FORM 10-KSB/A

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

              Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 2007

                         Commission File Number: 0-17170

                               TELVUE CORPORATION
                 (Name of small business issuer in its charter)

           Delaware                                       51-0299879
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                       Identification No.)

     16000 Horizon Way, Suite 500
       Mount Laurel, New Jersey                            08054
(Address of principal executive offices)                 (Zip Code)

Issuer's telephone number:  856-273-8888
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

      Title of Each Class

      Common, $0.01 per share par value

Check whether the Issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. ____

Indicate by check mark whether the Issuer (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 Issuer 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 is an accelerated filer (As
defined in Rule 12b-2 of the Exchange Act.  Yes ___  No _X_

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation-SB is not contained herein, and will not be contained, to the
best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. _X_

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ___  No _X_

The Issuer's revenue for the fiscal year ended December 31, 2007 was $4,038,639.

The Aggregate Market Value of voting and non-voting common equity held by
non-affiliates of the Issuer as of March 13, 2008, based on a per share average
bid and asked price of $.06 was $582,346.

Number of shares of Issuer's common stock outstanding as of March 13, 2008:
48,433,074 shares.

Transitional Small Business Disclosure Format:  Yes ___  No _X_

<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement for its 2008 Annual
Meeting of Shareholders, which definitive Proxy Statement will be filed with the
Securities and Exchange Commission not later than 120 days after the
Registrant's year end at December 31, 2007, are incorporated by reference into
Part III of this Form 10-KSB.

                                EXPLANATORY NOTE

This Form 10-KSB/A is being filed by TelVue Corporation to amend the Form 10-KSB
for the year ended December 31, 2007, filed with the Securities and Exchange
Commission on March 29, 2008 ("Form 10-KSB"), to correct a technical error in
the "Liquidity and Capital Resources" section of Item 6. "Management's
Discussion and Analysis or Plan of Operation" by completing the sentence at the
end of paragraph 6 and an inadvertent mistake on the "Report of Independent
Registered Public Accounting Firm" by including a signature and the location
from which the report was issued. For ease of reference, the Form 10-KSB is
being re-filed in its entirety with this Form 10-KSB/A.

                                     PART I
ITEM 1.     BUSINESS

GENERAL

      TelVue Corporation, a Delaware corporation ("TelVue"), was incorporated on
November 26, 1986. Until December 30, 1988, TelVue was a wholly owned subsidiary
of Science Dynamics Corporation ("Science"). On that date, TelVue's shares of
common stock were distributed to Science's shareholders of record as of December
30, 1988, on the basis of three shares of TelVue's common stock for each share
of Science's common stock then outstanding.

      TelVue operates two business segments. One segment ("TVTN/PSG") is a
system for displaying a fully automated TV station-like display on a cable
system access channel using computer based digital technology. The TVTN/PSG
segment includes Princeton Server Group, Inc. ("PSG"), which was acquired on
March 12, 2007. PSG develops high performance digital video systems, appliances,
and software that support capture, storage, manipulation, and play-out of
digital media in multiple popular formats. The other segment is a marketing and
service company which sells automatic number identification ("ANI")
telecommunications services to the cable television industry for the automated
ordering of pay-per-view features and events. TelVue previously had a business
segment that operated under the name Source Communications Group ("Source"), and
functioned as a communications solution provider and network integrator serving
clients mainly in the Mid-Atlantic States. In the second quarter of 2004, TelVue
made a decision to discontinue the Source segment operations.

      In 2003, TelVue developed a new product and service called the TVTN
Network ("TVTN") and applied for two patents related to the product. TVTN is a
system for displaying a fully automated TV station-like display on a cable
system access channel using computer-based digital technology. TVTN displays the
programming as graphics, text, imbedded music, and pictures with voice narration
and can run full motion video clips. TelVue is marketing TVTN to municipal
governments and school districts as a means of providing richer and more robust
TV programming for their local Cable TV Public, Education and Government Local
Access Channels ("PEG Channels"). Currently, most municipalities use a simple TV
display made up of only text messages with background music. TelVue directly
charges the municipalities a nominal start-up and monthly support fee along with
a sponsorship program that finds regional and national businesses as sponsors or
underwriters to help defray TVTN charges. In return, the TVTN client places an
acknowledgement of the sponsor's support on its town or school's access channel.

                                       2
<PAGE>

      On March 12, 2007, TelVue acquired PSG for $6.1 million and the
forgiveness of a $400,000 note. PSG develops high performance digital video
systems, appliances, and software that support capture, storage, manipulation
and play-out of digital media in multiple popular formats. PSG markets their
product to PEG TV and local origination broadcast stations, professional
broadcast stations and schools and universities. While TVTN specializes in
creating a customized look for the PEG Channels and providing localized and
dynamic content PSG provides digital server technology to store, schedule,
archive and playback video during the video content time allocated on the PEG
Channels. TelVue acquired PSG because it believes PSG and TVTN together will
provide a complete technology and support solution to owners and operators of
PEG Channels.

      The TVTN/PSG segment is principally a service-oriented business, and does
not engage in the manufacture of equipment required to provide its services. The
equipment and software used is owned and installed by TelVue and is located at
the customer's facility. During 2007, equipment purchases and software
modifications of $996,581 were made for the TVTN/PSG business unit.

      As of December 31, 2007, TelVue had contracts to provide TVTN to 132
towns, schools, and retirement communities and 87 contracts from sponsors to
fund some of the channels in these towns, schools, and retirement communities.
The town/school/retirement community contracts generally carry a term of three
or five years and may be cancelled with 90 days prior written notice. The
monthly charges to maintain a channel are billed one quarter in advance and
payment is due within 20 days of the billing date. The sponsor contracts are
generally for periods of six to twelve months with automatic renewals. Charges
to the sponsors of the channels are billed one month in advance and payment is
due within 20 days of the billing date.

      As of December 31, 2007, PSG had sold equipment in 34 different states and
the District of Columbia.

      The ANI service permits cable television companies to process special
ordering services without the attendant high-manpower requirements or extensive
physical plant and facilities that are otherwise required. ANI systems provide
an electronic means of recording a subscriber's telephone number together with
information as to what program or service was ordered and by whom, permitting
cable television companies to then unscramble appropriate signals for viewing by
the ordering subscriber, all without any interactive cable system and without
any form of operator intervention. At the time of dialing the order, the
recognition of the subscriber's telephone number is automatically recorded by
TelVue's ANI unit, presenting the subscriber with both a confirmation and
acknowledgment of receipt of his order. In turn, the automatically recorded
information regarding placement of an order is utilized by cable television
companies for purposes of billing for such specialized services.

      During 2007, no additional equipment purchases or software modifications
were required to provide the ANI service. TelVue serves cable television systems
across the United States via trunk lines and data circuits that it currently
leases from Verizon. TelVue believes it receives a favorable trunk usage rate
from Verizon. As of December 31, 2007, TelVue had contracts to provide service
to 228 cable television systems serving approximately 4.6 million subscribers
compared to approximately 4.8 million cable subscribers served as of December
31, 2006. Cable operators are moving their subscriber base onto two-way digital
ordering. As a result of this shift in the cable operators' business, TelVue is
experiencing a decline in the number of subscribers it serves and expects a
continued erosion of its subscriber base (see Item 6, Management's Discussion
and Analysis or Plan of Operation, of this Report).

                                       3
<PAGE>

      The Source segment was acquired on March 9, 2001 for $1.3 million pursuant
to TelVue's acquisition of the assets of J.D. Kraengel and Associates, Inc.,
f/k/a Dacon Corporation d/b/a Source Communications Group, a Delaware
corporation located in Mullica Hill, NJ. The Source segment sold and installed
computer related equipment, network systems, software, and data communications
equipment. In the second quarter of 2004, TelVue made a decision to discontinue
the Source segment operations. The decision to discontinue was a result of the
ongoing losses produced by the segment and the amount of time and resources
required to run the segment. TelVue made an effort to sell a portion of the
Source segment but was not successful.

      For information regarding TelVue's revenue, operations and assets, please
refer to TelVue's financial statements included at Item 7 of this Report and
Management's Discussion and Analysis or Plan of Operation included at Item 6 of
this Report.

LICENSES AND PATENTS

      On July 8, 2003, TelVue filed for a patent for TVTN. TVTN provides the
operators of Cable TV Government Access Channels, typically schools, towns, and
retirement communities, with the ability to generate a computerized TV signal on
those channels. The TVTN signal is comprised of pictures, headlines, voice-over
narration, full motion video clips and graphics. The pending patent includes the
WEBUS system. The WEBUS system is a proprietary system that allows TVTN
customers to independently post messages on their TV channel remotely and
instantaneously. On July 27, 2005, TelVue filed for a second patent for TVTN
which encompasses three additional claims. The claims consist of (i) WEBLINX, a
process that allows the TVTN content to appear on an affiliated website; (ii) a
system for installation of a text-to-speech conversion that converts text
screens to speech for use on the radio; and (iii) a mass emergency broadcast
system which allows one WEBUS user to broadcast an emergency message to one or
more TVTN affiliates simultaneously.

      As a result of our PSG acquisition, we acquired 4 pending patents filed
prior to March 12, 2007 for various improvements related to digital video
servers.

      TelVue has developed and has in service a system that allows subscribers
to order pay-per-view movies and events from their provider using the internet.
TelVue holds United States Patent No. 6,286,139, issued September 4, 2001
related to this system.

      TelVue previously purchased Switched-access Audio Response Units ("SARUs")
and one communication subsystem ("HP") from Atlas Telecom (formerly Syntellect).
TelVue possesses a perpetual, no charge license for the pay-per-view application
software residing on the SARUs it currently owns and for any future SARUs
purchased. TelVue did not purchase any SARUs from Atlas Telecom during 2007.
There is no affiliation between TelVue and Atlas Telecom other than a customer
and supplier relationship.

      TelVue pays Telco Solutions, Inc. a monthly licensing fee for an exclusive
license within the United States for the use of pay-per-view application
software, which resides on two (2) HPs that TelVue owns. TelVue purchases Link
On equipment ("LINK ONs") from Telco Solutions, Inc. The LINK ONs are used to
expand call capacity to accommodate new customers. The LINK ONs work in
conjunction with the SARUs. TelVue had purchased LINK ONs in place of SARUs
because the LINK ONs are more cost effective. TelVue pays Telco Solutions, Inc.
a monthly licensing fee for an exclusive license within the United States for
the use of pay-per-view application software residing on the LINK ONs. TelVue
did not purchase any LINK ONs during 2007.

                                       4
<PAGE>

      TelVue also uses equipment purchased from Science. Science holds United
States Patent No. 4,797,913 (issued January 10, 1989), encompassing ANI ordering
equipment and services employing the use of Feature Group D services (the
"Science Patent"). TelVue holds a perpetual, no charge and nonexclusive license
to use the Science Patent.

MARKETING OF SERVICES

      The TVTN/PSG segment is co-marketed using direct mail and telemarketing to
municipal and school officials while attending various League of Municipality
conferences, PEG Channel shows and school conferences to demonstrate the
service. In addition, TelVue utilizes website, internet meeting rooms, referrals
and demonstration DVDs and CDs to sell both TVTN and PSG servers.

