<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 1998

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

         FOR THE TRANSITION PERIOD FROM ____________ TO _______________

                  Commission file number: 333-59889; 333-59903


                               PARK `N VIEW, INC.
             (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                                           <C>       
         DELAWARE                                                  65-0612435
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                               Identification No.)


11711 N.W. 39TH STREET  CORAL SPRINGS, FL                           33065
(Address of principal executive offices)                          (Zip Code)
</TABLE>


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


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No

         The number of shares outstanding of the registrant's common stock, par
value $0.001 per share, as of February 9, 1999 was 4,318,182.


<PAGE>   2



                               PARK `N VIEW, INC.
                                    FORM 10-Q

                     FOR THE QUARTER ENDED DECEMBER 31, 1998


                                      INDEX


<TABLE>
<CAPTION>
                                                                                              PAGE NO.
                                                                                              --------
<S>      <C>                                                                                  <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

         Balance Sheets as of June 30, 1998 and December 31, 1998 (unaudited)                    1

         Statements of Operations for the three and six months ended December 31,                2
         1997 and 1998

         Statements of Cash Flows for the six months ended                                       3
         December 31, 1997 and 1998

         Notes to Condensed Financial Statements                                                 4

Item 2.  Management's Discussion and Analysis of Financial Condition                             6
         and Results of Operations

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                       19
Item 2.  Changes in Securities                                                                   20
Item 3.  Defaults Upon Senior Securities                                                         20
Item 4.  Submission of Matters to a Vote of Securities Holders                                   20
Item 5.  Other Information                                                                       20
Item 6.  Exhibits and Reports on Form 8-K                                                        20

Signatures                                                                                       21
</TABLE>



<PAGE>   3

                         PART I - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS.

                               PARK 'N VIEW, INC.
                                 BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                          JUNE 30,    DECEMBER  31,
                                                                                            1998           1998
                                                                                        ------------  -------------
                                                              ASSETS
               <S>                                                                      <C>           <C>
               Current Assets:
                 Cash and cash equivalents..........................................    $ 19,810,656  $  2,292,017
                 Short-term investments.............................................      32,039,916    27,942,541
                 Restricted investments.............................................       9,750,000     9,750,000
                 Accounts receivable, net of allowance for doubtful accounts of
                   $5,400 at June 30, 1998 and  December 31, 1998...................         184,180       203,225
                 Inventory..........................................................         362,738       331,416
                 Prepaid expenses and other.........................................         100,877       218,135
                                                                                        ------------  ------------
                        Total current assets........................................      62,248,367    40,737,334

               Property and Equipment, Net (Note 2).................................      18,448,601    29,978,509
               Restricted Investments...............................................       9,513,000     5,336,318
               Deferred Financing Costs.............................................       3,744,366     3,884,342
               Other Assets.........................................................         623,793       802,342
                                                                                        ------------  ------------
                        Total.......................................................    $ 94,578,127  $ 80,738,845
                                                                                        ============  ============

                                       LIABILITIES AND STOCKHOLDERS' DEFICIT
               Current Liabilities:
                 Accounts payable...................................................    $  2,067,113  $  2,292,669
                 Accrued expenses...................................................       1,550,888     2,331,758
                 Accrued interest on senior notes...................................         920,831     1,245,831
                 Deferred revenue...................................................         205,853       253,462
                 Current portion of capital lease obligations.......................         330,814       350,423
                 Current portion of long-term debt..................................          33,727        35,486
                                                                                        ------------  ------------
                        Total current liabilities...................................       5,109,226     6,509,629
                                                                                        ------------  ------------
               Obligations Under Capital Leases.....................................         185,174       311,082
                                                                                        ------------  ------------
               Long-Term Debt.......................................................      70,419,566    70,627,356
                                                                                        ------------  ------------
               Commitments and Contingencies (Note 3)
               Series A Redeemable Preferred Stock and Accrued Dividends -- Par
                 value $.01 per share; 627,630 shares authorized; 388,075 shares
                 issued and outstanding ($10.00 per share liquidation
                 preference, including accrued dividends of $542,538 and 
                 $677,607 as of June 30, 1998 and December 31, 1998, respectively)..       4,301,345     4,442,263
                                                                                        ------------  ------------

               Series B Redeemable Convertible Preferred Stock and Accrued
                 Dividends -- Par value $.01 per share; 1,372,370 shares
                 authorized, issued and outstanding ($10.93 per share
                 liquidation preference, including accrued dividends of
                 $1,712,083 and $2,237,083 as of June 30, 1998 and December 31, 
                 1998, respectively)................................................      16,316,432    16,860,461
                                                                                        ------------  ------------

               Series C Redeemable Convertible Preferred Stock and Accrued
                 Dividends -- Par value $.01 per share; 3,750,000 shares
                 authorized, 2,328,543 issued and outstanding ($8.00 per share
                 liquidation preference, including accrued dividends of
                 $1,115,631 and $1,767,621 as of June 30, 1998 and
                 December 31, 1998, respectively)..................................       18,516,147    19,237,285
                                                                                        ------------  ------------

               Common Stockholders' Deficit:
                 Common stock -- par value $.001 per share; 7,000,000 and
                   12,000,000 shares authorized at June  30, 1998 and December 31,
                   1998, respectively; 4,318,182 shares issued and outstanding.....            4,318         4,318
                 Additional paid-in capital........................................        1,465,923        59,838
                 Accumulated deficit...............................................      (21,740,004)  (37,313,387)
                                                                                        ------------  ------------
                        Total common stockholders' deficit.........................      (20,269,763)  (37,249,231)
                                                                                        ------------  -------------
                        Total......................................................     $ 94,578,127  $ 80,738,845
                                                                                        ============  ============
</TABLE>


                  See notes to condensed financial statements.


                                       1
<PAGE>   4


                               PARK 'N VIEW, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)




<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                    DECEMBER 31,                        DECEMBER 31,
                                              1997              1998              1997               1998
                                          -----------       -----------       -----------       ------------
<S>                                       <C>               <C>               <C>               <C>
Revenues:
  Service revenue......................   $   619,857       $ 1,936,992       $ 1,132,977       $  3,620,141
  Equipment sales......................        28,341            40,725            78,145             73,668
  Other................................        21,280             7,695            27,296             15,390
                                          -----------       -----------       -----------       ------------

          Total revenues...............       669,478         1,985,412         1,238,418          3,709,199
                                          -----------       -----------       -----------       ------------
Cost of Revenues:
  Service cost.........................       683,954         2,300,751         1,180,096          3,813,757
  Service depreciation.................       396,442         1,047,954           699,538          1,870,606
  Equipment cost.......................       253,945           579,471           475,355            946,712
  Advertising..........................        15,590            10,325            18,846             14,724
                                          -----------       -----------       -----------       ------------
          Total cost of revenues.......     1,349,931         3,938,501         2,373,835          6,645,799
                                          -----------       -----------       -----------       ------------
Gross margin...........................      (680,453)       (1,953,089)       (1,135,417)        (2,936,600)

Selling, general and
  administrative expenses..............     2,196,447         5,338,719         3,913,138          8,941,398
                                          -----------       -----------       -----------       ------------
Loss from operations...................    (2,876,900)       (7,291,808)       (5,048,555)       (11,877,998)
Interest expense.......................        11,226         2,596,997            20,935          5,241,734
Interest income and other..............      (160,171)         (797,106)         (286,443)        (1,546,352)
                                          -----------       -----------       -----------       ------------


          Net loss.....................    (2,727,955)       (9,091,699)       (4,783,047)       (15,573,380)


          Preferred stock dividends
            and amortization of
            preferred stock issuance
            costs......................      (730,343)         (714,381)       (1,261,761)        (1,406,085)
                                          -----------       -----------       -----------       ------------

           Net loss attributable to
            common stockholders........   $(3,458,298)      $(9,806,080)      $(6,044,808)      $(16,979,465)
                                          ===========       ===========       ===========       ============

          Basic loss per share.........   $      (.80)      $     (2.27)      $     (1.40)      $      (3.93)
                                          ===========       ===========       ===========       ============
</TABLE>


                  See notes to condensed financial statements.


