<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-K

         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
                                       OR
         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER: 00-21315

                             ON COMMAND CORPORATION
             (Exact Name of Registrant as specified in its charter)

               DELAWARE                              77-04535194
        (State of Incorporation)           (IRS Employer Identification No.)

6331 SAN IGNACIO AVENUE, SAN JOSE, CALIFORNIA                 95119
  (Address of Principal Executive Offices)                  (Zip code)

       Registrant's telephone number, including area code: (408) 360-4500

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
  TITLE OF EACH CLASS                                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
  -------------------                                 -----------------------------------------
<S>                                                   <C>
  Common Stock                                        NASDAQ National Market System
  Series A Common Stock Purchase Warrants             NASDAQ National Market System
  Series B Common Stock Purchase Warrants             NASDAQ National Market System
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

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

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

          The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant as of March 14, 2000, was $76,684,826 based
upon a price of $16.84375 per share, which was the average of the bid and asked
prices of such stock on March 14, 2000, as reported on the NASDAQ National
Market Reporting System. As of March 14, 2000, there were 30,436,423 shares of
the Registrant's Common Stock issued and outstanding and 1,424,875 Series A
Warrants, 2,625,000 Series B Warrants, and 3,450,000 Series C Warrants
(non-registered) issued and outstanding.

         DOCUMENTS INCORPORATED BY REFERENCE
None.


<PAGE>   2


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Part I
------------------------------------------------------------------------------------
                                                                                Page

<S>               <C>                                                           <C>
Item 1.           Business
                  Introduction                                                   1
                  General                                                        2
                  Industry Overview                                              2
                  Operating and Growth Strategy                                  3
                  Platforms                                                      3
                  Services                                                       5
                  Sales and Marketing                                            6
                  Installation and Service Operations                            7
                  Hotel Contracts                                                7
                  Technology -- Research and Development                         7
                  Suppliers                                                      7
                  Competition                                                    8
                  Regulation                                                     9
                  Patents, Trademarks, and Copyrights                            9
                  International Markets                                          9
                  Licensees and Other System Sales                              10
                  Markets and Customers                                         10
                  Employees                                                     11

Item 2.           Properties                                                    11

Item 3.           Legal Proceedings                                             11

Item 4.           Submission of Matters to a Vote of Security Holders           12

Part II
------------------------------------------------------------------------------------

Item 5.           Market for the Registrant's Common Equity and Related
                  Stockholder Matters                                           13

Item 6.           Selected Financial Data                                       14

Item 7.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                           15

Item 7A.          Quantitative and Qualitative Disclosures About
                  Market Risk                                                   22

Item 8.           Financial Statements and Supplementary Data                   22

Item 9.           Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                           41

Part III
------------------------------------------------------------------------------------

Item 10.          Directors and Executive Officers of the Registrant            42

Item 11.          Executive Compensation                                        45

Item 12.          Security Ownership of Certain Beneficial Owners
                  and Management                                                52

Item 13.          Certain Relationships and Related Transactions                54

Item 14.          Exhibits, Financial Statements, Schedules and                 56
                  Reports on Form 8-K
</TABLE>


                                       ii

<PAGE>   3


                                     PART I

         This Form 10-K contains forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which reflect On Command
Corporation's current judgment on those issues. Because such statements apply to
future events, they are subject to risks and uncertainties that could cause the
actual results to differ materially. Important factors, which could cause actual
results to differ materially, are described in the following paragraphs and are
particularly noted under Business Risks on pages 17 through 19. Although the
Company has attempted to list some of the important factors that may cause
actual results to differ materially from those anticipated, those factors should
not be viewed as the only factors that may affect future operating results.

ITEM 1. BUSINESS

INTRODUCTION

         On Command Corporation (the "Company" or "OCC") is a Delaware
corporation formed by Ascent Entertainment Group, Inc. ("Ascent") for the
purpose of (i) effecting the merger (the "Merger") of On Command Video
Corporation ("OCV"), a majority-owned subsidiary of Ascent, with a wholly-owned
subsidiary of OCC, after which OCV became a wholly-owned subsidiary of OCC, and
(ii) effecting the acquisition (the "Acquisition") of Spectradyne, Inc., a
wholly-owned subsidiary of SpectraVision, Inc. ("Oldco"). Following the
Acquisition, Spectradyne, Inc. changed its name to SpectraVision, Inc.
("SpectraVision"). At the time of the Merger and Acquisition, Ascent had been a
majority-owned subsidiary of COMSAT Corporation ("COMSAT"). On June 27, 1997,
COMSAT consummated the distribution of its 80.67% ownership interest in Ascent
to the COMSAT shareholders on a pro-rata basis in a transaction that was
tax-free for federal income tax purposes.

         The Merger and Acquisition were effective on October 8, 1996. The
Merger was accounted for using the historical book value of the assets,
liabilities, and stockholders' equity acquired from OCV in a manner similar to a
pooling of interests. The Acquisition was accounted for as a purchase using the
fair value of the assets acquired and liabilities assumed from SpectraVision.
Prior to the Merger and Acquisition (collectively hereafter, the "Acquisition"),
OCC had no significant operations other than On Command Development Corporation.

         As of the closing date of the Acquisition, the stockholders of OCV
received 21,750,000 shares of OCC Common Stock (72.5% of the initial OCC Common
Stock, of which Ascent received 17,149,766 shares). In consideration for the
acquisition of the assets and properties of SpectraVision by OCC, OCC paid
$4 million in cash and issued 8,041,618 shares of OCC Common Stock to the Oldco
bankruptcy estate for distribution to Oldco's creditors. Additionally, 208,382
shares were held in reserve pursuant to the Acquisition for potential
adjustments. Of these, 196,382 shares of reserve stock were subsequently
distributed to the Oldco bankruptcy estate for the benefit of Oldco's creditors
with the remaining 12,000 shares distributed to the OCV stockholders.

         In connection with the Acquisition, OCC also issued warrants
representing the right to purchase a total of 7,500,000 shares of OCC Common
Stock (20% of the outstanding common stock of OCC after exercise of the
warrants). The warrants have a term of seven years and an exercise price of
$15.27 per share of OCC Common Stock. Series A warrants to purchase on a
cashless basis an aggregate of 1,425,000 shares of OCC Common Stock were issued
to the former OCV stockholders, of which Ascent received warrants to purchase
1,123,823 shares; Series B warrants to purchase for cash an aggregate of
2,625,000 shares of OCC Common Stock were issued to the Oldco bankruptcy estate
for distribution to creditors; and $4.0 million in cash was paid and Series C
warrants to purchase for cash an aggregate of 3,450,000 shares of OCC Common
Stock were issued to OCC's investment advisors in consideration for certain
banking and advisory services provided in connection with the Acquisition.

         Unless otherwise indicated, all references to "On Command Corporation",
"OCC" or the "Company" will include On Command Corporation and its wholly owned
subsidiaries.




                                       1
<PAGE>   4

GENERAL

         OCC is a holding company whose principal assets are OCV, SpectraVision
and On Command Development Corporation, each of which operates as a separate,
wholly owned subsidiary of On Command Corporation. OCC is the leading provider
(by number of hotel rooms served) of in-room, on-demand video entertainment and
information services to the domestic lodging industry. OCC has experienced rapid
growth in the past seven years, increasing its base of installed rooms from
approximately 37,000 rooms at the end of 1992 to approximately 956,000 rooms at
December 31, 1999, of which approximately 884,000 rooms are served by on-demand
systems.

         OCC provides in-room video entertainment and information services on
three technology platforms, the recently developed OCX video system, the On
Command Video (OCV) System and the SpectraVision Systems. The OCX video system
provides enhanced multimedia applications, including an improved graphical
interface for movies and games, TV-based Internet with a wireless keyboard, and
other guest services. At December 31, 1999, OCC had installed the OCX systems in
approximately 34,000 hotel rooms, 30,000 with Internet capability. The OCV video
system is a patented video selection and distribution technology platform that
allows hotel guests to select at any time movies and games through the
television sets in their hotel rooms. At December 31, 1999 OCC had approximately
749,000 rooms installed with the OCV platform. There are variations of the
SpectraVision video systems still installed in hotels including tape based
scheduled and on demand systems. The SpectraVision video system generally offers
fewer movie choices than the OCV or OCX systems. At December 31, 1999, OCC had
177,000 rooms installed with SpectraVision equipment.

         In addition to movies, OCC's platforms provide for in-room viewing of
programming of select cable channels (such as HBO, Showtime, ESPN, CNN and
Disney Channel) and other interactive and information services, which includes
high speed Internet access through the OCX platform. OCC primarily provides its
services under long-term contracts to hotel chains, hotel management companies,
and individually owned and franchised hotel properties, predominantly in the
deluxe, luxury, and upscale hotel categories serving business travelers, such as
Marriott, Hilton, Hyatt, Wyndham, Starwood, Doubletree, Fairmont, Embassy
Suites, Four Seasons, and other select hotels.

         At December 31, 1999, approximately 87% of OCC's 956,000 installed
rooms were located in the United States, with the balance located primarily in
Canada, the Caribbean, Australia, Europe, Latin America, and the Asia-Pacific
region. In addition to installing systems in hotels served by OCC, OCC sells its
systems to certain other providers of in-room entertainment, including
Hospitality Network, Inc., which is licensed to use OCC's systems to provide
on-demand, in-room entertainment and information services to certain
gaming-based, hotel properties and ALLIN Communications, Inc., which is licensed
to install OCC's systems in cruise ships.

INDUSTRY OVERVIEW

         Providing in-room entertainment and information services to the lodging
industry includes offering pay-per-view motion pictures and Internet
connectivity, free-to-guest programming of select pay cable channels, and an
increasing array of interactive programs and information services. Pay-per-view
services were introduced in the early 1970s and have since become a standard
amenity offered by many hotels to their guests. Historically, providers of
programming to hotels delivered their content on a fixed time schedule that did
not provide the hotel guest flexibility in choosing when to watch a movie.
Typically, a guest would be offered a choice of four to eight movies, each of
which would be shown once every two to four hours. The development of video
switches (including OCV's patented video switch) enabled providers of
pay-per-view services to offer scheduling flexibility to the viewer. Changes in
technology have also led to the ability to provide a number of on-demand
interactive services such as guest folio review, automatic checkout, survey
completion, guest messaging, video games and Internet service. The market for
in-room entertainment and information is characterized as a highly competitive
environment among several industry-dedicated companies and a number of new
entrants including cable companies, telecommunications companies, laptop
connectivity companies and others. See "Competition."



                                       2
<PAGE>   5

OPERATING AND GROWTH STRATEGY

         On Command Corporation's operating and growth strategy is to: (i)
increase revenues and create new revenue sources through an expanding range of
interactive and information services offered to the lodging industry through the
OCX platform, including @Hotel TV-based Internet; (ii) increase its installed
hotel customer base by obtaining contracts with business and luxury hotels and
select mid-priced hotels without current service, converting hotels currently
served by other providers whose contracts are expiring, and servicing hotels
which are acquired or constructed by existing customers; (iii) expand its room
base in underserved foreign markets; and (iv) increase revenues and decrease
costs in certain hotels acquired in the SpectraVision acquisition by installing
more current technology offering greater reliability, broader selection, and
more viewing flexibility.

         OCC has been actively pursuing the renewal or extension of most of the
contracts with hotel customers with SpectraVision equipment by offering these
customers the opportunity to obtain OCV or OCX on-demand pay-per-view movies and
related services. As of December 31, 1999, OCC had converted approximately
181,000 rooms previously served by SpectraVision's systems to OCC's on-demand
system. Management expects to have a substantial majority of the remaining
SpectraVision rooms converted to OCC's on-demand system by the end of 2001.

PLATFORMS

         OCX Platform

         OCX is a multimedia platform that can be used to modify existing OCC
installations or can incorporate digital content storage in new installations.
At December 31, 1999, OCC had installed the OCX system in 34,000 hotel rooms,
and with Internet capability to approximately 30,000 rooms. The platform
currently provides interactive, multimedia menus, high-speed, TV-based Internet
service, e-mail access over the Internet, Sony PlayStation games, as well as
more choices and higher-quality video (with digital content storage) for OCC's
on-demand movie services. Potential offerings using the digital platform include
flexible pricing and packaging, non-theatrical short videos (such as business,
lifestyle, and sports videos) and special events, including out-of-market sports
events.

         On July 1, 1999, OCC launched its OCX platform, which is now being
supported by OCC using standard procedures. Over the next several months, OCC
will be implementing new systems and procedures to better service and support
the existing OCX properties and improve the operational efficiencies of the OCX
platform. OCC has been actively marketing OCX and at December 31, 1999 had
signed contracts to install OCX in an additional 75,000 rooms. OCC is outfitting
all major metropolitan areas with sufficient technical staff to support the
increasing demand for OCX.

         OCX provides enhanced multimedia applications and @Hotel Internet
access using a customized version of Microsoft's Internet Explorer, adapted for
use over the TV in conjunction with a wireless keyboard. @Hotel Internet service
is available to guests for a daily fee and includes complete web access and
e-mail capability. OCC has also partnered with several Internet content
providers to organize hotel-friendly Internet sites. OCX operates by means of
several client computers that serve multiple guestrooms and are located outside
of the actual rooms.



                                       3
<PAGE>   6

         The OCX platform supports a high degree of interactivity and
customization, including a powerful and compelling multimedia user interface.
The OCX platform is a standards-based, client-server architecture utilizing
Windows NT in the "back end" and a customized NTSC version of Internet Explorer
running on Windows 98 PC clients in the "front end." HTML-based menus allow
integration of content and navigational elements, and video content is provided
via a digital file server or an array of video cassette players.

         A key component of OCX is the "Site Manager" software application that
controls the system, interfaces with the hotel Property Management System, and
acts as the system's overall resource manager (including user session management
and resource allocation). In its design and functionality, this application
reflects OCC's years of operational experience and provides a key strategic
advantage in serving the lodging industry.

         The OCX platform provides a significant increase in the breadth of
possible services and in the efficiency of providing them. While the platform
itself may be extended to support extensive product offerings, early
implementations will include video-on-demand, TV-based Internet access, Sony's
PlayStation video games, and a rich multimedia user interface. With the OCX
technology, each component of the platform has multiple uses. For example, the
same PC client used for navigating graphics-intensive menus is used subsequently
for accessing the Internet, and sending e-mail, etc. With digital content
storage, a feature film could be replaced by four 30-minute short subject videos
(for example, instructional videos, self-help videos or comedy videos), unlike
one-for-one replacement with videocassettes. More importantly, the Company can
begin to transition to network delivery of content.

         OCC undertakes a significant investment when it installs its system in
a hotel property, sometimes rewiring part of the hotel. Depending on the size of
the hotel property, the quality of the cabling and antenna system at the hotel,
and the configuration of the system installed, the installation cost of a new,
OCV on-demand system with movies, guest services and video game capabilities,
including the head-end equipment averages from approximately $375 to $450 per
room. If the Company provides televisions, the cost can increase by $200 to $325
per room depending on the size of the TV. The installation cost of a full OCX
system, including digital content storage and Internet capability with a
wireless keyboard is approximately $75 per room higher than the OCV system in
the same size hotel. In addition, the OCV system can be modified to enable OCX
functionality for movies, games, Internet, and guest services. The cost of this
modification is between $175 - $300 per room depending on the required wiring in
the hotel. Most installations undertaken by OCC today use the OCX platform. Due
to constraints placed on OCC by most movie studios, OCX is only installed with
videocassette players in certain international markets.

         OCV Platform

         The On Command Video System was patented by OCV in 1992 and consists of
a microprocessor controlling the television in each room, a hand-held remote
control, and a central "head-end" video rack and system computer located
elsewhere in the hotel. Programming signals originate from video cassette
players located within the head-end rack and are transmitted to individual rooms
by way of OCV's proprietary video switching technology. Movie starts are
controlled automatically by the system computer. The system computer also
records the purchase by a guest of any title and reports billing data to the
hotel's accounting system, which posts the charge to the guest's bill.

         Manual functions of the OCV equipment and system are limited to
changing videocassettes once per month and are all handled by OCC's service
personnel who also update the system's movie titles screens. OCV's information
system is capable of generating regular reports of guests' entertainment
selections, permitting OCV to adjust its programming to respond to viewing
patterns. The number of guests that can view a particular movie at the same time
varies from hotel to hotel depending upon the popularity of the movie. OCV
provides more copies of the most popular programming to hotels. The high-speed,
two-way digital communications capability of the OCV system enables OCC to
provide advanced interactive and information features, such as video games, in
addition to basic guest services such as video checkout, room service ordering
and guest satisfaction surveys. The OCV system also enables hotel owners to
broadcast informational and promotional messages and to monitor room
availability.

         For example, in a typical hotel with 400 rooms, the central head-end
video rack would consist of approximately 120 videocassette recorders containing
up to ten copies of the most popular movies and a total of up to 50 different
titles. The OCV system includes a computerized in-room on-screen menu that
offers guests a list of only those movie selections available to the guest at
that time. As a result, even though the on-screen menu may not include a list of
all titles available in the particular hotel, the list includes all movies
currently available to the guest, thus eliminating the possibility of a guest
being disappointed when the guest's selection is not available.



                                       4
<PAGE>   7

         SpectraVision Platform

         In comparison with OCV systems, hotels still equipped with
SpectraVision technology generally offer fewer choices if served by
SpectraVision on-demand systems, or only offer hotel guests eight movies per day
at scheduled times, or some combination thereof. SpectraVision originated a
tape-based system which typically offered a hotel guest eight movies per day at
predetermined times. In 1991, SpectraVision introduced the Guest Choice system
to provide hotel guests with on-demand viewing of videotapes based upon
proprietary equipment and software. In 1994, SpectraVision introduced a digital
video on-demand service, called Digital Guest Choice. The Digital Guest Choice
system provides on-demand viewing of digitally stored movies that reside on high
capacity disk arrays. The Company has converted the Digital Guest Choice systems
in the United States to its OCV on-demand systems although some units of Digital
Guest Choice equipment continue to be used in Asia.

SERVICES

         Pay-Per-View Movie Services

         Through its OCV and SpectraVision subsidiaries, OCC provides on-demand
and, in some cases, scheduled in-room television viewing of major motion
pictures and independent non-rated motion pictures for mature audiences, for
which a hotel guest pays on a per-view basis. Depending on the type of system
installed and the size of the hotel, guests can choose up to 50 different movies
with an on-demand system, or from eight to twelve movies with a scheduled
system.

         OCC obtains the non-exclusive rights to show recently released motion
pictures from major motion picture studios generally pursuant to a master
agreement with each studio. The license period and fee for each motion picture
are negotiated individually with each studio, which typically receives a
percentage of that picture's gross revenues generated by the pay-per-view
system. Typically, OCC obtains rights to exhibit major motion pictures during
the "Hotel/Motel Pay-Per-View Window," which is the time period after initial
theatrical release and before release for home video distribution or cable
television exhibition. OCC attempts to license pictures as close as possible to
motion pictures theatrical release date to benefit from the studios' advertising
and promotional efforts. OCC also obtains independent motion pictures, most of
which are non-rated and are intended for mature audiences, for a one-time flat
fee that is nominal in relation to the licensing fees paid for major motion
pictures.

         OCC provides service under contracts with hotels that generally provide
for a term of five to seven years. Under these contracts, OCC installs its
system into the hotel at OCC's cost, and OCC retains ownership of all its
equipment used in providing the service. Traditionally, the hotel provides its
own televisions, however, based on certain economic evaluations, OCC may provide
televisions to hotels in exchange for other contractual consideration. OCC's
contracts with hotels generally provide that OCC will be the exclusive provider
of in-room, pay-per-view video entertainment services to the hotel and generally
permit OCC to set the movie price. The hotels collect movie-viewing charges from
their guests and retain a commission equal to a percentage of the total
pay-per-view revenue that varies depending upon the size and profitability of
the system. Some contracts also require OCC to upgrade systems to the extent
that new technologies and features are introduced during the term of the
contract. At the scheduled expiration of a contract, OCC generally seeks to
extend the agreement on terms that are based upon the competitive situation in
the market.

         The revenue generated from OCC's pay-per-view service is dependent on
the occupancy rate at the property, the "buy rate" or percentage of occupied
rooms that buy movies or other services at the property, and the price of the
movie or service. Occupancy rates vary based on the property's location, its
competitive position within the marketplace, and, over time, based on seasonal
factors and general economic conditions. Buy rates generally reflect the hotel's
guest mix profile, the popularity of the motion pictures or services available
at the hotel, and the guests' other entertainment alternatives. Buy rates also
vary over time with general economic conditions and the business of OCC is
closely related to the performance of the business and luxury hotel segments of
the lodging industry. Movie price levels are established by OCC and are set
based on the guest mix profile at each property and overall economic conditions.
Currently, OCC's movie prices typically range from $8.95 to $9.95 for a purchase
by the hotel guest. The current price for OCC's pay-per-day service is $15.99
per day.



                                       5
<PAGE>   8

         Free-To-Guest Services

         OCC also markets free-to-guest services pursuant to which a hotel may
elect to receive one or more programming channels, such as HBO, Showtime, CNN,
ESPN, TBS, Disney Channel, Discovery Channel, and other cable networks. OCC
provides hotels free-to-guest services through a variety of arrangements,
including having the hotel pay the company a fixed monthly fee per room for each
programming channel selected or having the price of such programming included in
the Company's other offerings.