      Sales of TelVue's ANI service to date have been made to operating cable
television companies with a broad geographical distribution. Relations with all
customers are good. Unfortunately, many cable operators are moving their
subscribers onto digital two-way ordering and, as a result, the number of
subscribers TelVue serves is declining and it is unable to attract many new
cable customers to its ANI service. As of December 31, 2007, there were two
Multi System Operators ("MSOs") that individually comprised more than 10% of
TelVue's ANI service revenues. Percentages of service revenue may vary as cable
operators continue to consolidate their systems with other cable operators, as
cable operators leave the ANI service and as the TVTN/PSG segment grows.

COMPETITION

      TVTN/PSG currently has competition from software and hardware suppliers to
municipalities that operate Municipal/Educational cable access channels.
However, at this time, none of those competitors offer the monthly programming
and service level or the sponsorship funding model that TVTN offers.

      TelVue uses telephone company grade, feature-laden equipment for its
automated pay-per-view order processing service. TelVue has a reputation for
offering customer friendly features and excellent customer service. TelVue is
unaware of any direct competitors to its ANI service. TelVue is aware, however,
that some TelVue customers have elected to process their own orders by
constructing their own ANI ordering processing platform.

EMPLOYEES

      At December 31, 2007, TelVue had forty full-time employees and one
part-time employee. Additional personnel may be added as circumstances require.

BACKLOG

      TVTN revenues are computed and assessed a fixed monthly support and
initial installation fee. As a result, no form of backlog exists, other than
that which is represented by accumulated service charge income, which has yet to
be paid to TelVue. Currently, PSG is in the process of fulfilling equipment
orders for 13 customers valued at approximately $171,000. TelVue's ANI service
revenues are computed and assessed on the basis of a fixed charge for every
order placed with a subscribing customer for specialized cable programming
services or for other services transmitted through its equipment.

RESEARCH AND DEVELOPMENT

      TelVue is principally a sales and marketing company. However, material
research and development is performed to introduce features on its PSG servers,
in addition to developing other uses for its server products.

                                       5
<PAGE>

ITEM 2.     PROPERTIES

      TelVue leases approximately 8,700 square feet of office space in the Mt.
Laurel, New Jersey, Horizon Way Corporate Center. The lease expires May 31,
2009. However, TelVue has the right to terminate the lease a year early provided
it gives 120 days prior notice and pays a termination fee of $2,184. The office
space is used to house the equipment used to provide the ANI service and TVTN,
as well as the executive, sales, secretarial and technical support personnel.

      TelVue also leases approximately 2,800 square feet of space in Princeton,
New Jersey. This lease expires on June 30, 2008. This space is used for research
and development of the PSG server product line.

ITEM 3.     LEGAL PROCEEDINGS

      TelVue is not involved in any material legal proceedings.

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

      No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders through solicitation of
proxies or otherwise.

                                     PART II

ITEM 5.     MARKET FOR THE ISSUER'S COMMON STOCK AND RELATED SECURITY
            HOLDER MATTERS

      The Issuer's common stock is traded in the Over-the-Counter Market.
Over-the-Counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual transactions. The
range of high and low bid prices for TelVue's common stock for the two most
recent fiscal years, as reported by The NASDAQ Stock Market, Inc. is as follows:


      QUARTER 2007                        HIGH                    LOW

        First                             $.11                   $.04

        Second                            $.12                   $.07

        Third                             $.19                   $.07

        Fourth                            $.13                   $.05

      QUARTER 2006

        First                             $.04                   $.02

        Second                            $.035                  $.02

        Third                             $.09                   $.03

        Fourth                            $.08                   $.031

      As of March 13, 2008, there were 308 holders of record of the common stock
of TelVue.

      TelVue has paid no cash dividends since its incorporation. TelVue intends
to retain any future earnings for use in its business and has no present
intention to pay cash dividends on its common stock in the foreseeable future.
Holders of the common stock are entitled to share ratably in dividends when and
as declared by the Board of Directors out of funds legally available therefore.

                                       6
<PAGE>

      Shares of common stock which have had the same beneficial owner for a
continuous period in excess of two years prior to the record date of any meeting
of stockholders, are entitled to 10 votes per share in any matters submitted for
vote, at a meeting of stockholders. All other stockholders have one vote per
share unless this limitation is waived by the Board of Directors. On August 21,
2006, the Board of Directors, with Mr. H.F. Lenfest, TelVue's majority
stockholder, abstaining from the action, waived the two year holding period
required to receive the full voting power of ten votes per share for the
23,459,133 shares of common stock Mr. H.F. Lenfest received for the conversion
of his preferred stock in August 2005. As of March 13, 2007, 41,192,682 shares
of TelVue's common stock were entitled to 10 votes per share. The remaining
7,240,392 shares of common stock were entitled to one vote per share. Mr. H.F.
Lenfest owns 38,016,586 shares of common stock, all of which are entitled to ten
votes per share.

EQUITY COMPENSATION PLAN INFORMATION

                      NUMBER OF
                  SECURITIES TO BE    WEIGHTED-AVERAGE        NUMBER OF
                     ISSUED UPON     EXERCISE PRICE OF       SECURITIES
                     EXCERISE OF        OUTSTANDING           REMAINING
                      OUTSTANDING     OPTIONS, WARRANTS     AVAILABLE FOR
                  OPTIONS, WARRANTS      AND RIGHTS        FUTURE ISSUANCE
PLAN CATEGORY         AND RIGHTS     COMPENSATION PLANS      UNDER EQUITY
-------------     -----------------  ------------------    ---------------
   Equity
compensation plans
  approved by
security holders        4,126,667              $.089            5,501,250

  Equity
compensation plans
  not approved by
security holders              (a)                (a)                (a)
                          200,000(b)            .06(b)              (b)
                        ---------              -----            ---------
Total                   4,326,667              $.089            5,501,250
                        =========              =====            =========

(a) In December 1997, TelVue adopted a director compensation plan. Under this
plan, each non-employee director, other than the majority stockholder, is
compensated $500 for each meeting attended by receiving shares of common stock
issued at the higher of per share fair market value of the common stock as of
the board of directors meeting date or $.05 per share.

(b) In 2006, TelVue issued 200,000 stock options to certain consultants of TVTN.

ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW OF COMPANY:

      During the year ended December 31, 2007, TelVue operated two business
segments. The first segment ("TVTN/PSG") includes TelVue Virtual Television
Networks ("TVTN"), which is a system for displaying a fully automated TV
station-like display on a cable system access channel using computer based
digital technology. The TVTN/PSG segment also includes Princeton Server Group,
Inc. ("PSG"), which was acquired on March 12, 2007. PSG develops high
performance digital video systems, appliances, and software that support
capture, storage, manipulation and play-out of digital media in multiple popular
formats. The second and legacy segment is a marketing and service company which
sells automatic number identification ("ANI") telecommunications services to the
cable television industry for the automated ordering of pay-per-view features
and events (the "ANI service").

                                       7
<PAGE>

      In 2003, TelVue developed the TVTN product and service and has applied for
three patents related to the product. TVTN is a system for displaying a fully
automated TV station-like display on a cable system access channel using
computer based digital technology. TVTN displays the programming as graphics,
text, imbedded music and pictures with voice narration and can run full motion
video clips. TelVue is currently marketing TVTN to municipal governments and
school districts as a means of providing richer and more robust TV programming
for their local Cable TV Public, Education and Government Local Access Channels
("PEG Channels"). Currently, most municipalities use a simple TV display made up
of only text messages with background music. TelVue directly charges the
municipalities a nominal start-up and monthly support fee along with a
sponsorship program that finds regional and national businesses as sponsors or
underwriters for TVTN clients to help defray TVTN charges. In return, the TVTN
client places an acknowledgement of the sponsor's support on its town or
school's access channel. While TVTN specializes in creating a customized look
for the PEG Channels and provides localized and dynamic content, PSG provides
digital server technology to store, schedule, archive and playback video during
the video content time allocated on the PEG Channel. TelVue acquired PSG because
it believes PSG and TVTN together will provide a complete technology and support
solution to owners and operators of PEG Channels. As a compliment to the TVTN
service, TelVue has introduced technology enabling local emergency management
officials to send emergency messages by e-mail to residents' cell phones and
computers. This four-in-one technology provides simultaneous phone, e-mail,
website and television notification. The new capability will be available
exclusively to residents in towns affiliated with TVTN.

      The ANI service permits cable television companies to process special
ordering services without the attendant high-manpower requirements or extensive
physical plant and facilities that are otherwise required. TelVue provides the
ANI service through equipment it purchases. TelVue's equipment for providing the
ANI service nationwide is located at TelVue's home office in Mt. Laurel, New
Jersey. TelVue serves cable television systems across the United States via
trunk lines and data circuits that it currently leases from Verizon. TelVue
believes it receives a favorable trunk usage rate from Verizon.

RESULTS OF OPERATIONS:

      The following discussion deals, at some length, with the decrease in
operating income for the year ended December 31, 2007, compared to the year
ended December 31, 2006, and the reasons for the decrease. TelVue further
discusses the continued loss of its subscriber base for the ANI service when
comparing the year ended December 31, 2007 to the year ended December 31, 2006.
The subscriber decline is the result of cable operators moving to digital
services which limit the number of analog pay-per-view channels available for
content and allows the cable operator's customers to order digital pay-per-view
or video on demand via the set top box. TelVue also discusses the marketing of
its TVTN/PSG service and the growth in TVTN/PSG revenue and expenses.

      The ANI segment had operating income of $478,790 for the year ended
December 31, 2007, compared to $763,028 for the year ended December 31, 2006.
The decrease in operating income was mainly a result of the decrease in ANI
service revenue of $207,172 for the year ended December 31, 2007, when compared
to the same period of 2006. As expected, pay-per-view buy revenue decreased
$49,129 for the year ended December 31, 2007, and feature revenue decreased
$189,144 for the year ended December 31, 2007 when compared to the same periods
of 2006. These decreases were mainly due to a reduction in the number of
subscribers served during this period when compared to 2006 (as discussed
below).

                                       8
<PAGE>

      As of December 31, 2007, TelVue was serving approximately 4.6 million
full-time cable subscribers compared to approximately 4.8 million full-time
cable subscribers served as of December 31, 2006. During the year ended December
31, 2007, approximately 1.5 million full-time and part-time cable subscribers
cancelled the ANI service, the largest being Time Warner Cable in New York, NY,
which accounted for 1.1 million part-time subscribers. During the same period,
92,000 new cable subscribers were added to the ANI service. The cable operators
cancelled the ANI service primarily as a result of moving their subscribers onto
two-way digital service which allows the cable operator to process ordering of
pay-per-view movies and events directly from its customers without using
TelVue's ANI service. Management believes the long-term effects of deployment of
digital two-way service will continue to negatively impact the TelVue ANI
service. As a result of the cable and satellite subscriber cancellations noted
above, TelVue expects to continue to decrease its revenue and operating income
indefinitely for its ANI segment.

