<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
                               (Amendment No. 1)



(Mark One)

(x)      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the quarterly period ended September 30, 2001
                                        ------------------

( )      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934
         For the quarterly period from       to
                                       -----    -----

                        Commission file number 000-19579

                            INTERACTIVE NETWORK, INC.
             (Exact name of registrant as specified in its charter)

      California                         94-3025019
      (State of incorporation)           (I.R.S. employer identification number)

                           180 Second Street, Suite B
                           Los Altos, California 94022
              (Address of principal executive offices and zip code)

                                 (650) 947-3345
              (Registrant's telephone number, including area code)


                        with a copy to Robert S. Townsend
                            Morrison & Foerster, LLP
                                425 Market Street
                             San Francisco, CA 94105
                                 (415) 268-7000

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 whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

Yes [X]  No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Class                                  Shares outstanding as of January 4, 2002
-----                                  -----------------------------------------
Common Stock                                      43,019,277

<PAGE>

                            INTERACTIVE NETWORK, INC.

                                      INDEX


PART I. FINANCIAL INFORMATION                                               Page
                                                                            ----

  ITEM 1.  FINANCIAL STATEMENTS................................................2

           CONSOLIDATED BALANCE SHEETS AS OF
           SEPTEMBER 30, 2001 (Unaudited) AND DECEMBER 31, 2000................2

           CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
           FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000.....3

           CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
           AND 2000............................................................4

           NOTES TO FINANCIAL STATEMENTS (Unaudited)...........................5

  SIGNATURES...................................................................7




                                EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q to the Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2001 is being filed to amend Item 1 of Part
I to read as follows. No other changes are being made to the Form 10-Q.


<PAGE>

                                            PART I.
                                     FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

<TABLE>
INTERACTIVE NETWORK, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                                               September 30,    December 31,
                                                                    2001            2000
                                                              --------------   --------------
                                                                (Unaudited)
<S>                                                           <C>              <C>
ASSETS
Current assets:
    Restricted cash                                           $   5,614,309    $   5,609,735
    Cash                                                            585,787          685,168
    Royalty fee receivable                                          202,500          250,000
    Prepaid expenses and other current assets                        40,160           47,218
                                                              --------------   --------------

          Total current assets                                    6,442,756        6,592,121

Deposits and other assets                                             3,430            3,220

                                                              --------------   --------------
          Total assets                                        $   6,446,186    $   6,595,341
                                                              ==============   ==============

LIABILITIES AND SHAREHOLDERS' (DEFICIT)

Current liabilities:
    Accounts payable and accrued liabilities                  $     605,840    $     443,952
    Liabilities subject to compromise                             5,577,630        5,503,263
    Promissory note - current                                             -           85,565
    Deferred legal fees                                                   -          957,775
                                                              --------------   --------------
          Total current liabilities                               6,183,470        6,990,555


Promissory note - noncurrent                                      1,247,254          598,955
Convertible promissory notes                                      1,657,436                -

Shareholders' deficit:
    Preferred stock, no par value, 10,000,000 shares
       authorized; no shares issued and outstanding as of
       September 30, 2001 and December 31, 2000                           -                -

    Common stock, no par value, 150,000,000 shares
       authorized; 43,019,277 shares issued and outstanding
       as of September 30, 2001 and December 31, 2000           145,874,986      145,874,986

    Accumulated deficit                                        (148,516,960)    (146,869,155)
                                                              --------------   --------------

          Total shareholders' deficit                            (2,641,974)        (994,169)
                                                              --------------   --------------


          Total liabilities and shareholders' deficit         $   6,446,186    $   6,595,341
                                                              ==============   ==============

                 See accompanying notes to consolidated financial statements.