         Internet Services

         Beginning in 1997, OCC developed and selectively deployed for market
testing several new services to complement its existing offerings and strengthen
its growth strategy by creating new potential revenue sources. In July 1999, OCC
commercially released its OCX platform which enables guest use of the @ Hotel
Internet services over the TV. At December 31, 1999, OCC had installed the
Internet service in approximately 30,000 rooms. As an adjunct to the OCX
multimedia platform, OCC has also installed high-speed laptop connectivity for
hotel rooms and high-bandwidth services for conference spaces. OCC's goal is to
provide a variety of services that leverage the connectivity infrastructure that
it has or will establish in its client hotels.

         Game Services

         At December 31, 1999, On Command offered games in approximately 186,000
rooms. Both the OCV and OCX platforms support Sony PlayStation games. Kids,
families, and business travelers can entertain themselves with the most popular
video game titles available on the market. There are between 8-16 titles
available in most game rooms at a guest price of $5.99/hour.

         Other Hotel and Guest Services

         In addition to entertainment services, OCC provides other guest
services to the lodging industry. These services use two-way interactive
communications capability of the Company's equipment and room availability
monitoring. Among the guest services provided are video check-out, room service
ordering and guest satisfaction survey. Guest services are also currently
available in Spanish, French, and certain other foreign languages. In most
cases, the guest services are made a part of the contract for pay-per-view
services which typically runs for a term of five to seven years. OCC is also
testing shorter and more targeted non-movie programming on a lower cost
pay-per-view basis. The initial categories of content include business,
lifestyle and kids-only. In addition, OCC is in the process of long-term testing
of a new sports category of programming that provides hotel guests with a
selection of out-of-market sports not televised nationally, or subject to local
blackout restrictions.


SALES AND MARKETING

         Substantially all of OCV's growth to date has been derived from
obtaining contracts with hotels in the United States not under contract with
existing vendors or served by other vendors as the contracts covering such
hotels expired. OCC believes that, as a result of the Acquisition, opportunities
for additional growth in the United States are more limited than in the past.
Therefore, the Company has broadened its strategy for obtaining new hotel
customers to both smaller hotels and international markets. The Company believes
that both smaller hotels in the United States and hotels in many international
markets are underserved by the in-room entertainment industry.

         OCC's marketing efforts have historically been primarily focused on
business and leisure hotels with approximately 150 rooms or more. Management
believes that such hotels consistently generate the highest revenues per room in
the lodging industry and have the highest potential for new service revenue
growth. The Company also targets smaller deluxe, luxury and upscale hotels and
select mid-priced hotels serving business travelers that meet its profitability
criteria. As mentioned above, the Company has recently begun to employ
additional engineering, development and marketing efforts to target hotels under
150 rooms. On Command intends to continue targeting established hotel chains,
certain business and leisure hotel management companies, and selected
independent hotels.

         OCC markets its services to hotel guests by means of on-screen
advertising that highlights the services and motion picture selections of the
month as well as an in-room entertainment guide distributed to more than 817,000
hotel rooms each month.



                                       6

<PAGE>   9

INSTALLATION AND SERVICE OPERATIONS

         At December 31, 1999, OCC's installation and service organization
consisted of approximately 368 installation and service personnel in the United
States and Canada. OCC installation and service personnel are responsible for
all of the hotel rooms served by OCC in the United States and Canada, including
system maintenance and distribution of videocassettes. OCC's installation
personnel also prepare site surveys to determine the type of equipment to be
installed at each hotel, install systems, train the hotel staff to operate the
systems, and perform quality control tests. OCC also uses local installation
subcontractors supervised by full-time OCC personnel to install its systems.

         OCC maintains a toll-free technical support hot line that is monitored
24 hours a day by trained support technicians. The on-line diagnostic capability
of the OCX, OCV and SpectraVision systems enables the technician to identify and
resolve a majority of the reported system malfunctions from OCC's service
control center without visiting the hotel property. Should a service visit be
required, the modular design of the OCX, OCV and SpectraVision systems generally
permits installation and service personnel to replace defective components at
the hotel site.

HOTEL CONTRACTS

         The Company typically negotiates and enters into a separate contract
with each hotel for the services provided. However, for some of the Company's
large hotel management customers, the Company negotiates and enters into a
single master contract for the provision of services for all of the
corporate-managed hotels of such management company. In the case of franchised
or independently owned hotels, the contracts are generally negotiated separately
with each hotel. Existing contracts generally have a term of five or seven years
from the date the system becomes operational. At expiration, OCC typically seeks
to extend the term of the contract on terms competitive in the market. At
December 31, 1999, approximately 10% of the pay-per-view hotels served by OCC
have contracts that have expired and are on a month-to-month basis.
Approximately 10% of the pay-per-view hotels served by OCC have contracts
expiring in 2000. However, some of the SpectraVision hotel contracts, which the
Company classified internally as expired, have two-year automatic renewal
provisions under certain conditions and may continue to be in effect. As a
result, the expiration rates set forth above may overstate the actual number of
hotel contracts that are expiring.

TECHNOLOGY - RESEARCH AND DEVELOPMENT

         On Command Development Corporation, a wholly-owned subsidiary of OCC,
develops technologies to be used by OCV and SpectraVision to support and enhance
OCV's and SpectraVision's operations and to develop new applications to be
marketed by OCV and SpectraVision.

         OCC's product development philosophy is to design high quality
entertainment and information systems which incorporate features allowing the
Company to add system enhancements as they become commercially available and
economically viable. The high speed, two-way digital communications capability
of the OCX system enables the Company to provide advanced interactive features
such as video games and Internet in addition to basic guest services such as
video checkout, room service ordering, and guest survey.

         The Company's systems incorporate proprietary communications system
designs with commercially manufactured components and hardware such as video
cassette players, televisions, amplifiers, and computers. Because the Company's
systems generally use industry standard interfaces, OCC can integrate new
technologies as they become economically viable.

SUPPLIERS

         OCC contracts directly with various electronics firms for the
manufacture and assembly of its systems hardware, the design of which is
controlled by On Command Development Corporation. Historically, these suppliers
have been dependable and able to meet delivery schedules on time. The Company
believes that, in the event of a termination of any of its sources, alternate
suppliers could be located without incurring significant costs or delays.
However, certain electronic component parts used with the Company's products are
available from a limited number of suppliers and can be subject to temporary
shortages because of general economic conditions and the demand and supply for
such component parts. In addition, some of the SpectraVision systems currently
installed in hotels require a high level of service and repair. As these systems
become older, servicing replacement parts will become more difficult. If the
Company were to experience a shortage of any given electronic part, the



                                       7
<PAGE>   10

Company believes that alternative parts could be obtained or system design
changes could be made. In such event, the Company could experience a temporary
reduction in the rate of new installations and/or an increase in the cost of
such installations.

         The head-end electronics are assembled at the Company's facilities for
testing prior to shipping. Following assembly and testing of equipment designed
specifically for a particular hotel, the system is shipped to each location,
where OCC-employed and trained technicians install the system, typically
assisted by independent contractors.

         For those hotels for which the Company supplies televisions, On Command
purchases such televisions from a small number of television vendors. In the
event of a significant price increase for televisions by such vendors, the
Company could face additional, unexpected capital expenditure costs.

         OCC, through its OCV and SpectraVision subsidiaries, maintains direct
contractual relations with various suppliers of pay-per-view and free-to-guest
programming, including the motion picture studios and/or their domestic and
international distributors and programming networks. OCC believes its
relationships with all suppliers are good.

         In addition, the Company receives satellite signal transport services
for much of its domestic cable television programming from DirecTV, Inc. The
Company believes that its relationship with DirecTV, Inc. is good. However, an
interruption in DirecTV's satellite service could interfere with the Company's
ability to serve many of its hotel customers' free-to-guest cable programming
requirements.

COMPETITION

         In the U.S., taking into account the various providers of cable
television services, there are numerous providers of in-room video entertainment
to the lodging industry, at least three of which provide on-demand pay-per-view,
free-to-guest programming, and guest services by means of the in-room
television. Internationally, there are more companies competing in the
pay-per-view lodging industry than in the United States.

         Pay-per-view, the most profitable component of the services offered,
competes for a guest's time and entertainment resources with broadcast
television, free-to-guest programming, and cable television services. In
addition, there are a number of competitors that are developing ways to use
their existing infrastructure to provide in-room entertainment and/or
information services to the lodging industry, including cable companies
(including wireless cable), telecommunications companies, Internet and
high-speed connectivity companies, and direct-to-home and direct broadcast
satellite companies. Some of these competitors have been providing free-to-guest
services to hotels and are beginning to provide video-on-demand, Internet and
high speed connectivity to hotels.

         OCC is the leading provider (by number of hotel rooms served) of
in-room video entertainment services to the United States lodging industry. OCC
is also the leading provider (by number of hotel rooms served) of in-room
on-demand video entertainment services to the lodging industry on a worldwide
basis. Domestically, OCC competes on a national scale primarily with LodgeNet
Entertainment Corporation ("LodgeNet") and on a domestic and international
regional basis with certain other smaller entities. Based on publicly available
information, OCC estimates that, at December 31, 1999, LodgeNet currently serves
approximately 4,900 lodging properties, of which 661,700 rooms are equipped with
on-demand service. At December 31, 1999, OCC served approximately 956,000 rooms,
of which approximately 884,000 are on-demand rooms.

         Competition with respect to in-room video entertainment and information
contracts centers on a variety of factors, depending upon the circumstances
important to a particular hotel. Among the more important factors are (i) the
features and benefits of the entertainment and information systems, (ii) the
quality of the vendor's technical support and maintenance services, and (iii)
the financial terms and conditions of the proposed contract. With respect to
hotel properties already receiving in-room entertainment services, the current
provider may have certain informational and installation cost advantages
compared to outside competitors.

         Furthermore, while the Company is addressing the likelihood of
increased demand for Internet services in the hotel guestroom, OCC may face
additional competition in this area from traditional as well as new competitors.



                                       8
<PAGE>   11

Some of these competitors may be better funded from both public capital and/or
private venture capital markets and have access to additional capital resources
which OCC does not have.

         OCC believes its competitive advantages include (i) technological
leadership represented by its superior on-demand capability and range of
services offered, (ii) system reliability and high quality service, and (iii)
its presence and ability to offer its service in most markets around the world.
OCC believes that its growth (including OCV's growth prior to the Acquisition)
reflects the strong competitive position of its products and services.

         OCC also competes with local cable television operators by customizing
packages of programming to provide only those channels desired by the hotel
subscriber, which typically reduces the overall cost of the service provided.

         On Command Corporation anticipates substantial competition in obtaining
new contracts with major hotel chains. The Company believes that hotels view the
provision of in-room on-demand entertainment and information both as a revenue
source and as a source of competitive advantage in that sophisticated hotel
guests are increasingly demanding a greater range of quality entertainment and
information alternatives. At the same time, OCC believes that certain major
hotel chains have awarded contracts based primarily on the level and nature of
financial and other incentives offered by the service provider. While the
Company believes its competitive advantages will enable OCC to continue to offer
financial arrangements that are attractive to hotels, its competitors may
attempt to maintain or gain market share at the expense of profitability. OCC
may not always be willing to match incentives provided by its competitors.

         The communications industry is subject to rapid technological change.
New technological developments could adversely effect OCC's operations unless
the Company is able to provide equivalent services at competitive prices.

REGULATION

         The Federal Communications Commission (the "FCC") has broad
jurisdiction over electronic communications. The FCC does not directly regulate
the Company's pay-per-view or free-to-guest services.

         On February 1, 1996, Congress passed The Telecommunications Act of 1996
(the "Telecommunications Act"), which was signed into law on February 8, 1996.
The Telecommunications Act has and will continue to alter federal, state, and
local laws and regulations for telecommunications providers and services, and
may affect On Command Corporation. There are numerous rulemakings to be
undertaken by the FCC that will interpret and implement the Telecommunications
Act. It is not possible at this time to predict the outcome of such rulemakings.

PATENTS, TRADEMARKS AND COPYRIGHTS

         The Company owns a number of patents and patent licenses covering
various aspects of its pay-per-view and interactive systems. Although OCC
maintains these patents, On Command Corporation believes that the design,
innovation, and quality of its products and their relations with its customers
are at least as important, if not more so, to the maintenance and growth of the
Company. The Company also owns various trade names, trademarks, service marks,
and logos used in its businesses, which OCC intends to actively protect. In
connection with the LodgeNet litigation, in 1998 the Company and LodgeNet have
licensed each other's patented technology for five years.

INTERNATIONAL MARKETS

         In addition to its operations in the fifty United States, OCC offers
its services in Canada, Latin America, Puerto Rico, the U.S. Virgin Islands,
Hong Kong, Singapore, Thailand, Australia, the Bahamas, Europe, and elsewhere in
the Asia-Pacific region.

         The Company historically experienced higher international revenues and
operating cash flow per room than in the United States because of higher prices,
higher buy rates, and the general lack of programming alternatives. However, the
Company generally also incurs greater capital expenditure and operating costs
outside



                                       9
<PAGE>   12

the United States. Additionally, the effect of the Asian economic crisis
contributed to a decline in revenues from that region in 1998 and 1999. At
December 31, 1999, the Company serviced 423 hotels with a total of approximately
126,000 rooms located outside the United States.

         The competition to provide pay-per-view services to hotels is even more
dispersed in international markets, than in the United States. Expansion of
OCC's operations into foreign markets involves certain risks that are not
associated with further expansion in the United States including availability of
programming, government regulation, currency fluctuations, language barriers,
differences in signal transmission formats, local economic and political
conditions, and restriction on foreign ownership and investment. Consequently,
these risks may hinder OCC's efforts to grow its base of hotel rooms in foreign
markets.


LICENSEES AND OTHER SYSTEM SALES

         OCC sells systems to certain other providers of in-room entertainment
including Hospitality Network, Inc., which is licensed to use OCV's system to
provide on-demand, in-room entertainment and information services to certain
gaming-based, hotel properties and Allin Interactive, who is licensed to install
OCX equipment on cruise ships. Through September 1998, MagiNet Corporation
(formerly Pacific Pay Video Limited) ("MagiNet"), was licensed to use OCV's
system to provide on-demand in-room entertainment in the Asia Pacific region. In
September 1998, OCV filed suit against MagiNet for violations of the license
agreement between MagiNet and OCV, and concurrently terminated MagiNet's license
to use the OCV system. MagiNet is contesting the termination and the lawsuit and
has asserted counterclaims against OCC and OCV.

MARKETS AND CUSTOMERS

         On Command currently provides entertainment and information services to
hotels which are associated with major hotels chains, management companies and
independent hotels including Adam's Mark, Fairmont, Four Seasons, Hilton
(including Hilton Garden Inn), Doubletree, Embassy Suites, Hampton Inn, Holiday
Inn, Hyatt, Loews, Marriott (including Courtyard By Marriott, Fairfield Inn,
Renaissance, Residence Inn, & Ritz-Carlton), Wyndham International, Inc.,
Radisson, Sheraton and Starwood Hotels & Resorts (W & Westin). OCC serves major
chains and selected other hotels throughout the United States, Canada, Latin
America, the United Kingdom, Spain, France, Australia, and the Asia-Pacific
region.

         The following table sets forth certain information regarding the number
of hotels and rooms served by OCC as of December 31, 1999 and 1998,
respectively:

<TABLE>
<CAPTION>
                                                          As of December 31
                                                        1999             1998
                                                        ----             ----

<S>                                             <C>              <C>
Hotels Served:
   U.S.                                                2,871            2,799
   Non-U.S.                                              423              421


Rooms Served:
   U.S.                                              830,000          805,000
   Non-U.S.                                          126,000          124,000


Total Net Room Revenue per Equipped
Room (NRER)
                                                $21.19/month     $20.76/month
</TABLE>




                                       10
<PAGE>   13

EMPLOYEES

         As of December 31, 1999, OCC employed a total of 914 persons, including
76 in engineering, 368 in domestic installation and service, 152 in domestic
manufacturing and operations, 29 in sales, 164 in management, administration and
finance, and 125 in international service and operations. During fiscal year
1999 and 1998, the majority of research and development efforts have been
performed by the Company's employees rather than outside consultants. None of
the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes employee relations are good.


ITEM 2. PROPERTIES

         On Command Corporation currently leases its headquarters located in San
Jose, California. The headquarters contain approximately 131,000 square feet of
office, light manufacturing, and storage space. In connection with the
acquisition of SpectraVision, On Command Corporation acquired the SpectraVision
headquarters building in Richardson, Texas which contained approximately 84,000
square feet of office, light manufacturing, and storage space. OCC sold the
Richardson facility in the fourth quarter of 1997 and leased back the facility
through March 31, 1998. The Company has transferred all necessary operations to
the San Jose headquarters. In connection with the Acquisition, OCC also acquired
other leased space that housed SpectraVision's customer support operations
throughout the United States, Canada, Latin America, Puerto Rico, Hong Kong, and
Australia. The Company's properties are suitable and adequate for the Company's
business operations.


ITEM 3.  LEGAL PROCEEDINGS

         On September 11, 1998, OCC reached an agreement with LodgeNet
Entertainment Corporation ("LodgeNet") to settle all pending litigation between
the companies. As a result, the companies have dismissed all pending litigation
between the parties in United States Federal District Courts in California and
South Dakota, with no admission of liability by either party. The terms of the
confidential settlement include a cross-license of each company's patented
technologies at issue to the other party and a covenant not to engage in patent
litigation against the other party for a period of five years. Each company is
responsible for its own legal costs and expenses, and in connection with the
multiple cross-licenses, OCC expects to receive royalty payments, net of legal
fees and expenses, in an aggregate amount of approximately $10.8 million. OCC
received the first payment of approximately $2.9 million (net of expenses) in
September 1998, the second payment of approximately $3.9 million (net of
expenses) in July 1999 and expects to receive a payment of approximately
$3.9 million (net of expenses) in July 2000. OCC will recognize the additional
royalty revenue as the cash payments are received.

         In September 1998, OCV filed suit against MagiNet, alleging a breach by
MagiNet of a license agreement between OCV and MagiNet, and terminating the
license agreement. OCV has also demanded the payment of license fees from
MagiNet which OCC believes were due and payable under the License Agreement and
have not been paid by MagiNet. MagiNet has counter-claimed against OCV, alleging
that OCV breached the license agreement, and alleging various torts by OCV in
its relationship with MagiNet. While the outcome of MagiNet's counterclaim
cannot be predicted with certainty, management of the Company intends to defend
itself vigorously and expects that any liability, to the extent not provided for
by insurance or otherwise, will not have a material adverse effect on the
financial condition of the Company.

         On Command Corporation, or its operating entities, is a defendant and
may be a potential defendant, in lawsuits and claims arising in the ordinary
course of business. While the outcomes of such claims, lawsuits, or other
proceedings cannot be predicted with certainty, management expects that such
liability, to the extent not provided for by insurance or otherwise, will not
have a material adverse effect on the financial condition of the Company.




                                       11
<PAGE>   14

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

         No matters were submitted to a vote of security holders during the
fourth quarter of 1999.



                                       12
<PAGE>   15
PART II

ITEM 5.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
         RELATED STOCKHOLDER MATTERS

         On Command Corporation's Common Stock and Series A and B Warrants are
traded on the NASDAQ National Market under the symbols ONCO, ONCOW, and ONCOZ
respectively. Series C Warrants were given to an advisor to the Acquisition
transaction but were not registered for public trading. The high and low closing
prices for On Command Corporation's securities during the periods January 1,
1999 through December 31, 1999 and January 1, 1998 through December 31, 1998 are
as follows:


<TABLE>
<CAPTION>
                                                Price Range
                                                -----------
         Common Stock                       High           Low
         ------------                       ----           ---
<S>                                         <C>            <C>
         1999:
         First Quarter                      $  10.3750     $   8.7500
         Second Quarter                     $  17.7500     $  13.1250
         Third Quarter                      $  19.1900     $  17.2800
         Fourth Quarter                     $  19.0000     $  14.9400

         1998:
         First Quarter                      $  10.3750     $   8.8750
         Second Quarter                     $  17.7500     $   9.0625
         Third Quarter                      $  19.1875     $  18.0000
         Fourth Quarter                     $  19.0000     $  14.9375
</TABLE>



<TABLE>
<CAPTION>
                                                Price Range
                                                -----------
         Series A Warrants                  High           Low
         -----------------                  ----           ---
<S>                                         <C>            <C>
         1999:
         First Quarter                      $   4.2500     $   3.7500
         Second Quarter                     $   6.0000     $   3.7500
         Third Quarter                      $   9.3750     $   5.7500
         Fourth Quarter                     $   7.8750     $   5.2500

         1998:
         First Quarter                      $   7.1250     $   6.7500
         Second Quarter                     $   6.0000     $   5.5000
         Third Quarter                      $   5.8750     $   5.2500
         Fourth Quarter                     $   5.7500     $   3.5000
</TABLE>


<TABLE>
<CAPTION>
                                                Price Range
                                                -----------
         Series B Warrants                  High           Low
         -----------------                  ----           ---
<S>                                         <C>            <C>
         1999:
         First Quarter                      $   2.7500     $   2.7500
         Second Quarter                     $   5.3750     $   2.5000
         Third Quarter                      $   6.5000     $   5.0000
         Fourth Quarter                     $   7.7500     $   3.8750

         1998:
         First Quarter                      $   5.4375     $   5.1250
         Second Quarter                     $   5.1875     $   5.0000
         Third Quarter                      $   4.1250     $   2.9375
         Fourth Quarter                     $   3.0000     $   2.0000
</TABLE>




                                       13
<PAGE>   16
         As of March 27, 2000 there were 30,436,423 shares of Common Stock,
1,424,875 Series A Warrants, 2,625,000 Series B Warrants, and 3,450,000 Series C
Warrants issued and outstanding. As of March 27, 2000 there were 340 Common
Stockholders, 18 Series A Warrant holders, 270 Series B Warrant holders, and 8
Series C Warrant holders of record. The Company's Transfer Agent and Registrar
is the Bank of New York located at 101 Barclay Street, New York, New York.