      ANI cost of revenues decreased for the year ended December 31, 2007 by
$21,184 when compared to the year ended December 31, 2006. This decrease was
primarily due to a favorable variance in software maintenance expense of $38,184
as a result of reversing 2006 accrued but unbilled expenses for Telco Solutions,
Inc., TelVue's HP software support provider ("Telco Solutions"). Telco Solutions
and TelVue worked out an arrangement to allow Telco Solutions to co-locate
equipment at the TelVue facility. In exchange for the co- location, Telco
Solutions waived their 2006 and 2007 software maintenance fees. Trunk lines
showed an increase of $63,748 as a result of credits received in 2006 related to
prior over-charges, in addition to increased current year usage for pay per view
events. There was also a reduction in technical payroll, payroll taxes and
benefits for the year of $43,566 when compared to the same period of 2006 as a
result of an increased amount being allocated to the TVTN/PSG segment. Selling
expenses related to the ANI service decreased by $4,529 for the year ended
December 31, 2007, when compared to the same periods of 2006. This decrease was
primarily the result of savings in payroll and payroll taxes being offset by
higher current year commission expense due to 92,000 cable subscribers being
adding in 2007 compared to zero being added in 2006. ANI segment general and
administrative expenses increased $89,794 for the year ended December 31, 2007
when compared to the same periods of 2006, largely a result of a recovery of bad
debt expense of $78,605 in 2006 related to reversing the Adelphia
Communications, Inc. ("Adelphia") bad debt expense previously recorded in 2003.
This was in addition to higher legal fees and a higher amount of corporate
administrative expenses allocated in 2007 when compared to 2006.

      The TVTN/PSG service had an operating loss of $3,607,806 for the year
ended December 31, 2007, compared to an operating loss of $2,512,337 for the
year ended December 31, 2006. TVTN/PSG service revenue increased $2,156,414 for
the year ended December 31, 2007, compared to the year ended December 31, 2006.
The majority of the revenue increases were attributed to the PSG operating unit,
which was acquired on March 12, 2007. To help speed TVTN penetration, shorten
the sale cycle, and assist clients in finding funding for the TVTN service,
TelVue offers a sponsorship program that finds regional and local businesses as
sponsors or underwriters for TVTN clients to help defray TVTN charges. In
return, the TVTN client places an acknowledgement of the sponsor's support on
its town or school's access channel. Many towns have adopted this method of
funding the cost of the TVTN service. As of December 31, 2007, TVTN was
providing service to 132 towns/schools/retirement communities compared to 94
towns at December 31, 2006, and also had 87 sponsors launched and funding the
town's channel as of December 31, 2007, compared to 79 sponsors launched at
December 31, 2006. TelVue is marketing the TVTN service nationally with an
initial focus in New Jersey, Pennsylvania and Delaware. TelVue has sold the

                                       9
<PAGE>

service to clients in California, Florida, Georgia, Maryland, Massachusetts, New
York, North Carolina, Texas, Virginia and Washington; the remaining customers
are in the New Jersey, Pennsylvania and Delaware areas. PSG's traditional
marketing efforts have been at conferences, seminars and trade shows, in
addition to the use of direct mail and referrals. PSG has sold equipment in 34
different states and the District of Columbia. Cost of revenues for the TVTN/PSG
service increased $1,036,103 for the year ended December 31, 2007, when compared
to the year ended December 31, 2006, mainly as a result of payroll for
additional production and design personnel, in addition to the expenses
associated with the PSG operating unit. Selling expenses related to the TVTN/PSG
service increased $253,032 for the year ended December 31, 2007, when compared
to the year ended December 31, 2006. This increase was a result of additional
sales personnel hired to aggressively market and sell the TVTN/PSG services, as
well as increases in advertising, commission, travel and trade show expenses
combined with the operating expenses of the PSG unit. TVTN/PSG general and
administrative expenses increased $1,275,578 for the year December 31, 2007 when
compared to the year ended December 31, 2006. This increase was primarily a
result of allocating a larger portion of rent and other operational expenses to
the TVTN/PSG segment, along with the addition of the expenses related to the PSG
operating unit. As with many start-up ventures, management anticipates that
expenses will continue to grow as the operations and marketing efforts for the
TVTN/PSG service increase.

      TelVue had a net loss of $3,960,799 for the year ended December 31, 2007,
compared to a net loss of $1,834,515 for the year ended December 31, 2006. At
December 31, 2007 and 2006, TelVue recorded valuation allowance increases of
$1,677,702 and $772,257, respectively, to reduce its deferred tax asset to zero.
The valuation allowances were recorded due to the uncertainty as to whether
future net income would be generated that would utilize TelVue's net operating
loss carry forward. TelVue's federal net operating loss carry forward was
approximately $7,400,000 on a tax-reporting basis as of December 31, 2007 (see
Note 12 of TelVue's accompanying financial statements).

      During the year ended December 31, 2007, TelVue purchased $996,581 of
equipment compared to $552,687 purchased during the year ended December 31,
2006. The majority of the equipment purchased during the year ended December 31,
2007 and 2006 was for software development and equipment related to the TVTN
service. Depreciation and amortization expense increased $189,335 and $507,050
for the year ended December 31, 2007, as a result of the capital purchases, in
addition to the amortization expense related to the PSG intangible assets.
Depreciation and amortization accounted for 18% and 8% of total operating
expenses for the year ended December 31, 2007 and 2006, respectively.

      As of December 31, 2007, TelVue maintained a bad debt reserve in the
amount of $6,510 as compared to $3,000 as of December 31, 2006. The reserve was
calculated based on the estimate that 1% of outstanding receivables would not be
collected.

      TelVue's days for sales in average accounts receivable was 47 days at
December 31, 2007, compared to 44 days at December 31, 2006, not including the
outstanding balances due from Adelphia Cable. TelVue does not offer incentives
or discounts to its customers, nor has it changed its credit terms with its
customers for its TVTN or ANI services. A 2% cash, 1% net 15 days discount is
offered by PSG for payments related to equipment purchases. TelVue had negative
cash flow from operating activities of $2,241,437 and $1,438,620 for the years
ended December 31, 2007 and 2006, respectively. The decrease in cash flow in
2007 compared to 2006 was primarily due to a reduction in ANI service revenue
and an increase in TVTN/PSG expenses (as described above).

                                       10
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES:

      Since November 2, 1989, TelVue has funded its expansion and operating
deficit from the proceeds of the sale of shares of TelVue's common stock and
Preferred Stock (as defined below) to Mr. H.F. Lenfest, TelVue's majority
stockholder, and from loans from Mr. Lenfest. From November 1989 to February
1996, TelVue borrowed an aggregate of $6,128,712 from Mr. Lenfest. These loans
and accrued interest were repaid in their entirety during 2003. On March 5,
2001, TelVue borrowed $650,000 from Mr. Lenfest to fund a portion of the Source
acquisition, at an interest rate of prime plus one percent (1%) compounded and
due on or before January 1, 2004. This loan was repaid in its entirety in 2001.

      In addition to the borrowings noted above, during January 1995, Mr.
Lenfest purchased from Science Dynamics Corporation ("Science"), TelVue's
non-interest bearing note in the amount of $541,000 (the "Science Note"). The
Science Note was originally issued by TelVue to Science and was payable December
31, 1996. The maturity date of the Science Note had been extended by TelVue and
Mr. Lenfest on a yearly basis. On June 16, 2005, the members of the Board of
Directors of TelVue and Mr. Lenfest extended the maturity date of the Science
Note to January 1, 2011.

      On March 9, 2001, pursuant to the terms of the acquisition of the assets
of Source for $1,300,000, TelVue paid $1,000,000 in cash and $300,000 pursuant
to a promissory note (the "Source Note"). The Source Note had a term of three
years. Interest only was payable monthly during year one at the rate of 8% per
annum. Beginning in year two, both principal and interest were payable monthly
at the rate of 5.06% per annum. During the first quarter of 2004, TelVue paid
the remaining balance on the Source Note in its entirety.

      On April 27, 2005, TelVue entered into a Line of Credit Note (the "2005
Note) with Mr. Lenfest. The 2005 Note was secured to provide funding to grow the
TVTN Network. Under the terms of the 2005 Note, TelVue may borrow, from time to
time, up to the maximum principal amount of the 2005 Note which is $3,800,000.
The minimum advance under the 2005 Note is $100,000 and the interest rate of the
2005 Note is equal to the prime rate plus one percent (1%). The 2005 Note
contains customary events of default, including, among others, non-payment of
principal and interest and in the event TelVue is involved in certain insolvency
proceedings. In the event of a default, all of the obligations of TelVue under
the 2005 Note may be declared immediately due and payable. The 2005 Note is
unsecured and will expire six years from the date of the first advance, which is
November 23, 2011, unless extended or renewed. Principal and interest on the
2005 Note are also due and payable on November 23, 2011. During the year ended
December 31, 2007, TelVue borrowed $1,600,000 under the terms of the 2005 Note,
bringing outstanding borrowings under the 2005 Note to $3,800,000 and accrued
interest on the borrowings to $444,727 as of December 31, 2007, fully exhausting
this note.

      As a result of the anticipated exhaustion of the credit under the 2005
Note, TelVue entered into an additional Line of Credit Note (the "2006 Note")
with Mr. Lenfest on November 3, 2006, in the principal amount of Ten Million
Dollars ($10,000,000). Under the 2006 Note, TelVue may request up to $5,000,000
for general working capital. TelVue may request up to an additional $5,000,000
available under the 2006 Note for purposes other than general working capital
upon mutual agreement by TelVue and Mr. Lenfest. The minimum advance under the
2006 Note is $100,000 and the interest rate on the 2006 Note is equal to the
prime rate plus one percent (1%). The 2006 Note contains customary events of
default, including, among others, non-payment of principal and interest and in
the event TelVue is involved in certain insolvency proceedings. In the event of
a default, all of the obligations of TelVue under the 2006 Note may be declared
immediately due and payable. The 2006 Note is unsecured and will expire six
years from the date of the first advance under the 2006 Note unless extended or
renewed. Principal and interest on the 2006 Note are also due and payable six
years from the date of the first advance under the 2006 Note, which was December

                                       11
<PAGE>

26, 2006. As of December 31, 2007, the Company had borrowed $8,400,000 under the
2006 Note with accrued interest in the amount of $547,551. TelVue is borrowing
approximately $300,000 per month under the 2006 Note and anticipates that the
funds will be exhausted by May 2008 or sooner.

      As a result of the anticipated exhaustion of the line of credit under the
2006 Note, TelVue entered into an additional Line of Credit Note (the "2007
Note") with Mr. Lenfest on December 21, 2007, in the principal amount of
$2,300,000. The minimum advance under the 2007 Note is $100,000 and the interest
rate on the 2007 Note is equal to the prime rate plus one percent (1%). The 2007
Note contains customary events of default, including, among others, non-payment
of principal and interest and in the event TelVue is involved in certain
insolvency proceedings. In the event of a default, all of the obligations of
TelVue under the 2007 Note may be declared immediately due and payable. The 2007
Note is unsecured and will expire six years from the date of the first advance
under the 2007 Note unless extended or renewed. Principal and interest on the
2007 Note are also due and payable six years from the date of the first advance
under the 2007 Note.

      On December 26, 2006, TelVue borrowed $400,000 from Mr. Lenfest under the
2006 Note to loan to PSG to fund their operating expenses (the "PSG Note"). The
PSG Note was a convertible note that bore interest at a rate of six percent (6%)
per annum. No payments of principal or interest were due until July 1, 2007.
Under the PSG Note interest accrued through July 1, 2007 was to be added to the
principal. Interest was payable monthly from July 1, 2007 through January 1,
2008. The remaining balance was payable in forty eight (48) monthly installments
of principal and interest commencing February 1, 2008. The PSG Note was
scheduled to mature in January 2012. TelVue had the option to convert the unpaid
principal balance of the note and all accrued interest into common stock of PSG.
In connection with the PSG Note TelVue received a warrant, which entitled TelVue
to purchase 129,629 shares of common stock of PSG for $1.08 per share. The
warrant was to commence on July 1, 2007 and expire on December 31, 2016. The PSG
Note was forgiven on March 12, 2007, in connection with TelVue's acquisition of
all of the outstanding stock of PSG (see below and Note 4 and Note 16 of
TelVue's accompanying financial statements).

