38      .001  --5.00
       Exercised.............................................    (10,432)     .07      .001  --5.00
       Forfeited.............................................     (2,000)    3.00              3.00
                                                               ---------
       Exercisable at June 30, 1999..........................    506,945     2.81      1.00  --5.00
       Vested................................................    520,154     3.64       .01 --10.50
       Exercised.............................................    (89,084)    1.063      .01  --5.00
       Forfeited.............................................    (87,789)    6.12       .01  --8.50
                                                               ---------
       Exercisable at June 30, 2000..........................    850,226     3.84       .01 --10.50
                                                               =========
</TABLE>

                                      F-14
<PAGE>   68
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes information concerning options outstanding as of
June 30, 2000:

<TABLE>
<CAPTION>
                               OPTIONS OUTSTANDING                          OPTIONS EXERCISABLE
                 -----------------------------------------------   --------------------------------------
                              WEIGHTED AVERAGE
                  NUMBER OF       REMAINING          WEIGHTED                                WEIGHTED
   RANGE OF        OPTIONS     CONTRACTUAL LIFE      AVERAGE            NUMBER OF        AVERAGE EXERCISE
EXERCISE PRICE   EXERCISABLE       (YEARS)        EXERCISE PRICE   OPTIONS EXERCISABLE        PRICE
--------------   -----------   ----------------   --------------   -------------------   ----------------
<S>              <C>           <C>                <C>              <C>                   <C>
$1.00 -- $ 1.50     297,110          7.0              $ 1.10             207,031              $ 1.18
 3.00 --   4.00     345,000          9.0                3.19             203,816                2.98
 4.75 --   5.00   1,236,955          8.8                4.97             398,009                4.97
 8.50 --  10.00      82,850          9.3               10.19              41,370               10.37
 1.00 --  10.00   1,961,915          8.6                4.29             850,226                3.84
                  =========                                              =======
</TABLE>

SFAS No. 123 requires entities that account for awards for stock-based
compensation in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," to present pro forma disclosure as
if compensation cost was measured at the date of grant based on the fair value
of the award. No options were granted during the year ended June 30, 1998. The
fair value of the options granted during the years ended June 30, 1999 and 2000
were estimated at the date of grant using the Black-Scholes option valuation
model with the following weighted-average assumptions: a risk free interest rate
of 6.3%, no dividend yield and an expected life of ten years. In fiscal year
2000, a volatility factor of 60% was used in computing the pro forma
compensation expenses. The minimum value method was used for fiscal years 1998
and 1999. The weighted average grant date fair value per option granted during
1999 and 2000 was $11.63 and $11.25, respectively.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options.

For purposes of pro forma disclosure, the estimated fair value of the options is
amortized to expense over the option vesting periods. The Company's net loss
determined in accordance with SFAS No. 123 on a pro forma basis for the years
ended June 30, 1998, 1999 and 2000 would have been as follows:

<TABLE>
<CAPTION>
                                                           1998           1999           2000
                                                       ------------   ------------   ------------
      <S>                                              <C>            <C>            <C>
      Net Loss attributable to common stockholders
       As reported..................................   $(16,526,284)  $(42,703,000)  $(87,054,249)
       Pro forma....................................    (16,563,990)   (43,335,281)   (87,514,486)
      Loss per share:
       As reported..................................          (3.83)         (9.89)         (7.88)
       Pro forma....................................          (3.84)        (10.03)         (7.92)
</TABLE>

The pro forma amount may not be representative of the future effects on reported
net income (loss) that will result from the future granting of stock options,
since the pro forma compensation expense is allocated over the periods in which
options become exercisable and new option awards are granted each year.

At June 30, 2000, the Company had outstanding warrants which allow the holders
to purchase 280,399 and 100,000 shares of common stock at $8 and $9.20 per
share, respectively, and units that include warrants which allow the holders to
purchase 316,925 shares of common stock at $.01 per share.

In November 1999, the Company entered into an advertising arrangement with
PACCAR, Inc. and, in connection therewith, issued warrants to PACCAR to purchase
75,000 shares at $17.00 a share and 31,750

                                      F-15
<PAGE>   69
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

shares at $.01. The Company recognized the value of warrants issued to PACCAR
Inc. as selling, general and administrative expenses. The Company determined the
value of these warrants using the Black-Scholes option pricing model. The
vesting of these warrants depends on PACCAR's purchase of $1.0 million of our
advertising services in each of two years following the date the Company issued
the warrant. The unvested portion of the warrants will be remeasured each
quarter and if different from the fair value in determining the deferred
marketing expense that was recorded in the prior quarter will be reflected as an
additional charge or credit to expense at that time. At the time the warrants
vest, the fair value of the vested portion will be remeasured for a final time
and will not continue to be remeasured in subsequent periods. The deferred
marketing expense recorded for the PACCAR warrants at June 30, 2000 was $96,423,
which is being amortized over the term of the PACCAR commitment and recognized
as selling, general and administrative expenses.