         The Company currently has a $200 million credit facility. This facility
has certain restrictive covenants including a restriction on the Company's
ability to pay dividends or make other distributions.

ITEM 6.  SELECTED FINANCIAL DATA

          The financial data set forth below, except hotel and room data, was
derived from the audited consolidated financial statements of the Company and
should be read in connection with the Consolidated Financial Statements and
related Notes included elsewhere herein. References herein are to the financial
statements and footnotes included in Part II, Item 8 "Financial Statements and
Supplementary Data".

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                                     ------------------------------------------------------------------
                                                        1999          1998          1997         1996(1)        1995
                                                     ----------    ----------    ----------    ----------    ----------
                                                                (Dollars in thousands, except per share data)
<S>                                                  <C>           <C>           <C>           <C>           <C>
INCOME STATEMENT DATA:
  Total revenues .................................   $  252,948    $  238,820    $  222,103    $  147,469    $  102,059
  Total direct costs of revenues .................      113,218       103,902       103,343        71,019        48,417
  Total operating expenses .......................      158,636       151,068       142,166        87,770        45,091
  Income (loss) from operations ..................      (18,906)      (16,150)      (23,406)      (11,320)        8,551
  Net income (loss) (2) ..........................      (29,394)      (25,966)      (33,314)      (14,739)        4,902
  Net income (loss) applicable to
       nonredeemable common stock ................      (29,394)      (25,966)      (33,314)      (15,222)        4,261
  Basic net income (loss) per share ..............        (0.97)        (0.86)        (1.11)        (0.67)         0.24
  Diluted net income (loss) per share ............        (0.97)        (0.86)        (1.11)        (0.67)         0.22
  Shares used in basic per share
      calculations (in thousands) ................       30,222        30,150        30,081        22,625        17,554
  Shares used in diluted per share
      calculations (in thousands) ................       30,222        30,150        30,081        22,625        19,406
CASH FLOW DATA:
   Net  cash provided by operating activities ....   $   70,893    $   53,913    $   53,481    $   42,784    $   41,374
   Net cash used in investing activities .........      (85,478)      (83,208)      (88,044)      (80,505)      (63,693)
   Net cash provided by financing activities .....       16,337        30,379        35,268        42,521        14,952
OTHER DATA:
  EBITDA (3) .....................................   $   75,912    $   72,049    $   55,578    $   41,960    $   37,288
  Cash dividends per share .......................           --            --            --    $     0.49            --
  Rooms served at end of period (4) ..............      956,000       929,000       893,000       917,000       361,000
      On Demand rooms ............................      884,000       829,000       765,000       709,000       361,000
      Scheduled rooms ............................       72,000       100,000       128,000       208,000            --
  Hotels served at end of period .................        3,366         3,220         3,060         3,144         1,221
  Capital expenditures (5) .......................   $   85,478    $   83,208    $   92,307    $   70,545    $   63,693
BALANCE SHEET DATA (AT END OF PERIOD):
  Total assets ...................................   $  402,917    $  402,968    $  401,388    $  396,538    $  211,005
  Total debt .....................................      180,000       163,000       133,000        98,000        15,942
  Redeemable common stock ........................           --            --            --            --        11,684
  Total stockholders' equity .....................      164,095       190,005       217,167       250,917       169,804
</TABLE>

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

(1)      1996 data reflects the acquisition of SpectraVision which was recorded
         using the purchase method of accounting as defined by generally
         accepted accounting principles. As such, all revenues, expenses and
         capital expenditures of SpectraVision for the period October 8 through
         December 31, 1996, are included herein. Also included are the room and
         hotel counts and the assets and liabilities of SpectraVision at
         December 31, 1996.



                                       14
<PAGE>   17

(2)      1996 data also includes $8.7 million of charges which management
         believes are one-time in nature which consist of asset write-downs,
         reserves, and expense accruals related to the Acquisition and
         integration of SpectraVision; re-alignment of the Company's operating
         practices; and the establishment of On Command Corporation as a new
         public company. Of the non-recurring charges, $6.7 million affected
         EBITDA (see note 3). Excluding non-recurring charges, the net loss
         applicable to non-redeemable common stock for 1996 would have been $6.5
         million, net loss per common and equivalent share would have been
         $0.29, and EBITDA would have been $48.7 million.

(3)      EBITDA represents earnings before interest, income taxes, depreciation,
         amortization, stock based compensation and other non-operating items
         such as gain/loss on disposal of assets and exchange rate gain/loss.
         The most significant difference between EBITDA and cash provided from
         operations is changes in working capital. EBITDA is presented because
         it is a widely accepted financial indicator used by certain investors
         and analysts to analyze and compare companies on the basis of operating
         performance. In addition, management believes EBITDA provides an
         important additional perspective on the Company's operating results and
         the Company's ability to service its long-term debt and fund the
         Company's continuing growth. EBITDA is not intended to represent cash
         flows for the period, or to depict funds available for dividends,
         reinvestment or other discretionary uses. EBITDA has not been presented
         as an alternative to operating income or as an indicator of operating
         performance and should not be considered in isolation or as a
         substitute for measures of performance prepared in accordance with
         generally accepted accounting principles, which are presented in the
         financial statements in Item 8 and discussed in Item 7 under Liquidity
         and Capital Resources. See the Consolidated Financial Statements and
         the Notes thereto appearing elsewhere in this document. The Company's
         method for calculating EBITDA may be different than other companies.

(4)      The decrease in rooms in 1997 is primarily due to the sale and
         termination of certain U.S. hotel contracts, which hotels received
         satellite only broadcasts of pay-per-view movies.

(5)      Capital expenditures primarily include the installation of systems in
         new hotels, the conversion of SpectraVision systems and upgrades made
         to existing equipment in hotels, and internal fixed asset purchases.


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

         The following discussion and analysis addresses results of operations
for the calendar years ended December 31, 1999, 1998 and 1997.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

         Total revenues for the year ended December 31, 1999 increased $14.2
million, or 5.9%, to $253.0 million, as compared to $238.8 million in 1998. Room
revenues increased $12.3 million, or 5.4%, in 1999 to $239.5 million, as
compared to $227.2 million in 1998. The increase was primarily attributable to
new hotel installations, continued conversions of SpectraVision equipped
properties, lower movie denial rates, higher average movie price, higher game
and internet revenue, and, on average, more cable programming channels in each
room during 1999 than in 1998. Video system sales and other revenues increased
$1.9 million, or 16.4%, to $13.5 million in 1999, as compared to $11.6 million
in 1998. The increase was primarily due to increased ordering of video systems
by a major licensee, sales of OCX systems to a provider of entertainment systems
to the cruise ship industry, and an increase in the net royalty payment received
from LodgeNet. (See Note 13 to Notes to Consolidated Financial Statements).

         Total direct costs of revenues for the year ended December 31, 1999
increased $9.3 million, or 9.0%, to $113.2 million, as compared to $103.9
million in 1998. Direct costs associated with room revenue in 1999 increased
$7.8 million, or 7.9%, to $106.8 million, as compared to $99.0 million in 1998,
and as a percentage of room revenue increased to 44.6% for the year ended
December 31, 1999 from 43.6% for the year ended December 31, 1998. The increase
in the direct cost as a percentage of revenue is primarily due to an increase in
movie royalties and hotel commissions. Direct costs from video system sales and
other revenues increased $1.5 million,



                                       15
<PAGE>   18

or 30.6%, to $6.4 million in 1999, as compared to $4.9 million in 1998,
primarily due to the increase in video system sales. Direct costs associated
with video systems sales and other revenue as a percentage of video system sales
and other revenues increased to 47.7% for the year ended December 31, 1999 from
42.1% for the year ended December 31, 1998. The increase is primarily due to
lower margins on projects where the Company will contract with the hotel to
provide wiring services prior to the movie system installation and lower margins
on system sales.

         Operations expenses, which consist primarily of labor and material
expense required to maintain the existing equipment in hotels, for the year
ended December 31, 1999 decreased $1.4 million, or 4.5%, to $29.9 million, as
compared to $31.3 million for the year ended December 31, 1998, and as a
percentage of room revenue decreased to 12.5% from 13.8% for the same period of
1998. The decrease is primarily due to the shut-down of the Company's Richardson
facility in the first quarter of 1998 and lower costs for repair material,
freight, and TV repair during 1999.

         Research and development expenses for the year ended December 31, 1999
increased $1.0 million, or 13.3%, to $8.5 million, as compared to $7.5 million
for the year ended December 31, 1998. The increase is primarily due to the
continued development of the OCX system, the Company's interactive multimedia
technology and other new product offerings such as high-speed laptop
connectivity.

         Selling, general and administrative expenses for the year ended
December 31, 1999 increased $1.4 million, or 5.8%, to $25.4 million, as compared
to $24.0 million for the year ended December 31, 1998. The increase is
principally due to increased expenses in the areas of Account Management and
Product Management as the Company continues to build its infrastructure in
support of new interactive services (e.g. @Hotel Internet service) offered with
OCX, the Company's new interactive platform.

         Depreciation, amortization, and stock based compensation expenses for
the year ended December 31, 1999 increased $6.6 million, or 7.5%, to $94.8
million, as compared to $88.2 million for year ended December 31, 1998, and as a
percentage of total revenue increased to 37.5% for 1999 from 36.9% during 1998.
The increase is mainly due to depreciation on capital investments associated
with the growing room base and converting hotels served by SpectraVision
equipment, accelerated depreciation on certain end-of-life assets and a $1.1
million non-cash expense associated with accounting for cashless stock options
in an executive compensation agreement, reflecting the increased share price,
partially offset by the termination of amortization on SpectraVision equipment
in October 1999.

         Interest Income for the year ended December 31, 1999 remained
relatively flat as compared to 1998.

         Interest Expense/other expense for the year ended December 31, 1999
increased $0.4 million to $10.8 million, as compared to $10.4 million for the
year ended December 31, 1998. This increase is attributable to additional
borrowings incurred by On Command during 1999.

         Provision for income taxes for the year ended December 31, 1999
represents tax on income in certain international and domestic jurisdictions.

         Net loss increased to $29.4 million for the year ended December 31,
1999 from $26.0 million for year ended December 31, 1998 due to the factors
described above.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

         Total revenues increased $16.7 million, or 7.5%, to $238.8 million in
1998, as compared to total net revenues of $222.1 million in 1997. Room revenues
increased $16.7 million, or 7.9%, to $227.2 million in 1998 from $210.5 million
in 1997. The increase was primarily due to stronger buy rates for movies during
1998, higher total rooms during the year, and a higher percentage of total rooms
being served by higher revenue producing on-



                                       16
<PAGE>   19


demand equipment in 1998 as compared to 1997. Revenues during 1997 were also
affected by a satellite outage in January affecting certain SpectraVision
properties and the termination and sale of approximately 40,000 rooms during the
second half of the year that were receiving satellite only pay-per-view movies.
Video system sales and other revenues remained relatively flat during 1998 as
compared to 1997. This was due to a lower number of video system sales to the
Company's primary licensees offset by the receipt of a $2.9 million royalty
payment (net of legal fees) from LodgeNet made during the third quarter of 1998
(see Note 14 of Notes to Consolidated Financial Statements).

         Total direct cost of revenues increased by $0.6 million, or 0.5%, to
$103.9 million in 1998 as compared to $103.3 million in 1997. Direct costs
associated with room revenue increased $2.4 million, or 2.5%, to $99.0 million
in 1998 from $96.6 million in 1997, however, as a percentage of room revenue
decreased to 43.6% in 1998 as compared to 45.9% in 1997. The dollar amount
increase was due to higher room revenues in 1998 as compared to 1997, while the
decrease in the percentage was due to lower feature movies royalties as a
percentage of total room revenues, and lower satellite/lease cost during 1998.
Direct costs from video system sales and other revenues decreased $1.8 million,
or 27.1%, to $4.9 million, as compared to $6.7 million in 1997, as a result of a
decline in sales of video systems. Direct costs as a percentage of video system
sales and other revenues decreased to 42.1% in 1998 from 57.9% in 1997. The
improved gross margin was largely due to the receipt of the LodgeNet royalty
payment during 1998.

         Operations expenses, which consist primarily of labor and material
expense required to maintain the existing equipment in hotels, decreased $2.7
million, or 7.9%, to $31.3 million in 1998, as compared to $34.0 million in
1997, and as a percentage of total revenue decreased to 13.1% in 1998 from 15.3%
in 1997. The decrease was primarily due to non-recurring satellite re-deployment
expenses incurred in the first quarter of 1997 and a higher percentage of rooms
using OCV technology which is less expensive to support than SpectraVision
technology.

         Research and development expenses in 1998 increased $0.6 million, or
9.0%, to $7.5 million as compared to $6.9 million in 1997. The higher expenses
are due to increasing efforts in the development of the Company's new products,
services and programming support.

         Selling, general, and administrative expenses increased $1.8 million,
or 7.9%, to $24.0 million in 1998, as compared to $22.3 million in 1997. The
increase is principally due to higher expenses in product management and
marketing in order to support new products and initiatives.

         Depreciation and amortization expense increased $9.2 million, or 11.7%,
to $88.2 million in 1998 from $79.0 million in 1997, and as a percentage of
total revenue increased to 36.9% in 1998 from 35.6% in 1997. These expenses are
primarily attributable to depreciable assets associated with video systems that
generate movie revenue. The dollar increase reflects capital investments
associated with growing the Company's room base and converting SpectraVision
rooms to OCC equipment.

         Interest/Other expense net increased to $10.4 million in 1998, as
compared to $9.3 million in 1997. This increase was due to the Company's greater
reliance on debt financing to continue its expansion of its installed customer
base, somewhat offset by a lower effective interest rate in 1998.

         Provision for income taxes for 1998 represents tax benefits on losses
in certain foreign jurisdictions.

         Net loss decreased to $26.0 million in 1998 from $33.3 million in 1997
due to the factors described above.



                                       17
<PAGE>   20

LIQUIDITY AND CAPITAL RESOURCES

         The primary sources of cash during 1999 were net cash from operations
of $70.9 million and net borrowings of $17.0 million from the Company's
revolving credit facility. Cash was expended primarily for capital expenditures
which totaled $85.5 million during 1999, primarily for the conversion of
SpectraVision systems, the installation of new hotels with the OCX and OCV
systems, the conversion of OCV systems to OCX, increased inventory, and internal
fixed asset purchases. At December 31, 1999, the Company's installed room base
was approximately 956,000, as compared to approximately 929,000 at the end of
1998. During 1999, the Company installed its OCX and OCV systems in
approximately 96,900 rooms, of which approximately 56,900 were new hotel
installations, approximately 29,500 were conversions of SpectraVision
properties, and 10,500 were conversions of OCV systems to OCX.

         The Company's principal cash requirements in 2000 are expected to
include the installation of the Company's OCX system in new hotels, the
continued conversion of SpectraVision properties to the more dependable OCX
system, and conversions of OCV rooms to OCX, and internal fixed asset purchases.
The Company anticipates these activities will require capital expenditures of
approximately $90.0 to $110.0 million in 2000.

         At December 31, 1999, the Company had $180.0 million outstanding under
its Credit Facility and had access to an additional $20.0 million of long-term
financing. The Company expects that the available cash, cash flows from
operations and funds available under the Credit Facility will be sufficient to
finance its expected investment in in-room video systems through the first
quarter and into the second quarter of 2000. The Company anticipates capital
expenditures in connection with the continued installation and conversion of
hotel rooms will be approximately $6 to $8 million per month through June 30,
2000. In order to meet its business plan beyond the second quarter of 2000, the
Company will need to raise additional financing and re-negotiate the financial
covenants in its current Credit Facility. The Company is currently pursuing its
alternatives in this area. If the Company is unable to raise additional
financing, the Company would need to reduce its capital spending well below the
levels stated above for the year 2000 which would inhibit its ability to grow -
see Business Risks - "DEPENDENCE ON ADDITIONAL CAPITAL FOR GROWTH."

LIMITATIONS ON ADDITIONAL DEBT FINANCING

         On Command Corporation and Ascent entered into a Corporate Agreement,
as amended (the "Corporate Agreement"), pursuant to which OCC has agreed with
Ascent not to incur any indebtedness without Ascent's prior consent, other than
indebtedness under the Credit Facility, and indebtedness incurred in the
ordinary course of operations which together shall not exceed $200 million in
the aggregate through June 30, 2000.

FOREIGN EXCHANGE

         The Company believes the risks of foreign exchange rate fluctuations on
its present operations are not material to the Company's overall financial
condition. However, should the Company's international operations continue to
grow, OCC will consider using foreign currency contracts, swap arrangements, or
other financial instruments designed to limit exposure to foreign exchange rate
fluctuations.

BUSINESS RISKS

CONTROL BY ASCENT

         Ascent owned approximately 56.6% of the outstanding OCC Common Stock at
December 31, 1999. Accordingly, Ascent has the ability to control the management
and policies of On Command Corporation and the outcome of matters submitted to
the stockholders for approval, including the election of directors. In addition,
the Company and Ascent have entered into a Corporate Agreement which requires
the Company to get Ascent's approval with respect to incurring indebtedness and
issuing equity.

         On February 22, 2000, Ascent entered into an Agreement and Plan of
Merger with Liberty Media Corporation ("Liberty") and Liberty AEG Acquisition,
Inc. ("Merger Sub"), an indirect wholly-owned subsidiary of Liberty. Pursuant to
the Merger Agreement, Merger Sub commenced a Tender Offer (the "Offer") offering



                                       18
<PAGE>   21

Ascent stockholders $15.25 in cash for each share of Ascent common stock.
Liberty commenced the Offer on February 29, 2000 and under its terms and subject
to its conditions, the Offer will expire on March 27, 2000, unless extended
pursuant to the Merger Agreement. The Offer is conditioned on the tender of at
least a majority of the Ascent shares as well as other customary conditions.
Under the Merger Agreement and subject to the terms thereof, if Merger Sub
purchases a majority of the outstanding Ascent common stock in the Offer, Merger
Sub will be merged with and into Ascent (the "Merger") and all shares not
purchased in the Offer (other than Shares held by Liberty, Merger Sub or Ascent,
or shares held by dissenting stockholders) will be converted into the right to
receive $15.25 per Share in cash. Liberty has indicated its intention to sell
Ascent's Sports related businesses.

DEPENDENCE ON ADDITIONAL CAPITAL FOR GROWTH

         The growth of On Command Corporation's business requires substantial
investment on a continuing basis to finance capital expenditures and related
expenses. Prior to the acquisition of SpectraVision, OCC had relied on capital
provided by Ascent and cash flow from operations to finance its growth. However,
Ascent is not obligated to provide any additional capital or debt financing to
On Command Corporation. On Command Corporation intends to use cash flow from
operations and additional borrowings (subject to the limitations discussed under
"Limitations on Additional Debt Financings") to support its growth. Whether or
when On Command Corporation can achieve cash flow levels sufficient to support
its anticipated growth cannot be accurately predicted. Unless such cash flow
levels are achieved, On Command Corporation may require additional borrowings or
the sale of debt or equity securities (subject to the limitations described
under "Limitations on Additional Debt Financings"), or some combination thereof,
to provide funding for growth or, alternatively, may have to reduce growth to a
level that can be supported by internally generated cash flow. On Command
Corporation can give no assurances with respect to the impact on the results of
operations and financial condition if On Command Corporation is required to
reduce growth to a level that can be supported by internally generated cash
flow.

THINLY TRADED STOCK IN THE PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE

         At December 31, 1999, approximately 43.4% of the outstanding On Command
Common Stock is traded on the Nasdaq National Market, the public market for the
OCC Common Stock and the On Command Corporation Warrants, and accordingly, the
Stock and Warrants may not be subject to an active public market which can be
sustained. Further, the stock markets may experience volatility that affects the
market prices of companies in ways unrelated to the operating performance of
such companies. These market fluctuations may adversely affect the market price
of the OCC Common Stock or Warrants.