      On March 12, 2007, PSG was acquired by TelVue for $6.1 million and the
forgiveness of the PSG Note (described above). TelVue borrowed $6.1 million from
Mr. Lenfest under the 2006 Note. PSG develops high performance digital video
systems, appliances, and software that support capture, storage, manipulation
and play-out of digital media in multiple popular formats. PSG markets their
product to PEG TV and local origination broadcast stations, professional
broadcast stations and schools and universities. TelVue acquired PSG as a
complement to its TVTN Network with the objective being to offer towns,
municipalities and schools a packaged turnkey product of hardware and software.

      On June 16, 2005, Mr. Lenfest, the holder of all of TelVue's outstanding
Class A Redeemable Convertible Preferred Stock (the "Preferred Stock"), informed
TelVue of his intent to convert all of his 3,518,694 shares of Preferred Stock
into TelVue's common stock. Each share of Preferred Stock was convertible into
6.667 shares of common stock. The conversion of the Preferred Stock to common
stock occurred on August 2, 2005, upon Mr. Lenfest's delivery of the Preferred
Stock in the form of a lost certificate affidavit. As a result of the
conversion, TelVue issued 23,459,133 shares of common stock to Mr. Lenfest. Mr.
Lenfest's beneficial ownership interest in the common stock of TelVue, after the
cancellation of the warrants to purchase common stock described below, was
approximately 78.3 percent as of December 31, 2006. The Preferred Stock was
eliminated and is included as 23,459,133 shares of common stock in the
stockholders' equity section of the balance sheet. On August 21, 2006, the Board
of Directors, with Mr. Lenfest abstaining from the action, waived the two year
holding period required to receive the full voting power of ten votes per share
for the 23,459,133 shares of common stock Mr. Lenfest received for the
conversion of his Preferred Stock.

                                       12
<PAGE>

      The Preferred Stock had a par value of $1 per share and provided for a
cumulative six percent (6%) semiannual dividend. The dividend was payable in
cash or additional shares of Preferred Stock at $1 per share, at TelVue's
option. TelVue had accrued dividends on the Preferred Stock since the beginning
of 1998, but no dividends had been paid. On June 16, 2005, Mr. Lenfest agreed to
relinquish his right to all accrued but unpaid dividends attributable to the
Preferred Stock. Therefore, $3,061,269 of accrued dividends was reversed and is
included in stockholders' equity as a decrease to TelVue's accumulated deficit.

      On June 16, 2005, the members of the Board of Directors of TelVue and Mr.
Lenfest agreed to terminate a Warrant Agreement between Mr. Lenfest and TelVue.
Pursuant to the Warrant Agreement, Mr. Lenfest had the right to purchase up to
29,915,160 shares of TelVue's common stock for $.01 per share, the fair market
value of the common stock on the grant date. The Warrant Agreement was entered
into on March 15, 1991, in connection with a prior line of credit to TelVue
provided by Mr. Lenfest.

      TelVue's ability to fully fund its operating expenses has suffered by the
loss of a large number of its subscriber base for the ANI service. As discussed
above, TelVue anticipates a continued decrease in revenue and an increase in net
loss for the ANI service. In order to continue to fund a majority of its ANI
operating expenses, TelVue needs to retain its current subscriber base level.
Management believes that over time, continued erosion will occur in the
subscriber base. As discussed above, during the year ended December 31, 2007,
TelVue had 1,547,000 full and part-time subscribers cancel service and only
92,000 new subscribers were added to the ANI service. The cable operators
cancelled the ANI service primarily as a result of moving their subscribers onto
two-way digital service.

      TelVue has been, and continues to be, dependent upon Mr. Lenfest for funds
to pay the majority of operating and capital expenditures for TVTN as well as
the newly acquired PSG subsidiary. As discussed above, the financing from Mr.
Lenfest under the 2005 Note has been exhausted, and TelVue believes that the
financing from Mr. Lenfest under the 2006 Note will be exhausted by
approximately May 2008 or sooner. As a result of this, TelVue secured the 2007
Note from Mr. Lenfest to help TelVue grow TVTN to a profitable level. The 2005
Note has helped, and the 2006 Note and 2007 Note will help, to fund the growth
of TVTN and the PSG subsidiary, as well as fund the ANI service in the event it
becomes cash flow negative. While maintaining the ANI pay-per-view ordering
business, TelVue intends to continue to aggressively market and sell TVTN and
PSG service. However, there can be no assurance that its marketing efforts will
be successful.

ITEM 7.     FINANCIAL STATEMENTS

      The Financial Statements are set forth in this report beginning at page
F-1.

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE

      There have been no disagreements of any nature at any time with TelVue's
auditors with regard to any aspect of TelVue's financial statements, its
financial disclosure or its accounting practices.

ITEM 8A.    CONTROLS AND PROCEDURES

      (a) Evaluation of Disclosure Controls and Procedures. TelVue's Chief
Executive Officer and its Treasurer (Controller), have evaluated the
effectiveness of TelVue's disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended) as of the end of the period covered by this
report. Based upon that evaluation, TelVue's Chief Executive Officer and its

                                       13
<PAGE>

Treasurer (Controller) have concluded that TelVue's disclosure controls and
procedures were adequate and effective to ensure that material information
relating to TelVue would be made known to them by others within the company,
particularly during the period in which this annual report on Form 10-KSB was
being prepared.

      (b) Changes in Internal Controls. During the annual period covered by this
report, there were no changes in TelVue's internal control over financial
reporting that has materially affected, or is reasonably likely to materially
affect TelVue's internal control over financial reporting.

      (c) Management's Report on Internal Control Over Financial Reporting.

      TelVue's management is responsible for the preparation and integrity of
the Consolidated Financial Statements appearing in our annual report on Form
10-KSB. The financial statements were prepared in conformity with generally
accepted accounting principles appropriate in the circumstances and,
accordingly, include certain amounts based on our best judgments and estimates.
Financial information in this annual report on Form 10-KSB is consistent with
that in the financial statements.

      Management is also responsible for establishing and maintaining effective
internal control over financial reporting as such term is defined in Rule
13a-15(f) under the Securities Exchange Act of 1934, as amended. TelVue's
internal control over financial reporting includes those policies and procedures
that pertain to TelVue's ability to record, process, summarize and report
reliable financial data. Management recognizes that there are inherent
limitations in the effectiveness of any internal control over financial
reporting, including the possibility of human error and the circumvention or
overriding of internal control. Accordingly, even effective internal control
over financial reporting can provide only reasonable assurance with respect to
financial statement preparation. Further, because of changes in conditions, the
effectiveness of internal control over financial reporting may vary over time.

      In order to ensure TelVue's internal control over financial reporting is
effective, management regularly assesses such controls and did so most recently
for its financial reporting as of December 31, 2007. This assessment was based
on criteria for effective internal control over financial reporting described in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this assessment, management
believes the Corporation maintained effective internal control over financial
reporting as of December 31, 2007.

      TelVue's Board of Directors, acting through its Audit Committee, is
responsible for the oversight of accounting policies, financial reporting and
internal control. The Audit Committee of the Board of Directors is comprised
entirely of outside directors who are independent of management. The Audit
Committee is responsible for performing an oversight role by reviewing and
monitoring the financial, accounting and auditing procedures of TelVue in
addition to reviewing TelVue's financial statements. TelVue's independent
auditors have full and unlimited access to the Audit Committee, with or without
management, to discuss the adequacy of internal control over financial
reporting, and any other matters which they believe should be brought to the
attention of the Audit Committee.

      This annual report does not include an attestation report from TelVue's
independent auditors regarding internal control over financial reporting.
Management's report was not subject to attestation by TelVue's independent
auditors pursuant to temporary rules of the Securities and Exchange Commission
that permit TelVue to provide only management's report in this annual report.

                                       14
<PAGE>

ITEM 8B.    OTHER INFORMATION

      Effective January 1, 2008, the salary of Randy Gilson, TelVue's Vice
President of Technical Services, was increased to $129,907. Joseph M. Murphy,
TelVue's President and Chief Executive Officer declined a salary increase.
Further details of each officer's compensation are set forth on Exhibit 10.12 to
this annual report on Form 10-KSB and incorporated herein by reference.

                                    PART III

ITEM 9.     DIRECTORS AND EXECUTIVE OFFICERS OF ISSUER AND CORPORATE
            GOVERNANCE

      The information called for by this Item is incorporated herein by
reference to TelVue's Proxy Statement for its 2008 Annual Meeting of
Shareholders that will be filed not later than April 29, 2008.

ITEM 10.    EXECUTIVE COMPENSATION

      The information called for by this Item is incorporated herein by
reference to TelVue's Proxy Statement for its 2008 Annual Meeting of
Shareholders that will be filed not later than April 29, 2008.

ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            AND RELATED STOCKHOLDER MATTERS

      The information called for by this Item is incorporated herein by
reference to TelVue's Proxy Statement for its 2008 Annual Meeting of
Shareholders that will be filed not later than April 29, 2008.

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
            INDEPENDENCE

      At December 31, 2007, TelVue was indebted to Mr. Lenfest in the principal
amount of $12,200,000 and accrued interest of $992,278.

      Other related transactions are described in Notes 4, 7, 8, 10 and 14 of
the 2007 Financial Statements of TelVue.

      Certain other information called for by this Item is incorporated herein
by reference to TelVue's Proxy Statement for its 2008 Annual Meeting of
Shareholders that will be filed not later than April 29, 2008.

ITEM 13.    EXHIBITS AND FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

      Report of Independent Registered Public Accounting Firm dated March 28,
      2008.

      Balance Sheets as of December 31, 2007 and 2006.

      Statements of Operations for the years ended December 31, 2007 and 2006.

      Statements of Stockholders' Deficit for the years ended December 31, 2007
      and 2006.

      Statements of Cash Flows for the years ended December 31, 2007 and 2006.

      Notes to Financial Statements.

                                       15
<PAGE>


                        TelVue Corporation and Subsidiary

                        Consolidated Financial Statements

                     Years Ended December 31, 2007 and 2006

Table of Contents
                                                                Page No.

Report of Independent Registered Public Accounting Firm          F - 2

Consolidated Financial Statements

     Consolidated Balance Sheets                                 F - 3

     Consolidated Statements of Operations                       F - 4

     Consolidated Statements of Stockholders' Deficit            F - 5

     Consolidated Statements of Cash Flows                       F - 6

     Notes to Consolidated Financial Statements                  F - 7



                                       F-1
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To The Board of Directors and Stockholders
TelVue Corporation and Subsidiary


We have audited the accompanying consolidated balance sheets of TelVue
Corporation (a Delaware corporation) and subsidiary as of December 31, 2007 and
2006, and the related consolidated statements of operations, stockholders'
deficit and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TelVue Corporation
and subsidiary as of December 31, 2007 and 2006, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.