                                       2
<PAGE>   5


                               PARK 'N VIEW, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED
                                                                   DECEMBER 31,
                                                           ---------------------------
                                                             1997                1998
                                                             ----                ----
<S>                                                       <C>                <C>
Operating Activities:
  Net loss .........................................      $ (4,783,047)      $(15,573,380)

  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization ..................           742,317          2,382,928
    Changes in assets and liabilities:
      Accounts receivable ..........................           (25,407)           (18,273)
      Inventory ....................................          (191,614)            31,321
      Prepaid expenses and other ...................           (27,517)          (118,040)
      Other assets .................................           (25,170)          (207,448)
      Accounts payable .............................           (43,542)           225,557
      Accrued expenses .............................          (140,251)           780,871
      Accrued interest on senior notes .............                              325,000
      Deferred revenue .............................           (21,020)            47,609
                                                          ------------       ------------
         Net cash used in operating activities .....        (4,515,251)       (12,123,853)
                                                          ------------       ------------
Investing Activities:
    Decrease in short-term investments .............                            4,097,375
    Decrease in restricted investments .............                            4,176,682
    Purchases of property and equipment ............        (7,118,221)       (13,154,083)
                                                          ------------       ------------
         Net cash used in investing activities .....        (7,118,221)        (4,880,026)
                                                          ------------       ------------
Financing Activities:

  Proceeds from issuance of common and preferred
     stock .........................................        18,628,344
  Payment of stock and debt issuance costs and other        (1,081,835)          (302,327)
  Payment of obligation under capital lease ........          (120,327)          (196,410)
  Notes payable ....................................           (16,388)            16,022)
                                                          ------------       ------------
         Net cash provided by (used in) financing
            activities .............................        17,409,794           (514,759)
                                                          ------------       ------------
Net Increase (Decrease)In Cash And Cash
  Equivalents ......................................         5,776,322        (17,518,638)
                                                          ------------       ------------
Cash And Cash Equivalents, Beginning Of Period .....         4,717,394         19,810,656
                                                          ------------       ------------

Cash And Cash Equivalents, End Of Period ...........      $ 10,493,716       $  2,292,017
                                                          ============       ============

Supplemental Cash Flow Information:

  Interest paid ....................................      $     13,340       $  4,583,443
                                                          ============       ============

Non-Cash Financing And Investing Activities:


  Capital lease obligations relating to
    acquisition of property and equipment ..........      $     19,229       $    341,928
                                                          ============       ============

  Issuance of common stock warrants ................      $    100,399
                                                          ============
</TABLE>

                  See notes to condensed financial statements.


                                       3
<PAGE>   6


                               PARK 'N VIEW, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       BASIS OF PRESENTATION

         The interim balance sheet as of December 31, 1998, the interim
statements of operations for the three-month and six-month periods ended
December 31, 1997 and 1998 and the interim statement of cash flows for the
six-month periods ended December 31, 1997 and 1998 are unaudited. In the opinion
of management, all adjustments necessary for a fair presentation of such
financial statements have been included. All adjustments made were of a normal
recurring nature. Certain information and footnote disclosure normally included
in the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Park 'N View, Inc. (the
"Company") believes that the disclosures included are adequate and provide a
fair presentation of interim period results. Interim financial statements are
not necessarily indicative of financial position or operating results to be
expected for the entire year. These interim financial statements should be read
in conjunction with the audited financial statements of the Company and the
notes thereto for the year ended June 30, 1998.

2.       PROPERTY AND EQUIPMENT

         Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                    June 30, 1998      December 31, 1998
                                                    -------------      -----------------
    <S>                                             <C>                <C>
    Site equipment and ....................          $16,484,956          $26,817,257
    improvements
    Construction equipment ................              150,059              150,059
    Computer equipment ....................              352,643              682,653
    Vehicles ..............................              451,382              861,634
    Furniture, fixtures and other equipment               65,869               65,869
                                                     -----------          -----------
              Subtotal ....................           17,504,909           28,577,472
    Less accumulated depreciation .........            2,630,706            4,596,812
                                                     -----------          -----------
              Subtotal ....................           14,874,203           23,980,660
    Component inventory ...................            3,574,398            5,997,849
                                                     -----------          -----------
    Property and equipment, net ...........          $18,448,601          $29,978,509
                                                     ===========          ===========
</TABLE>


         Component inventory represents equipment that is awaiting installation
at a site. Upon installation the cost of the related equipment is transferred to
site equipment and improvements and depreciation commences once the site is
operational. Component inventory is temporarily staged at the Company's
warehouse until all equipment for a site is received, certain assembly
operations are complete and the site is ready to accept the equipment for
installation. The period of time that the component inventory is staged at the
Company's warehouse is approximately 45 days and the construction period at the
site is approximately 30 days. Accordingly the time period between the date of
acquisition of the component inventory and the completion date for the
installation at the site is approximately 75 days. Component inventory is
reclassified to site equipment upon completion of the site on a FIFO basis for
all components.


                                       4
<PAGE>   7


3.       COMMITMENTS AND CONTINGENCIES

         In July 1998, the Company entered into contracts with AT&T to lease T-1
lines and purchase long distance and local telephone service. The minimum lease
payments for the T-1 lines approximate $5.1 million, $7.7 million and $7.7
million per year during the first, second, and third years of the lease,
respectively. The Company's minimum purchase commitment for the long distance
and local telephone service is $480,000 per year for a two year term.

         In August 1998, the Company entered into an operating lease for a wide
area network. The annual minimum rental amount approximates $1.2 million for a
three year term. The leases become effective when the equipment is delivered and
installed. As of December 31, 1998, some routing equipment had been delivered
but not installed and no operating leases have become effective. It is
anticipated that the majority of the equipment will be installed during the
quarter ended March 31, 1999, at which time the leases will become effective.

         A potential problem exists for all companies that rely on computers as
the year 2000 approaches. The "Year 2000" problem is the result of the past
practice in the computer industry of using two digits rather than four to
identify the applicable year. This practice could result in incorrect results
when computers perform arithmetic operations, comparisons or data field sorting
involving years later than 1999. The Company is in the process of conducting a
review of its computer systems to identify the systems that could be affected by
the "Year 2000" issue and is developing a plan to address the issue. The Company
will utilize both internal and, if needed, external resources to reprogram or
replace and test all of its software for Year 2000 compliance, and the Company
expects to complete the project during the second half of 1999. The Company has
a preliminary estimate of $300,000 as the maximum cost of evaluating, testing,
reprogramming, and modifying its software. The estimate is based on the belief
that no major problems will be encountered in becoming Year 2000 compliant.
Based on its preliminary internal review, the Company believes that the
Company-developed software is Year 2000 compliant. However, the Company plans to
do more extensive testing of the PNV Software during the current calendar year
which may require the use of independent consultants to assist in the Company's
evaluation to assure a correct assessment of cost and risk. In addition, the
Company relies on third party vendors which must also become Year 2000
compliant. The Company has a significant reliance on outside vendors such as
telephone companies, satellite system providers, electrical providers and the
wide area network supplier. These services are critical in the Company's ability
to generate revenue. The ability of third parties with which the Company
transacts business to adequately address their Year 2000 issues is outside of
the Company's control. The Company is planning to create a comprehensive list of
all internal and external software programs to assure that a full review of such
software is completed. However, if any necessary modifications to the PNV
Software are not completed in a timely manner or if the Company's vendors are
not Year 2000 compliant, the Year 2000 problem may have a material
adverse-impact on the operations of the Company. The Company has not made any
progress in assessing its non-information technology systems. These types of
systems are more difficult to assess and repair than information technology
systems and the Company may have to replace the non-information technology
systems that cannot be repaired. The Company will begin reviewing its
non-information technology systems in the second half of 1999. The Company
presently has no basis on which to estimate the costs of assessing and repairing
or replacing its non-information technology systems or to determine whether such
costs will have a material adverse effect on the Company's operations or
financial condition.