HIGHLY COMPETITIVE IN-ROOM ENTERTAINMENT INDUSTRY

         The hotel in-room entertainment industry is highly competitive. Due to
the high level of penetration in the United States lodging industry already
achieved by participants in the in-room entertainment industry and the current
rate of construction and expansion of hotel properties in the United States,
most of the growth opportunities in the in-room entertainment industry currently
involve securing contracts to serve hotels that are already being served by a
competing vendor, expanding internationally and broadening the range of services
provided. These circumstances have led to increasing competition for contract
renewals, particularly at hotels operated by major hotel chains. There can be no
assurance that On Command Corporation will obtain new contracts with hotels
currently served by other vendors or that On Command Corporation will be able to
retain contracts with the hotels served by OCV and SpectraVision when those
contracts expire. The loss by On Command Corporation of one or more of the major
hotel chain customers, such as Marriott, Starwood, Hyatt or Hilton, could have a
material adverse impact on On Command Corporation's results of operations. On
Command Corporation is currently engaged in negotiations with Marriott, Hilton,
and Starwood, as well as other key customers, regarding the renewal, extension
or amendment of their existing contracts, and On Command Corporation believes
that each of these negotiations is affected by the competitive environment. See
"Dependence on Significant Customers." In addition, there are a number of
potential competitors that could utilize their existing infrastructure to
provide in-room entertainment to the lodging industry, including cable companies
(including wireless cable), telecommunications companies, and direct-to-home and
direct broadcast satellite companies. Some of these potential competitors
already are providing free-to-guest services to hotels and testing
video-on-demand. Some of these potential competitors have substantially greater
resources than On Command Corporation.



                                       19
<PAGE>   22

DEPENDENCE ON SIGNIFICANT CUSTOMERS

         Marriott, Hilton, Holiday Inn, Hyatt and Starwood accounted for
approximately 25%, 20%, 10%, 8%, and 7%, respectively, of On Command
Corporation's room revenues for the year ended December 31, 1999. These revenue
percentages represent all chain affiliations including owned, managed, and
franchised hotels. Contracts are written at the hotel level and therefore
expirations occur over extended periods of time depending on the installation
date of the particular hotel. The loss of any of these customers, or the loss of
a significant number of other hotel chain customers, could have a material
adverse effect on On Command Corporation's results of operations or financial
condition. However, these customers represent both chain-owned managed hotels,
as well as franchisees. The Company often has different contracts on different
terms with the chain-owned/managed hotels, on the one hand, and with the
franchisees (or groups of franchisees), on the other.

DEPENDENCE ON PERFORMANCE OF LODGING INDUSTRY

         On Command's business is closely linked to the performance of the hotel
industry in which overall occupancy has been declining recently, though not as
significantly as in many of the luxury and business hotels served by OCC.
Declines in hotel occupancy as a result of general business, economic, seasonal
and other factors can have a significant adverse impact on On Command
Corporation's results of operations.

RISK OF TECHNOLOGICAL OBSOLESCENCE

         Technology in the entertainment and communications industry is
continuously changing as new technologies and developments continue to be
introduced. There can be no assurance that future technological advances will
not result in improved equipment or software systems that could adversely affect
On Command Corporation's competitive position. In order to remain competitive,
On Command Corporation must maintain the programming enhancements, engineering
and technical capability and flexibility to respond to customer demands for new
or improved versions of its systems and new technological developments, and
there can be no assurance that On Command Corporation will have the financial or
technological resources to be successful in doing so.

SEASONALITY

         The business of On Command Corporation is seasonal, with higher
revenues per room realized during the summer months and lower revenues per room
realized during the winter months due to business and vacation travel patterns.

ANTI-TAKEOVER PROTECTIONS

         Ascent owns approximately 56.6% of the OCC Common Stock at December 31,
1999, before giving effect to the exercise of any Warrants. Accordingly, On
Command Corporation will not be able to engage in any strategic transactions
without the approval of Ascent - see "CONTROL BY ASCENT." Even if Ascent's
interest in On Command Corporation were reduced below such level, On Command
Corporation's Certificate of Incorporation contains certain provisions that
could make it more difficult for a third party to acquire, or discourage a third
party from attempting to acquire, control of On Command Corporation. Such
provisions could limit the price that certain investors might be willing to pay
in the future for shares of OCC Common Stock. Certain of such provisions allow
On Command Corporation to issue preferred stock with rights senior to those of
the OCC Common Stock and impose various procedural and other requirements which
could make it more difficult for stockholders to effect certain corporate
actions.

PROGRAMMING

         The cost to the Company to license feature movies from major movie
studios is subject to change as the major movie studios continue to negotiate
for higher royalty rates as well as higher minimum payments by the Company. Such
changes may have adverse impacts on the Company's earnings. While the Company
intends to address such trends, there can be no assurance that the Company's
efforts will prove effective.


                                       20
<PAGE>   23

YEAR 2000

         The Company had developed a formal plan to identify, evaluate and
implement changes to its computer systems as necessary to address the Year 2000
issue. Through the date of this report, there have been no adverse effects on
the Company's business, results of operations or financial condition as a result
of Year 2000 problems with its computer systems and operations. In addition, the
Company has not encountered any Year 2000 problems with any of its vendors or
customers. Although the Company has made reasonable efforts to identify and
protect itself with respect to external Year 2000 problems, there can be no
assurance that the Company will not be affected by such problems.




                                       21
<PAGE>   24

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Company is exposed to market risk from changes in interest rates,
which could impact its results of operations and financial condition,
particularly, the Company's interest expense and cash flow. The Company does not
hedge this exposure. Revolving loans extended under the Credit Facility
generally bear an interest rate that is variable and based on the London
Interbank Offering Rate ("LIBOR") and on certain operating ratios of the
Company. At December 31, 1999, the Company had $180.0 million outstanding on the
Credit Facility and the weighted average interest rate on the Credit Facility
was 6.736%. Assuming no increase or decrease in the amount outstanding, a
hypothetical immediate 100 basis point increase (or decrease) in interest rates
at December 31, 1999 would increase (or decrease), the Company's annual interest
expense and cash outflow by approximately $1.8 million.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Independent Auditors' Report

Consolidated Balance Sheets at December 31, 1999 and 1998

Consolidated Statements of Operations for the years ended December 31, 1999,
1998 and 1997

Consolidated Statements of Stockholders' Equity for the years ended December 31,
1999, 1998 and 1997

Consolidated Statements of Comprehensive Loss for the years ended December 31,
1999, 1998 and 1997

Consolidated Statements of Cash Flows for the years ended December 31, 1999,
1998 and 1997

Notes to the Consolidated Financial Statements




                                       22
<PAGE>   25

INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
   On Command Corporation:

We have audited the accompanying consolidated balance sheets of On Command
Corporation (a majority-owned subsidiary of Ascent Entertainment Group, Inc.)
and subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity, comprehensive loss and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a)(2). These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule based
on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of On Command Corporation and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

DELOITTE & TOUCHE LLP


San Jose, California
March 3, 2000




                                       23
<PAGE>   26

ON COMMAND CORPORATION

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998 (IN THOUSANDS, EXCEPT PAR VALUE AMOUNTS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS                                                                                   1999              1998
<S>                                                                                  <C>             <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                          $    8,972      $    7,235
  Accounts receivable (less allowance for doubtful accounts of $2,287 in 1999
    and $1,484 in 1998)                                                                  32,037          32,167
   Other current assets                                                                   1,211           2,633
                                                                                     ----------      ----------
         Total current assets                                                            42,220          42,035
VIDEO SYSTEMS, Net                                                                      266,947         267,880
PROPERTY AND EQUIPMENT, Net                                                              17,644          11,829
GOODWILL, Net                                                                            73,297          77,674
OTHER ASSETS, Net                                                                         2,809           3,550
                                                                                     ----------      ----------
                                                                                     $  402,917      $  402,968
                                                                                     ==========      ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                                                                   $   31,435      $   23,305
  Accounts payable to stockholder (Note 9)                                                1,054             138
  Accrued compensation                                                                    6,431           5,916
  Other accrued liabilities                                                               8,750          11,977
  Current portion of capital lease obligations                                            2,533              --
  Taxes payable                                                                           6,809           7,632
                                                                                     ----------      ----------
         Total current liabilities                                                       57,012          48,968
CAPITAL LEASES OBLIGATIONS AND OTHER LONG TERM LIABILITIES (Note 6)                       1,758             995
REVOLVING CREDIT FACILITY (Note 5)                                                      180,000         163,000
                                                                                     ----------      ----------
         Total liabilities                                                              238,770         212,963


COMMITMENTS AND CONTINGENCIES (Notes 6 and 13)

STOCKHOLDERS' EQUITY
  Preferred stock, $.01 par value; shares authorized - 10,000; none outstanding              --              --
  Common stock, $.01 par value; shares authorized - 50,000 in 1999 and 1998;                303             302
    shares issued and outstanding 30,313 in 1999 and 30,173 in 1998
  Additional paid-in capital                                                            251,677         249,809
  Common stock warrants                                                                  31,450          31,450
  Accumulated other comprehensive loss                                                     (872)         (2,539)
  Accumulated deficit                                                                  (118,411)        (89,017)
                                                                                     ----------      ----------
         Total stockholders' equity                                                     164,147         190,005
                                                                                     ----------      ----------
                                                                                     $  402,917      $  402,968
                                                                                     ==========      ==========
</TABLE>


          See accompanying notes to consolidated financial statements.




                                       24
<PAGE>   27

ON COMMAND CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                            1999            1998            1997
<S>                                                                   <C>             <C>             <C>
REVENUES:
  Room revenues                                                          $  239,473      $  227,177      $  210,493
  Video systems sales/other
                                                                             13,475          11,643          11,610
                                                                         ----------      ----------      ----------

           Total revenues (see Note 10 for related party revenues)          252,948         238,820         222,103
                                                                         ----------      ----------      ----------

DIRECT COSTS OF REVENUES:
  Room revenues                                                             106,791          98,999          96,617
  Video systems sales /other                                                  6,427           4,903           6,726
                                                                         ----------      ----------      ----------

           Total direct costs of revenues                                   113,218         103,902         103,343
                                                                         ----------      ----------      ----------

OPERATING EXPENSES:
  Operations                                                                 29,958          31,301          33,993
  Research and development                                                    8,479           7,537           6,912
  Selling, general and administrative (excludes $1,064
    of stock based compensation in 1999 included below)                      25,381          24,031          22,277
  Depreciation, amortization and stock-based compensation (Note 7)           94,818          88,199          78,984
                                                                         ----------      ----------      ----------

           Total operating expenses                                         158,636         151,068         142,166
                                                                         ----------      ----------      ----------

LOSS FROM OPERATIONS                                                        (18,906)        (16,150)        (23,406)

INTEREST INCOME                                                                 520             503             155

INTEREST/OTHER EXPENSE                                                      (10,808)        (10,428)         (9,277)
                                                                         ----------      ----------      ----------

LOSS BEFORE INCOME TAXES                                                    (29,194)        (26,075)        (32,528)

PROVISION (BENEFIT) FOR INCOME TAXES
                                                                                200            (109)            786
                                                                         ----------      ----------      ----------

NET LOSS                                                                 $  (29,394)     $  (25,966)     $  (33,314)
                                                                         ==========      ==========      ==========



BASIC AND DILUTED NET LOSS PER SHARE                                     $    (0.97)     $    (0.86)     $    (1.11)
                                                                         ==========      ==========      ==========

SHARES USED IN BASIC AND DILUTED
  PER SHARE COMPUTATIONS                                                     30,222          30,150          30,081
                                                                         ==========      ==========      ==========
</TABLE>

  See accompanying notes to consolidated financial statements.



                                       25
<PAGE>   28

ON COMMAND CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                                ACCUM.
                                                              COMMON STOCK           ADDITIONAL    COMMON        OTHER
                                                         ------------------------      PAID-IN      STOCK        COMP.
                                                           SHARES        AMOUNT        CAPITAL     WARRANTS      LOSS

<S>                                                      <C>           <C>           <C>          <C>          <C>
BALANCES,  January 1, 1996                                   30,047    $      300    $  249,164   $   31,450   $     (260)

Exercise of stock options                                        67             1           238
Issuance of common stock under ESP plan (see Note 7)              2                          29
Translation adjustment                                                                                               (704)
Net loss
                                                         ----------    ----------    ----------   ----------   ----------

BALANCES,  December 31, 1997                                 30,116           301       249,431       31,450         (964)

Exercise of stock options                                        42             1           236
Issuance of common stock under ESP plan (see Note 7)             15                         142
Translation adjustment                                                                                             (1,575)
Net loss
                                                         ----------    ----------    ----------   ----------   ----------

BALANCES, December 31, 1998                                  30,173    $      302    $  249,809   $   31,450   $   (2,539)

Exercise of stock options                                       123             1           588
Stock based compensation                                                                  1,064
Issuance of common stock to directors                             2                          29
Issuance of common stock under ESP plan (see Note 7)             15                         187
Translation adjustment                                                                                              1,667
Net loss
                                                         ----------    ----------    ----------   ----------   ----------

BALANCES, December 31, 1999                                  30,313    $      303    $  251,677   $   31,450   $     (872)
                                                         ==========    ==========    ==========   ==========   ==========

<CAPTION>

                                                         RETAINED        TOTAL
                                                         EARNINGS     STOCKHOLDERS'
                                                         (DEFICIT)       EQUITY

<S>                                                      <C>          <C>
BALANCES,  January 1, 1996                               $  (29,737)   $  250,917

Exercise of stock options                                                     239
Issuance of common stock under ESP plan (see Note 7)                           29
Translation adjustment                                                       (704)
Net loss                                                    (33,314)      (33,314)
                                                         ----------    ----------

BALANCES,  December 31, 1997                                (63,051)      217,167

Exercise of stock options                                                     237
Issuance of common stock under ESP plan (see Note 7)                          142
Translation adjustment                                                     (1,575)
Net loss                                                    (25,966)      (25,966)
                                                         ----------    ----------

BALANCES, December 31, 1998                              $  (89,017)   $  190,005

Exercise of stock options                                                     589
Stock based compensation                                                    1,064
Issuance of common stock to directors                                          29
Issuance of common stock under ESP plan (see Note 7)                          187
Translation adjustment                                                      1,667
Net loss                                                    (29,394)      (29,394)
                                                         ----------    ----------

BALANCES, December 31, 1999                              $ (118,411)   $  164,147
                                                         ==========    ==========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       26
<PAGE>   29

ON COMMAND CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997  (IN THOUSANDS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                       1999        1998        1997

<S>                                  <C>         <C>         <C>
Net loss                             $(29,394)   $(25,966)   $(33,314)

Translation adjustments                 1,667      (1,575)       (704)
                                     --------    --------    --------

Comprehensive loss                   $(27,727)   $(27,541)   $(34,018)
                                     ========    ========    ========
</TABLE>


          See accompanying notes to consolidated financial statements.



                                       27
<PAGE>   30

ON COMMAND CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                  1999            1998            1997
<S>                                                                            <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                        (29,394)        (25,966)        (33,314)
  Adjustments to reconcile net loss to net cash provided by operating
    activities:
    Depreciation, amortization and stock based compensation                        94,818          88,278          78,984
    Deferred income taxes, net                                                         --              --             (47)
    Provision for loss on long term investment                                         --              --             917
    (Gain)/Loss on disposal of fixed assets                                           (46)             72            (844)
    Changes in assets and liabilities net of effects from acquired
      operations:
      Accounts receivable                                                             412          (5,439)         (1,584)
      Other assets                                                                  1,056               7           1,420
      Accounts payable                                                              8,062           3,269           3,246
      Accounts payable to stockholder                                                 917              34              83
      Accrued compensation                                                            484            (121)            880
      Other accrued liabilities                                                    (3,635)         (2,735)          5,395
      Taxes payable                                                                (1,781)         (3,486)         (1,655)
                                                                               ----------      ----------      ----------

           Net cash provided by operating activities                               70,893          53,913          53,481
                                                                               ----------      ----------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                            (85,478)        (83,208)        (92,307)
  Proceeds from sale of property and equipment                                         --              --           4,263
                                                                               ----------      ----------      ----------

           Net cash used in investing activities                                  (85,478)        (83,208)        (88,044)
                                                                               ----------      ----------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings under  credit facility                                  17,000          30,000         165,000
  Payment of former credit facility                                                    --              --        (130,000)
  Payments on capital lease obligations                                            (1,468)             --              --
  Proceeds from issuance of common stock                                              805             379             268
                                                                               ----------      ----------      ----------

           Net cash provided by financing activities                               16,337          30,379          35,268
                                                                               ----------      ----------      ----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                               (15)           (136)           (151)
                                                                               ----------      ----------      ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                           1,737             948             554

CASH AND CASH EQUIVALENTS, Beginning of year                                        7,235           6,287           5,733
                                                                               ----------      ----------      ----------

CASH AND CASH EQUIVALENTS, End of year                                         $    8,972      $    7,235      $    6,287
                                                                               ==========      ==========      ==========

SUPPLEMENTAL INFORMATION:
  Cash paid for income taxes                                                   $      193      $       --      $    1,012
                                                                               ==========      ==========      ==========
  Cash paid for interest                                                       $    9,549           9,597           6,832
                                                                               ==========      ==========      ==========

NONCASH INVESTING AND FINANCING ACTIVITIES:
  Reversal of accrued mode in purchase price allocation                        $       --      $       --      $    3,000
                                                                               ==========      ==========      ==========
  Capital lease obligations                                                    $    5,760      $       --      $       --
                                                                               ==========      ==========      ==========
</TABLE>

          See accompanying notes to consolidated financial statements.




                                       28
<PAGE>   31

ON COMMAND CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997


1.    BASIS OF PRESENTATION

      On Command Corporation (the "Company" or "OCC") is a Delaware corporation
      formed in July 1996 by Ascent Entertainment Group, Inc. ("Ascent") for the
      purpose of effecting (i) the merger of On Command Video Corporation
      ("OCV"), a majority-owned subsidiary of Ascent, with a wholly-owned
      subsidiary of OCC, after which OCV became a wholly-owned subsidiary of
      OCC, and (ii) the acquisition (the "Acquisition") of Spectradyne, Inc., a
      wholly-owned subsidiary of SpectraVision, Inc. Following the Acquisition,
      Spectradyne, Inc. changed its name to SpectraVision, Inc.
      ("SpectraVision"). Ascent had been a majority-owned subsidiary of COMSAT
      Corporation ("COMSAT") and on June 27, 1997, COMSAT consummated the
      distribution of its 80.67% ownership interest in Ascent to the COMSAT
      shareholders on a pro-rata basis in a transaction that was tax-free for
      federal income tax purposes (the "Distribution").

      On February 22, 2000, Ascent entered into an Agreement and Plan of Merger
      with Liberty Media Corporation ("Liberty") and Liberty AEG Acquisition,
      Inc. ("Merger Sub"), an indirect wholly-owned subsidiary of Liberty. Prior
      to Ascent entering into the Merger Agreement, the OCC Board of Directors
      approved the Merger Agreement. Pursuant to the Merger Agreement, Merger
      Sub commenced a Tender Offer (the "Offer") offering to Ascent stockholders
      $15.25 in cash for each share of Ascent common stock. Liberty commenced
      the Offer on February 29, 2000 and under its terms and subject to its
      conditions, the Offer will expire on March 27, 2000, unless extended
      pursuant to the Merger Agreement. The Offer is conditioned on the tender
      of at least a majority of the Ascent shares as well as other customary
      conditions. Under the Merger Agreement and subject to the terms thereof,
      if Merger Sub purchases a majority of the outstanding Ascent common stock
      in the Offer, Merger Sub will be merged with and into Ascent (the
      "Merger") and all shares not purchased in the Offer (other than Shares
      held by Liberty, Merger Sub or Ascent, or shares held by dissenting
      stockholders) will be converted into the right to receive $15.25 per share
      in cash.

2.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      ORGANIZATION AND NATURE OF BUSINESS - The Company designs, develops,
      manufactures and installs proprietary video systems. The Company's primary
      installed video system is OCV's patented video selection and distribution
      system that allows hotel guests to select motion pictures on
      computer-controlled television sets located in their hotel rooms at any
      time. The Company also provides in-room viewing of free-to-guest
      programming of select cable channels and other interactive services under
      long-term contracts to hotels and businesses. These interactive services
      include games, Internet offerings and various hotel and guest services.
      The Company has operating subsidiaries or branches in the United States,
      Canada, Mexico, Hong Kong, Singapore, Thailand, Australia, Spain and the
      United Kingdom. All significant intercompany accounts and transactions
      have been eliminated.

      PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
      statements include the accounts of OnCommand Corporation and its wholly
      owned subsidiaries. All significant intercompany accounts and transactions
      have been eliminated.

      CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt
      instruments, with insignificant interest rate risk, acquired with an
      original maturity of less than three months to be cash equivalents. Cash
      equivalents consist primarily of certificates of deposit and bank savings
      accounts.

      VIDEO SYSTEMS, PROPERTY AND EQUIPMENT - Video systems and property and
      equipment are stated at cost less accumulated depreciation and
      amortization. Installed video systems consist of equipment and related
      costs of installation at hotel locations. Construction in progress
      consists of purchased and manufactured parts of partially constructed
      video systems. Depreciation and amortization are provided using the
      straight-line method over the shorter of the estimated useful lives,
      generally three to twenty years, or lease terms. Video systems and
      equipment acquired from the SpectraVision Acquisition were depreciated
      over 36 months, which term was completed in October 1999.

      OTHER ASSETS - Other assets at December 31, 1999 and 1998 include an
      investment of $348,000 in MagiNet Corporation (See Note 9 for additional
      discussion on MagiNet) and approximately $0 and $610,000 at December 31,
      1999 and 1998, respectively, for technology acquired in the SpectraVision
      Acquisition (net of



                                       29
<PAGE>   32

      amortization recorded on a straight-line basis over three years). The
      investment in MagiNet was reduced by $917,000 in 1997 from an original
      cost of $1,265,000 due to a dilution of the Company's ownership in
      MagiNet.