/s/ Pressman Ciocca Smith LLP
Huntingdon Valley, Pennsylvania
March 28, 2008

                                       F-2
<PAGE>

TelVue Corporation and Subsidiary
Consolidated Balance Sheets
December 31, 2007 and 2006

ASSETS                                                 2007            2006
                                                       ----            ----
CURRENT ASSETS
  Cash and cash equivalents ....................   $    225,660    $    191,157
  Accounts receivable - trade, net of
   allowance for doubtful accounts of
   $6,500 in 2007 and $3,000 in 2006 ...........        641,683         392,134
  Inventory ....................................        244,994               -
  Prepaid expenses .............................        120,646          62,328
                                                   ------------    ------------

            TOTAL CURRENT ASSETS ...............      1,232,983         645,619

NOTE RECEIVABLE ................................              -         400,329


PROPERTY AND EQUIPMENT .........................      7,364,421       6,240,135
  Less accumulated depreciation ................      5,763,185       5,342,637
                                                   ------------    ------------
                                                      1,601,236         897,498

DEFINITE-LIVED INTANGIBLE ASSETS
  Net of accumulated amortization
   of $507,050 .................................      4,041,670               -

INDEFINITE-LIVED INTANGIBLE ASSETS-GOODWILL ....      1,921,405               -

INDEFINITE-LIVED INTANGIBLE ASSETS-OTHER .......        397,260               -

OTHER ASSETS ...................................          8,800           8,800
                                                   ------------    ------------
                                                   $  9,203,354    $  1,952,246
                                                   ============    ============
LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable .............................   $    705,182    $    105,109
  Accrued expenses .............................        236,538         373,161
  Deferred service revenue .....................        416,434         153,041
  Other liabilities ............................          3,178           1,407
                                                   ------------    ------------
            TOTAL CURRENT LIABILITIES ..........      1,361,332         632,718

LINES OF CREDIT - MAJORITY STOCKHOLDER .........     12,200,000       2,600,000

NOTE PAYABLE - MAJORITY STOCKHOLDER ............        541,000         541,000

ACCRUED INTEREST - MAJORITY STOCKHOLDER ........        992,278         111,735

REDEEMABLE CONVERTIBLE PREFERRED STOCK
 $1 par value, 6,900,000 shares authorized,
  no shares outstanding ........................              -               -

STOCKHOLDERS' DEFICIT
  Common stock, $.01 par value, 100,000,000
   shares authorized, 48,433,074 and
   48,356,407 shares issued and outstanding
   at December 31, 2007 and 2006,
   respectively ................................        484,331         483,564
  Additional paid-in capital ...................      4,876,639       4,874,656
  Accumulated deficit ..........................    (11,252,226)     (7,291,427)
                                                   ------------    ------------
                                                     (5,891,256)     (1,933,207)
                                                   ------------    ------------
                                                   $  9,203,354    $  1,952,246
                                                   ============    ============
See accompanying notes
                                       F-3
<PAGE>

TelVue Corporation and Subsidiary
Consolidated Statements of Operations
Years Ended December 31, 2007 and 2006

                                                     2007              2006
                                                     ----              ----
REVENUES
  ANI services .............................     $  1,364,543      $  1,571,715
  TVTN/PSG service .........................        2,674,096           517,682
                                                 ------------      ------------
                                                    4,038,639         2,089,397
COST OF REVENUES
  ANI services .............................          459,492           480,676
  TVTN/PSG services ........................        1,595,651           559,548
                                                 ------------      ------------
                                                    2,055,143         1,040,224

           GROSS PROFIT ....................        1,983,496         1,049,173

OPERATING EXPENSES
  Selling and marketing ....................        1,700,830         1,468,776
  General and administrative ...............        2,482,082         1,096,941
  Depreciation and amortization ............          929,600           232,765
                                                 ------------      ------------
                                                    5,112,512         2,798,482
                                                 ------------      ------------

           OPERATING LOSS ..................       (3,129,016)       (1,749,309)

OTHER INCOME (EXPENSE)
  Interest expense - related party .........         (880,543)         (110,025)
  Interest income ..........................           38,715            17,819
  Gain on sale of equipment ................                -             7,000
  Gain on sale of marketable securities ....           10,045                 -
                                                 ------------      ------------
                                                     (831,783)          (85,206)
                                                 ------------      ------------
           LOSS BEFORE INCOME TAXES ........       (3,960,799)       (1,834,515)

INCOME TAX EXPENSE .........................                -                 -
                                                 ------------      ------------
           NET LOSS ........................     $ (3,960,799)     $ (1,834,515)
                                                 ============      ============

BASIC NET LOSS PER COMMON SHARE ............     $      (0.08)     $      (0.04)
                                                 ============      ============

DILUTED NET LOSS PER COMMON SHARE: .........     $      (0.08)     $      (0.04)
                                                 ============      ============
           WEIGHTED AVERAGE NUMBER
            OF SHARES OUTSTANDING ..........       48,387,348        48,348,133
                                                 ============      ============
See accompanying notes
                                       F-4
<PAGE>

TelVue Corporation and Subsidiary
Consolidated Statements of Stockholders' Deficit
Years Ended December 31, 2007 and 2006

                                        Additional                     Total
                               Common    Paid-In    Accumulated    Stockholders'
                               Stock     Capital      Deficit         Deficit
                              --------  ----------  ------------   -------------

BALANCE, JANUARY 1, 2006 ...  $483,364  $4,873,856  $ (5,456,912)  $    (99,692)

Issuance of 20,000 shares
 of common stock ...........       200         800             -          1,000
Net loss ...................         -           -    (1,834,515)    (1,834,515)
                              --------  ----------  ------------   ------------

BALANCE, DECEMBER 31, 2006 .   483,564   4,874,656    (7,291,427)    (1,933,207)

Issuance of 76,667 shares
 of common stock ...........       767       1,983             -          2,750
Net loss ...................         -           -    (3,960,799)    (3,960,799)
                              --------  ----------  ------------   ------------
BALANCE, DECEMBER 31, 2007 .  $484,331  $4,876,639  $(11,252,226)  $ (5,891,256)
                              ========  ==========  ============   ============
See accompanying notes
                                       F-5
<PAGE>

TelVue Corporation and Subsidiary
Consolidated Statements of Cash Flows
Years Ended December 31, 2007 and 2006

CASH FLOWS FROM OPERATING ACTIVITIES                     2007           2006
                                                         ----           ----

  Net loss .......................................   $(3,960,799)   $(1,834,515)
  Adjustments to reconcile net loss
    to net cash (used in) operating
    activities:
    Depreciation and amortization ................       929,600        232,765
    (Gain) on sale of equipment ..................             -         (7,000)
    (Gain) on sale of marketable securities ......       (10,045)             -
    Accrued interest on note receivable ..........             -           (329)
  Changes in operating assets and liabilities:
    Accounts receivable - trade ..................      (143,915)       (88,779)
    Other receivable .............................             -         10,900
    Inventory ....................................      (140,601)             -
    Prepaid expenses .............................       (58,318)       (21,695)
    Accounts payable .............................       320,540        (25,607)
    Accrued expenses .............................      (136,623)       163,161
    Deferred service revenue .....................        76,410         23,557
    Other liabilities ............................         1,771         (1,103)
    Accrued interest -
      majority stockholder .......................       880,543        110,025
                                                     -----------    -----------
           NET CASH (USED IN)
           OPERATING ACTIVITIES ..................    (2,241,437)    (1,438,620)

CASH FLOWS FROM INVESTING ACTIVITIES
  Cash paid for acquisition ......................      (240,274)             -
  Proceeds from sale of equipment ................             -          7,000
  Proceeds from sale of marketable securities ....        10,045              -
  Purchases of property and equipment ............      (996,581)      (552,687)
                                                     -----------    -----------
           NET CASH (USED IN)
           INVESTING ACTIVITIES ..................    (1,226,810)      (545,687)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from line of credit -
    majority stockholder .........................     3,500,000      2,000,000
  Issuance of common stock .......................         2,750          1,000
                                                     -----------    -----------
           NET CASH PROVIDED BY
           FINANCING ACTIVITIES ..................     3,502,750      2,001,000
                                                     -----------    -----------
           NET INCREASE IN CASH
           AND CASH EQUIVALENTS ..................        34,503         16,693

           CASH AND CASH EQUIVALENTS
           AT BEGINNING OF YEAR ..................       191,157        174,464
                                                     -----------    -----------
           CASH AND CASH EQUIVALENTS
           AT END OF YEAR ........................   $   225,660    $   191,157
                                                     ===========    ===========
See accompanying notes
                                       F-6
<PAGE>

                        TelVue Corporation and Subsidiary
                   Notes to Consolidated Financial Statements
                           December 31, 2007 and 2006

Note 1 - Summary of Significant Accounting Policies

This summary of significant accounting policies of TelVue Corporation and
subsidiary ("the Company") is presented to assist in understanding its
consolidated financial statements. These accounting policies conform to
accounting principles generally accepted in the United States of America and
have been consistently applied in the preparation of the consolidated financial
statements.

Basis of Consolidation

The consolidated financial statements include the accounts of TelVue Corporation
and its wholly-owned subsidiary, Princeton Server Group, Inc. from March 12,
2007, the date of acquisition. Significant intercompany accounts and
transactions have been eliminated in consolidation.

Business Activity and Concentration of Credit Risk

The Company operates two business segments. One segment is a marketing and
service division, which sells automatic number identification telecommunications
services ("ANI service") to the cable television industry throughout the United
States for the automated ordering of pay-per-view features and events. The
Company grants credit to cable television operators throughout the nation.
Consequently, the Company's ability to collect the amounts due from customers is
affected by economic fluctuations in the cable television industry. The other
business segment is a system for displaying a fully automated television
station-like display on a cable system access channel using computer based
digital technology ("TVTN service"). This segment also includes Princeton Server
Group, Inc. ("PSG"), which develops high performance digital video systems,
appliances and software that support capture, storage, manipulation and playout
of digital media in multiple popular formats.

The Company maintains cash balances at a financial institution located in the
Philadelphia area. Accounts at this institution are insured by the Bank
Insurance Fund up to $100,000. The Company maintains cash balances in excess of
the insured amount.

During 2007, one customer accounted for 10% of revenues and accounted for 8% of
receivables at December 31, 2007. During 2006, two customers accounted for 46%
of revenues and accounted for 36% of receivables at December 31, 2006.

Currently, the Company's primary source of financing is the majority
stockholder. The Company has not sought to obtain significant funding from third
parties on terms that are acceptable to the Company.

Use of Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
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 consolidated financial statements and reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

                                      F-7
<PAGE>

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all
short-term debt securities purchased with an original maturity of three (3)
months or less to be cash equivalents.

Accounts Receivable - Trade

Trade accounts receivable are stated at the amount management expects to collect
from outstanding balances. Management provides for probable uncollectible
amounts through a charge to earnings and a credit to a valuation allowance based
on its assessment of the current status of individual accounts. Balances that
are still outstanding after management has used reasonable collection efforts
are written off through a charge to the valuation allowance and a credit to
trade accounts receivable.

Inventory

Inventory is stated at the lower of cost or market. Cost is determined by the
specific-identification method, and market represents the lower of replacement
cost or estimated net realizable value.

Business Combination

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 141,
"Business Combinations", the Company accounts for all business combinations by
the purchase method. The total cost of acquisitions is allocated to the
underlying assets, based on fair market values as determined by an independent
appraiser. The Company recognizes intangible assets apart from goodwill if they
arise from contractual or legal rights or if they are separable from goodwill.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
provided over the estimated useful lives using the straight-line method.
Amortization of leasehold improvements is included with depreciation expense and
is provided over the shorter of the remaining lease term or estimated useful
life. Property and equipment consists primarily of operating equipment. For
income tax purposes, recovery of capital costs for property and equipment is
made using accelerated methods over statutory recovery periods.