                                              2
</TABLE>
<PAGE>

<TABLE>
INTERACTIVE NETWORK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>

                                                            THREE MONTHS                   NINE MONTHS
                                                         ENDED SEPTEMBER 30,           ENDED SEPTEMBER 30,
                                                  -----------------------------    ---------------------------
                                                       2001            2000            2001           2000
                                                  ------------     ------------    ------------   ------------
<S>                                               <C>              <C>             <C>            <C>
Royalty fees                                      $    67,500      $        -      $  202,500     $         -
                                                  ------------     ------------    ------------   ------------
General and administrative expenses:
    Salaries                                           75,000          81,188         222,336         213,016
    Employer payroll taxes                              5,914           6,524          28,640          23,309
    Contract labor                                     (8,083)         69,233          24,436          97,839
    Rent                                                9,000           6,000          27,000          11,165
    Directors' & Officers' insurance                   37,848           7,751          70,550           7,751
    Other administrative costs                         11,775          23,519          28,754          77,384

       Legal fees                                     114,580         177,642         254,174         348,619
       Accounting fees                                 19,244          40,339          66,415          94,711
       Advisory fees                                        -               -               -         390,000
       Legal - NTN litigation                          10,851          19,911          36,787          34,815
       Shareholder relations - proxy                        -         210,795           1,400         239,454
                                                  ------------     ------------    ------------   ------------
General and administrative expenses                   276,129         642,902         760,492       1,538,063
                                                  ------------     ------------    ------------   ------------
          Loss from operations                       (208,629)       (642,902)       (557,992)     (1,538,063)

Other (income) and expense
    Interest (income)                                 (54,125)        (96,183)       (199,553)       (296,032)
    Interest expense                                  170,668         180,000         457,042         375,000
    Net loss from investment in affiliate
       accounted for by the equity method             299,951         256,064         919,296         534,715
    Reserve for impairment of investment                   49              -         (219,296)              -
    Litigation settlement                                   -              -                -       3,081,785
                                                  ------------     ------------    ------------   ------------

          Other (income) and expense, net             416,543         339,881         957,489       3,695,468
                                                  ------------     ------------    ------------   ------------

          Loss before reorganization expenses        (625,172)       (982,783)     (1,515,481)     (5,233,531)

Reorganization expenses                                28,524         242,996         129,173         349,518
                                                  ------------     ------------    ------------   ------------

          Net loss before federal & state taxes      (653,696)     (1,225,779)     (1,644,654)     (5,583,049)

             Federal & state taxes                      3,152           4,800           3,152           4,800

          Net loss                                $  (656,848)    $(1,230,579)    $(1,647,806)    $(5,587,849)
                                                  ============    ============    ============    ============

Basic and diluted net loss per share              $     (0.01)    $     (0.03)    $     (0.04)    $     (0.14)
Shares used in basic and diluted net loss
   per share                                       43,019,277      39,637,241      43,019,277      39,069,181


                         See accompanying notes to consolidated financial statements.
</TABLE>

                                                       3
<PAGE>

INTERACTIVE NETWORK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                           NINE MONTHS
                                                                        ENDED SEPTEMBER 30,
                                                                   ---------------------------
                                                                       2001           2000
                                                                   ------------   ------------
<S>                                                                <C>            <C>
Cash flows from operating activities:
    Net loss                                                       $(1,647,806)   $(5,587,849)
    Adjustments to reconcile net loss to net cash provided by
        (used for) operating activities:
          Loss from investment in affiliate                            919,296         34,715
          Allowance for investment in affiliate                       (219,296)             -
          Changes in assets and liabilities:
             Royalty fee receivable                                     47,500              -
             Prepaid expenses and other assets                           6,849         34,263
             Accounts payable                                          196,713        548,891
             Liabilities subject to compromise                          74,367      2,791,368
             Deferred legal fees                                      (525,000)             -
             Other accrued liabilities                                 132,570         (3,600)
                                                                   ------------   ------------
                Cash provided by (used in) operating activities:    (1,014,807)    (2,182,212)

Cash flows from investing activities:
    Investment in Two Way TV (US)                                   (1,700,000)             -
    Promissory note receivable from Two Way TV (US)                  1,000,000       (750,000)
                                                                   ------------   ------------
                Cash provided by (used in) financing activities:      (700,000)      (750,000)
                                                                   ------------   ------------


Cash flows from financing activities:
    Proceeds from bridge financing                                   1,620,000              -
    Sale of common stock                                                     -      1,704,996
                                                                   ------------   ------------
                Cash provided by (used in) financing activities:     1,620,000      1,704,996
                                                                   ------------   ------------

Net increase (decrease) in cash                                    $   (94,807)   $(1,227,216)

Cash:
    Beginning of period                                              6,294,903      7,576,158
                                                                   ------------   ------------
    End of period                                                  $ 6,200,096    $ 6,348,942
                                                                   ------------   ------------

                  See accompanying notes to consolidated financial statements

                                               4
</TABLE>
<PAGE>

                            INTERACTIVE NETWORK, INC.