      GOODWILL - Goodwill resulted from the SpectraVision Acquisition and
      represents the excess of the aggregate purchase price over the fair value
      of net assets acquired. The goodwill is being amortized over 20 years
      using the straight-line method. Amortization expense was $4,376,000,
      $4,376,000, and $4,454,000, in 1999, 1998, and 1997, respectively.

      EVALUATION OF LONG-LIVED ASSETS - The Company evaluates the potential
      impairment of long-lived assets and long-lived assets to be disposed of in
      accordance with Statement of Financial Accounting Standards No. 121,
      "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
      Assets to be Disposed Of". As of December 31, 1999 and 1998, management
      believes that there was not any impairment of the Company's long-lived
      assets or other identifiable intangibles.

      REVENUE RECOGNITION - The Company installs pay-per-view video systems in
      hotels, generally under five- to seven-year agreements, whereby it
      recognizes revenues at the time of viewing. Revenue from the sale of video
      systems is recognized when the equipment is shipped, except for systems
      requiring installation by the Company, which is recognized upon completion
      of the installation. Revenues from video management services and royalties
      are recognized when earned and payment is considered probable.

      STOCK-BASED COMPENSATION - The Company accounts for stock-based awards to
      employees using the intrinsic value method in accordance with APB Opinion
      No. 25, Accounting for Stock Issued to Employees.

      NET LOSS PER SHARE - Basic loss per share excludes dilution and is
      computed by dividing net loss applicable to nonredeemable common stock by
      the weighted-average number of common shares outstanding for the period.
      Diluted loss per share reflects the potential dilution that could occur if
      securities or other contracts to issue common stock were exercised or
      converted into common stock. Common share equivalents are excluded from
      the computations in loss periods as their effect would be antidilutive.
      For the years ended December 31, 1999, 1998 and 1997 approximately 10.0
      million, 10.1 million, and 9.9 million equivalent dilutive securities
      (primarily common stock options and warrants), respectively, have been
      excluded from the weighted-average number of common shares outstanding for
      the diluted net loss per share computation as they are antidilutive.

      FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts of cash and
      cash equivalents, accounts receivable and accounts payable approximate
      fair value because of the short-term maturity of these instruments. The
      fair value of the revolving credit facility at December 31, 1999 was
      approximately $187,000,000 based on the current rate offered to the
      Company for debt of the same remaining maturities.

      FOREIGN CURRENCY TRANSLATION - For translation of its foreign currencies,
      the Company has determined that the local currencies of its international
      subsidiaries are the functional currencies. Assets and liabilities of the
      international subsidiaries are translated at the rate of exchange in
      effect at period end. Results of operations are translated at the average
      rate of exchange in effect during the period. Translation adjustments are
      included within stockholders' equity. Balances of international
      subsidiaries denominated in currencies other than the functional currency
      are restated at the rate of exchange at year end and any resulting gains
      or losses are included in the results of operations.

      USE OF ESTIMATES, CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES - The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period. Such management estimates include the
      allowance for doubtful accounts receivable, the estimated useful lives of
      video systems, property and equipment and intangible assets, including
      goodwill, reducing construction in progress to its net realizable value
      and the amounts of certain accrued liabilities.

      The Company participates in the highly competitive in-room entertainment
      industry and believes that



                                       30
<PAGE>   33

      changes in any of the following areas could have a material adverse effect
      on the Company's future financial position or results of operations:
      decline in hotel occupancy as a result of general business, economic,
      seasonal or other factors; loss of one or more major hotel chain
      customers; ability to obtain additional capital to finance capital
      expenditures; ability to maintain compliance with Credit Facility
      covenants; ability to retain senior management and key employees; and
      risks of technological developments.

      RECENTLY ISSUED ACCOUNTING STANDARDS - In 1998, the Company early adopted
      Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
      Software Developed or Obtained for Internal Use," which provides guidance
      on accounting for the costs of computer software developed or obtained for
      internal use. In 1999 and 1998, the Company capitalized approximately
      $5,700,000 and $4,100,000 of costs, respectively, in accordance with this
      SOP.

      In 1998, the Company adopted Statement of Financial Accounting Standards
      No. 131, "Disclosures about Segments of an Enterprise and Related
      Information," which establishes annual and interim reporting standards for
      an enterprise's business segments and related disclosures about its
      products, services, geographic areas and major customers. The Company
      operates in one reportable segment (see Note 11).

      In June 1998, the Financial Accounting Standards Board issued SFAS No.
      133, "Accounting for Derivative Instruments and Hedging Activities," which
      defines derivatives, requires that all derivatives be carried at fair
      value and provides for hedge accounting when certain conditions are met.
      SFAS No. 133, as amended by SFAS 137, is effective for all fiscal years
      beginning after June 15, 2000. The Company does not believe that the
      adoption of this statement will have a material impact on the Company's
      financial position, results of operations or cash flows.

      RECLASSIFICATIONS - Certain prior year amounts have been reclassified to
      conform to the current year presentation. These reclassifications had no
      effect on net loss or total stockholders' equity.

3.    VIDEO SYSTEMS

      Video systems at December 31 consist of the following (in thousands):


<TABLE>
<CAPTION>
                                                              1999            1998
<S>                                                        <C>             <C>
                      Installed video systems              $  524,167      $  459,178
                      Construction in progress                 48,590          46,431
                                                           ----------      ----------
                                                              572,757         505,609
                      Accumulated depreciation               (305,810)       (237,729)
                                                           ----------      ----------

                      Video systems, net                   $  266,947      $  267,880
                                                           ==========      ==========
</TABLE>

      At December 31, 1999, the net basis of installed video systems included
      items acquired under capital leases at a cost of $3,085,000, less
      accumulated depreciation of $1,285,000.



                                       31
<PAGE>   34
4.    PROPERTY AND EQUIPMENT

      Property and equipment at December 31 consist of the following (in
      thousands):

<TABLE>
<CAPTION>
                                                                  1999          1998
<S>                                                             <C>           <C>
         Furniture and fixtures                                 $  3,523      $  4,377
         Machinery, computer equipment and software               22,514        15,568
         Leased vehicles under capital leases                      2,675            --
         Buildings and leasehold improvements                      1,672         1,453
                                                                --------      --------
                                                                  30,384        21,398
         Accumulated depreciation and amortization               (12,740)       (9,569)
                                                                --------      --------

         Property and equipment, net                            $ 17,644      $ 11,829
                                                                ========      ========
</TABLE>

      Vehicles acquired under capital leases had a cost basis of $2,675,000 at
      December 31, 1999, less accumulated amortization of $453,900.

5.    REVOLVING CREDIT FACILITY

      The Company currently has a $200 million credit facility (the "Credit
      Facility"). The Credit Facility matures in November 2002 and, subject to
      certain conditions, can be renewed for two additional years. At December
      31, 1999, there was $20.0 million of available borrowings under the Credit
      Facility, subject to certain covenant restrictions.

      Revolving loans extended under the Credit Facility bear interest at the
      London Interbank Offering Rate ("LIBOR") plus a spread that may range from
      0.375% to 0.75% depending on certain operating ratios of the Company.
      During 1999, the weighted average interest rate on the Credit Facility was
      6.736%. In addition, a fee ranging from 0.1875% to 0.25% per annum is
      charged on the unused portion of the Credit Facility, depending on certain
      operating ratios of the Company. The Credit Facility contains customary
      covenants and agreements, most notably, the inclusion of restrictions on
      the Company's ability to pay dividends or make other distributions as well
      as leverage and interest coverage covenants. The Company was in compliance
      with such covenants at December 31, 1999. In order to meet its business
      plan beyond the second quarter of 2000, the Company will need to raise
      additional financing and re-negotiate the financial covenants in its
      current Credit Facility. The Company is currently pursuing its
      alternatives in this area. If the Company is unable to raise additional
      financing, the Company would need to reduce its capital spending for the
      year 2000 which would inhibit its ability to grow.

6.    COMMITMENTS

      OPERATING LEASES

      The Company leases its principal facilities under a noncancelable
      operating lease which expires in June 2004. In addition to lease payments,
      the Company is responsible for taxes, insurance and maintenance of the
      leased premises. The Company also leases certain other office space and
      equipment. These operating leases expire at dates ranging from 2000 to
      2004.

      Rental payments for the Company's principal facility were approximately
      $1,690,000, $1,553,000,and $1,303,000 during the years ended December 31,
      1999, 1998, and 1997, respectively. In 1997 the owner of this facility was
      a minority stockholder. Rental expense under all operating leases was
      approximately $2,145,000, $5,100,000, and $4,400,000, for the years ended
      December 31, 1999, 1998, and 1997, respectively.

      Future minimum annual payments under noncancelable operating leases at
      December 31, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
         YEARS ENDING DECEMBER 31:
<S>                                                        <C>
         2000                                               $ 2,104
         2001                                                 1,915
         2002                                                 1,910
         2003                                                 1,850
         2004 and thereafter                                    940
                                                            -------

         Total                                              $ 8,719
                                                            =======
</TABLE>

      CAPITAL LEASES

      During 1999, the Company amended certain of its operating lease
      agreements, primarily for vehicles and equipment, that qualify such
      amended leases as capitalized leases. Certain of these leases contain
      restrictions including maintenance of certain operating ratios. Following
      is a summary of future minimum lease payments for the Company's capital
      lease obligations:

                                       32
<PAGE>   35

<TABLE>
<CAPTION>
         YEARS ENDING DECEMBER 31:

<S>                                                              <C>
         2000                                                    $  2,819
         2001                                                       1,820
                                                                 --------
         Total future minimum lease payments                        4,639
         Less amounts representing interest                          (348)
                                                                 --------

         Present value of future minimum lease payments             4,291
         Less current portion                                       2,533
                                                                 --------
         Long-term portion of capital lease obligations          $  1,758
                                                                 --------
</TABLE>

      PURCHASE COMMITMENTS

      Non-cancelable commitments for the purchase of video systems and office
      equipment amounted to approximately $9,500,000 at December 31, 1999.

7.    STOCKHOLDERS' EQUITY

      STOCK OPTION PLAN

      The Company adopted the 1996 Key Employee Stock Option Plan (the 1996
      Plan), expiring in 2006, under which employees may be granted, among other
      equity incentives, incentive or non-statutory stock options for the
      purchase of common stock of the Company. In addition, restricted stock
      purchases, performance awards, dividend equivalents, stock payment or
      appreciation rights or deferred stock may be granted under the plan. A
      total of 3,000,000 shares were initially reserved for the plan.

      The exercise price is set by the Company's Board of Directors. Incentive
      stock options are granted at no less than fair market value on the date of
      grant. Options generally expire in ten years, vest over a five-year period
      and are exercisable in installments of 20% one year from the date of grant
      and 5% quarterly thereafter. Unvested options are canceled upon
      termination of employment.

      Under employment agreements with certain former officers, 1,426,874
      options were granted in 1996 with a three-year vesting period. During
      1998, 1,041,562 of such options were cancelled. During the year ended
      December 31, 1999, $1,064,000 was recorded as stock-based compensation
      expense due to the cashless exercise feature of such options. No such
      expense was recorded in prior periods as the exercise price of such
      options exceeded the fair market value of the Company's common stock.



                                       33
<PAGE>   36

      1997 NON-EMPLOYEE DIRECTORS STOCK PLAN

      In May 1997, the Company adopted the Company's 1997 Non-Employee Directors
      Stock Plan ("Directors Plan"). The Directors Plan authorizes the granting
      of an annual award of 400 shares of the Company's common stock and,
      pursuant to an amendment adopted in 1999, a one-time non-qualified option
      to purchase 50,000 shares of the Company's common stock (a "Director
      Option") to each Independent Director. The aggregate number of shares of
      the Company's Common Stock which may be issued upon exercise of Directors
      Options granted under the Directors Plan plus the number of shares which
      may be awarded pursuant to the Directors Plan will not exceed 296,800,
      subject to adjustment to reflect events such as stock dividends, stock
      splits, recapitalizations, mergers or reorganizations of or by the
      Company. In 1999 and 1998, 200,000 and 12,000 options were granted,
      respectively. No options were granted in 1997.

      The following is a summary of activity under all of the Company's Stock
      Option Plans:

<TABLE>
<CAPTION>
                                                                            Options Outstanding
                                                                       ---------------------------

                                                         OPTIONS                         WEIGHTED
                                                        AVAILABLE        NUMBER          AVERAGE
                                                        FOR GRANT       OF SHARES        EXERCISE
                                                                                          PRICE
<S>                                                    <C>            <C>             <C>
Balances, January 1, 1997 (314,345 exercisable
  at a weighted-average price of $7.30)                   771,197       2,181,565      $    14.14

Granted (weighted-average fair value of $3.96)           (324,000)        324,000           11.54
Exercised                                                      --         (68,506)           5.22
Canceled                                                   63,250         (63,250)          12.63
                                                       ----------      ----------

Balances, December 31, 1997 (814,178 exercisable
  at a weighted-average price of $12.95)                  510,447       2,373,809           14.09

Granted (weighted-average fair value of $4.62)           (644,196)        644,196           13.22
Exercised                                                      --         (41,218)           6.00
Canceled                                                1,236,312      (1,236,312)          15.26
                                                       ----------      ----------

Balances, December 31, 1998 (697,313 exercisable
  at a weighted-average price of $12.43)                1,102,563       1,740,475           13.13

Granted (weighted-average fair value of $7.02)         (1,270,500)      1,270,500           14.00
Increase in options authorized                            200,000              --
Exercised                                                      --        (117,745)           5.00
Canceled                                                  408,151        (408,151)          12.79
                                                       ----------      ----------

Balances, December 31, 1999 (690,847 exercisable
  at a weighted-average price of $12.77)                  440,214       2,485,079           13.70
                                                       ==========      ==========
</TABLE>




                                       34
<PAGE>   37

      Additional information regarding options outstanding as of December 31,
      1999 as follows:

<TABLE>
<CAPTION>
                                               OPTIONS OUTSTANDING               OPTIONS EXERCISABLE
                                           ---------------------------       --------------------------
                                            WEIGHTED
                                             AVERAGE          WEIGHTED                         WEIGHTED
        RANGE OF                            REMAINING         AVERAGE                          AVERAGE
        EXERCISE             NUMBER        CONTRACTUAL        EXERCISE          NUMBER         EXERCISE
         PRICES           OUTSTANDING      LIFE (YEARS)         PRICE        EXERCISABLE         PRICE

<S>                       <C>              <C>               <C>            <C>                <C>
       $4.40-5.92             50,259            1.9           $  5.30            50,259        $   5.30
       $7.04-9.34            334,012            8.1           $  8.71           144,762        $   8.62
      $10.97-13.00           762,496            8.2           $ 12.53           191,779        $  12.05
      $14.78-18.25         1,337,712            9.2           $ 15.93           304,047        $  15.75
                           ---------                                          ---------
                           2,485,079            8.5           $ 13.70           690,847        $  12.47
                           =========                                          =========
</TABLE>

      As discussed in Note 2, the Company continues to account for its
      stock-based awards using the intrinsic value method in accordance with
      Accounting Principles Board No. 25, "Accounting for Stock Issued to
      Employees", and its related interpretations. Accordingly, no compensation
      expense has been recognized in the financial statements for employee stock
      arrangements, as the exercise price of the options is not less than the
      fair market value of the underlying stock at the date of grant. Statement
      of Financial Accounting Standards No. 123, "Accounting for Stock-Based
      Compensation", (SFAS No. 123) requires the disclosure of pro forma net
      income and earnings per share had the Company adopted the fair value
      methods as of the beginning of fiscal 1995. Under SFAS No. 123, the fair
      value of stock-based awards to employees is calculated through the use of
      option pricing models, even though such models were developed to estimate
      the fair value of freely tradable, fully transferable options without
      vesting restrictions, which significantly differ from the Company's stock
      option awards. These models also require subjective assumptions, including
      future stock price volatility and expected time to exercise, which greatly
      affect the calculated values. The Company's calculations were made using
      the Black-Scholes option pricing model with the following weighted-average
      assumptions for 1999, 1998, and 1997: expected life of 5.5 years for 1999,
      1998, and 1997 grants; stock volatility of 45.9% and a risk free interest
      rate of 6.41% for 1999 grants; stock volatility of 25% and risk free
      interest rates of 6% for 1998 and 1997 grants; and no dividends during the
      expected term. The Company's calculations are based on a single option
      valuation approach and forfeitures are recognized as they occur. If the
      computed fair values of the awards had been amortized to expense over the
      vesting period of the awards, pro forma net loss would have been
      approximately $31,167,000 ($1.02 per basic and diluted share) in 1999,
      $28,848,000 ($0.96 per basic and diluted share) in 1998 and $37,397,000
      ($1.24 per basic and diluted share) in 1997. However, the impact of
      outstanding nonvested stock options granted prior to 1995 has been
      excluded from the pro forma calculation; accordingly, the pro forma
      adjustments are not indicative of future period pro forma adjustments,
      when the calculation will apply to all applicable stock options.

      EMPLOYEE STOCK PURCHASE PLAN

      In August 1997, the Company adopted the Employee Stock Purchase Plan (the
      "ESP Plan") which is intended to qualify under Section 423 of the Internal
      Revenue Code. Under the terms of the ESP Plan, Company employees can
      purchase the Company's common stock at a 10% discount from the market
      value on the purchase date. As of December 31, 1999, 31,498 shares have
      been purchased by Company employees.

      ON COMMAND WARRANTS

      In connection with the Acquisition, OCC also issued warrants representing
      the right to purchase a total of 7,500,000 shares of OCC common stock (20%
      of the outstanding common stock of OCC after exercise of the warrants).
      The warrants have a term of seven years and an exercise price of $15.27
      per share of OCC common stock. Series A warrants to purchase on a cashless
      basis an aggregate of 1,425,000 shares of OCC common stock were issued to
      the former OCV stockholders, of which Ascent received warrants to purchase
      1,123,823 shares; Series B warrants to purchase for cash an aggregate of
      2,625,000 shares of OCC common stock were issued to the former
      SpectraVision bankruptcy estate for distribution to creditors; and $4
      million in cash was paid and Series C warrants were issued to OCC's
      investment advisor to purchase for cash an aggregate of 3,450,000 shares
      of OCC common stock in consideration for certain banking and advisory
      services provided in connection with the transactions. The fair value of
      the Series A warrants has been recognized as a dividend to the former OCV
      stockholders while the fair value of Series B and Series C warrants has
      been accounted for as a cost of the Acquisition. Subsequent to the
      Acquisition, OCC's investment advisor obtained a seat on the Company's
      Board of Directors.

                                       35
<PAGE>   38

      SHARES RESERVED FOR FUTURE ISSUANCE

      Shares of common stock reserved for future issuance at December 31, 1999
      are as follows:

<TABLE>
<S>                                                   <C>
         Option Plans                                  2,925,293
         ESP Plan                                        148,502
         Warrants                                      7,500,000
                                                      ----------

         Total                                        10,573,795
                                                      ==========
</TABLE>

8.    INCOME TAXES

      In conjunction with the SpectraVision acquisition (see Note 1), the
      Company ceased being a member of Ascent's consolidated tax group.
      Accordingly, OCC began filing a separate return commencing on October 6,
      1996.

      The provision (benefit) for income taxes for the years ended December 31
      consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                       1999        1998        1997
<S>                                                   <C>         <C>         <C>
         Current:
           Federal                                    $   --      $   --      $   --
           State                                         162          --         198
           Foreign                                        38        (109)        635
                                                      ------      ------      ------

                                                         200        (109)        833
         Deferred:
           Federal                                        --          --          --
           State                                          --          --          --
           Foreign                                        --          --         (47)
                                                      ------      ------      ------

                                                          --          --         (47)
                                                      ------      ------      ------

         Total                                           200        (109)        786
                                                      ======      ======      ======
</TABLE>

      The provision for income taxes differs from the amount obtained by
      applying the federal statutory rate (35%) to loss before income taxes for
      the years ended December 31 as follows (in thousands):

<TABLE>
<CAPTION>
                                                                  1999          1998          1997


<S>                                                             <C>           <C>           <C>
         Tax benefit computed at federal statutory rate         $(10,218)     $ (9,126)     $(11,385)
         State tax benefit net of federal benefit                   (689)       (1,080)       (1,246)
         Goodwill                                                  1,690         1,750         1,750
         Other                                                       130           440           459
         Foreign                                                      38          (109)          588
                                                                --------      --------      --------
         Valuation allowance                                       9,249         8,016        10,620

         Provision for income taxes                             $    200      $   (109)     $    786
                                                                ========      ========      ========
</TABLE>



                                       36
<PAGE>   39

      Loss before income taxes for the years ended December 31 consists of the
      following (in thousands):

<TABLE>
<CAPTION>
                                                        1999          1998          1997

<S>                                                   <C>           <C>           <C>
         Domestic                                     $(26,359)     $(23,438)     $(31,800)
         Foreign                                        (2,835)       (2,637)         (728)
                                                      --------      --------      --------

         Total                                        $(29,194)     $(26,075)     $(32,528)
                                                      ========      ========      ========
</TABLE>

        Deferred income taxes, which result from the net tax effects of
        temporary differences between the carrying amounts of assets and
        liabilities for financial reporting purposes and the amounts used for
        income tax purposes, at December 31 consist of the following (in
        thousands):

<TABLE>
<CAPTION>
                                                                        1999          1998
<S>                                                                   <C>           <C>
         Deferred tax assets:
           Tax net operating loss and credit carryforwards            $ 60,526      $ 40,021
           Accruals not recognized for tax purposes                      5,655         5,413
           Other                                                         2,755         2,850
           Valuation allowance                                         (56,650)      (47,401)
                                                                      --------      --------
         Total deferred tax assets                                      12,286           883

         Deferred tax liabilities:
           Depreciation and amortization                               (12,267)         (817)
           Other                                                           (19)          (66)
                                                                      --------      --------

         Total deferred tax liabilities                                (12,286)         (883)
                                                                      --------      --------

         Net deferred tax liability                                   $     --      $     --
                                                                      ========      ========
</TABLE>

      The Company has federal net operating loss carryforwards of approximately
      $151,000,000, which expire beginning in 2010. However, because of the
      acquisition of SpectraVision by On Command Corporation, the pre-ownership
      change net operating loss carryforwards (approximately $43,000,000
      million) are subject under Section 382 of the Internal Revenue Code to an
      annual limitation estimated to be approximately $6,000,000 million. In
      addition, the Company has state net operating loss carryforwards of
      approximately $111,000,000 which expire beginning in 2000. Certain of the
      state net operating loss carryforwards (approximately $7,000,000 million)
      are subject to the annual limitation under Section 382. Alternative
      minimum tax credit carryforwards of approximately $1,595,000 and $251,000
      are available to offset future regular federal and state tax liabilities,
      respectively. Research and development tax credit carryforwards of
      approximately $32,000 and $611,000 are available to offset future federal
      and state tax liabilities, respectively.