Customer installation costs incurred to provide the TVTN service are capitalized
and depreciated over the term of the contract, which is typically three (3)
years.

Expenditures for renewals and betterments that extend the useful lives of
property and equipment are capitalized. Expenditures for maintenance and repairs
are charged to expense as incurred.

Goodwill, Trademarks and Other Intangible Assets

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets", the
Company classifies intangible assets into three categories: (1) intangible
assets with definite lives subject to amortization, (2) intangible assets with
indefinite lives not subject to amortization and (3) goodwill. The Company tests
intangible assets with definite lives for impairment if conditions exist that
indicate the carrying value may not be recoverable. Such conditions may include
an economic downturn in a geographic market or a change in the assessment of
future operations. The Company records an impairment charge when the carrying
value of the definite lived intangible asset is not recoverable by the cash
flows generated from the use of the asset.

                                      F-8
<PAGE>

Intangible assets with indefinite lives and goodwill are not amortized. The
Company tests these intangible assets and goodwill for impairment at least
annually or more frequently if events or circumstances indicate that such
intangible assets or goodwill might be impaired. All goodwill is assigned to
reporting units, which are one level below the operating segments. Goodwill is
assigned to the reporting unit that benefits from the synergies arising from
each business combination. The Company performs impairment tests of goodwill at
each reporting unit level. Such impairment tests for goodwill include comparing
the fair value of the respective reporting unit with its carrying value,
including goodwill. When the fair value is less than the carrying value of the
intangible assets or the reporting unit, the Company records an impairment
charge to reduce the carrying value of the assets to fair value.

The Company determines the useful lives of our identifiable intangible assets
after considering the specific facts and circumstances related to each
intangible asset. Factors the Company considers when determining useful lives
include the contractual term of any agreement, the history of the asset, the
Company's long-term strategy for the use of the asset, any laws or other local
regulations which could impact the useful life of the asset, and other economic
factors, including competition and specific market conditions. Intangible assets
that are deemed to have definite lives are amortized, generally on a straight-
line basis, over their useful lives, ranging from 1 to 15 years.

Valuation of Long-Lived Assets

In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", the Company periodically evaluates whether events or
circumstances have occurred that indicate that the remaining useful lives of its
long-lived assets, including property and equipment should be revised or that
the remaining balance of such assets may not be recoverable using objective
methodologies. Such methodologies include evaluations based on cash flows
generated by the underlying assets or other determinants of fair value. As of
December 31, 2007, management believes that no revisions to the remaining lives
or write-downs of carrying values are required.

Revenue Recognition

The Company recognizes ANI service revenues in the month service is provided,
net of an estimate for programs not billable by the cable television operator.
The Company recognizes TVTN service revenues in the month the service is
provided. Amounts billed for start-up are deferred and recognized on the
straight-line basis over the term of the contract.

Income Taxes

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement 109" ("FIN 48"). FIN 48 establishes a single
model to address accounting for uncertain tax positions. FIN 48 clarifies the
accounting for income taxes by prescribing a minimum recognition threshold a tax
position is required to meet before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition, measurement,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. The Company adopted the provisions of FIN 48 on
January 1, 2007. Upon adoption, the Company recognized no adjustment in the
amount of unrecognized tax benefits. As of the date of adoption, the Company had
no unrecognized tax benefits. The Company's policy is to recognize interest and
penalties that would be assessed in relation to the settlement value of
unrecognized tax benefits as a component of income tax expense.

                                      F-9
<PAGE>

The Company and its subsidiary are subject to U.S. federal income tax as well as
income tax in multiple state jurisdictions. The Company is no longer subject to
U.S. federal income tax examinations for years before 2003 and state income tax
examinations before 2002. However, to the extent allowed by law, the tax
authorities may have the right to examine prior periods where net operating
losses were generated and carried forward, and make adjustments up to the amount
of the net operating loss carryforward amount. The Company is not currently
under Internal Revenue Service ("IRS") tax examination. The Company is not
currently under examination by any state jurisdictions.

The Company uses the asset and liability method of accounting for income taxes
in accordance with SFAS No. 109, "Accounting for Income Taxes". SFAS 109
requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the consolidated
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the differences between the financial
statement carrying amounts and tax bases of assets and liabilities using enacted
tax rates in effect in the years in which the differences are expected to
reverse. The measurement of deferred tax assets is reduced, if necessary, by a
valuation allowance for any tax benefits which are not expected to be realized.
Differences between financial reporting and tax bases arise most frequently from
differences in timing of income and expense recognition. Deferred income tax
expense is measured by the change in the net deferred income tax asset or
liability during the year.

Shared-Based Compensation

Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123R,
"Share-Based Payment," and related interpretations, to account for share-based
compensation. SFAS 123R supersedes APB Opinion No. 25, "Accounting for Stock
Issued to Employees" and revises guidance in SFAS 123, Accounting for
Stock-Based Compensation". The Company has adopted SFAS 123R using the modified
prospective method. SFAS 123R requires that compensation expense be recognized
in the consolidated financial statements for share-based awards based on the
grant date fair value of those awards. Prior to January 1, 2006, the Company
accounted for stock options in accordance with APB No. 25. Accordingly,
compensation was recognized only if the exercise price was less than the quoted
market price of the stock on the grant date.

Advertising

The Company follows the policy of charging the costs of advertising to expense
as incurred. Advertising expense is included in selling and marketing expense in
the accompanying statements of operations.

Note 2 - Acquisition

On March 12, 2007, the Company acquired all of the issued and outstanding shares
of capital stock of PSG for a purchase price of $6,100,000 in cash plus the
forgiveness of a $400,000 loan owed by PSG. The acquisition was funded with
funds drawn under a $10,000,000 line of credit held by the Company with the
Company's majority stockholder. The Company accounts for this acquisition as a
business combination under the purchase method of accounting. The results of PSG
are included in the Company's TVTN/PSG operating segment.

The accompanying consolidated financial statements include the operations of PSG
since the date of acquisition.

                                      F-10
<PAGE>

The following unaudited pro forma information for the years ended December 31,
2007 and 2006, is presented as if the acquisition of PSG occurred on January 1,
2006. This information is based on the historical results of operations,
adjusted for acquisition costs, and, in the opinion of management, is not
necessarily indicative of what the results would have been had the Company
operated PSG since January 1, 2006.

                                                     2007             2006
                                                     ----             ----
  Revenues .................................     $ 4,329,184      $ 3,923,773
  Net loss .................................     $(4,497,861)     $(4,060,290)
  Basic and diluted net loss per share .....     $     (0.09)     $     (0.08)

Note 3 - Supplemental Disclosures of Cash Flow Information

Supplemental Schedule Relating to Acquisition

  Accounts receivable ....................   $   105,634
  Inventory ..............................       104,393
  Property and equipment .................       129,707
  Definite-live intangible assets ........     4,548,720
  Goodwill ...............................     1,921,405
  Other indefinite-lived intangible assets       397,260
  Accounts payable and accrued expenses ..      (279,533)
  Deferred service revenue ...............      (186,983)
  Note payable ...........................      (400,329)
  Amount financed ........................    (6,100,000)
                                             -----------
CASH PAID FOR ACQUISITION ................   $   240,274
                                             ===========

During 2007 and 2006, there was no cash paid for interest or income taxes.

Noncash Investing and Financing Transactions

During the year ended December 31, 2007, the Company received marketable
securities with a value of $63,719 from a customer as partial payment of
outstanding receivables. These securities were sold in July 2007, resulting in a
realized gain of $10,045. In December 2006, the majority stockholder, on behalf
of the Company, loaned $400,000 to PSG, prior to the acquisition, under the
Company's line of credit in exchange for a convertible note receivable.

Note 4 - Note Receivable

The note was a convertible note, which bore interest at six percent (6%). The
note was forgiven in March 2007, when the Company acquired all of the
outstanding stock of PSG. See Note 2.

Note 5 - Property and Equipment

A schedule of property and equipment at December 31, 2007 and 2006, is as
follows:
                                                                    Estimated
                                                                  Useful Lives
                                         2007           2006        in Years
                                         ----           ----      ------------
  Operating equipment ............    $6,739,755    $5,893,857        3-5
  Office furniture and equipment .       462,970       300,189        3-5
  Leasehold improvements .........        46,089        46,089         5
  Software .......................       115,607          -            3
                                      ----------    ----------
                                      $7,364,421    $6,240,135
                                      ==========    ==========

                                      F-11
<PAGE>

Note 6 - Intangible Assets

A schedule of definite-lived intangible assets and accumulated amortization as
of December 31, 2007 is as follows:

                                                                      Weighted
                                                                      Average
                                        Accumulated                 Amortization
                             Amount     Amortization       Net         Period
                           ----------   ------------   ----------   ------------
Software ...............   $3,600,000    $  407,143    $3,192,857      7 years
Patents ................      788,220        41,600       746,620     15 years
Customer list ..........       74,900        39,531        35,369     18 months
Customer contract ......       57,800        11,440        46,360      4 years
Maintenance contracts ..       27,800         7,336        20,464      3 years
                           ----------    ----------    ----------
                           $4,548,720    $  507,050    $4,041,670
                           ==========    ==========    ==========

Amortization expense from definite-lived assets for the year ended December 31,
2007 was $507,050. The following table presents the Company's estimate of
amortization expense for each of the five succeeding years for definite-lived
intangible assets:

                 Year Ending December 31,
                          2008 .................  $  625,920
                          2009 .................     590,550
                          2010 .................     583,215
                          2011 .................     569,844
                          2012 .................     566,834
                       Thereafter ..............   1,105,307
                                                  ----------
                                                  $4,041,670
                                                  ==========

A schedule of indefinite-lived intangible assets as of December 31, 2007 is as
follows:

                 Goodwill ......................  $1,921,405
                 Trademarks ....................     397,260
                                                  ----------
                                                  $2,318,665
                                                  ==========

Note 7 - Lines of Credit - Majority Stockholder

In April 2005, the Company entered into a line of credit agreement with the
majority stockholder. Under the terms of the agreement, the Company may borrow
up to $3.8 million, the maximum principal amount of the line. Amounts
outstanding accrue interest at prime plus one percent (1%). The effective
interest rates at December 31, 2007 and 2006 were 8.25% and 9.25%, respectively.
Accrued interest is due at maturity. The line is unsecured and will mature in
November 2011. As of December 31, 2007 and 2006, the amounts outstanding under
this line of credit were $3,800,000 and $2,200,000, respectively.

                                      F-12
<PAGE>

In November 2006, the Company entered into an additional line of credit
agreement with the majority stockholder. Under the terms of the agreement, the
Company may borrow up to $10 million, the maximum principal amount of the line.
The Company may borrow up to $5 million for general working capital and may
borrow up to $5 million for purposes other than general working capital. Amounts
outstanding accrue interest at prime plus one percent (1%). The effective
interest rates at December 31, 2007 and 2006 were 8.25% and 9.25%, respectively.
Accrued interest is due at maturity. The line is unsecured and will mature in
November 2012. At December 31, 2007 and 2006, the amounts outstanding under this
line of credit were $8,400,000 and $400,000, respectively

In December 2007, the Company entered into an additional line of credit
agreement with the majority stockholder. Under the terms of the agreement, the
Company may borrow up to $2.3 million, the maximum principal amount of the line.
Amounts outstanding accrue interest at prime plus one percent (1%). The
effective interest rate at December 31, 2007 was 8.25%. Accrued interest is due
at maturity. The line is unsecured and will mature six years after the initial
advance. As of December 31, 2007, there was no outstanding balance.