4.       SUBSEQUENT EVENTS

         On January 27, 1999, the Company entered into a Telecom Service
Agreement (the "Telecom Service Agreement") with TA Operating Corporation
("TA"). TA, itself or through its affiliates, currently owns or operates (or has
entered into franchise agreements with certain entities entitling them to
operate) approximately 145 full-service truckstops. Pursuant to the Telecom
Service Agreement, the



                                       5
<PAGE>   8


Company has the right to install the equipment to provide prepaid phone cards,
fleet telecommunications services, coin and coinless phones, fleet in-bound 800
calling, and internet access and data transmission at an initial three (3)
truckstops. Unless TA notifies the Company of the termination of the Telecom
Service Agreement within sixty (60) days after the installation of the equipment
at these initial sites, the Company will begin the installation of equipment at
TA's truckstops on a buildout schedule to be mutually agreed upon by the Company
and TA, which will provide for installation at approximately ten (10) truckstops
per month on average. Unless TA notifies the Company of the termination of the
Telecom Service Agreement within sixty (60) days after the installation of the
equipment at the initial sites or the Company fails to perform its obligations
under the Telecom Service Agreement, the Company will have the exclusive right
to provide these telecommunications services at TA's truckstops during the four
(4) year term of the Telecom Service Agreement.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

     Cautionary Statement Identifying Important Factors That Could Cause the
                  Company's Actual Results to Differ From Those
                     Projected in Forward Looking Statements

         Pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, readers of this report are advised that this
document contains both statements of historical facts and forward looking
statements. Forward looking statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
indicated by the forward looking statements. Examples of forward looking
statements include but are not limited to (i) projections of revenues, income or
loss, earnings per share, capital expenditures, dividends, capital structure and
other financial items, (ii) statements of the plans and objectives of the
Company or its management or Board of Directors, including product enhancements,
or estimates or predictions of actions by customers, suppliers or competitors,
or regulatory authorities, (iii) statements of future economic performance, and
(iv) statements of assumptions underlying other statements and statements about
the Company and its business.

         This report also identifies important factors which could cause actual
results to differ materially from those indicated by the forward looking
statements. These risks and uncertainties include the Company's ability to
complete the development and installation of the PNV Network, gain a larger
customer base, and to obtain capital to fund the continued expansion of the
Company's business, service indebtedness, obtain discounts for long distance and
other telephone services, obtain equipment from suppliers, and to compete
successfully against the providers of cable and digital satellite programming
services. See "Risk Factors" below.

OVERVIEW

         As of December 31, 1998, the PNV Network was available at 188
full-service truckstops. This compares to 118 as of June 30, 1998 and 75 as of
December 31, 1997. During December 1998, the Company had over 33,000 subscribers
(including approximately 3,480 drivers sponsored by five fleets under contracts
with the Company); this compares to approximately 25,000 subscribers during June
1998 and approximately 12,800 during December 1997.

         During December 1998, the Company had approximately 22,000 monthly
subscribers and approximately 11,000 daily subscribers; during December 1997,
the Company had approximately 6,000 monthly subscribers and approximately 6,800
daily subscribers. Of the Company's monthly subscribers during December 1998,
13,600 were under the Company's Power Plan Program and 3,480 were fleet trucking
company subscriptions; during December 1997, 2,000 were under the Company's
Power Plan Program, and 564 of the Company's monthly subscriptions were fleet
trucking company subscriptions. 


                                       6
<PAGE>   9


         Since October 1998, the Company has experienced slower membership
growth, lower revenue per subscriber, and higher costs than the Company
anticipated. As a result, the Company has recently slowed the buildout of the
PNV Network from a planned 10 to 15 new sites per month to approximately 6 to 8
new sites per month to conserve cash.

         The Company believes that the slower than anticipated membership growth
resulted from the lack of market acceptance of the Company's services by truck
drivers and the Company's failure to enter into any new contracts with fleet
trucking companies. The Company continues to market the PNV Network in an effort
to increase market acceptance of the PNV Network and recognition of the benefits
of the PNV Network by truck drivers. The Company also now offers a program
pursuant to which fleet trucking companies either would permit automatic payroll
deductions as a means for the fleet's truck drivers to pay for the truck
drivers' subscriptions to the PNV Network or would subsidize a portion of the
subscription rate for their truck drivers.

         The Company believes that the lower than anticipated revenue per
subscriber is due primarily to the relatively large number of daily subscribers
as compared to monthly subscribers and the lower than anticipated usage by truck
drivers of long distance telephone minutes offered by the Company.

         The Company believes that the higher than anticipated costs are due to
salaries, marketing expenses and other costs associated with the buildout of the
PNV Network that were higher than anticipated. While the slowed buildout of the
PNV Network will reduce the Company's capital expenditures and will conserve
cash, the Company nonetheless continues to expect to incur a significant net
loss and negative cash flow from operations at least through the fiscal year
ending June 30, 1999.

RECENT DEVELOPMENTS

         On January 27, 1999, the Company entered into a Telecom Service
Agreement (the "Telecom Service Agreement") with TA Operating Corporation
("TA"). TA, itself or through its affiliates, currently owns or operates (or has
entered into franchise agreements with certain entities entitling them to
operate) approximately 145 full-service truckstops. Pursuant to the Telecom
Service Agreement, the Company has the right to install the equipment to provide
prepaid phone cards, fleet telecommunications services, coin and coinless
phones, fleet in-bound 800 calling, and internet access and data transmission at
an initial three (3) truckstops. Unless TA notifies the Company of the
termination of the Telecom Service Agreement within sixty (60) days after the
installation of the equipment at these initial sites, the Company will begin the
installation of equipment at TA's truckstops on a buildout schedule to be
mutually agreed upon by the Company and TA, which will provide for installation
at approximately ten (10) truckstops per month on average. Unless TA notifies
the Company of the termination of the Telecom Service Agreement within sixty
(60) days after the installation of the equipment at the initial sites or the
Company fails to perform its obligations under the Telecom Service Agreement,
the Company will have the exclusive right to provide these telecommunications
services at TA's truckstops during the four (4) year term of the Telecom Service
Agreement. The Company believes that it will cost approximately $5,000 to
install the equipment required under the Telecom Service Agreement at each site.
Assuming that the Company installs such equipment at each of the approximately
145 truckstops currently owned or operated by TA, the Company would spend
approximately $725,000 in aggregate to install the necessary equipment.

RESULTS OF OPERATIONS

         Three months and six months ended December 31, 1998 and 1997

         Revenues. The Company's net revenues increased 197% to $1,985,000 for
the three months ended December 31, 1998 from $669,000 for the three months
ended December 31, 1997. Service revenues increased 212% to $1,937,000 for the
three months ended December 31, 1998 from $620,000 for



                                       7
<PAGE>   10


the three months ended December 31, 1997. Equipment sales increased 46% to
$41,000 for the three months ended December 31, 1998 from $28,000 for the three
months ended December 31, 1997. For the six months ended December 31, 1998 net
revenues increased 200% to $3,709,000 from $1,238,000 for the six months ended
December 31, 1997. Service revenues increased 220% to $3,620,000 for the six
months ended December 31, 1998 from $1,133,000 for the six months ended December
31, 1997. Equipment sales decreased 5% to $74,000 for the six months ended
December 31, 1998 from $78,000 for the six months ended December 31, 1997. The
increase in revenues for the three months and six months ended December 31, 1998
was primarily due to additional subscription membership to the PNV Network.