      Current federal and California state tax laws include substantial
      restrictions on the utilization of net operating losses and tax credits in
      the event of an "ownership change" of a corporation. Accordingly, the
      Company's ability to utilize net operating loss and tax credit
      carryforwards may be limited as a result of such "ownership change" as
      defined. Such a limitation could result in the expiration of carryforwards
      before they are utilized.

9.    RELATED PARTY TRANSACTIONS

      ASCENT ENTERTAINMENT GROUP, INC.

      During 1996, the Company and Ascent entered into a Corporate Agreement, as
      amended, pursuant to which the Company has agreed with Ascent not to incur
      any indebtedness without Ascent's prior consent, other than indebtedness
      under the Company's Credit Facility (see Note 5), and indebtedness
      incurred in the ordinary course of operations which together shall not
      exceed $200 million through June 30, 2000; provided, however, that such
      indebtedness may only be incurred in compliance with the financial
      covenants contained in the Credit Facility, with any amendments to such
      covenants subject to the written consent of Ascent.



                                       37
<PAGE>   40

      Effective October 8, 1996, the Company entered into an "Intercompany
      Management Services Agreement" with Ascent under which Ascent would
      provide certain management services to OCC through December 31, 1999.
      Services to be provided include insurance administration, coordination and
      advisory services regarding corporate financing, employee benefits
      administration, public relations, and various other general corporate
      functions. Fees for such services were $100,000 per month. In 1999, 1998
      and 1997, Ascent waived the management services fee due under the
      Agreement. The Company had approximately $1,054,000 and $138,000 in
      non-interest bearing payables to Ascent at December 31, 1999 and 1998,
      respectively.

      MAGINET CORPORATION

      The Company had video system sales of approximately $0, $83,000 and
      $751,000, in 1999, 1998 and 1997, respectively, and room revenues of
      approximately $0, $0, and $150,000, in 1999, 1998 and 1997, respectively,
      from MagiNet Corporation which is a related party by virtue of the
      Company's preferred stock investment in this company. Accounts receivable
      from MagiNet at December 31, 1999 and 1998 was approximately $0 and
      $40,000, respectively, (See Note 2 for additional discussion).

10.   CONCENTRATION OF CREDIT RISK

      The Company generates the majority of its revenues from the guest usage of
      proprietary video systems located in various hotels primarily throughout
      the United States, Canada, Mexico, Europe, Australia and the Far East. The
      Company performs periodic credit evaluations of its installed hotel
      locations and generally requires no collateral while maintaining
      allowances for potential credit losses. The Company invests its cash in
      high-credit quality institutions. These instruments are short-term in
      nature and, therefore, bear minimal risk.

      Marriott Corporation and its affiliates accounted for 25%, 24%, and 21%,
      of room revenues for the years ended December 31, 1999, 1998, and 1997,
      respectively, while Holiday Inn Corporation accounted for 10%, 11%, and
      11% of room revenues for the years ended December 31, 1999, 1998, and
      1997, respectively. In addition, the Company earned revenues of
      approximately $47,895,000, $22,955,000, and $22,000,000, which accounted
      for 20%, 10%, and 10% of total room revenues for the years ended December
      31, 1999, 1998, and 1997, respectively, from Hilton and its affiliates.
      Hilton owns approximately 2,333,346 shares of the Company's common stock,
      or 8.3% of the common stock at December 31, 1999. Accounts receivable from
      Hilton and its affiliates at December 31, 1999 and 1998 was approximately
      $1,600,000, and $1,400,000, respectively.

11.   GEOGRAPHIC OPERATING INFORMATION

      The following represents total revenues for the years ended December 31,
      1999, 1998 and 1997 and long-lived assets (excluding goodwill) as of
      December 31, 1999, 1998 and 1997 by geographic territory (in thousands):

<TABLE>
<CAPTION>
                                  1999                      1998                      1997
                         ---------------------     ---------------------     ---------------------
                                       LONG-                     LONG-                     LONG-
                           TOTAL       LIVED         TOTAL       LIVED         TOTAL       LIVED
                         REVENUES*     ASSETS      REVENUES*     ASSETS      REVENUES*     ASSETS
                         --------     --------     --------     --------     --------     --------
<S>                      <C>          <C>          <C>          <C>          <C>          <C>
United States            $227,904     $251,448     $215,054     $254,769     $197,086     $270,540
Canada                     13,034       21,021       12,690       17,984       13,251        6,596
All other foreign          12,010       14,931       11,076       10,506       11,766        7,130
                         --------     --------     --------     --------     --------     --------
Total                    $252,948     $287,400     $238,820     $283,259     $222,103     $284,266
                         ========     ========     ========     ========     ========     ========
</TABLE>


      *Net revenues are attributed to countries based on invoicing location of
      customer.



                                       38
<PAGE>   41

12.   EMPLOYEE BENEFIT PLAN

      Qualified employees are eligible to participate in the Company's 401(k)
      tax-deferred savings plan. Participants may contribute up to 20% of their
      eligible earnings (to a maximum of approximately $10,000 per year) to this
      plan, for which the Company, at the discretion of the Board or Directors,
      may make matching contributions. Matching contributions made by the
      Company were approximately $995,000, $773,000, and $711,000, for the years
      ended December 31, 1999, 1998, and 1997, respectively.


13.   LEGAL MATTERS

      On September 11, 1998, OCC reached an agreement with LodgeNet
      Entertainment Corporation ("LodgeNet") to settle all pending litigation
      between the companies. As a result, the two providers of in-room
      entertainment and information services to the lodging industry have
      dismissed all pending litigation between the parties in United States
      Federal District Courts in California and South Dakota, with no admission
      of liability by either party. The terms of the confidential settlement
      include a cross-license of each company's patented technologies at issue
      to the other party and a covenant not to engage in patent litigation
      against the other party for a period of five years. Each company is
      responsible for its own legal costs and expenses, and in connection with
      the multiple cross-licenses, OCC expects to receive royalty payments net
      of legal fees and expenses in an aggregate amount of approximately $10.8
      million. OCC received the first payment of approximately $2.9 million (net
      of expenses) in September 1998, the second payment of $3.9 million (net of
      expenses) in July, 1999 and expects to receive an additional payment of
      approximately $3.95 million (net of expenses) in July 2000 although no
      assurance can be given. OCC will be recognizing the additional royalty
      revenue when the final cash payment is received.

      In September 1998, OCV filed suit against MagiNet, alleging a breach by
      MagiNet of a license agreement between OCV and MagiNet, and terminating
      the license agreement. OCV has also demanded the payment of license fees
      from MagiNet which OCC believes were due and payable under the License
      Agreement and have not been paid by MagiNet. MagiNet has counter-claimed
      against OCV, alleging that OCV breached the license agreement, and
      alleging various torts by OCV in its relationship with MagiNet. While the
      outcome of MagiNet's counter claim cannot be predicted with certainty, the
      Company intends to defend itself vigorously and expects that any
      liability, to the extent not provided for by insurance or otherwise, will
      not have a material adverse effect on the financial condition of the
      Company.

      The Company is a defendant, and may be a potential defendant, in lawsuits
      and claims arising in the ordinary course of its business. While the
      outcomes of such claims, lawsuits, or other proceedings cannot be
      predicted with certainty, management expects that such liability, to the
      extent not provided for by insurance or otherwise, will not have a
      material adverse effect on the financial condition of the Company.



                                       39
<PAGE>   42

14.   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

      The following is a summary of unaudited quarterly results of operations
      for the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                     DEC.31      SEPT. 30       JUNE 30      MARCH 31

                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                <C>           <C>           <C>           <C>
      1999
      Revenues                                     $ 61,399      $ 67,752      $ 62,564      $ 61,233
      Direct costs of revenue                        28,123        29,152        28,483        27,460
      Operating expenses                             39,276        40,941        40,089        38,330
      Loss from operations                           (6,000)       (2,341)       (6,008)       (4,557)
      Net loss                                       (9,090)       (4,982)       (8,460)       (6,862)
      Basic and diluted loss per share             $  (0.30)     $  (0.16)     $  (0.28)     $  (0.23)

      1998
      Revenues                                     $ 59,082      $ 62,975      $ 60,895      $ 55,868
      Direct costs of revenue                        26,424        26,696        26,862        23,920
      Operating expenses                             37,278        37,555        38,705        37,530
      Loss from operations                           (4,620)       (1,276)       (4,672)       (5,582)
      Net loss                                       (7,076)       (3,974)       (7,078)       (7,838)
      Basic and diluted loss per share             $  (0.23)     $  (0.13)     $  (0.23)     $  (0.26)
</TABLE>

                                    * * * * *




                                       40
<PAGE>   43

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

        Not applicable.




                                       41
<PAGE>   44

                                    PART III


ITEM 10.  DIRECTORS AND OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS OF THE REGISTRANT

        In accordance with General Instruction G to the Annual Report on Form
10-K, included herein is the following table, which sets forth the names, ages,
at March 1, 2000, and titles of executive officers of the Company, and
biographical information with respect to such officers.

<TABLE>
<CAPTION>
Name                            Age    Position
----                            ---    --------

<S>                             <C>    <C>
Allan Goodson                   42     Executive Vice President and Chief Operating Officer

Ronald D. Lessack               53     Senior Vice President, Operations

Richard C. Fenwick, Jr          43     Senior Vice President, Engineering

Paul J. Milley                  46     Senior Vice President, and Chief Financial Officer

Jean A. deVera                  50     Senior Vice President, Sales & Account Management

Arthur M Aaron                  42     Acting General Counsel and Secretary
</TABLE>

         Allan Goodson has been Executive Vice President and Chief Operating
Officer of On Command Corporation since January 2000. Prior thereto, Mr. Goodson
served as a founding partner and Chief Operating Officer of STC Cable Corp. from
April 1998 to June 1999. Prior to that he held the position of Executive Vice
President and Chief Operating Officer for TCI Great Lakes, Inc. from August 1992
to November 1995.

        Ronald D. Lessack has been Senior Vice President, Operations since
December 1996 and was named Vice President, Operations of On Command Corporation
in September 1996. Prior to joining On Command Corporation, Mr. Lessack was Vice
President, Operations of OCV since January 1994. Prior to that he was self
employed as a consultant from July 1992 to February 1994, and prior to that he
was a Vice President of Watkins Johnson Co. Group.

         Richard C. Fenwick, Jr. has been Senior Vice President of Engineering
since December 1996 and was named Vice President, Engineering of On Command
Corporation in September 1996. Mr. Fenwick had been Vice President, Engineering
of OCV since September 1992.

        Paul J. Milley has been Senior Vice President, and Chief Financial
Officer since February 2000. Prior thereto, Mr. Milley was Senior Vice President
- Finance since joining the Company in December 1996. Prior thereto, Mr. Milley
was Vice President and Chief Financial Officer of The 3DO Company where he
worked since October 1993. Prior to joining the 3DO company, Mr. Milley was
Senior Vice President and Chief Financial Officer of Computerland Corporation
where he worked from July 1989 to September 1993.

        Jean A. deVera has been Senior Vice President, Sales & Account Manager
of On Command Corporation since October 1997, having been promoted from Vice
President, National Accounts, a title Ms. deVera held since September 1996.
Prior to joining On Command Corporation, Ms. deVera was Vice President, National
Accounts of OCV since January 1994. From 1977 through December 1993, Ms. deVera
held various positions at COMSAT Video Enterprises, the last of which was
Director of Sales Administration.

         Arthur M. Aaron has been Acting General Counsel and Secretary since
April 1998. Mr. Aaron has been Executive Vice President, Business Affairs, of
Ascent Entertainment Group, Inc. since January 2000, and prior thereto was Vice
President, Business and Legal Affairs of Ascent since April 1995. Prior thereto,
he was a General Attorney in the office of the General Counsel of COMSAT
Corporation since July 1993.



                                       42
<PAGE>   45


DIRECTORS OF THE REGISTRANT

         James A. Cronin, III, 45, has been a Director of On Command Corporation
since its formation in July 1996 and was Vice President and Acting Chief
Financial Officer from July 1996 until September 1996 and Chairman and Acting
Chief Executive Officer from August 1999 to February 2000, at which time he
resigned as Acting Chief Executive Officer. Mr. Cronin was Executive Vice
President, Chief Financial Officer and Chief Operating Officer of Ascent from
November 1996 to January 2000, and prior thereto was Chief Operating Officer and
Executive Vice President, Finance for Ascent from June 1996 to November 1996.
Prior to joining Ascent, Mr. Cronin served as a financial and management
consultant from 1992 through June 1996. Mr. Cronin is also a Director of Landair
Services, Inc.

         Richard D. Goldstein, 48, has been a Director of On Command Corporation
since November 1998. Mr. Goldstein has served as a Managing Director or Senior
Managing Director and as one of three principals of Alpine Capital Group Inc., a
merger advisory and investment/merchant banking firm in New York and related
entities (including Alpine Equity Partners L.P.) since 1990. From 1976 to 1990
Mr. Goldstein was with the law firm of Paul, Weiss, Rifkand, Wharton & Garrison,
where he became a partner in 1984. Mr. Goldstein is also a Director of US
Franchise Systems, Inc., a NASDAQ company that is a hotel franchisor.

         Charles M. Lillis, 57, has been a director of On Command Corporation
since February 2000. Mr. Lillis is Chairman and Chief Executive Officer of
MediaOne Group. Prior thereto, Mr. Lillis was President and Chief Executive
Officer of MediaOne Group from April 1995 to May 1997, and prior to that time
was President of US WEST Diversified Group from 1991 to 1994 and was Executive
Vice President and Chief Planning Officer of US WEST, Inc. from 1987 to 1991.
Mr. Lillis joined US WEST in 1985 as Vice President of Strategic Marketing. Mr.
Lillis is also a member of the boards of directors of SuperValu, Inc. and
Ascent.

         Peter May, 57, has been a director of On Command Corporation since
February 2000. Mr. May is currently President and Chief Operating Officer of
Triarc Companies, Inc. Mr. May was President and Chief Operating Officer of
Triangle Industries, Inc. from 1983 to December 1988. Mr. May is a Trustee of
the University of Chicago and a member of the Advisory Council on the Graduate
School of Business of the University of Chicago. Mr. May is also a member of the
board of directors of Ascent.

         J.C. Sparkman, 66, has been a Director of On Command Corporation since
November 1998. Mr. Sparkman served as Executive Vice President and Chief
Operating Officer of Tele-Communications, Inc. from 1987 until his retirement in
1995. Mr. Sparkman is a Director of TCI, Shaw Communications and Universal
Electronics, Inc.

         J. David Wargo, 45, has been a Director of On Command Corporation since
November 1998. Mr. Wargo is President of Wargo & Company, Inc. Mr. Wargo is also
a Director of TV Guide, Inc.

         Gary L. Wilson, 59, has been a Director of On Command Corporation since
September 1996. Mr. Wilson is chairman of the board and a principal investor in
NWA, Inc., parent of Northwest Airlines and several other transportation-related
subsidiaries. He served as co-chairman since 1991 and was named chairman in
1997. Mr. Wilson is a director of The Walt Disney Company. He joined The Walt
Disney Company in 1985 and served as executive vice president and chief
financial officer until 1990. He also serves on the board of trustees at Duke
University, the board of visitors at the Fuqua School of Business at Duke, and
also the board of overseers of The Wharton School at the University of
Pennsylvania. Mr. Wilson is a member of the board of directors of CB Richard
Ellis, Inc. and the National Collegiate Athletic Association Foundation.



                                       43
<PAGE>   46

OTHER INFORMATION CONCERNING DIRECTORS

COMMITTEES

         The Board has two standing committees, described below.

         The Audit Committee consists of Messrs. Cronin, Wargo (Chairman) and
Wilson. The Committee makes recommendations to the Board of Directors concerning
the selection of independent public accountants; confers with the independent
public accountants to determine the scope of the audit that such accountants
will perform; receives reports from the independent public accountants and
transmits such reports to the Board of Directors, and after the close of the
fiscal year, transmits to the Board of Directors the financial statements
certified by such accountants; inquires into, examines and makes comments on the
accounting procedures of the Company and the reports of the Independent Public
Accountants; considers and makes recommendations to the Board of Directors upon
matters presented to it by the officers of the Company pertaining to the audit
practices and procedures adhered to by the Company; considers and makes
recommendations to the Board of Directors in respect of the financial affairs of
the Company, including matters related to the capital structure and
requirements, financial performance, dividend policy, capital and significant
capital commitments; and reviews and approves the Company's overall financial
policies and procedures, spending controls, systems integrity, balance sheet
reserve levels, and revenue and expense accountability. The Committee met two
times in 1999.

         The Compensation Committee consists of Messrs. Goldstein (Chairman) and
Sparkman. The Committee approves long-term compensation for senior executives;
considers and makes recommendations to the Board of Directors with respect to:
programs for human resources development and management organization and
succession; salary and bonus for senior executives; and compensation matters and
policies and employee benefit and incentive plans; and exercises authority
granted to it to administer such plans. In addition, the Compensation Committee
recommends to the Board of Directors qualified candidates for election as
directors and as Chairman of the Board, and considers, acts upon or makes
recommendations to the Board of Directors with respect to such other matters as
may be referred to it by the Board of Directors, the Chairman of the Board or
the Chief Executive Officer. It will consider candidates recommended by
stockholders, if the recommendations are submitted in writing to the Secretary
of the Company. The Committee met three times during 1999.

DIRECTORS COMPENSATION

         In May 1997 the Company adopted a compensation plan for Independent
Directors (defined as directors who are neither employees of the Company nor
officers or employees of Ascent, so long as Ascent, directly or indirectly holds
50% or more of the outstanding Common Stock of the Company). Independent
Directors receive an annual retainer of $6,000 in cash, payable quarterly; $500
for each Board meeting attended; and $500 for each official Committee of the
Board attended. Each Independent Director who is also a chairman of an official
Committee meeting of the Board receives an additional annual fee of $2,000
payable quarterly. In addition, the Board of Directors and the Company's
stockholders approved the 1997 Non-Employee Directors Stock Plan (the "Directors
Plan") to grant annual awards of the Company's Common Stock and options to
purchase the Company's Common Stock to Independent Directors. The Directors Plan
originally authorized the granting of an award of 400 shares of the Company's
Common Stock and a non-qualified option to purchase 4,000 shares of the
Company's Common Stock, priced at the fair market value on the date of grant, to
each Independent Director on an annual basis following the company's Annual
Stockholder meeting. Such options are exercisable as follows: 25% on the first
anniversary of the date of grant, 50% on the second anniversary of the date of
grant and 100% on the third anniversary of the date of grant.

         In April 1999, the Board ratified and adopted an amendment to the
Director Plan, which amendment was approved by shareholders at the 1999 meeting.
Pursuant to the amendment the Independent Directors would continue to receive
400 shares annually, however, the annual grant to Independent Directors of an
option to purchase 4,000 shares of common stock of the Company was replaced with
a one-time grant of an option to purchase 50,000 shares of the Company's common
stock (the "Option"). Under the terms of the amendment, any Independent Director
who received an Option would not be eligible to receive an additional Option
until the fifth annual meeting after the original grant. The Options vest 25% on
the first anniversary of grant, and 25% and 50%, respectively, on the second and
third anniversaries,



                                       44
<PAGE>   47

or 100% upon a change in control of the Company. In November 1999, the Board
acted to provide that an acquisition of Ascent would constitute a change in
control of the Company for purposes of the Directors Plan.

         Mr. Cronin was an executive of Ascent from June 1996 through January
2000 and was on the Compensation Committee of On Command Corporation from
October 1996 through 1998. There were no compensation committee interlocks or
insider participation in compensation decisions during 1999.

COMPLIANCE WITH SECURITIES LAWS

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
initial reports of ownership and reports of changes in ownership with the SEC
and the NASDAQ National Market System. Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. The Company has undertaken the obligation to make these filings on behalf
of its directors and executive officers.