Note 8 - Note Payable - Majority Stockholder

In January 1995, the Company's majority stockholder acquired from Science
Dynamics Corporation ("SDC") an unsecured note in the amount of $541,000. The
note is noninterest bearing and repayment is restricted to cash not needed for
operations as determined by the Company. The maturity date of the note is
January 1, 2011.

Note 9 - Lease Commitments

The Company leases office facilities and trunk lines and data circuits. Future
minimum lease payments under non-cancelable operating leases with initial terms
of one year or more consisted of the following at December 31, 2007:

                 Year Ending December 31,
                          2008 .................  $  141,989
                          2009 .................      51,850
                                                  ----------
                                                  $  193,839
                                                  ==========

Rental expense under the operating lease for office facilities amounted
to$176,442 and $144,100 for the years ended December 31, 2007 and 2006,
respectively.

It is expected that, in the normal course of business, expiring leases will be
renewed or replaced by leases on other properties; thus, it is anticipated that
future minimum operating lease commitments will not be less than the amount
incurred in 2007.

Note 10 - Capital Stock

Common Stock Voting Rights and Concentration of Control

Shares of common stock, which have had the same beneficial owner for a
continuous period in excess of two (2) years prior to the record date of any
meeting of stockholders, will be entitled to 10 votes per share in any matters
submitted for vote at a meeting of stockholders. All other stockholders have one
vote per share unless this limitation is waived by the Board of Directors.

                                      F-13
<PAGE>

In November 1989, the Company issued 12,896,968 shares of common stock for
$1,250,000 to an individual who effectively acquired control of the Company. In
January 1995, this individual acquired an additional 1,660,485 shares of common
stock of the Company from SDC. In August 2005, this individual converted all of
his 3,518,694 shares of Class A Redeemable Convertible Preferred Stock into
23,459,133 shares of common stock.

Redeemable Convertible Preferred Stock

In April 1990, the Company issued 1,250,000 shares of Class A Redeemable
Convertible Preferred Stock ("Preferred Stock") for $1,250,000. The Preferred
Stock had a par value of $1 per share and paid a cumulative $.06 semiannual
dividend. The dividend was payable in cash or additional shares of Preferred
Stock at $1 per share, at the option of the Company. The Company had accrued
dividends on the Preferred Stock, but no dividends had been paid. In June 2005,
the stockholder agreed to relinquish his right to all accrued but unpaid
dividends attributable to the Preferred Stock. Each share of Preferred Stock was
convertible into 6.667 shares of common stock at any time, at the option of the
holder. The Preferred Stock had a preference of $1 per share plus unpaid
dividends in the event of liquidation. The Company may have redeemed the
Preferred Stock at any time for $2 per share. The stockholder of the Preferred
Stock is the majority stockholder. The majority stockholder can designate all of
the Company's directors and, therefore, could have influenced the Company's
willingness to cause redemption of the Preferred Stock. As a result, the
Preferred Stock had been classified outside of the stockholders' deficit section
of the accompanying balance sheets. In August 2005, the majority stockholder
converted all of his 3,518,694 shares of Class A Redeemable Convertible
Preferred Stock into 23,459,133 shares of common stock.

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income, after
deduction of preferred stock dividends, when applicable, by the weighted average
number of shares outstanding. Diluted earnings per common share is computed by
dividing net income, after deduction of preferred stock dividends, when
applicable, by the weighted average number of shares outstanding adjusted to
include incremental common shares that would have been outstanding if
potentially dilutive common shares had been issued.

Note 11 - Stock Compensation Plans

Effective January 1, 2006, the Company adopted SFAS123(R) using the modified
prospective method. Under the "modified prospective" method, compensation costs
are recognized for all newly granted or modified stock-based awards and for the
unvested portion of all awards granted to the effective date. Prior to 2006, the
Company accounted for share-based compensation, including stock options, using
the method prescribed in Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees". Under APB Opinion No. 25, no
compensation costs was recognized for stock options with an exercise price equal
to the fair market value of the Company's common stock on the date of grant. The
pro forma effect on net earnings assuming compensation cost had been recognized
in accordance with SFAS123 was not material and the results for prior periods
have not been restated. The adoption of SFAS123(R) did not have a material
effect on share-based compensation expense for the years ended December 31, 2007
and 2006. In addition, the adoption of SFAS123(R) will not have a material
effect on the Company's future stock-based compensation expense.

                                      F-14
<PAGE>

The Company is using the straight-line method to recognize share-based
compensation expense. The amount of share-based compensation recognized during a
period is based on the value of the awards that vest in that period. For the
years ended December 31, 2007 and 2006, stock-based compensation cost was
$21,470 and $5,204, respectively, and had no effect on basic and diluted loss
per share.

Director Compensation Plan

In December 1997, the Company adopted a director compensation plan. Under this
plan, each non-employee director, other than the majority stockholder is
compensated $500 for each meeting attended by receiving shares of common stock
issued at the higher of the per share fair market value of the common stock as
of the board of directors meeting date or $.05 per share.

Stock Option Plan

In May 1999, the Company established the TelVue Corporation 1999 Stock Option
Plan (the "Plan"). Under the Plan, the Company may grant options to acquire up
to 10 million shares of common stock. Options granted under the Plan are
intended to be incentive stock options ("ISO"). The exercise price of each ISO
will not be less than the market price of the Company's stock on the date of the
grant. The exercise price for an option, which is not an ISO, will not be less
than 50% of the market price of the Company's stock on the date of the grant.
The options expire ten years after the date of the grant or at the expiration of
the plan, which is June 28, 2009. Options vest ratably over three years,
beginning one year after the date of grant. Employees hired prior to January 1,
1995, are entitled to immediate vesting of 25% of their options. In addition,
the Company has granted stock options to non-employees.

The following table summarizes activity for all stock options for the years
ended December 31, 2007 and 2006:

                                                      2007        2006
                                                      ----        ----
  Weighted-average fair value of options granted    $ 0.044     $ 0.015

At December 31, 2007, the value of the unvested portion of all outstanding stock
options was $84,874 which the Company expects to amortize and recognize as
compensation expense over the weighted-average service period of approximately
3.0 years.

The fair values of the options granted during the years ended December 31, 2007
and 2006 were determined using the Black-Scholes option pricing model, which
incorporates various assumptions. The risk-free rate of return of interest for
the average contractual life of the option is based on U.S. Government
Securities Treasury Constant Maturities. Expected volatility is based on the
historical daily volatility of the Company's common stock. The expected life is
determined using the short-cut method permitted under Staff Accounting Bulletin
no. 107, Share-Based Payment. The expected dividend yield is zero because the
Company currently does not pay or expect to pay dividends to stockholders. The
following are the weighted average assumptions used during the years ended
December 31, 2007 and 2006:

                                                      2007        2006
                                                      ----        ----
  Expected life in years .......................      10.0        3.02
  Risk-free interest rate ......................      4.49%      4.73%
  Volatility ...................................      3.05%     40.96%
  Expected dividend yield ......................        -          -

                                      F-15
<PAGE>

A summary of all option activity follows:
                                                     Options Outstanding
                                                     -------------------
                                                             Weighted Average
                                                 Options      Exercise Price
                                                 -------     ----------------
  Balance, December 31, 2005 ................   2,066,667        $ .045
  Granted and assumed .......................     420,000          .047
  Forfeited .................................     (70,000)         .051
                                                ---------
  Balance, December 31, 2006 ................   2,416,667        $ .045
  Granted and assumed .......................   2,610,000          .154
  Exercised .................................     (66,667)         .026
  Forfeited .................................    (633,333)         .081
                                                ---------
  Balance, December 31, 2007                    4,326,667        $ .089
                                                =========

The following table summarizes the status of stock options outstanding and
exercisable at December 31, 2007:
                                                 Weighted
                                                 Average
                                                Remaining
                    Exercise      Options      Contractual        Options
                      Price     Outstanding    Life (Years)     Exercisable
                    --------    -----------    ------------     -----------
                    $ .025         640,000         1.5             640,000
                    $ .030         360,000         1.5             306,666
                    $ .040         200,000         1.5             153,333
                    $ .045          20,000         1.5              20,000
                    $ .050         100,000         1.5                -
                    $ .070         696,667         1.5             696,667
                    $ .090         150,000         1.5             100,000
                    $ .130       2,160,000         1.5                -
                                 ---------                       ---------
Total                            4,326,667                       1,916,666
                                 =========                       =========
Weighted Average
Exercise Price                     $  .089                         $  .047
                                    ======                          ======

Note 12 - Corporate Income Taxes

The provisions for income tax expense (benefit) consist of the following
components:

  Current                                2007               2006
                                         ----               ----
    Federal ....................      $         -       $         -
    State ......................                -                 -
                                      -----------       -----------
                                                -                 -
  Deferred

    Federal ....................       (1,318,913)         (616,281)
    State ......................         (358,789)         (155,976)
                                      -----------       -----------
                                       (1,677,702)         (772,257)
    Valuation allowance increase        1,677,702           772,257
                                      -----------       -----------
                                                -                 -
                                      -----------       -----------
                                      $         -       $         -
                                      ===========       ===========

                                      F-16
<PAGE>

The categories of temporary differences that give rise to deferred tax assets
and liabilities are as follows:
<TABLE>
<CAPTION>
                                             Federal                    State
                                        2007          2006         2007        2006
                                    -----------   -----------   ---------   ---------
<S>                                 <C>           <C>           <C>         <C>
  Deferred Tax Assets:
    Net operating loss
     carryforward ................  $ 2,532,612   $ 1,511,474   $ 614,066   $ 341,895
    Accrued interest - stockholder      307,011        34,571      89,305      10,056
    Deferred revenue .............      128,845        47,351      37,479      13,774
    Allowance for bad debts ......        2,014           889         586         259
                                    -----------   -----------   ---------   ---------
Gross Deferred Tax Asset .........    2,970,482     1,594,285     741,436     365,984

  Deferred Tax Liabilities:

    Property and equipment,
     principally due to
     differences in depreciation .      (67,416)      (39,856)    (19,610)    (11,594)
    Goodwill amortization ........      (29,724)            -      (8,647)          -
                                    -----------   -----------   ---------   ---------
  Net Deferred Tax Asset Before
    Valuation Allowance ..........    2,873,342     1,554,429     713,179     354,390
    Valuation allowance ..........   (2,873,342)   (1,554,429)   (713,179)   (354,390)
                                    -----------   -----------   ---------   ---------
Net Deferred Tax Asset ...........   $        -    $        -   $       -    $      -
                                    ===========   ===========   =========   =========
</TABLE>

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which temporary differences are deductible and carryforwards are available. Due
to the uncertainty of the Company's ability to realize the benefit of the
deferred tax assets, the net deferred tax assets are fully offset by a valuation
allowance at December 31, 2007 and 2006. Inherent uncertainty regarding the
creation and development of a market for the Company's developing TVTN (TelVue
Virtual Television Networks) product and service has prevented the Company from
reaching the "more likely than not" conclusion required under the applicable
literature to recognize deferred tax assets on its balance sheet at December 31,
2007 and 2006.

The Company has a net operating loss carryforward for Federal income tax
purposes of approximately $7,400,000 on a tax-reporting basis. The carryforward
will begin to expire in 2010, if not utilized.