         Cost of Revenues. Cost of revenues, excluding service depreciation,
increased 203% to $2,891,000 for the three months ended December 31, 1998 from
$953,000 for the three months ended December 31, 1997. For the six months ended
December 31, 1998 cost of revenues, excluding service depreciation, increased
185% to $4,775,000 for the six months ended December 31, 1998 from $1,674,000
for the six months ended December 31, 1997. The increase in cost of revenues for
the three months and six months ended December 31, 1998 is principally due to
costs associated with the increase in the number of sites of the PNV Network,
the costs associated with the increase in sales volume, and, with respect to the
three months ended December 31, 1998, a non-recurring expense incurred in
connection with the upgrading of the PNV Network. The number of active sites
increased 151% to 188 as of December 31, 1998 from 75 active sites as of
December 31, 1997. Cost of revenues includes commission payable to truckstops,
cable programming, leased telephone lines and purchased long distance minutes,
equipment, freight, site repairs, and, with respect to the three months ended
December 31, 1998, a non-recurring expense incurred in connection with the
upgrading of the PNV Network. In particular, the cost of phone lines increased
247% to $944,000 for the three months ended December 31, 1998 from $272,000 for
the three months ended December 31, 1997. For the six months ended December 31,
1998 the cost of phone lines and purchased long distance minutes increased 248%
to $1,559,000 from $448,000 for the six months ended December 31, 1997. This
increase is due to the increase in the number of sites, long distance telephone
minutes included with memberships and the addition of T-1 lines, which began to
be installed at the Company's sites in the three month period ended December 31,
1998. The cost of site repairs increased to $255,000 for the three months ended
December 31, 1998 from $15,000 for the three months ended December 31, 1997. For
the six months ended December 31, 1998 site repairs increased to $416,000 from
$32,000 for the six months ended December 31, 1997. The increase in site repairs
is due to the increased number of truckstops at which the PNV Network is
installed. In addition, the Company incurred a non-recurring expense of $223,000
in connection with the upgrading of the PNV Network during the three months
ended December 31, 1998. Service depreciation increased $652,000 to $1,048,000
for the three months ended December 31, 1998 from $396,000 for the three months
ended December 31, 1997. Service depreciation increased $1,171,000 to $1,871,000
for the six months ended December 31, 1998 from $700,000 for the six months
ended December 31, 1997. The increase in service depreciation reflects the
additional buildout of the PNV Network.

         Gross Margin. The gross margin was a negative amount of $1,953,000 for
the three months ended December 31, 1998 compared to a negative amount of
$680,000 for the three months ended December 31, 1997. This represents an
increase in the negative gross margin of 187%. For the six months ended December
31, 1998 the gross margin was a negative amount of $2,937,000 compared to a
negative gross margin of $1,135,000 for the six months ended December 31, 1997.
This represents an increase in the negative gross margin of 159%.

         Selling Expense. Total selling expense increased 104% to $2,456,000 for
the three months ended December 31, 1998 from $1,205,000 for the three months
ended December 31, 1997. The increase was primarily attributable to an increase
in salaries, travel and marketing expenses. Salaries increased 62% to $981,000
for the three months ended December 31, 1998 from $604,000 for the three months
ended December 31, 1997. Travel expenses increased 33% to $327,000 for the three
months ended December 31, 1998 from $246,000 for the three months ended December
31, 1997. Marketing expenses increased 270% to $1,018,000 for the three months
ended December 31, 1998 from $275,000 for the three months ended December 31,
1997. The increase in salaries, travel and marketing expenses reflects
additional sales personnel and marketing efforts, including those for the new
sites.

         For the six months ended December 31, 1998, total selling expense
increased 102% to $4,174,000 from $2,063,000 for the six months ended December
31, 1997. The increase was primarily attributable to an increase in salaries,
travel and marketing expenses. Salaries increased 89% to



                                       8
<PAGE>   11


$1,926,000 for the six months ended December 31, 1998 from $1,020,000 for the
six months ended December 31, 1997. Travel expenses increased 70% to $717,000
for the six months ended December 31, 1998 from $421,000 for the six months
ended December 31, 1997. Marketing expenses increased 168% to $1,322,000 for the
six months ended December 31, 1998 from $493,000 for the six months ended
December 31, 1997. The increase in salaries, travel and marketing expenses
reflects additional sales personnel and marketing efforts for the new sites.

         General and administrative expenses. Total general and administrative
expenses increased 191% to $2,883,000 for the three months ended December 31,
1998 from $991,000 for the three months ended December 31, 1997. The increase
was primarily attributable to an increase in salaries, travel and professional
fees. Salaries increased 163% to $1,420,000 for the three months ended December
31, 1998 from $539,000 for the three months ended December 31, 1997. Travel
expense increased 315% to $353,000 for the three months ended December 31, 1998
from $85,000 for the three months ended December 31, 1997. Professional fees
increased 74% to $139,000 for the three months ended December 31, 1998 from
$80,000 for the three months ended December 31, 1997.

         For the six months ended December 31, 1998, total general and
administrative expenses increased 158% to $4,767,000 from $1,850,000 for the six
months ended December 31, 1997. The increase was primarily attributable to an
increase in salaries, travel and professional fees. Salaries increased 150% to
$2,412,000 for the six months ended December 31, 1998 from $965,000 for the six
months ended December 31, 1997. Professional fees increased 182% to $268,000 for
the six months ended December 31, 1998 from $95,000 for the six months ended
December 31, 1997. Travel expenses increased 139% to $461,000 for the six months
ended December 31, 1998 from $193,000 for the six months ended December 31,
1997.

         Interest Expense (Income) and Other- Net. Interest expense (income) and
other - net increased to $1,800,000 for the three months ended December 31, 1998
from $(149,000) of interest income for the three months ended December 31, 1997.
For the six months ended December 31, 1998 interest expense (income) and
other-net increased to $3,695,000 from $(266,000) of interest income for the six
months ended December 31, 1997. The additional net interest expense for the
three and six months ended December 31, 1998 compared to the three month and six
ended December 31, 1997 is primarily attributable to the interest expense on
Series A 13% Senior Notes due 2008 in the aggregate principal amount of
$75,000,000 issued in May 1998 (the "Old Notes"). Pursuant to an exchange offer
completed in December 1998, the Company exchanged the Old Notes for Series B 13%
Senior Notes due 2008 in the aggregate principal amount of $75,000,000 (the "New
Notes"), which are registered with the Securities and Exchange Commission.

         Net Loss. The Company's net loss increased 233% to $9,092,000 for the
three months ended December 31, 1998 from $2,728,000 for the three months ended
December 31, 1997. The net loss increased 226% to $15,573,000 for the six months
ended December 31, 1998 from $4,783,000 for the six months ended December 31,
1997. The Company expects to incur a significant net loss and negative cash flow
from operations at least through the fiscal year ending June 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

         Net cash used in operating activities was $12,124,000 and $4,515,000
for the six months ended December 31, 1998 and 1997, respectively. The
$7,609,000 increase in net cash used in operating activities for the six months
ended December 31, 1998 compared to the six months ended December 31, 1997
primarily resulted from an increase in the net loss of $10,790,000 to
$15,573,000 for the six months ended December 31, 1998 compared to a net loss of
$4,783,000 for the six months ended December 31, 1997. This was offset by an
increase in non-cash expenditure for depreciation of $1,641,000 to $2,383,000
for the six months ended December 31, 1998 from $742,000 for the six months
ended December 31, 1997.


                                       9
<PAGE>   12


         Net cash used in investing activities was $4,880,000 and $7,118,000 for
the six months ended December 31, 1998 and 1997, respectively. The $2,238,000
decrease in net cash used in investing activities for the six months ended
December 31, 1998 compared to the six months ended December 31, 1997 resulted
from the net decrease in short term and restricted investments in the amount of
$8,274,000 for the six months ended December 31, 1998 compared to the six months
ended December 31, 1997. This was offset by an increase in capital expenditures
of $6,036,000 to $13,154,000 for the six months ended December 31, 1998 from
$7,118,000 for the six months ended December 31, 1997. The increase in capital
expenditures was the result of the installation of the PNV Network at
approximately 70 truckstops during the six months ended December 31, 1998
compared to 39 installations completed during the six months ended December 31,
1997.

         Net cash provided by (used) in financing activities was ($515,000) and
$17,410,000 for the six months ended December 31, 1998 and 1997, respectively.
The $17,925,000 decrease in net cash provided by financing activities for the
six months ended December 31, 1998 compared to the six months ended December 31,
1997 resulted primarily from issuance of Series C Preferred Stock during the six
months ended December 31, 1997.

         In the six months ended December 31, 1998, the Company's working
capital decreased $22,911,000 from June 30, 1998. The decrease was primarily
attributable to a decrease in cash and cash equivalents of $17,519,000 and a
decrease in short term investments of $4,097,000 and an increase in accounts
payable and accrued expenses of $1,006,000.