         Based solely on its review of copies of such forms received and filed
by it with respect to 1999, or written representations from certain reporting
persons, the Company believes that all of its directors and executive officers
and persons who own more than 10% of the Company's registered equity have
complied with the reporting requirements of Section 16(a).


ITEM 11.  EXECUTIVE COMPENSATION

         The following table shows the compensation received for the three
fiscal years ended December 31, 1999 by the (i) Chairman and former Acting Chief
Executive Officer, (ii) the former President and Chief Operating Officer, (iii)
the Senior Vice President, Operations of OCC and, previously, OCV, (iv) the
Senior Vice President, Finance, and (v) the Senior Vice President, Engineering
of OCC and, previously, OCV (the officers being hereafter referred to as the
"Named Executive Officers").

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                     ANNUAL COMPENSATION               LONG TERM COMPENSATION
                                     -------------------------------  -------------------------
                                                           OTHER      RESTRICTED    SECURITIES
                                                           ANNUAL        STOCK       UNDERLYING      ALL OTHER
NAME AND                              SALARY     BONUS  COMPENSATION    AWARD(S)    OPTIONS/SARS   COMPENSATION
POSITION(1)                  YEAR      ($)        ($)      ($)(2)         ($)          (#)(3)         ($)(4)

<S>                          <C>     <C>        <C>       <C>         <C>           <C>           <C>
James A. Cronin, III         1999    500,000    200,000        -0-           -0-           -0-       $ 33,699
Chairman and Acting          1998    498,846    375,000        -0-           -0-           -0-         16,069
Chief Executive Officer      1997    400,000    350,000        -0-           -0-       297,500*        13,177


Brian A.C. Steel             1999    360,833    156,791        -0-           -0-           -0-       $ 18,365
   President and             1998    294,617    250,000        -0-           -0-           -0-         19,520
   Chief Operating           1997    290,000    203,000    172,467           -0-           -0-        483,894
   Officer

Ronald D. Lessack            1999    217,500     60,300        -0-           -0-        50,000          5,852
  Senior Vice                1998    205,500     57,000        -0-           -0-        48,200          6,320
  President,                 1997    193,500     70,000        -0-           -0-        10,000*         5,572
  Operations

Paul J. Milley               1999    194,375     57,500        -0-           -0-        50,000          5,528
  Senior Vice                1998    181,249     54,000        -0-           -0-        50,000          5,000
  President, CFO             1997    174,996     44,000     30,000           -0-           -0-         61,403

Richard Fenwick, Jr          1999    204,375     50,500        -0-           -0-        50,000          5,324
  Senior Vice                1998    178,958     45,000        -0-           -0-        35,300          6,320
  President,                 1997    165,000     40,000        -0-           -0-        10,000*         4,984
  Engineering
</TABLE>



                                       45
<PAGE>   48

(1)      Mr. Cronin served as Acting Chief Executive Officer of the Company from
         August 1999 through February 2000 and the compensation above is
         compensation for his serving as Executive Vice President, Chief
         Operating Officer and Chief Financial Officer of Ascent. Mr. Steel
         resigned as President, Chief Operating Officer and a director of the
         Company on August 6, 1999.

(2)      Other Annual Compensation consists of tax reimbursements for the
         amounts shown. Other Annual Compensation shown for 1997, 1998 and 1999
         does not include perquisites and other personal benefits because the
         aggregate amount of such compensation does not exceed the lesser of (i)
         $50,000 or (ii) 10% of the combined salary and bonus for the Named
         Executive Officer in each year.

(3)      All options marked with an asterisk (*) are Stock Appreciation Rights
         ("SARs") that were issued in exchange for Ascent employee stock
         options, which options were canceled in connection with the grant of
         the SARs. In connection with Mr. Steel's resignation, 16,055 OCC
         options held by Mr. Steel were cancelled.

(4)      For 1999, other compensation includes: (i) contributions by the Company
         on behalf of the executive to the Company's 401(k) plan, (ii) life
         insurance premiums for policies in excess of $50,000 face value, (iii)
         auto allowance and (iv) for Mr. Cronin, unused credits under the Ascent
         cafeteria plan.


<TABLE>
<CAPTION>
                                   401(k)  INSURANCE        AUTO
Name                             MATCHING    PREMIUM   ALLOWANCE   CREDITS      TOTAL

<S>                              <C>       <C>        <C>         <C>        <C>
James A. Cronin, III             $      0   $      0   $ 13,199   $ 20,500   $ 33,699
Brian A.C. Steel                    5,000        165     13,200        -0-     18,365
Ronald D. Lessack                   5,000        852        -0-        -0-      5,852
Paul J. Milley                      5,000        528        -0-        -0-      5,528
Richard Fenwick, Jr                 5,000        324        -0-        -0-      5,324
</TABLE>


                        Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                              Individual Grants
---------------------------------------------------------------
                          NUMBER OF         PERCENT OF TOTAL                                            GRANT DATE
                          SECURITIES        OPTIONS GRANTED TO      EXERCISE OR    EXPIRATION DATE      PRESENT VALUE
                          UNDERLYING        EMPLOYEES IN FISCAL     BASE PRICE                          $(3)
NAME                      OPTIONS           YEAR(2)                 ($/SH)
                          GRANTED(#)(1)
--------------------      -------------     -------------------     -----------    ---------------      -------------

<S>                       <C>               <C>                     <C>            <C>                  <C>
Richard Fenwick, Jr.        50,000            4%                    $16.00             12/07/09          $413,108
Ronald Lessack              50,000            4%                    $16.00             12/07/09          $413,108
Paul Milley                 50,000            4%                    $16.00             12/07/09          $413,108

</TABLE>



                                       46
<PAGE>   49

(1)      The options expire ten years from grant date and vest 50% annually over
         two years.

(2)      The total number of options granted to OCC employees in 1999 was
         1,070,500.

(3)      On Command used the Black-Scholes option pricing model to determine
         grant date present values using the following assumptions: stock price
         volatility of 45.9%, a five to six year option term, a risk-free rate
         of return of 6.41%, and no dividend yield. Forfeitures are reflected as
         they occur. The use of this model is in accordance with SEC rules;
         however the actual value of an option will be measured by the
         difference between the stock price and the exercise price on the date
         the option is exercised.

OPTION EXERCISES AND FISCAL YEAR-END VALUES

         THE FOLLOWING TABLE SETS FORTH INFORMATION ON (i) OPTIONS EXERCISED BY
THE NAMED EXECUTIVE OFFICERS IN 1999, AND (ii) THE NUMBER AND VALUE OF THEIR
UNEXERCISED OPTIONS AT DECEMBER 31, 1999.


         AGGREGATED OPTION EXERCISES IN 1999, AND YEAR-END OPTION VALUES


<TABLE>
<CAPTION>
                                                     NUMBER OF SECURITIES
                                                     Underlying Unexercised       Value of In-The Money
                                                     OPTIONS AT 12/31/99          OPTIONS AT 12/31/99
                                                     ----------------------       ---------------------


                               SHARES
                             UNDERLYING                                 UN-                       UN-
                               OPTIONS      VALUE     EXERCISABLE   EXERCISABLE  EXERCISABLE  EXERCISABLE
           NAME               EXERCISED    REALIZED       (#)           (#)          ($)          ($)
<S>                          <C>           <C>        <C>           <C>          <C>          <C>
James A. Cronin, III               -0-          -0-          -0-          -0-          -0-          -0-
Ascent                             -0-          -0-      148,750      148,750     $470,496     $470,496

Brian A.C. Steel               175,000     $511,000       73,851          -0-          -0-          -0-

Ronald D. Lessack                  -0-          -0-      105,440      114,560     $497,034     $340,832
Ascent                             -0-          -0-       10,000          -0-     $ 31,630          -0-

Paul J. Milley                     -0-          -0-       40,000      110,000     $113,090     $336,810

Richard Fenwick, Jr             10,000     $ 59,200       95,760      104,240     $712,517     $289,882
Ascent                             -0-          -0-       10,000          -0-     $ 31,630          -0-
</TABLE>

EMPLOYMENT AND SEVERANCE ARRANGEMENTS

         In September 1996, the Company and Mr. Steel entered into an employment
agreement that expired on September 11, 2000. Pursuant to the agreement, Mr.
Steel's initial base salary was $290,000 per year, subject to increases at the
discretion of the Board of Directors of the Company. Under the agreement, Mr.
Steel was eligible for annual bonuses based on performance measures determined
by the Compensation Committee with a target bonus equal to 70% of Mr. Steel's
base salary for achieving 100% of the target level for the performance measures.
In addition, Mr. Steel was granted options to purchase 385,312 shares of OCC
Common Stock, exercisable at the following per-share prices: (i) 80% of such
options at a per-share price equal to $15.33 and (ii) 20% of such options at a
per-share price equal to $16.40. The options vested 25% on September 11, 1997
and an additional 25% on September 11, 1998, and the remaining 50% were to vest
on September 11, 1999. Under the agreement the options expire at the earlier of
(i) three months after the date upon which Mr. Steel is terminated for "cause"



                                       47
<PAGE>   50

(as defined in the employment agreement); (ii) one year after Mr. Steel's
employment agreement is terminated as a result of death or (iii) on September
11, 2006.

         In addition, the employment agreement for Mr. Steel provides that upon
a "Change of Control Event" (as defined in the agreement), Mr. Steel will be
entitled to elect to terminate his employment with the Company and, for the
longer of (a) the remainder of the term of his employment agreement as if such
agreement had not been terminated and (b) one year following the date of such
termination (such period being the "Duration Period"), will receive: (i) his
then current base salary; (ii) an annual bonus equal to 70% of his then current
base salary for each year during the Duration Period; and (iii) all other
benefits provided pursuant to the employment agreement. A "Change of Control
Event" is defined in the employment agreement as an affirmative determination,
either jointly by Mr. Steel and the Board of Directors or pursuant to an
arbitration which Mr. Steel has the right to invoke, that any "change of
control" of the Company (defined as an event as result of which (i) a single
person or entity other than Ascent or its affiliates owns 50% or more of the
voting stock of the Company or (ii) a single person or entity other than COMSAT
Corporation ("COMSAT") or its affiliates (which as of the date of the employment
agreements held approximately 80% of the outstanding Common Stock of Ascent, but
which consummated the distribution of its 80.67% ownership interest in Ascent to
the COMSAT shareholders on June 27, 1997) owns directly or indirectly 50% or
more of the voting stock of Ascent) or prospective change of control would be
reasonably likely to have a materially detrimental effect on either the
day-to-day circumstances of Mr. Steel's employment, or the compensation payable
to Mr. Steel under his employment agreement.

         On December 28, 1998, On Command and Mr. Steel entered into an
amendment to Mr. Steel's employment agreement. Pursuant to the amendment, Mr.
Steel assumed the title of President and Chief Operating Officer of OCC through
September 11, 2000, while reporting directly to the Chief Executive Officer and
Board of Directors of OCC, and if there was no Chief Executive Officer, then to
the Chairman. In addition, under the terms of the amendment (i) Mr. Steel's base
salary was increased to $375,000 per year and (ii) if OCC failed to review Mr.
Steel's compensation prior to June 1, 1999 or revise such compensation prior to
August 1, 1999, then Mr. Steel would be entitled to terminate his employment
with OCC and receive (a) his then base salary for a year from such termination,
and (b) a pro-rated annual bonus for the year in which employment was
terminated, and (iii) if Mr. Steel terminated his employment pursuant to the
foregoing clause (ii), then a pro-rated portion of the options previously
granted to Mr. Steel under OCC's stock option plans that were scheduled to vest
during the year of such termination, would vest as of the date of such
termination. Although OCC and Mr. Steel entered into negotiations regarding his
position and compensation at OCC during the above time periods, Mr. Steel's
compensation was not revised prior to August 1 and on August 6, 1999, Mr. Steel
resigned from OCC pursuant to the terms of his amended employment agreement.

         On January 7, 2000, On Command and Allan Goodson entered into an
employment agreement that expires on January 7, 2002. Pursuant to the agreement,
Mr. Goodson's initial base salary under the agreement is $300,000 per year,
subject to increases at the discretion of the Board of Directors of OCC. Under
the agreement, Mr. Goodson is eligible for annual bonuses based on performance
measures determined by the OCC Compensation Committee with a target bonus equal
to 70% of Mr. Goodson's base salary for achieving 100% of the target level for
the performance measures. In addition, Mr. Goodson has been granted options to
purchase 100,000 shares of OCC Common Stock, exercisable at a per-share price
equal to $15.90625. The options vest 50% on January 7, 2001 and 50% on January
7, 2002. The options will expire at the earliest of: (i) three months after the
date upon which Mr. Goodson is terminated for "cause" (as defined in the
employment agreement); (ii) one year after Mr. Goodson's employment agreement is
terminated as a result of death; or (iii) on January 7, 2010. Mr. Goodson's
agreement does not contain "change-of-control" provisions.

         In addition, Mr. Goodson's agreement provides that if Mr. Goodson is
terminated without "cause" (as defined in the agreement) or upon any substantial
reduction (except in connection with the termination of his employment
voluntarily by Mr. Goodson, or by the Company for "cause") by the Company of Mr.
Goodson's responsibilities as Executive Vice President and Chief Operating
Officer of the Company, or the Company is in material default of the agreement,
then: (i) there shall be no forfeiture of any rights or interests related to
fringe benefits granted under the agreement, including, without limitation, the
SARs and any other stock-based incentives, except that half of his 100,000
options will vest, to the extent not previously vested, and the other half of
which will be canceled, immediately upon such termination becoming effective and
final; (ii) the executive shall receive current base salary, fringe benefits and
the annual bonus outlined in the agreement for the longer of (a) the



                                       48
<PAGE>   51

remainder of the employment period under the agreement or (b) one year following
the date of such termination, with no obligation to seek other employment and no
offset to the amounts paid by the Company if other employment is obtained; and
(iii) all other benefits provided pursuant to the agreement shall be received by
the executive.

         In February 1999, the Company adopted a change of control severance
plan for the Company's executive officers at or above the level of vice
president (the "Severance Plan"). Under the Severance Plan, such employees are
eligible for certain payments and benefits, if within one year of a Change of
Control, such employee's employment is either terminated by the Company for any
reason other than death, disability or cause, or is terminated by the employee
for good reason. "Change of Control" is defined as any event as a result of
which any single entity or "group" (as defined in Rule 13d-5 of the Exchange
Act) other than Ascent or a group of which Ascent is a part owns more than fifty
percent (50%) of the voting stock of the Company.

         Under the Severance Plan eligible employees would be entitled to salary
continuation of from six months to twelve months depending upon the employee's
length of service, an annual bonus prorated to the effective date of
termination, and during the relevant period of salary continuation, continued
participation in OCC's benefit plans. In addition, stock options held by an
eligible employee would become 100% vested immediately and remain exercisable
for one year.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

         The Compensation Committee, which is composed of two directors, Richard
Goldstein (Chairman) and J.C. Sparkman, is responsible for establishing and
administering the Company's executive compensation philosophy. Set forth below
is the Committee's report on the 1999 compensation of the executive officers of
the Company, including Mr. Steel, the former President and Chief Operating
Officer of the Company (who resigned August 6, 1999), and the other executive
officers of the Company whose compensation is discussed below under "Executive
Compensation" (collectively, the "Named Executive Officers").

ANNUAL COMPENSATION

         Each of the Named Executive Officer's annual compensation for 1999 was
based on the Company's executive compensation philosophy that emphasizes
risk-based performance incentives as a key component of both annual and
long-term compensation.

         In 1999 Mr. Steel's compensation was based upon his amended employment
agreement, and was paid through August 6, 1999, the date of his resignation as
President, Chief Operating Officer and a director of the Company. (See Executive
Compensation -- Employment Agreements.) Mr. Cronin, who served as Acting Chief
Executive Officer of the Company from August 1999 through February 2000,
received no compensation from the Company in 1999. Mr. Cronin's compensation for
his duties as Executive Vice President, Chief Operating Officer and Chief
Financial Officer of Ascent is reflected in the compensation table on page 43.

         The other Named Executive Officers' annual base salary rates were
consistent with competitive salary ranges developed by the Company. These salary
ranges are based on market data for technology companies of comparable revenue
in the same geographic area. Annual salary adjustments take into account
individual Named Executive Officers' achievements during the prior year towards
key Company-wide objectives set annually, as well as the Named Executive
Officers' performance of their individual responsibilities.

         The bonus opportunities for the Named Executive Officers for 1999 were
based on corporate goals for the year and specified strategic and/or other
operating objectives established by management in consultation with the
Compensation Committee. Distributions to the Named Executive Officers under the
executive bonus plan are reviewed and determined by the Compensation Committee
on an annual basis. The bonus targets for the Named Executive Officers, other
than Mr. Steel, are allocated among the individual executive officers with
reference to responsibilities, performance and goal achievement of individual
executive officers.

         The annual bonus target for Mr. Steel is as set forth in his employment
agreement which provides for target bonuses in an amount equal to seventy
percent of base salary for Mr. Steel for achieving certain performance



                                       49
<PAGE>   52

measures as approved by the Compensation Committee. For 1999, Mr. Steel's bonus
of $156,791 was based on the severance provisions of his employment agreement,
which provided for a bonus of seventy percent of base salary pro-rated through
August 6, 1999.

         Bonuses for Messrs. Fenwick, Lessack and Milley were based on the
achievement of one or more strategic or operating measures as compared to
planned performance for the Company, as well as Mr. Cronin's evaluations of each
individual executive officer's achievement of his performance objectives for the
year. The Board reviewed and approved the Compensation Committee's bonus
recommendations for each of the Named Executive Officers.

LONG TERM COMPENSATION

         In connection with Mr. Steel's hiring by the Company in September 1996,
the Board, with the review and approval of Ascent's Compensation Committee and
Board of Directors, awarded Mr. Steel stock options to purchase 385,312 shares
of OCC Common Stock. The options vested 25% after one year and an additional 25%
after two years, and the remaining 50% were to vest after three years. The
options were to expire 10 years after the grant. Mr. Steel's employment
agreement was amended in December 1998 to provide that under certain
circumstances the remaining 50% would vest pro rata upon his termination of
employment and would expire one year thereafter. Eighty percent of the shares
purchasable upon exercise of each option were purchasable at a price per share
of $15.33 and the remaining twenty percent were purchasable at $16.40 per share.
The intent in granting the options was to create an immediate and significant
link between Mr. Steel's compensation and the interests of OCC's stockholders.
The size of the option award and the vesting schedule were effectively based
upon the practices of companies engaging in public offerings.

         At the time of his resignation from the Company, Mr. Steel vested in
369,257 of his 385,312 options and had one year from the date of his
resignation, August 6, 1999, in which to exercise the options.

         In December 1999, Messrs. Lessack, Fenwick and Milley each received an
award of a non-qualified stock option to purchase 50,000 shares of On Command
common stock pursuant to the Company's 1996 Key Employee Stock Plan. Each grant
vests 50% annually over two years and the amounts of the options awarded were
based on internal guidelines developed by the Company in an effort to be
competitive with other long-term incentive compensation for comparable positions
in technology companies. The Compensation Committee, in making the grant,
recognized the importance of increasing the link between senior management's
compensation and the interests of On Command's stockholders. The size of the
awards and the vesting schedule were determined in an effort to be competitive
with other companies in similar industries. All of the options will expire 10
years after the date of grant.

COMPENSATION COMMITTEE

Richard Goldstein, Chairman
J. C. Sparkman




                                       50
<PAGE>   53

                      SHAREHOLDER RETURN PERFORMANCE GRAPH

The following graph and chart compare the cumulative total shareholder return on
the Company's common stock, including the reinvestment of dividends, with the
return on the NASDAQ Index and a Company-constructed peer group.(1) On October
10, 1996, the Company's common stock began publicly trading. The performance
graph sets forth the return on $100 invested in On Command Corporation common
stock and the two stock indices from October 10, 1996 to December 31, 1999.

                  COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
          ON COMMAND CORPORATION, NASDAQ INDEX AND PEER GROUP INDEX(1)


                                    [GRAPH]



<TABLE>
<CAPTION>
                                10/10/96  12/31/96  12/31/97  12/31/98  12/31/99

<S>                             <C>       <C>       <C>       <C>       <C>
On Command Corp.                   $100      $ 67      $ 54      $ 38      $ 78
NASDAQ Index                       $100      $104      $128      $180      $333
Peer Group Index                   $100      $ 84      $ 81      $112      $312
</TABLE>


Assumes $100 invested on October 10, 1996 in the Common Stock of On Command
Corp., the NASDAQ Index and Peer Group Index (weighted by market
capitalization). Total return assumes reinvestment of dividends and common stock
equivalents.


(1)  The Company-constructed peer group is weighted annually by market
     capitalization and consists of publicly-traded companies including Advanced
     Radio Telecom Corporation, Ascent Entertainment Group, LodgeNet
     Entertainment Corporation and Youthstream Media Networks. United Pan-Europe
     Communications (an ADR) acquired @Entertainment in August 1999.
     @Entertainment was included in the peer group through July 1999 after which
     their data was no longer available.



                                       51
<PAGE>   54

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


COMMON STOCK OWNERSHIP OF FIVE PERCENT HOLDERS

         As of March 20, 2000, the record date, approximately [30,436,423]
shares of Common Stock were issued and outstanding. To the knowledge of the
Company, based upon Schedules 13G or 13D filed with the Securities and Exchange
Commission (the "SEC" or "Commission"), the following persons were the only
beneficial owners of more than five percent of the Company's Common Stock as of
December 31, 1999.