              Notes to Unaudited Consolidated Financial Statements

                               September 30, 2001

The consolidated financial information of Interactive Network, Inc. (the
"Company") furnished herein reflects all adjustments, consisting only of normal
recurring adjustments which in the opinion of management are necessary to
present fairly the financial position of the Company as of September 30, 2001
and the results of its operations and cash flows for the periods presented. This
Quarterly Report on Form 10-Q should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-K Report for the
year ended December 31, 2000 filed with the Securities and Exchange Commission
("SEC") on April 16, 2001. The results of operations for the three-month or
nine-month periods ended September 30, 2001 are not necessarily indicative of
the results for any subsequent quarter or for the entire year ending December
31, 2001.

Current liabilities consist of accounts payable, and legal fees and expenses
incurred in connection with the Company's Chapter 11 bankruptcy proceedings and
general corporate work. Payment of Morrison & Foerster's pre-confirmation fees,
which was subject to Bankruptcy Court approval, was deferred by agreement until
April 22, 2000, when payment was due in full without interest. As the Company
lacked funds to pay Morrison & Foerster's fees at that time, Morrison & Foerster
did not apply to the Bankruptcy Court for approval of its fees.

Long-term debt at September 30, 2001 and December 31, 2000, was as follows:

                                       September 30,       December 31,
                                            2001               2000
------------------------------------------------------------------------
Promissory note - prime + 1%             $1,259,502            $684,520
Convertible notes - 10%                   1,657,436                   -
------------------------------------------------------------------------
Less current portion                              -              85,565
------------------------------------------------------------------------
Total long-term debt                     $2,916,938            $598,955
------------------------------------------------------------------------

On June 30, 2001, with approval from the Bankruptcy Court, the Company paid
Morrison & Foerster $500,000 as partial payment of the principal and interest on
the pre-confirmation fees. The remaining pre-confirmation fees are subject to an
agreement between Morrison & Foerster and the Company, with the first payment
due on October 15, 2002. In September 2001 the Company amended its previous
agreement with its counsel for payment of the remaining amount on the following
terms: the remaining pre-confirmation legal fees of approximately $494,517 is
included in a new promissory note from the Company to Morrison & Foerster, along
with the approximately $684,520 owed to legal counsel for post-confirmation
expenses. Interest is accruing on the $494,517 of pre-confirmation expenses as
of July 1, 2001 at 1% per annum over Bank of America's prime rate. The Company
has paid approximately $62,000 in interest and incurred approximately an
additional $41,500 of interest expense on these $684,520 in post-confirmation
expenses as of October 15, 2001 at 1% per annum over Bank of America's prime
rate. Repayment of principal and interest on this promissory note is required to
commence on October 15, 2002, and will be paid in 24 equal monthly installments
each consisting of 1/24th of the aggregate of the unpaid principal amount under
the promissory note and the unpaid interest accrued through September 30, 2002.
The interest accruing on this promissory note after October 1, 2002, will be
paid with such equal monthly installments.

In the second quarter of 2001, the Company raised $1.12 million through the sale
of 112 units to private investors pursuant to 10% Convertible Promissory Notes
and Common Stock Purchase Warrants. Each unit consists of (i) a $10,000
convertible promissory note bearing interest at 10% per annum that is
convertible into its common stock at the rate of $.50 per share, and (ii) a
five-year warrant to purchase 20,000 shares at an exercise price of $.60 per
share. An additional $505,000 (50.5 units) was raised in the third quarter under
the same terms.