         The Company's capital commitments consist primarily of capital leases
and noncancelable operating leases for office space, furnishings, equipment and
T-1 lines. In addition, the Company has entered into a contract for the purchase
of long distance and other telephone services that contain minimum purchase
requirements for a two-year period. Pursuant to the contract for the lease of
T-1 lines, the Company is required to lease approximately (i) 200 T-1 lines
having minimum payments, before available discounts, of $5.1 million during the
first year following the start-up period, and (ii) 300 T-1 lines having a
minimum payments, before available discounts, of $7.7 million during the second
and third years following February 1999. In addition, the Company's contract
with AT&T for long distance and other telephone services requires the Company
for a term of two years to purchase each month, at minimum, services having an
undiscounted price of $40,000 based upon standard AT&T rates. Discounts are
available under each contract. The Company may terminate the contracts with AT&T
at any time, but, upon termination, the Company generally would become obligated
to pay to AT&T the remaining aggregate undiscounted required minimum amounts
under each contract. At December 31, 1998, the Company's minimum commitments
under contracts relating to the lease of T-1 lines and the purchase of long
distance and other telephone services, totaled $692,913, $422,639, $316,541,
$188,637 and $28,962 for the five years ending June 30, 1999 through 2003,
respectively. (See Note 3 to the condensed financial statements). In addition,
the Company has committed to leasing routing and switching equipment for the
wide area network at each truckstop at which the PNV Network is available
estimated at an aggregate expenditure of $3.6 million ($15,000 per site) over a
three year lease term. Such installation, together with the installation of the
T-1 lines, will substantially complete the Company's planned enhancements to the
PNV Network. The Company anticipates that a majority of the routing equipment
will be installed during the three months ending March 31, 1999 and the
operating lease payments will begin during this period.

         The Company believes that it will cost approximately $5,000 to install
the equipment required under the Telecom Service Agreement at each site.
Assuming that the Company installs such equipment at each of the approximately
145 truckstops currently owned or operated by TA, the Company would spend
approximately $725,000 in aggregate to install the necessary equipment.

         The Company expects that it will have significant capital requirements
in the future to fund the continued expansion of its business and for working
capital purposes, and there can be no assurance that such capital requirements
will be available on terms satisfactory to the Company, if at all. The Company's
capital requirements will depend on numerous factors, including the growth of
the Company's revenues, if any, and the rate of such growth. Thereafter, if the
Company's cash flow from operations is not sufficient to provide funds for
working capital and capital expenditures and if equity, debt or other financing
is not available, the Company expects that it may experience insufficient
liquidity which could have a material adverse affect on the Company's financial
condition and results of operations. There can



                                       10
<PAGE>   13


be no assurance that additional financing will be available when needed, if at
all, or, if available, on terms acceptable to the Company. If adequate funds are
not available on acceptable terms, the Company will be required to delay or
limit any further expansion of its business. Any inability to fund its future
capital requirements could have a material adverse effect on the Company's
business, financial condition and operating results.

YEAR 2000

         A potential problem exists for all companies that rely on computers as
the year 2000 approaches. The "Year 2000" problem is the result of the past
practice in the computer industry of using two digits rather than four to
identify the applicable year. This practice could result in incorrect results
when computers perform arithmetic operations, comparisons or data field sorting
involving years later than 1999. The Company is in the process of conducting a
review of its computer systems to identify the systems that could be affected by
the "Year 2000" issue and is developing a plan to address the issue. The Company
will utilize both internal and, if needed, external resources to reprogram or
replace and test all of its software for Year 2000 compliance, and the Company
expects to complete the project during the second half of 1999. The Company has
a preliminary estimate of $300,000 as the maximum cost of evaluating, testing,
reprogramming, and modifying its software. The estimate is based on the belief
that no major problems will be encountered in becoming Year 2000 compliant.
Based on its preliminary internal review, the Company believes that the
Company-developed software is Year 2000 compliant. However, the Company plans to
do more extensive testing of the PNV Software during the current calendar year
which may require the use of independent consultants to assist in the Company's
evaluation to assure a correct assessment of cost and risk. In addition, the
Company relies on third party vendors which must also become Year 2000
compliant. The Company has a significant reliance on outside vendors such as
telephone companies, satellite system providers, electrical providers and the
wide area network supplier. These services are critical in the Company's ability
to generate revenue. The ability of third parties with which the Company
transacts business to adequately address their Year 2000 issues is outside of
the Company's control. The Company is planning to create a comprehensive list of
all internal and external software programs to assure that a full review of such
software is completed. However, if any necessary modifications to the PNV
Software are not completed in a timely manner or if the Company's vendors are
not Year 2000 compliant, the Year 2000 problem may have a material
adverse-impact on the operations of the Company. The Company has not made any
progress in assessing its non-information technology systems. These types of
systems are more difficult to assess and repair than information technology
systems and the Company may have to replace the non-information technology
systems that cannot be repaired. The Company will begin reviewing its
non-information technology systems in the second half of 1999. The Company
presently has no basis on which to estimate the costs of assessing and repairing
or replacing its non-information technology systems or to determine whether such
costs will have a material adverse effect on the Company's operations or
financial condition.

RISK FACTORS

Limited History of Operations

         The Company was incorporated in September 1995. Accordingly, there is
limited financial information about the Company upon which to base an evaluation
of the Company's performance. Given the Company's limited operating history,
there is no assurance that it will be able to generate sufficient cash flow to
service its debt obligations or to achieve its objectives.

History of Losses, Negative Cash Flow and Negative Gross Margin

         The Company has experienced a net loss and negative cash flow from
operations in each quarter since it was incorporated. As of December 31, 1998,
the Company had a common stockholders' deficit of $37.2 million. The Company
expects to incur a significant net loss and negative cash flow from operations
at least through the fiscal year ending June 30, 1999. There can be no assurance
that the Company will



                                       11
<PAGE>   14


ever be profitable. From September 1995 to date, the Company's cost of revenues
has been substantially higher than its revenues, leading to a negative gross
margin. There can be no assurance that the Company will generate significant
revenue in the future, and even if it does so, that the Company's revenues will
ever exceed its cost of revenues.

Future Capital Requirements; Uncertainty of Additional Funding

         The Company expects that it will have significant capital requirements
in the future to fund the continued expansion of its business and for working
capital purposes, and there can be no assurance that such capital requirements
will be available on terms satisfactory to the Company, if at all. The Company's
capital requirements will depend on numerous factors, including the growth of
the Company's revenues, if any, and the rate of such growth. Once the Company
has used the net proceeds from the sale of the Old Notes, if the Company's cash
flow from operations is not sufficient to provide funds for working capital and
capital expenditures and if equity or debt or other financing is not available,
the Company expects that it may experience insufficient liquidity which could
have a material adverse effect on the Company's financial condition and results
of operations. There can be no assurance that additional financing will be
available when needed, if at all, or, if available, on terms acceptable to the
Company. If adequate funds are not available on acceptable terms, the Company
will be required to delay or limit any further expansion of its business. Any
inability to fund its future capital requirements would have a material adverse
effect on the Company's business, financial condition and operating results.

Ability to Sustain and Increase Subscription Sales; Retention

         The future success of the Company depends upon its ability to
significantly increase its revenues which, in turn, depends materially upon its
ability to increase the number of subscribers to the PNV Network. During
December 1998, the Company had approximately 33,000 active subscribers of whom
approximately 22,000 had subscribed on a monthly basis (including subscription
sales at the Company's vending machines at truckstops, pursuant to a monthly
subscription program referred to as the "Power Plan Program" and pursuant to the
Company's contracts with fleet trucking companies) and 11,000 were daily
subscribers. The Company also now offers a program pursuant to which fleet
trucking companies either would permit automatic payroll deductions as a means
for the fleet's truck drivers to pay for the truck drivers' subscriptions to the
PNV Network or would subsidize a portion of the subscription rate for their
truck drivers, each of which the Company believes will increase monthly
subscriptions. To date, the Company's average revenue per subscriber has been
lower than expected which the Company believes is due primarily to the
relatively large number of daily subscribers as compared to monthly subscribers
and to lower than anticipated usage by truck drivers of long distance telephone
minutes offered by the Company. Market research and the Company's experience
indicate that, in order to provide a benefit to truck drivers sufficient to
justify the monthly subscription fee, the PNV Network must be available
nationally at a minimum threshold number of sites so that truck drivers can rely
on access to the PNV Network as they travel their routes. The Company believes
that this number of sites ranges between 200 and 250, depending on site
location, size and other factors. As of December 31, 1998, the PNV Network was
installed and operating at 188 truckstops.