In April 2000, the Company also issued to AOL a warrant to purchase 287,590
shares of the Company's common stock at an exercise price of $6.6875 per share.
This warrant became exercisable in full in May 2000. The amortization of the
value of this warrant is being recognized as selling, general and administrative
expenses. The value of this warrant was determined using the Black-Scholes
option pricing model to be approximately $1.2 million. The Company has recorded
this amount as deferred marketing expense which is being amortized on a
straight-line basis over the 26-month term of the Company's agreement with AOL.

In connection with options granted to purchase common stock, the Company
recorded deferred stock-based compensation of $13,380,690 for the year ended
June 30, 1999 and $2,400,451 for the year ended June 30, 2000. Such amounts
represent, for employee stock options, the difference between the exercise price
and the fair value of the Company's common stock at the date of grant, and, for
non-employees, the deemed fair value of the option at the date of vesting. The
deferred charges for employee options are being amortized to expense through the
Company's fiscal year ending 2003 and the deferred charges for non-employee
options were amortized to expense through the year ended June 30, 1999.
Stock-based compensation expense for employee and non-employee options of
$5,035,315 and $6,877,106 was recognized for the years ended June 30, 1999 and
2000, respectively, and is a non-cash charge.

9. NET LOSS PER SHARE

The following is a reconciliation of the numerators and denominators used in
computing basic and diluted net loss per share.

<TABLE>
<CAPTION>
                                                                        JUNE 30,
                                                       ------------------------------------------
                                                           1998           1999           2000
                                                       ------------   ------------   ------------
      <S>                                              <C>            <C>            <C>
       Net loss attributable to common stockholders
          (numerator), basic and diluted:...........   $(16,526,284)  $(42,703,000)  $(87,054,249)
                                                       ============   ============   ============
       Shares (denominator), weighted average common
          shares outstanding, basic and diluted.....      4,318,182      4,318,456     11,044,001
                                                       ============   ============   ============
       Net loss per share, basic and diluted........   $      (3.83)  $      (9.89)  $      (7.88)
                                                       ============   ============   ============
</TABLE>

For the above mentioned periods, the Company had securities outstanding which
could potentially dilute basic earnings per share in the future, but were
excluded in the computation of diluted net loss per share

                                      F-16
<PAGE>   70
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

in the periods presented, as their effect would have been antidilutive. Such
outstanding securities consist of the following:

<TABLE>
<CAPTION>
                                                                            JUNE 30,
                                                                ---------------------------------
                                                                  1998        1999        2000
                                                                ---------   ---------   ---------
      <S>                                                       <C>         <C>         <C>
      Convertible preferred stock............................   4,203,543   4,226,543          --
      Outstanding options....................................     409,346   1,739,396   1,961,915
      Warrants...............................................     785,774     885,774   1,241,671
                                                                ---------   ---------   ---------
         Total...............................................   5,398,663   6,851,713   3,203,586
                                                                =========   =========   =========
</TABLE>

10. INCOME TAXES

No current income taxes have been provided for any periods presented as the
Company has had net operating losses since inception. The Company had
approximately $112.0 million in net operating loss carryforwards at June 30,
2000 for federal income tax purposes, with approximately $2.0 million expiring
in 2011, $5.8 million expiring in 2012, $13.5 million expiring in 2018, $33.7
million expiring in 2019 and $57.0 million expiring in 2020. The Company also
had approximately $112.0 million in net operating loss carryforwards at June 30,
2000 for state income tax purposes. The expiration dates of these state net
operating loss carryforwards differ according to the statutes of each state
taxing authority. Utilization of a portion of the net operating loss
carryforwards may be subject to a substantial annual limitation due to the
"change in ownership" provisions of the Internal Revenue Code of 1986. The
annual limitation may result in the expiration of net operating losses before
utilization.

Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
and tax credit carryforwards. The Company has not recognized any benefit for its
net deferred tax asset and has offset the net deferred tax asset by a valuation
allowance, as it is more likely than not that this asset will not be realized
prior to its expiration. The tax effects of significant items comprising the
Company's net deferred tax asset as of June 30, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                        1999           2000
                                                                    ------------   ------------
      <S>                                                           <C>            <C>
      Net deferred tax assets (liabilities):
       Net operating loss carryforward............................  $ 17,785,634   $ 46,230,924
       Nonqualified stock option expense..........................     1,712,007      4,884,092
       Charitable contribution carryforward.......................            --          8,588
       Nondeductible lease accrual................................        10,057             --
       Bad debt reserve...........................................        10,584         79,759
       Bonus accrual..............................................            --        123,000
       Vacation accrual...........................................        94,979        197,275
       Differences between book and tax basis of property.........        39,969        255,654
       Amortization...............................................       (25,027)       793,906
                                                                    ------------   ------------
                                                                      19,628,203     52,573,198
      Valuation allowance.........................................   (19,628,203)   (52,573,198)
                                                                    ------------   ------------
       Net deferred taxes.........................................  $         --   $         --
                                                                    ============   ============
</TABLE>

The Company's effective tax rate, 0%, for each of the three years in the period
ended June 30, 2000 is substantively less than its applicable statutory rate,
34%, because the Company has experienced net operating losses since its
inception.

                                      F-17
<PAGE>   71
                                    PNV INC.
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

11. LEGAL MATTERS

In July 1999, Robert T. and Julie McCurry filed a lawsuit against the Company, a
truckstop chain and others at which the Company's network is deployed in
Superior Court of Shasta County, California. The lawsuit seeks a total of
$2,000,000 in actual damages resulting from an injury suffered by Mr. McCurry
when he tripped on one of the access points to the Company's network in a
truckstop parking lot. The amount sought exceeds the limit of the Company's
insurance policy. The Company has notified its insurance carrier of this lawsuit
and it is defending the Company in this lawsuit. The Company is unaware of any
issues which would result in the denial of insurance coverage.

The Company has received 30 to 35 additional claims arising from slip and fall
incidents relating to its network. The Company has advised its insurance carrier
of these incidents and the carrier has denied coverage or is reserving its
rights to deny coverage on several of these incidents due to the Company's
alleged failure to provide timely notice of such incidents. The Company's
present understanding of these claims is preliminary. Due to the inherent
uncertainty as to the outcome of these claims or whether such claims will be
covered by insurance, the Company cannot estimate the amount of loss, if any,
that will result from the resolution of these matters.

The Company anticipates that it will be, from time to time, subject to claims
and suits for personal injury arising in the ordinary course of its business.
The Company anticipates that these claims and suits, to the extent of actual
damages, will generally be covered by insurance.

12. BENEFIT PLAN

During fiscal year ended 1999, the Company adopted a 401(k) plan that is
available to substantially all of its employees. Participants may contribute, on
a pre-tax basis, between 1% and 15% of their annual compensation. The Company is
not required to contribute to the plan, but has made a discretionary
contribution of $59,430 and $150,499 for the years ended June 30, 1999 and 2000,
respectively.

                                      F-18
<PAGE>   72

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on September 27, 2000.

                                          PNV Inc.

                                          By:       /s/ ROBERT P. MAY
                                            ------------------------------------
                                                       Robert P. May
                                               President and Chief Executive
                                                           Officer

Each person whose signature appears below hereby constitutes and appoints Robert
P. May and Casey L. Gunnell and either of them his true and lawful
attorney-in-fact with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments to this Report on Form 10-K and to cause the same to be filed, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all acts and
things that said attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant in the
capacities indicated on the 27th day of September 2000.

<TABLE>
<CAPTION>
                      SIGNATURE                                             POSITION
                      ---------                                             --------
<C>                                                      <S>

                  /s/ ROBERT P. MAY                      President, Chief Executive Officer and
-----------------------------------------------------      Director (Principal Executive Officer)
                    Robert P. May

                /s/ CASEY L. GUNNELL                     Chief Financial Officer (Principal Financial
-----------------------------------------------------      and Accounting Officer)
                  Casey L. Gunnell

                  /s/ IAN WILLIAMS                       Chairman of the Board and Director
-----------------------------------------------------
                    Ian Williams

                /s/ ROBERT M. CHEFITZ                    Director
-----------------------------------------------------
                  Robert M. Chefitz

                    /s/ RAY GREER                        Director
-----------------------------------------------------
                      Ray Greer

                                                         Director
-----------------------------------------------------
                 Daniel K. O'Connell

               /s/ WILLIAM J. RAZZOUK                    Director
-----------------------------------------------------
                 William J. Razzouk
</TABLE>
<PAGE>   73