                                       5
<PAGE>

The issuance of convertible debt securities by the Company with a detachable
conversion feature did not create a "beneficial conversion feature" because the
conversion price ($.60) was not "in-the-money at the commitment date." As
described in EITF 98-5, the debt was therefore accounted for in accordance with
APB Opinion 14, Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants, Paragraph 16. The Company determined that the portion of the
proceeds from the issuance allocable to the warrants is de minimus, and
therefore the entire proceeds were treated as debt.

INVESTMENT IN AFFILIATE. The Company owns 50% of the outstanding capital stock
of Two Way TV (US), Inc. (formerly known as TWIN Entertainment, Inc.) ("Two Way
TV (US)"), a corporate joint venture between the Company and Two Way TV Limited
("Two Way TV Ltd."). Two Way TV (US)'s offices are located at 6300 Wilshire
Blvd., Suite 1750, Los Angeles, CA 90048. Two Way TV (US) operates in the United
States and Canada using technology licensed to it by the Company and Two Way TV
Ltd. In addition to its initial investment of $500,000 in January 2000, the
Company made additional investments in Two Way TV (US) in the form of multiple
loans totaling $1.4 million through the second quarter of 2001. The Company made
further loans during the quarter ended September 30, 2001 of $100,000 in July
2001, $100,000 in August 2001 and $100,000 in September 2001. The Company has
made an additional loan for $100,000 in October 2001. Two Way TV Ltd. made
similar loans to Two Way TV (US), leaving the relative ownership interests in
Two Way TV (US) unchanged. On September 10, 2001, each of us and Two Way TV Ltd.
converted the loan amounts to equity in Two Way TV (US) at a price of $0.50 per
share, resulting in a 3,400,000 new shares of Two Way TV (US) common stock
issued to us and 3,400,000 new shares of Two Way TV (US) common stock issued to
Two Way TV Ltd.

Condensed financial data of Two Way TV (US) for the three and nine month periods
ended September 30, 2001 is as follows:

<TABLE>
<CAPTION>

                                            THREE MONTHS    NINE MONTHS      PERIOD FROM
                                                ENDED          ENDED       INCEPTION ENDED
                                            SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,
                                                2001           2001             2001
<S>                                          <C>            <C>            <C>
SUMMARY OF OPERATIONS
Revenues                                     $         0    $         0    $         0
Costs and expenses                               534,296      2,031,922      4,218,371
Loss before income taxes                             376          2,309          3,109
Net loss                                     $  (534,672)   $(2,034,231)   $(4,221,480)
Interactive Network's equity in net loss     $  (267,336)   $(1,017,116)   $(2,110,740)

BALANCE SHEET DATA
Assets
Current assets                               $   136,983
Non-current assets                               406,017
                                             ------------
     Total assets                            $   542,999
                                             ============

LIABILITIES AND SHAREHOLDERS'EQUITY
Current liabilities                          $   323,305
Non-current liabilities                                0
                                             ------------
                                                 323,305
Shareholders' deficit                            219,694
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $   542,999
                                             ============
</TABLE>

The Company periodically evaluates the recoverability of its equity investments,
in accordance with APB No. 18, "The Equity Method of Accounting for Investments
in Common Stock," and if circumstances arise where a loss in value is considered
to be other than temporary, the Company will record a write-down of investment
cost. The Company's recoverability analysis is based on the projected
undiscounted cash flows of the operating ventures, which is the lowest level of
cash flow information available. The Company's share of the operating loss from
its joint venture investment in Two Way TV (US) was approximately $300,000 for
the quarter ended September 30, 2001 accounted for by the equity method. The
Company also made a small $49 adjustment to its allowance against its investment
and outstanding loans to write the investment, including loans, down to zero at
September 30, 2001, as no assurance can be made that the joint venture will be
profitable in the future.

                                       6
<PAGE>

SIGNATURES

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.

Date: January 9, 2002

                                          INTERACTIVE NETWORK, INC.
                                          (Registrant)

                                          By: /s/ Bruce Bauer
                                              ----------------------------------
                                              Bruce W. Bauer
                                              Chairman of the Board
                                              President, Chief Executive Officer
                                              (principal executive officer) and
                                              Chief Financial Officer
                                              (principal financial officer)





                                       7