         Even if truck drivers initially subscribe to the PNV Network, there can
be no assurance that they will renew their subscriptions. Of those subscribers
who purchased a subscription in September 1998, Company data indicates that
approximately 70% renewed their subscriptions at least once between that
subscription and December 1998. In October 1997, the Company implemented the
Power Plan Program, which was designed to increase monthly subscription
renewals. Pursuant to this program, a subscriber's monthly subscription is
automatically renewed and the monthly fee is automatically drafted from or
charged to the subscriber's checking account or credit card until the subscriber
cancels the subscription. As of December 31, 1998, the Company had 13,600
monthly subscribers pursuant to the Power Plan Program, however, there can be no
assurance that the number of such subscribers will continue to grow. The Company
also now offers a program pursuant to which fleet trucking companies either
would permit automatic payroll deductions as a means for the fleet's truck



                                       12
<PAGE>   15


drivers to pay for the truck drivers' subscriptions to the PNV Network or would
subsidize a portion of the subscription rate for their truck drivers, each of
which the Company believes will increase monthly subscription renewals. There
are many factors that could cause a subscriber not to renew a subscription,
including dissatisfaction with the PNV Network and the services offered or with
the number and location of the truckstops at which the PNV Network is available.

         The Company's ability to increase subscriptions to the PNV Network
depends significantly upon its ability to increase sales to fleets. During the
three month period ended December 31, 1998, the Company did not enter into any
new contracts with fleet trucking companies, but the number of drivers sponsored
by the five fleets under contract with the Company increased from approximately
2,500 during September 1998 to approximately 3,480 during December 1998. As of
December 31, 1998, the Company had entered into contracts with five fleet
trucking companies for a minimum of 2,329 subscriptions for terms ranging from
one to three years, subject to certain earlier termination rights by the fleet
trucking companies. There can be no assurance, however, that the fleets having
earlier termination rights will not terminate their contracts prior to the
expiration of their stated terms, existing contracts will be renewed or the
Company will be able to increase its subscription sales to fleets.

         The ability of the Company to attract and retain subscribers will also
depend in part on the ability of such subscribers to access a stall at a
truckstop served by the PNV Network and, with regard to the use of the Company's
telephone services, to access one of the local telephone lines maintained by the
Company in connection with the telephone service offered. Subscribers may on
occasion be unable to utilize the PNV Network due to a lack of open stalls at
some of the busier truckstops. In addition, users of the PNV Network's telephone
service at a particular truckstop cannot exceed the number of local lines
available. The Company presently maintains an average of 12 local telephone
lines at each truckstop served by the PNV Network. In connection with the
proposed enhancements to the PNV Network to increase its capacity and
functionality to allow the Company to offer additional telecommunications
services, the Company intends, among other things, to install and maintain a T-1
line, and to reduce the number of local lines, at each truckstop. Although this
installation will increase the number of users that may access the PNV Network's
telecommunications services simultaneously, this number will still be limited.
In addition, truck drivers may find that the truckstops served by the PNV
Network are not conveniently located. If truck drivers find that the truckstops
served by the PNV Network are not conveniently located, it is unlikely that they
will purchase or renew subscriptions. The Company's inability to attract and
retain subscribers and to significantly increase revenues from sales of
subscriptions, including subscription sales to fleets, for any reason, would
have a material adverse effect on the Company's business, financial condition
and results of operations, including its ability to make payments on the Notes.

Substantial Leverage; Possible Inability to Service Indebtedness

         As a result of the issuance of the Old Notes, which now have been
exchanged for the New Notes, the Company is highly leveraged. At December 31,
1998, the Company had total long-term debt of $70.6 million and a common
stockholders' deficit of $37.2 million. The Company's earnings were insufficient
to cover its fixed charges and preferred stock dividend requirements by
approximately $17.0 and $6.0 million for the six months ended December 31, 1998
and 1997, respectively. The Company is permitted to incur additional
indebtedness in the future under the indenture relating to the New Notes,
subject to the restrictions set forth in such indenture.

         The Company's ability to make scheduled payments of principal of, or to
pay interest or liquidated damages, if any, on its indebtedness will depend on
the Company's future performance which, to a certain extent is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond its control. There can be no assurance that the
Company's business will generate sufficient cash flow from operations and that
anticipated revenue growth will be realized in an amount sufficient to enable
the Company to service its indebtedness or to continue the installation of the
PNV



                                       13
<PAGE>   16


Network and the payment of the costs associated with the provision of
telecommunications and entertainment services and its operations.

         The degree to which the Company is leveraged could have important
consequences to the Company's future prospects, including the following: (i)
limiting the ability of the Company to obtain any necessary financing in the
future for working capital, capital expenditures, debt service requirements or
other purposes; (ii) the Company's vulnerability to the effects of general
economic downturns or to delays or increases in the costs of installing the PNV
Network or planned subsequent improvements thereto or providing planned
telecommunications services in addition to those currently provided may be
increased; (iii) limiting the flexibility of the Company in planning for, or
reacting to, changes in its business; (iv) leveraging the Company more highly
than some of its potential competitors, which may place it at a competitive
disadvantage; (v) increasing its vulnerability in the event of a downturn in its
business or the economy generally; and (vi) requiring that a substantial portion
of the Company's cash flow from operations be dedicated to the payment of
principal and interest on the New Notes and not be available for other purposes.

         The Company expects to generate significant negative cash flow at least
through the fiscal year ending June 30, 1999. If the Company does not ultimately
generate sufficient cash flow to meet its debt service and capital requirements,
the Company may need to examine alternative strategies that may include actions
such as reducing or delaying capital expenditures, restructuring or refinancing
its indebtedness, the sale of assets or seeking additional equity, debt or other
financing. There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all. In addition, there can be no
assurance that the Company will be able to effect any such refinancing on
commercially reasonable terms or at all.

Expansion of PNV Network Installation

         The Company's ability to achieve its objectives will depend in large
part on the timely and cost-effective installation of the PNV Network at a
significant number of additional truckstops and the addition of T-1 lines and
certain additional equipment at all the truckstops at which the PNV Network is
available. The success of the Company in installing the PNV Network will depend
on, among other things, timely performance by the third parties of their
contractual obligations. Due to slower membership growth than anticipated, lower
than anticipated revenue growth per subscriber, and higher than anticipated
costs, the Company has recently slowed the buildout of the PNV Network from a
planned 10 to 15 new sites per month to approximately 6 to 8 new sites per
month. There can be no assurance that the Company will be able to achieve its
buildout rate as planned and any failure to do so could have a material adverse
effect on the Company's business, financial condition and results of operations.

         The Company is presently utilizing the services of four contractors,
three of which the Company believes operate on a national basis and one of which
the Company believes operates on a regional basis. To date, the installation of
the PNV Network at truckstops by outside contractors has been completed
substantially on the Company's schedule and within its budget, and the
installation services performed by such contractors have been satisfactory to
the Company. Although management believes that there are a number of contractors
that could perform the required installation services or that the Company could
employ sufficient persons to perform such services, there can be no assurance
that it will be able to obtain the services of outside contractors that can
install the PNV Network on a timely basis and at a cost acceptable to the
Company.

         In connection with planned enhancements to the PNV Network, the Company
intends to install T-1 lines, in addition to local telephone lines, at each
truckstop served by the PNV Network. The Company has entered into a contract
with AT&T for the lease of T-1 lines. Any delay in the installation of the T-1
lines or adverse weather or other complications could significantly delay the
Company's planned increase in the number of truckstops served by the PNV
Network. Such delay or an increase in the cost associated with the installation
of the PNV Network could adversely affect the Company's planned buildout of the
PNV Network which in turn could adversely affect the Company's ability to create




                                       14
<PAGE>   17


substantial demand for its services and increase subscription sales and, as a
result, the Company's business, financial condition and results of operations.