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------                                  -----------
<C>           <C>  <S>
 3.1*          --  Amended and Restated Certificate of Incorporation.
 3.2*          --  Amended and Restated By-laws.
 4.1**         --  Indenture, dated as of May 27, 1998, by and between the
                   Company and State Street Bank and Trust Company, as trustee.
 4.2****       --  Warrant Agreement, dated as of May 27, 1998, by and between
                   the Company and State Street Bank and Trust Company, as
                   warrant agent.
 4.3****       --  Warrant Registration Rights Agreement, dated as of May 27,
                   1998, by and between the Company and Donaldson, Lufkin &
                   Jenrette Securities Corporation.
10.1*          --  Fleet Service Agreement, dated as of February 1, 1999, by
                   and between the Company and Trucks For You.
10.2**         --  Fleet Service Agreement, dated as of February 1, 1998, by
                   and between the Company and Carroll Fulmer & Co., Inc.
10.3**         --  Fleet Service Agreement, dated as of March 1, 1998, by and
                   between the Company and Contract Freighters, Inc.
10.4**         --  Fleet Service Agreement, dated as of March 11, 1998, by and
                   between the Company and Lake City Express.
10.5**         --  Fleet Service Agreement, dated as of April 1, 1998, by and
                   between the Company and Top Gun Transport, Inc.
10.6**         --  Cable Television and Telephone Service Agreement, dated as
                   of August 14, 1995, by and between the Company and AMBEST.
10.7**         --  Cable Television and Telephone Service Agreement, dated as
                   of July 11, 1996, by and between the Company and
                   Professional Transportation Partners, LLC.
10.8**         --  Cable Television and Telephone Service Agreement, dated as
                   of March 18, 1997, by and between the Company and North
                   America Truck Stop Network.
10.9**         --  Cable Television and Telephone Service Agreement, dated as
                   of October 28, 1995, by and between the Company and Travel
                   Ports of America, Inc.
10.10**        --  Cable Television and Telephone Service Agreement, dated as
                   of February 15, 1996, by and between the Company and Pilot
                   Corporation.
10.11**        --  Cable Television and Telephone Service Agreement, dated as
                   of February 7, 1997, by and between the Company and All
                   American Plazas, Inc.
10.12**        --  Cable Television and Telephone Service Agreement, dated as
                   of September 12, 1997, by and between the Company and Petro
                   Stopping Centers, L.P.
10.13**+       --  Cable Television and Telephone Service Agreement, dated
                   March 12, 1998 by and between the Company and TA Operating
                   Corporation d/b/a Travel Centers of America.
10.14*         --  Lease, dated as of July 20, 1992, by and between CB
                   Institutional Fund VI and Arden Technologies, Inc., as
                   amended March 29, 1996 and April 5, 1996, as assigned to the
                   Company pursuant to Assignment of Lease, dated October 16,
                   1995, by and between the Company and Arden Technologies,
                   Inc.
10.15*         --  Sublease Agreement and Consent to Sublease, dated as of June
                   1, 1998, by and between the Company and Security World
                   International, Inc.
10.16**        --  Lease, dated August 11, 1997, between Unipower Corporation
                   and the Company.
10.17**        --  Software Development Agreement, dated November 22, 1995,
                   between the Company and GreenLight Technologies, Inc.
</TABLE>
<PAGE>   74