The reconciliation of reported income tax expense to the amount of income tax
expense that would result from applying the U.S. Federal income tax rate of 34%
to pretax income is as follows:

                                                  2007          2006
                                                  ----          ----
   Federal income tax at statutory rates ..   $(1,346,672)   $(623,735)
   State income tax, net of federal benefit      (356,472)    (165,106)
   Valuation allowance ....................     1,677,702      772,257
   Other ..................................        25,442       16,584
                                              -----------    ---------
                                              $         -    $       -
                                              ===========    =========

                                      F-17
<PAGE>

Note 13 - Pension Plan

Effective March 1, 2006, the Company has a 401(k)plan available to all employees
who have completed 90 days of service and are at least 21 years old. Employees
may contribute to the plan, subject to IRS limitations. Prior to March 1, 2006,
the Company maintained a Salary Reduction Simplified Employee Pension ("SARSEP")
plan under section 408(k) of the Internal Revenue Code for all eligible
employees. Employees were eligible to participate if they were at least 21 years
old and had been employed by the Company for at least 90 days. Under the plan,
employees could defer up to 12.5% of their salary, subject to Internal Revenue
Service limits. The Company matched fifty percent (50%) of 2007 and 2006
contributions by participating eligible employees up to five percent (5%) of
their salary, for a maximum matching contribution of 2.5% of salary. The
Company's contributions for 2007 and 2006 amounted to $48,683 and $30,111,
respectively.

Note 14 - Related Party Transactions

The Company has three unsecured lines of credit and note payable to the majority
stockholder. (See Notes 7 and 8).

Note 15 - Segment Information

Based on the criteria set forth in SFAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information", the Company operates two business
segments. One segment is a marketing and service division, which sells automatic
number identification ("ANI") telecommunications services to the cable
television industry. The other segment ("TVTN/PSG") is a system for displaying a
fully automated TV station-like display on a cable system access channel using
computer based digital technology. The TVTN/PSG segment includes PSG, which was
acquired on March 12, 2007. PSG develops high performance digital video systems,
appliances, and software that support capture, storage, manipulation and
play-out of digital media in multiple popular formats. The segments' accounting
policies are the same as those described in the summary of significant
accounting policies.

Summarized financial information by reporting segment as of and for each of the
years ended December 31, 2007 and 2006, is as follows:

                                      ANI         TVTN/PSG
 Year Ended December 31, 2007      Services       Services           Total
 ----------------------------     ----------     -----------      -----------

Revenues ....................     $1,364,543     $ 2,674,096      $ 4,038,639
Depreciation and amortization         36,977         892,623          929,600
Operating income (loss) .....        478,790      (3,607,806)      (3,129,016)
Assets ......................        348,671       8,854,683        9,203,354
Capital expenditures ........              -         996,581          996,581

 Year Ended December 31, 2006
 ----------------------------

Revenues ....................     $1,571,715     $   517,682      $ 2,089,397
Depreciation and amortization         24,788         207,977          232,765
Operating income (loss) .....        763,028      (2,512,337)      (1,749,309)
Assets ......................      1,010,282         941,964        1,952,246
Capital expenditures ........              -         552,687          552,687

                                      F-18
<PAGE>

Note 16 - Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

Cash and Cash Equivalents, Receivables, Accounts Payable, Accrued Expenses and
Notes Payable

The carrying amount approximates fair market value because of the short maturity
of those instruments.


                                      F-19
<PAGE>

EXHIBITS

3.1    Certificate of Incorporation of TelVue (incorporated by reference to
       TelVue's Registration Statement on Form S-8, filed with the Securities
       and Exchange Commission on April 20, 1989 (the "Registration Statement"),
       File No. 333-28263).

3.2    Bylaws of TelVue (incorporated by reference to TelVue's Registration
       Statement, File No. 333-288263).

3.3    Certificate of Amendment of Certificate of Incorporation of TelVue, dated
       April 11, 1990 (incorporated by reference to TelVue's Annual Report on
       Form 10-K for the year ended December 31, 1991, (the "1991 Form 10-K"),
       File No. 000-17170).

3.4    Certificate of Amendment of Certificate of Incorporation of TelVue, dated
       March 15, 1991 (incorporated by reference to the 1991 Form 10-K, File No.
       000-17170).

3.5    Form of copy of Amendment of Certificate of Incorporation of TelVue,
       filed September 25, 1995 (incorporated by reference to the TelVue's Form
       10-QSB for the period ended September 30, 1995, (the September 30, 1995
       Form 10-QSB, File No. 000-17170).

4.1    The TelVue Corporation 1999 Stock Option Plan (incorporated by reference
       to Exhibit 99 of TelVue's Registration Statement on Form S-8, dated
       September 23, 1999), (the "1999 Stock Option Plan") File No. 000-17170).

4.2    Form of ISO Option Agreement issued pursuant to the 1999 Stock Option
       Plan (incorporated by reference to TelVue's Annual Report on Form 10-KSB
       for the year ended December 31, 1999, (the "1999 Form 10-KSB") File No.
       000-17170).

4.3    Form of NQSO Option Agreement issued pursuant to the 1999 Stock Option
       Plan (incorporated by reference to the 1999 Form 10-KSB, File No.
       000-17170).

4.4    Certificate of Designation of Class A Preferred Stock (incorporated by
       reference to the September 30, 1990 Form 10-Q, File No. 000- 17170).

4.5    Warrant Termination Agreement, dated June 16, 2005, by and between TelVue
       and H.F. (Gerry) Lenfest (incorporated by reference to the June 30, 2005
       Form 10-QSB, File No. 000-17170).

4.6    Waiver by H.F.(Gerry) Lenfest, waiving the right to receive past, present
       or future dividends with respect to the TelVue's Class A Redeemable
       Convertible Preferred Stock (incorporated by reference to the June 30,
       2005 Form 10-QSB, File No.000-17170).

10.1   Distributorship Agreement, dated November 2, 1989, between the Company
       and Science (incorporated by reference to the 1989 Form 10-K, File No.
       000-17170).

10.2   Stock Purchase Agreement, dated November 2, 1989, between the Company and
       H.F. Lenfest (incorporated by reference to the Company's Report on Form
       8-K, dated November 15, 1989, (the "1989 Form 8-K"), File No. 000-17170).

10.3   Shareholders' Agreement, dated November 2, 1989, among TelVue and certain
       of its stockholders (incorporated by reference to the Company's 1989 Form
       8-K, File No. 000-17170).

                                       16
<PAGE>

10.4   Option Agreement, dated November 2, 1989, among TelVue and certain of its
       stockholders (incorporated by reference to the 1989 Form 8-K, File No.
       000-17170).

10.5   Lease Agreement dated April 25, 1991 for office space and the First
       Amendment to Lease dated March 30, 1994 ("Office Lease Agreement"),
       between TelVue and Bloom Associates (incorporated by reference to the
       1994 Form 10-KSB, File No. 000-17170).

10.6   Second Amendment to Office Lease Agreement Dated May 5, 1999, between
       TelVue and Bloom Associates (incorporated by reference to the 1999 Form
       10-KSB, File No. 000-17170).

10.7   Third Amendment to Office Lease Agreement Dated April 28, 2004, between
       TelVue and Bloom Associates (incorporated by reference to the June 30,
       2006 Form 10-QSB, File No. 000-17170).

10.8   Fourth Amendment to Office Lease Agreement Dated April 19, 2006, between
       TelVue and The Bloom Organization of South Jersey, LLC (incorporated by
       reference to the June 30, 2006 Form 10-QSB, File No. 000-17170).

10.9   Asset Purchase Agreement by and among TelVue and J.D. Kraengel and
       Associates, Inc. f/k/a Dacon Corporation d/b/a Source Communications
       Group and Jeffrey Kraengel, dated February 14, 2001 (incorporated by
       reference to the March 26, 2001 Form 8-K, File No. 000-17170).

10.10  Retirement Agreement dated April 29, 2004 between TelVue and Frank J.
       Carcione (incorporated by reference to the December 31, 2004 Form 10-KSB,
       File No. 000-17170).

10.11  Summary of Director Compensation (incorporated by reference to the 2004
       Form 10-KSB, File No. 000-17170).

10.12  Summary of Executive Compensation, as amended (incorporated by reference
       to the December 31, 2007 Form 10-KSB, file No. 000-17170).

10.13  Line of Credit Note, dated April 27, 2005, between H.F. (Gerry) Lenfest
       and TelVue (incorporated by reference to the Form 8-K filed on May 3,
       2005, File No. 000-17170).

10.14  Amended and Restated Promissory Note, in the principal amount of
       $541,000, dated June 16, 2005, between H.F. (Gerry) Lenfest and TelVue
       (incorporated by reference to the September 30, 2005 Form 10-QSB, File
       No. 000-17170).

10.15  Line of Credit Note, dated November 3, 2006, between H.F. (Gerry) Lenfest
       and TelVue (incorporated by reference to the Form 8-K filed on November
       3, 2006, File No. 000-17170).

10.16  Stock Purchase Agreement by and among TelVue and Princeton Server Group,
       dated March 12, 2007 (incorporated by reference to the March 13, 2007
       Form 8-K, File No. 000-17170).

10.17  Convertible Note for $400,000, dated December 26, 2006, issued to TelVue
       by the Princeton Server Group, LLC (incorporated by reference to the
       December 31, 2006 Form 10-KSB, File No. 000- 17170).

10.18  Separation Agreement by and between TelVue and Stanley Greene, dated
       December 29, 2006 (incorporated by reference to the December 31, 2006
       Form 10-KSB, File No. 000-17170).

                                       17
<PAGE>

10.19  Separation Agreement by and between TelVue and Irene DeZwaan, dated
       February 8, 2007 (incorporated by reference to the December 31, 2006 Form
       10-KSB, File No. 000-17170).

10.20  Line of Credit Note, dated December 21, 2007, between H.F. (Gerry)
       Lenfest and TelVue (incorporated by reference to the Form 8-K filed on
       December 21, 2007, File No. 000-17170).

11.    Statement re: Computation of Per Share Earnings (see TelVue's December
       31, 2007 Financial Statements included herein).

23.    Consent of Pressman Ciocca Smith LLP, Independent Registered Public
       Accounting Firm (included herein).

31.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
       1350 as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of
       2002(included herein).

31.2   Certification of Controller pursuant to 18 U.S.C. Section 1350 as adopted
       pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (included
       herein).

32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
       1350 as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of
       2002 (included herein).

32.2   Certification of Controller pursuant to 18 U.S.C. Section 1350 as adopted
       pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (included
       herein).

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The information called for by this Item is incorporated herein by
reference to TelVue's Proxy Statement for its 2008 Annual Meeting of
Shareholders that will be filed not later than April 29, 2008.


                                   SIGNATURES

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

                                    TELVUE CORPORATION


DATED:  11/20/08                    By: /s/Joseph M. Murphy
                                    -------------------------------------
                                    Joseph M. Murphy
                                    President and Chief Executive Officer


                                       18
<PAGE>

                                  EXHIBIT INDEX

23.    Consent of Pressman Ciocca Smith LLP, Independent Registered Public
       Accounting Firm.

31.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
       1350 as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of
       2002(included herein).

31.2   Certification of Controller pursuant to 18 U.S.C. Section 1350 as adopted
       pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (included
       herein).

32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
       1350 as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of
       2002(included herein).

32.2   Certification of Controller pursuant to 18 U.S.C. Section 1350 as adopted
       pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (included
       herein).

                                       19