Minimum Requirements Contracts

         The Company has entered into contracts with AT&T for the lease of T-1
lines and the purchase of long distance and other telephone services. These
contracts require the Company to pay a specified minimum dollar amount of lease
payments and to purchase a specified minimum dollar amount of long distance
telephone services, each of which amounts is subject to certain discounts based
on the T-1 lines leased and the telephone services purchased. The Company's
ability to achieve its objectives depends in significant part on its ability to
obtain these discounts. Any failure to obtain the available discounts with
regard to its T-1 line lease payments and its long distance telephone service
rates could have a material adverse effect on the Company's business, financial
condition and results of operations.

         In addition, the Company has entered into an operating lease for a wide
area network with an annual minimum rental amount of approximately $1.2 million
for a three year term.

Future Revenue Streams; Cost Savings

         The Company's ability to achieve its objectives depends significantly
on its ability to generate revenues from planned future services and recognize
cost-savings from planned enhancements to the PNV Network. The PNV Network as
currently designed does not have the capacity to provide certain of these
planned future services and the capacity of the proposed PNV Network
architecture to provide such services is untested and the market for such
services is undetermined. Any inability of the Company to generate revenue from
such planned future services or realize anticipated cost-savings could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Potential Unavailability of Equipment

         The Company purchases its satellite equipment, head-end equipment,
telephone and cable switching equipment, computer hardware and cable programming
from outside suppliers. The Company has no purchase agreements with any such
supplier other than its cable programming supplier, Echostar Communications
Corporation ("Echostar"). The Company presently purchases its satellite
equipment and computer hardware from a sole supplier and management believes
that limited alternative sources for such items exist. The Company believes that
its relationships with the suppliers of these items are good. However, if the
Company were required to purchase telephone switching equipment from another
source, it would require reprogramming of certain of the Company's software or
if the Company were required to purchase any alternative equipment from another
source, it would require that the Company modify and redesign the PNV Network in
certain respects which, in each case, could result in service delays and expense
to the Company. In addition, the Company purchases the cable programming offered
through the PNV Network from Echostar. Although management believes that limited
alternative sources for cable programming exist, utilizing an alternative source
could require retrofitting certain equipment at each truckstop site and could
result in an interruption in the Company's ability to offer cable television
services through the PNV Network for a limited period of time. Any failure of
the Company to obtain any of the foregoing equipment, particularly its cable and
telephone switching equipment, or cable programming, could have a material
adverse effect on the Company's ability to expand its business in a timely
fashion and, as a result, on its results of operations and financial condition.

Dependence on Contractual Relationships with Truckstops

         All of the Company's current revenues are generated from its operation
of the PNV Network at truckstops. The Company expects that the provision of
telecommunications and entertainment services, including planned future
services, through the PNV Network will continue to be the sole source of the
Company's revenues for the foreseeable future. The Company is dependent on its
ability to continue to install the PNV Network for its future expansion.


                                       15
<PAGE>   18


         The Company has contracted with truckstop chains and independent
truckstop owners located throughout the United States. While most independent
truckstop owners who own a single truckstop execute a standard contract, the
contracts executed by truckstop chains that operate multiple truckstops vary
significantly. The contracts generally provide that the truckstop chains and
independent truckstop owners may terminate the contract, and the Company's
exclusive rights under the contract, if the Company fails in any material
respect to perform any of its obligations under the contract and fails to remedy
the breach within 30 days after the Company receives notice of the breach. For
example, if the Company fails to install the PNV Network in accordance with the
buildout schedule in certain of its contracts, truckstop owners owning over
one-third of the Company's proposed truckstop locations may terminate the
exclusivity provisions contained in such contracts. Any failure by the Company
to meet its contractual obligations that results in the termination of
contracts, including the loss of the Company's exclusive rights under such
contracts, would have a material adverse effect on the Company's financial
condition and results of operations.

         In addition, as of December 31, 1998, the Company had contracts to
install the PNV Network at approximately 338 truckstops through trucking
associations whose members consist of smaller truckstop chains generally having
fewer than 10 truckstops. These associations act as purchasing agents for their
members. The Company entered into contracts with these associations as an
efficient manner in which to gain access to and establish a relationship with
numerous small to medium size truckstops. These associations do not have
authority to legally bind their members. Therefore, while each association has
granted the Company the exclusive right to provide cable television and
telephone services to its members, this contractual right is not binding on each
member. Prior to installation of the PNV Network at an association member's
truckstop, the Company enters into a contract with the association member
granting the Company the exclusive right to install the PNV Network at the
member's truckstops. Accordingly, there can be no assurance that the Company's
contracts with truckstop associations will result in the Company installing the
PNV Network at additional truckstop locations.

Management of Growth

         The Company has expanded its operations significantly over the past 12
months, placing significant demands on its financial, marketing and sales,
administrative and operational personnel and systems. The Company has also
experienced rapid growth in its management and staff, including the addition of
three executive officers during the past 12 months. As of December 31, 1998, the
number of the Company's full-time employees had increased to 223 from 174 as of
June 30, 1998. The growth in the size and scope of the Company's business
activities have placed, and are expected to continue to place, a strain on the
Company's management and operations. In connection with its planned expansion of
the PNV Network locations and services, management has been and in the future
will be required to recruit, organize, train and manage additional personnel to
perform, among other things (i) the planning and engineering activity associated
with the installation of the PNV Network at each truckstop, (ii) the assembly at
the Company's headquarters of the electronics and other equipment comprising the
PNV Network and the loading of such equipment for delivery to each site, (iii)
the inspection of each site upon completion of the installation, (iv) the
training of the truckstop employees and (v) the marketing and promotion of the
PNV Network at each site. The Company's success in managing the expansion of its
business will depend to a large extent on the Company's ability to hire, train
and supervise such additional personnel. There can be no assurance that the
Company will be able to attract, train, supervise and retain an adequate number
of such personnel. The failure of the Company to effectively manage the growth
in its business and to develop the additional personnel, systems, resources,
procedures and controls necessary to support that growth in a timely manner
would have a material adverse effect on the Company's business, financial
condition and results of operations.

Competition

         In the voice and data communication and entertainment arenas, the
Company competes with various elements of other providers' offerings based on
ease of access, functionality and cost. These



                                       16
<PAGE>   19


industries are highly competitive, and the Company expects to face strong
competition from existing and potential competitors. The Company's competitors
comprise a broad range of companies engaged in telecommunications and
entertainment, including but not limited to, public pay telephone operators,
cellular telephone companies, long distance telephone companies, cable
operators, direct broadcast satellite companies, as well as companies developing
new technologies. Certain of these competitors and potential competitors are
well established companies and have significantly greater financial, marketing
and programming resources than the Company.

         The Company's telecommunication services compete with cellular
telephones, pay telephones and providers of long distance cards and prepaid
cards. Cellular service is widely available and, although it is currently more
expensive than the PNV Network, it is becoming more affordable. The Company
believes that drivers currently use pay telephones located at truckstops for a
significant number of the calls they make and there can be no assurance that the
Company will successfully attract customers who predominately use these pay
telephones. The Company understands that one company, HighwayMaster, resells
cellular telephone service to provide both voice and data communication to the
truck cab. The Company's long distance services compete with providers of long
distance cards and pre-paid cards such as AT&T and MCI and with providers of
toll free (800 and 888) numbers that fleets or even individuals use to call
fleet headquarters or home. Qualcomm's OmniTRACS service, another competitor, is
used primarily for mobile vehicle location and two-way text messaging and it
addresses the trucking fleets' need for real-time mobile text communication.
Based on publicly available data, the OmniTRACS service has an installed base of
approximately 210,000 units in 32 countries worldwide, of which the Company
believes that over 150,000 units are installed in the United States which would
compete with certain of the Company's services. In addition, the Company
believes that there is a company that has begun installing Internet/e-mail
kiosks in truckstops. There can be no assurance that the Company will be able to
effectively compete against these or future telecommunications competitors, many
of which have large customer bases and significantly more resources than the
Company.

         With respect to entertainment, the Company's competition currently
consists of entertainment alternatives located outside the truck cab and
primarily in the truckstop. Community television and game rooms inside the
truckstop are the most readily available entertainment alternatives for
long-haul truck drivers. The Company believes that a small number of
professional truck drivers have purchased direct broadcast satellite dishes to
receive television programming in their cab. Cable providers to such users as
residential apartment buildings could seek to compete by offering programming to
truckstops. There can be no assurance that the Company will be able to compete
successfully against the providers of cable and digital satellite programming
services, most of which will have access to greater resources and provide more
programming than the PNV Network.