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------                                  -----------
<C>           <C>  <S>
10.18**        --  Technology Transfer and Development Agreement, dated as of
                   November 4, 1996, by and among GreenLight, Inc., Jody Green,
                   Lewis Tatham and the Company.
10.19**        --  Customer Agreement, dated December 17, 1997, by and between
                   the Company and Echostar Satellite Corporation.
10.20**        --  Compensation Plan.
10.21*         --  Stock Option Plan.
10.21.1*       --  Severance Program.
10.22**        --  Pledge, Escrow and Disbursement Agreement, dated as of May
                   27, 1998, by and between the Company and State Street Bank
                   and Trust Company, as trustee and escrow agent.
10.23**        --  Warrant, dated as of August 22, 1997, granted to Alex. Brown
                   & Sons Incorporated.
10.24**        --  Warrant, dated as of August 22, 1997, granted to Alex. Brown
                   & Sons Incorporated.
10.25**+       --  Warrant, dated March 12, 1998.
10.26**+       --  Letter Agreement, dated as of May 18, 1998, by and between
                   the Company and a holder of warrants to purchase shares of
                   the Company's common stock.
10.27*         --  Master Agreement to Lease Equipment, dated as of August 21,
                   1998, by and between the Company and Cisco Systems Capital
                   Corporation.
10.28***+      --  Telecom Service Agreement, dated as of January 27, 1999, by
                   and between the Company and TA Operating Corporation.
10.29*         --  Pay Telephone Telecommunications Service Agreement, dated as
                   of February 24, 1999 by and between the Company and CfL,
                   LLC, as amended by Letter Agreement, dated as of February
                   24, 1999.
10.30***       --  Employment Agreement, dated as of March 1, 1999, by and
                   between the Company and Robert P. May.
10.31***       --  Joinder to Stock Purchase Agreement and Related Documents,
                   dated as of March 1, 1999 by Robert P May.
10.32***       --  Nonqualified Stock Option Award Agreement, dated as of March
                   3, 1999, by and between the Company and Robert P. May.
10.33***       --  Letter Agreement, dated as of March 3, 1999 by and between
                   the Company and Robert P. May.
10.34***+      --  Warrant, dated as of March 12, 1999.
10.35*         --  Marketing and Advertising Agreement, dated as of April 28,
                   1999, by and between the Company and Volvo Trucks North
                   America, Inc.
10.36*         --  Letter Agreement, dated May 12, 1999 by and between the
                   Company and Volpe Brown Whelan & Company, LLC.
10.37*         --  Employment Agreement, dated as of May 24, 1999, by and
                   between the Company and Steven Yevoli.
10.38*         --  Nonqualified Stock Option Award Agreement, dated as of May
                   24, 1999, by and between the Company and Steven Yevoli.
10.39*         --  Agreement of Lease, dated as of July 26, 1999, by and
                   between the Company and Eleven Penn Plaza LLC.
10.40*         --  Employment Agreement, dated as of June 21, 1999, by and
                   between the Company and Mark Cleveland.
10.41*         --  Nonqualified Stock Option Award Agreement, dated as of June
                   23, 1999, by and between the Company and Mark Cleveland.
</TABLE>
<PAGE>   75

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------                                  -----------
<C>           <C>  <S>
10.42*+        --  Second Amendment to Cable Television and Telephone Service
                   Agreement, dated as of June 28, 1999, by and between the
                   Company and Pilot Corporation.
10.43*+        --  Pre-Paid Phone Card Agreement, dated as of July 16, 1999, by
                   and between the Company and Transcommunications
                   Incorporated.
10.44*         --  Fleet Services Agreement, dated as of August 19, 1999, by
                   and between the Company and US Xpress, Inc.
10.45*****     --  Letter Agreement dated November 18, 1999 by and between the
                   Company and PACCAR.com, a division of PACCAR, Inc.
10.46******    --  Interactive Service Agreement dated March 15, 2000 by and
                   between PNV Inc. and American Online, Inc.
10.47******    --  Warrant to purchase 287,599 shares of common stock dated as
                   of March 15, 2000, issued to American Online, Inc.
10.48          --  Cable Television and Telephone Service Agreement dated March
                   31, 2000 by and between PNV, Inc. and Williams
                   TravelCenters, Inc.
10.49          --  Promissory Note dated May 30, 2000 made by Mark Cleveland
                   payable to the Company.
10.50++        --  Form of AT&T Contract Tariff Order by and between the
                   Company and AT&T.
10.51          --  Letter Agreement dated April 17, 2000 by and between the
                   Company and Casey Gunnell.
10.52          --  Letter Agreement dated August 1, 2000 by and between the
                   Company and Jeffrey T. Hendrickson.
23.1           --  Consent of Deloitte & Touche LLP.
24.1           --  Power of Attorney (included on signature page).
27.1           --  Financial Data Schedule.
</TABLE>

---------------------------

     * Incorporated by reference to the Registration Statement on Form S-1
       (Registration No. 333-78343) filed with the Securities and Exchange
       Commission on September 17, 1999, as amended.

    ** Incorporated by reference to the Registration Statement on Form S-4
       (Registration No. 333-59889) filed with the Securities and Exchange
       Commission on July 24, 1998.

   *** Incorporated by reference to the Quarterly Report on Form 10-Q filed with
       the Securities and Exchange Commission on May 17, 1999.

  **** Incorporated by reference to the Registration Statement on Form S-1
       (Registration No. 333-59903) filed with the Securities and Exchange
       Commission on July 24, 1998, as amended.

 ***** Incorporated by reference to the Quarterly Report on Form 10-Q filed with
       the Securities and Exchange Commission on February 14, 2000.

****** Incorporated by reference to the Quarterly Report on Form 10-Q filed with
       the Securities and Exchange Commission on May 15, 2000.

     + Portions of this Exhibit have been omitted and filed separately with the
       Securities and Exchange Commission pursuant to an order for confidential
       treatment granted by the Securities and Exchange Commission.

    ++ Portions of this Exhibit are omitted and filed separately with the
       Securities and Exchange Commission pursuant to a request for confidential
       treatment.