Substantial Reliance on Key Personnel

         The success of the Company is dependent to a significant extent on the
personal efforts and abilities of its senior management. The Company has no
employment agreement with any members of its senior management. The Company
believes that the loss of services of any member of its senior management could
have a material adverse effect on the Company. The Company maintains key man
term life insurance on the life of Mr. Williams, the Chief Executive Officer, in
the amount of $1.0 million, payable to the Company. There can be no assurance
that the Company will be able to retain its senior management or that it will be
able to attract or retain other skilled personnel in the future.

Regulatory Matters

         The FCC and relevant state regulatory authorities ("PSC's") have the
authority to regulate interstate and intrastate telephone rates, respectively,
ownership of transmission facilities and the terms and conditions under which
certain of the Company's telephone service offerings are provided. Federal and
state regulations and regulatory trends have had, and in the future are likely
to have, both positive and negative effects on the Company and its ability to
compete. There can be no assurance that changes in 



                                       17
<PAGE>   20


current or future federal or State regulations or future judicial changes
would not have a material adverse effect on the Company's business, financial
condition or results of operations.

         Interstate telecommunications carriers are subject to a number of other
federal regulatory obligations and reporting requirements, including obligations
to contribute to universal service and other subsidy funds, to permit resale of
their services by other carriers, and to take certain steps to protect
consumers. While the Company does not believe the burdens imposed by federal
regulations will be onerous, failure to comply with applicable regulations could
result in fines or other penalties, including loss of authority to provide
interstate service.

         The intrastate operations of the Company are subject to various
state laws and regulations. Most states require the Company to apply for
certification to provide long distance telecommunications services, operator
services, pay phones or competitive local exchange services, or to register or
be found exempt from regulation, before commencing intrastate services. Most
states also require the Company to file and maintain detailed tariffs listing
their rates for intrastate service. Many states also impose various reporting
requirements and/or require prior approval for transfers of control of certified
carriers, assignment of carrier assets, including customer bases, carrier stock
offerings, incurrence by carriers of significant debt obligations and
acquisitions of telecommunications operations. Other regulatory requirements may
mandate that the Company permit resale of its services by other companies, make
payments to intrastate universal service and similar funds, and take certain
steps to protect consumers. Certificates of authority can generally be
conditioned, modified, canceled, terminated and revoked by state regulatory
authorities for failure to comply with state law and/or rules, regulations and
policies of the state regulatory authorities. Fines and other penalties also may
be imposed for such violations. Any delay by the Company in complying with these
state laws and regulations would limit the Company's ability to provide
telecommunications services to the long-haul trucking industry. In addition, if
the Company were not to be in compliance with relevant state laws and
regulations, the appropriate state regulatory body may force the Company to
suspend offering its telecommunications services in such state. Such an event
could have a material adverse effect on the Company's business, financial
condition and results of operations.

         Although the Company has not determined whether its current and
anticipated telephone service offerings are subject to regulation by all state
and federal regulatory authorities, the Company is in the process of obtaining
authority, pursuant to regulation, certification, tariffs, notifications, or on
an unregulated basis, to provide intrastate interexchange service in the 48
contiguous states and Hawaii. The Company currently is authorized to provide
such services in all states except North Carolina and South Carolina in which
applications are pending. The interpretation and enforcement of such laws and
regulations in relation to the Company's current and future service offering may
vary, and there can be no assurance that the Company will be in compliance with
all such laws and regulations at any one point in time.

         Various state and federal regulatory factors may have an impact on the
Company's ability to service customers. Many of the rights and obligations
created by statute and regulation are subject to ongoing regulatory
implementation proceedings and review by the courts, and are subject to change.
Changes to some regulations could benefit the Company, while other changes could
make it more difficult for the Company to compete.

         Cable television companies are subject to extensive governmental
regulation. The Company does not believe that it is subject to such regulations.
However, in the event the Company is required to comply with such regulations,
the expense, potential delay and management distraction potentially resulting
from the compliance process could have a material adverse effect on the
Company's results of operations and financial condition.

Trucking Industry; Target Market

         The Company's business is dependent upon the trucking industry in
general and upon long-haul trucking activity in particular. In turn, the
trucking industry is dependent on economic factors, such as the level of
domestic economic activity and interest rates, as well as operating factors such
as fuel prices and



                                       18
<PAGE>   21


fuel taxes over which the Company has no control and which could contribute to a
decline in truck travel. The long-haul trucking business is also a mature
industry that has grown slowly in recent years and has, in the past, been
susceptible to recessionary downturns.

         The current target market for the PNV Network is comprised primarily of
the long-haul truck drivers in the United States (including Canadian drivers
crossing the U.S.-Canadian border to deliver and/or pick up loads) that spend
material amounts of time in truckstops. There is no consensus as to the number
of long-haul truck drivers that comprise the Company's target market, and there
can be no assurance that the Company's estimate of the size of its target market
is accurate. Although a number of sources, including government agencies, trade
associations, industry publications and the Company's own independently retained
market research consulting firm have published estimates based on one or more of
the following: freight taxes, diesel fuel usage, number of trucks, number of
truck drivers, commercial drivers licenses or other data relating to the
trucking industry, these estimates vary widely. Accordingly, there can be no
assurance that the Company's estimate of its target market is not materially
inaccurate, which could increase the penetration level that the Company must
achieve in order to successfully implement its business plan.

Rapid Technological Changes

         The telecommunications and cable industries are subject to rapid and
significant changes in technology. While the Company believes that for the
foreseeable future these changes will neither materially affect the continued
use of the Company's technology or the current or planned design, functionality
or capacity of the PNV Network or the telecommunications and cable services
offered nor materially hinder the Company's ability to acquire necessary
technologies, the effect of technological changes on the business of the Company
cannot be predicted. Thus, there can be no assurance that technological
developments will not have a material adverse effect on the Company.

Proprietary Rights

         The Company believes that recognition of its products and services is
an important competitive factor in its industry. Accordingly, it promotes (or
intends to promote) the following in connection with its marketing activities
and holds or has filed an application for a United States trademark registration
for the following: "PARK 'N VIEW," "INCAB PNV," "PNV USA," "YOUR CAB. YOUR
CABLE. YOUR CALL.," "PARK 'N VIEW" (with design), "DEN" (with design), and
"WHERE SMART DRIVERS STAY CONNECTED."

         The Company also regards the software developed by the Company (the
"PNV Software") as proprietary and attempts to protect it as a trade secret. The
Company holds no patents or copyrights on its software technology. If the
Company decides to seek either a copyright or a patent for the PNV Software,
there can be no assurance that the Company will be able to obtain such a
copyright or a patent. The intellectual property protections employed by the
Company, however, may not afford complete protection and there can be no
assurance that third parties will not independently develop such know-how or
obtain access to its know-how, ideas, concepts and documentation.

                           PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.

         The Company is involved in legal proceedings from time to time, none of
which management believes, if decided adversely to the Company, would have a
material adverse effect on the business, financial condition or results of
operations of the Company.


                                       19
<PAGE>   22


ITEM 2.           CHANGES IN SECURITIES.

         None

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES.

         None

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

         None

ITEM 5.           OTHER INFORMATION.

         None

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits.

                  Exhibit Number            Description of Exhibit

                  27       Financial Data Schedule.

         (b)      Reports on Form 8-K.

                  None



                                       20
<PAGE>   23


                                   SIGNATURES

         Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

                                    PARK `N VIEW, INC.


Date: February 12, 1999             /s/      Ian Williams
                                    --------------------------------------------
                                    Ian Williams, Chairman of the Board and
                                      Chief Executive Officer

Date: February 12, 1999             /s/      R. Michael Brewer
                                    --------------------------------------------
                                    R. Michael Brewer, Vice President - Finance
                                      and Chief Financial Officer




                                       21
<PAGE>   24
                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit Number                      Description of Exhibit
--------------                      ----------------------
<S>                                 <C>
27                                  Financial Data Schedule.
</TABLE>


                                       22