<TABLE>
<CAPTION>
Name and Address of                         Amount and Nature of                Percent of Common Stock
Beneficial Owner                            Beneficial Ownership                Issued and Outstanding

<S>                                         <C>                                <C>
Ascent Entertainment Group, Inc.(1)                 18,274,091                         56.5%
1225 Seventeenth Street, Ste. 1800
Denver, CO 80202

Credit Suisse First Boston(2)                        2,969,952                          9.8%
11 Madison Avenue
New York, NY 10010

Hilton Hotels Corporation(3)                         2,486,132                          8.3%
9336 Civic Center Drive
Beverly Hills, CA 90210

Merrill Lynch & Co., Inc.(4)                         2,153,239                         7.11%
800 Scudders Mill Road
Plainsboro, NJ 08536

Merrill Lynch  Corporate Bond Fund(5)                1,184,150                         5.19%
800 Scudders Mill Road
Plainsboro, NJ 08536

Gary Wilson(6)                                       1,810,000                          5.7%
9665 Wilshire Blvd., Suite 200
Beverly Hills, CA 90212
</TABLE>

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

(1)  Ascent Entertainment Group, Inc. ("Ascent") holds sole voting and
     dispositive power over 17,150,299 shares of Common Stock of On Command
     Corporation and 1,123,792 Series A Warrants of On Command Corporation.

(2)  Based on information contained in Schedule 13G/A filed with the Commission
     and dated February 14, 2000. Credit Suisse First Boston shares voting and
     dispositive power over 2,969,952 shares of Common Stock with its
     consolidated subsidiaries to the extent that they constitute a part of the
     Credit Suisse First Boston business unit which is engaged in corporate and
     investment banking, trading, private equity investment and derivatives
     business on a world-wide basis.

(3)  Hilton Hotels Corporation holds 2,333,346 shares of Common Stock of On
     Command Corporation and 152,782 Series A Warrants of On Command
     Corporation.

(4)  Based on information contained in Schedule 13G filed with the Commission
     and dated February 4, 2000. Merrill Lynch & Co., Inc., ("MLI") is the
     beneficial owner of 2,153,239 shares of OCC Common Stock (7.11%) (sole
     voting and dispositive power: 0 shares and shared voting and dispositive
     power: 2,153,239 shares) as parent holding company of Merrill Lynch Asset
     Management Group, which is comprised of registered investment advisors to
     various registered investment companies.



                                       52
<PAGE>   55

(5)  Based on information contained in Schedule 13G filed with the Commission
     and dated February 4, 2000. Merrill Lynch Corporate Bond Fund, Inc.
     ("Fund") is the beneficial owner of 1,569,811 shares of OCC Common Stock
     (5.19%) (sole voting and dispositive power: 0 shares and shared voting and
     dispositive power: 1,569,811 shares).

(6)  Mr. Wilson holds 1,810,000 Series C Warrants to purchase Common Stock of
     OCC with an exercise price of $15.33 per share.


COMMON STOCK OWNERSHIP OF MANAGEMENT

         The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 2000, by all directors
and nominees, by each of the executive officers named in the Summary
Compensation Table on page 45, and by all directors and executive officers as a
group. Under rules of the SEC, beneficial ownership includes any shares over
which an individual has sole or shared voting power or investment power, and
also any shares that the individual has the right to acquire within 60 days
through the exercise of any stock option or other right.


<TABLE>
<CAPTION>
                                                            Ascent Entertainment Group, Inc.
Name(1)                             Common Stock                     Common Stock
-----                               ------------            --------------------------------

<S>                               <C>                       <C>
James A. Cronin, III                     --                               --
Richard Fenwick, Jr                 102,820      (3)                      --
Richard D. Goldstein                 12,900      (2)                      --
Alan Goodson                             --                               --
Ronald D. Lessack                   115,080      (5)                     820
Charles Lillis                           --                            4,000      (11)
Peter May                                --                               --      (10)
Paul J Milley                        50,000      (7)                      --
J.C. Sparkman                        12,900      (6)                      --
Brian A.C. Steel                     73,851      (9)                      --
J. David Wargo                       12,900      (4)                      --
Gary Wilson                       1,827,700      (8)                      --

All Executive Officers
And Directors as a group
(14 persons)                      2,206,951                            6,339
</TABLE>

(1)      Unless otherwise indicated, each person has sole voting and investment
         powers over the shares listed, and no director or executive officer
         beneficially owns more than 1.0% of the Common Stock of the Company or
         Ascent.

(2)      Includes vested options to purchase 12,500 shares of On Command Common
         Stock.

(3)      Includes vested options to purchase 102,820 shares of Common Stock and
         186 Series A Warrants of OCC.

(4)      Includes vested options to purchase 12,500 shares of On Command Common
         Stock.

(5)      Includes vested options to purchase 115,080 shares of Common Stock and
         186 Series A Warrants of OCC.

(6)      Includes vested options to purchase 12,500 shares of On Command Common
         Stock.

(7)      Includes vested option to purchase 50,000 shares of On Command Common
         Stock.

(8)      Mr. Wilson holds 1,810,000 Series C Warrants to purchase common stock
         of On Command with an exercise price of $15.33 per share and vested
         options to purchase 16,500 shares of On Command Common Stock.

(9)      Includes vested options to purchase 73,851 shares of On Command Common
         Stock.



                                       53
<PAGE>   56

(10)     Mr. May disclaims beneficial ownership of 2,876,700 shares of Ascent
         Common Stock which are directly held by Ascent Acquisition Group, LLC,
         an entity which is 50% owned by Triarc Companies, Inc. ("Triarc"). Mr.
         May is a director, President and Chief Operating Officer of Triarc.

(11)     Includes vested options to purchase 4,000 shares of Ascent Common
         Stock.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATIONSHIP WITH ASCENT

MERGER AGREEMENT

         On February 22, 2000, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Liberty Media Corporation ("Liberty") and
Liberty AEG Acquisition, Inc. ("Merger Sub"), an indirect wholly-owned
subsidiary of Liberty. Prior to Ascent entering into the Merger Agreement, the
OCC Board of Directors approved the Merger Agreement. Pursuant to the Merger
Agreement, Merger Sub commenced a Tender Offer (the "Offer") offering Ascent
stockholders $15.25 in cash for each share of Ascent common stock. Liberty
commenced the offer on February 29, 2000 and under its terms and subject to its
conditions, the Offer will expire on March 27, 2000, unless extended pursuant to
the Merger Agreement. The Offer is conditioned on the tender of at least a
majority of the Ascent shares as well as other customary conditions. Under the
Merger Agreement and subject to the terms thereof, following the Offer, Merger
Sub will be merged with and into Ascent (the "Merger") and all shares not
purchased in the Offer (other than Shares held by Liberty, Merger Sub or Ascent,
or shares held by dissenting stockholders) will be converted into the right to
receive $15.25 per Share in cash.

         Ascent owns approximately 56.6% of the Company's issued and outstanding
Common Stock. For so long as Ascent continues to own more than 50% of the
outstanding voting stock of the Company, Ascent will be able, among other
things, to approve any corporate action requiring majority stockholder approval,
including the election of a majority of the Company's directors, effect
amendments to the Company's Certificate of Incorporation and Bylaws and approve
any other matter submitted to a vote of the stockholders without the consent of
the other stockholders of the Company. In addition, through its representation
on the Board of Directors, Ascent is able to influence certain decisions,
including decisions with respect to the Company's dividend policy, the Company's
access to capital (including the decision to incur additional indebtedness or
issue additional shares of Common Stock), mergers or other business combinations
involving the Company, the acquisition or disposition of assets by the Company
and any change in control of the Company.

         The Company and Ascent have entered into a Management Services
Agreement pursuant to which Ascent provides certain management services,
including insurance, administration, coordination and advisory services
regarding corporate financing, employee benefits administration, public
relations and other corporate functions to the Company and makes available
certain of its employee benefit plans to the Company's employees. Pursuant to
the Services Agreement, Ascent is entitled to the payment of (i) an annual fee
of $1.2 million, (ii) the actual cost to Ascent of the benefits provided to the
Company's employees and (iii) certain of Ascent's actual out-of-pocket expenses
in connection with the Services Agreement (not including overhead and the cost
of its personnel). Further, the Company will indemnify Ascent from all damages
from Ascent's performance of services under the Services Agreement unless such
damages are caused by willful breach by Ascent or willful misconduct or gross
negligence by Ascent's employees in fulfilling its obligations under the
Services Agreement. Ascent will indemnify the Company from damages arising from
willful breach by Ascent or gross negligence or willful misconduct by Ascent's
employees in the performance of the Services Agreement. The Services Agreement
is for an initial term through December 31, 1999, renewable for additional
one-year terms by Ascent upon notice to On Command which election Ascent may
exercise as long as it and its subsidiaries own at least 50% of the outstanding
Common Stock. The Services Agreement is subject to the termination by either
party upon 60 days prior notice if Ascent fails to own the largest percentage
and at least 40% of the Company's outstanding securities.

         The Company and Ascent have also entered into a Corporate Agreement
that governs certain other relationships and arrangements between the Company
and Ascent. Pursuant to the Corporate Agreement, for so long as Ascent
beneficially owns, directly or indirectly, the largest percentage (and at least
40%) of the outstanding securities of the Company entitled to be cast for the
election of directors, Ascent may propose, at each election of



                                       54
<PAGE>   57

directors, a slate of directors, or in the case of vacancies, individual
directors, for election so that at all times during the term of the Corporate
Agreement, a majority of the Board of Directors of the Company is comprised of
persons designated by Ascent. In addition, pursuant to the Corporate Agreement,
as amended, for so long as Ascent owns the largest percentage (and at least 40%)
of the outstanding OCC Common Stock (i) the Company will not incur any
indebtedness, other than that under its existing Credit Facility (and
refinancings thereof) and indebtedness incurred in the ordinary course of
business which together shall not exceed $200 million in the aggregate through
June 30, 2000, or issue any equity securities or any securities convertible into
equity securities without Ascent's prior consent, (ii) the Company may not amend
its Certificate of Incorporation or Bylaws without Ascent's prior consent, and
(iii) the Company will utilize reasonable cash management procedures and use its
reasonable best efforts to minimize the Company's excess cash holdings.





                                       55
<PAGE>   58

                                     PART IV

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

(a)(1)   FINANCIAL STATEMENTS

         The following consolidated financial statements of On Command
         Corporation are included in Item 8:

         Independent Auditors' Report

         Consolidated Balance Sheets at December 31, 1999 and 1998

         Consolidated Statements of Operations for the years ended December 31,
         1999, 1998 and 1997

         Consolidated Statements of Stockholders' Equity for the years ended
         December 31, 1999, 1998 and 1997

         Consolidated Statements of Comprehensive Loss for the years ended
         December 31, 1999, 1998 and 1997

         Consolidated Statements of Cash Flows for the years ended December 31,
         1999, 1998 and 1997

         Notes to the Consolidated Financial Statements


(a)(2)   FINANCIAL STATEMENT SCHEDULES

         The following consolidated financial statement schedule of On Command
         Corporation is included:

         Schedule II -- Valuation Accounts

         Information required by the other schedules has been presented in the
         Notes to the Consolidated Financial Statement or such schedule is not
         applicable and, therefore, has been omitted.

(a)(3)   EXHIBITS AND REPORTS ON FORM 8-K

         (A) EXHIBIT

EXHIBIT
NO.                                    DESCRIPTION

3.1      Certificate of Amended and Restated Certificate of Incorporation of On
         Command Corporation, which is incorporated by reference to Exhibit 3.1
         of Form S-4.

3.2      Bylaws of On Command Corporation, which is incorporated by reference to
         Exhibit 3.3 of Form S-4.

3.3      Amendment to Bylaws dated as of November 23, 1998, which is
         incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the
         Company's Annual Report on Form 10-K for the year ended December 31,
         1998.

3.4      Amendment to Bylaws dated as of August 5, 1999.

4.1      Registration Rights Agreement by and among On Command Corporation and
         the other parties named therein, which is incorporated by reference to
         Exhibit 4.1 of Form S-4.

4.2      Warrant Agreement by and among On Command Corporation and the other
         parties named therein, which is incorporated by reference to Exhibit
         4.2 of Form S-4.

10.1     Master Services Agreement, dated as of August 3, 1993, by and between
         Marriott International, Inc., Marriott Hotel Services, Inc. and On
         Command Video Corporation (confidential treatment granted), which is
         incorporated by reference to Form S-4, (Incorporated by reference to
         Exhibit 10.6 of the Registration statement on Form S-1 (File No.
         33-98502) of Ascent Entertainment Group, Inc.).

10.2     Hilton Hotels Corporation-On Command Video Agreement, dated April 27,
         1993, by and between Hilton Hotels Corporation and On Command Video
         Corporation, which is incorporated by reference to Exhibit 10.4 of Form
         S-4 (confidential treatment granted).

10.3*    Amended and Restated Employment Agreement between On Command
         Corporation and Robert Kavner, dated as of December, 1998, which is
         incorporated by reference to Exhibit 10.3 to the Company's Annual
         Report on Form 10-K for the year ended December 31, 1998.

10.4*    Amendment to Employment Agreement between On Command Corporation and
         Brian Steel, dated as of December 31, 1998, which is incorporated by
         reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K
         for the year ended December 31, 1998.



                                       56
<PAGE>   59

10.5*    Employment and Consulting Agreement, dated November 20, 1991, between
         Robert Snyder and On Command Video Corporation which is incorporated by
         reference to Exhibit 10.9 of Form S-4.

10.6     Standard Lease, dated June, 1996, between Berg & Berg Developers, and
         On Command Video Corporation (Incorporated by reference to Exhibit
         10.10 of the Annual Report on Form 10-K for the year ended December 31,
         1996 ("OCC 1996 Form 10-K")).

10.7     Corporate Agreement dated as of October 8, 1996, between On Command
         Corporation and Ascent Entertainment Group, Inc. (Incorporated by
         reference to Exhibit 10.22 of the Annual Report on Form 10-K for the
         year ended December 31, 1996 at Ascent Entertainment Group, Inc.
         (Commission File No. 0-27192)).

10.8*    1996 Key Employee Stock Plan (Incorporated by reference to Exhibit
         10.13 of the OCC 1996 Form 10-K).

10.9*    1997 Employee Stock Purchase Plan (Incorporated by reference to Exhibit
         4(c) of Form S-8 filed August 8, 1997).

10.10*   Amended and restated 1997 Non-Employee Directors Stock Plan.

10.11    First Amended and Restated Credit Agreement dated as of November 24,
         1997, between On Command Corporation and the Lenders Named Therein and
         NationsBank of Texas, N.A., which is incorporated by reference to
         Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1997.

10.12    Change of Control Severance Plan for Executive Officers. (Incorporated
         by reference to Exhibit 10.12 of the Annual Report on Form 10-K for the
         year-ended December 31, 1998).

21.1     Subsidiaries of On Command Corporation.

23.1     Independent Auditors' Consent.

23.2     Independent Auditors' Consent.

23.3     Independent Auditors' Consent.

27       Financial Data Schedule.

*        Indicates compensatory plan or arrangement.

 (B)  REPORTS

         No reports on Form 8-K were filed during the quarter ended December 31,
         1999.




                                       57
<PAGE>   60

                                   SIGNATURES

        PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY SAN JOSE,
STATE OF CALIFORNIA ON MARCH 27, 2000.

                                             On Command Corporation

                                             By: /s/ ALLAN H. GOODSON
                                                --------------------
                                             Allan H. Goodson
                                             Executive Vice President and Chief
                                             Operating Officer

        PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE                                            TITLE                                               DATE
---------                                            -----                                               ----

<S>                                                  <C>                                                 <C>
/s/ ALLAN H. GOODSON                                 Executive Vice President and Chief                  March 27, 2000
------------------------------                       Operating Officer
Allan H. Goodson                                     (Principal Executive Officer)

/s/ PAUL J. MILLEY                                   Senior Vice President, Finance                      March 27, 2000
------------------------------                       (Principal Accounting and Financial Officer)
Paul J. Milley

/s/ JAMES A. CRONIN, III                             Chairman of the Board                               March 27, 2000
------------------------------
James A. Cronin, III

/s/ RICHARD D. GOLDSTEIN                             Director                                            March 27, 2000
------------------------------
Richard D. Goldstein

/s/ CHARLES M. LILLIS                                Director                                            March 27, 2000
------------------------------
Charles M. Lillis

/s/ PETER MAY                                        Director                                            March 27, 2000
------------------------------
Peter May

/s/ J.C. SPARKMAN                                    Director                                            March 27, 2000
------------------------------
J.C. Sparkman

/s/ J. DAVID WARGO                                   Director                                            March 27, 2000
------------------------------
J. David Wargo

/s/ GARY L. WILSON                                   Director                                            March 27, 2000
------------------------------
Gary L. Wilson
</TABLE>


                                       58
<PAGE>   61

ON COMMAND CORPORATION
SCHEDULE II

VALUATION ACCOUNTS

<TABLE>
<CAPTION>
COL A                                                   COL B               COL C            COL D            COL E

                                                                         Charged to
Description                                    Balance at Beginning         Costs                        Balance at End
                                               of Period                 or Expenses      Deductions        of Period
-----------                                    --------------------      -----------      ----------     --------------
<S>                                            <C>                       <C>              <C>            <C>
From January 1, 1999 to December 31, 1999
   Deferred tax asset valuation allowance              $ 47,401,000        9,249,000               --     $ 56,650,000
   Bad debt allowance                                     1,484,000        1,137,000          334,000        2,287,000

From January 1, 1998 to December 31, 1998
   Deferred tax asset valuation allowance              $ 39,385,000        8,016,000               --     $ 47,401,000
   Bad debt allowance                                     1,630,000          982,000        1,128,000        1,484,000

From January 1, 1997 to December 31, 1997
   Deferred tax asset valuation allowance              $ 28,765,000       10,620,000               --     $ 39,385,000
   Bad debt allowance                                       629,000        1,001,000               --        1,630,000
</TABLE>




                                       59
<PAGE>   62

OFFICERS
Allan Goodson
Executive Vice President and Chief Operating
Officer


Richard C. Fenwick, Jr.
Senior Vice President, Engineering

Ronald D. Lessack
Senior Vice President, Operations

Paul J. Milley
Senior Vice President, Finance

Arthur M. Aaron
Acting General Counsel and Secretary

Jean A. deVera
Senior Vice President, Account Management

DIRECTORS
James A. Cronin, Chairman

Peter May
President, Chief Operating Officer
and Director of Triarc Companies, Inc.

Charles M. Lillis
Chief Executive Officer and Chairman
Media One Group

Gary L. Wilson
Chairman, Northwest Airlines, Inc.

Richard D. Goldstein
Senior Managing Director, Alpine Capital Group
Director, US Franchise Systems, Inc;
Roberts Radio LLC; and The Berkshire
Bank

J. David Wargo
President, Wargo & Company, Inc.
Director, TV Guide, Inc.

J.C. Sparkman
Director, TCI; Shaw Communications;
and Universal Electronics, Inc.


COMMON STOCK

The Company's common stock commenced trading
on October 8, 1996, and is listed on the
NASDAQ National Market under the symbol
ONCO.

SERIES A COMMON STOCK PURCHASE WARRANTS

The Series A Warrants commenced trading on
October 8, 1996, and are listed on the
NASDAQ National Market under the ticker
symbol ONCOW.

SERIES B COMMON STOCK PURCHASE WARRANTS

The Series B Warrants commenced trading on
January 10, 1997, and are listed on the
NASDAQ National Market under the ticker
symbol ONCOZ.

FORM 10-K AND OTHER INVESTOR INFORMATION

A copy of our Form 10-K, filed with the
Securities and Exchange Commission (SEC), is
included in this report. Additional copies
are available upon request. To have your
name placed on a mailing list for copies of
press releases and periodic reports to the
SEC, please call or fax our corporation
headquarters.

AUDITORS

Deloitte & Touche LLP
60 S. Market Street, Suite 800
San Jose, California 95113

TRANSFER AGENT
Bank of New York
101 Barclay Street (22W)
New York, New York 10286
Website Address: http://stock.bankofny.com

SHAREHOLDER SERVICES AGENT

If you have questions concerning your
ownership or records, please write to:
  On Command Corporation
  c/o The Bank of New York
  Shareholder Relations Department - 11E
  PO Box 11258
  Church Street Station
  New York, New York 10286
  E-Mail Address: Shareowner-
  svcs@Email.bony.com



                                       60
<PAGE>   63



                      SHAREHOLDER RETURN PERFORMANCE GRAPH

The following graph and chart compare the cumulative total shareholder return on
the Company's common stock, including the reinvestment of dividends, with the
return on the NASDAQ Index and a Company-constructed peer group.(1) On October
10, 1996, the Company's common stock began publicly trading. The performance
graph sets forth the return on $100 invested in On Command Corporation common
stock and the two stock indices from October 10, 1996 to December 31, 1999.

                  COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
          ON COMMAND CORPORATION, NASDAQ INDEX AND PEER GROUP INDEX(1)


                                    [GRAPH]



<TABLE>
<CAPTION>
                                10/10/96  12/31/96  12/31/97  12/31/98  12/31/99

<S>                             <C>       <C>       <C>       <C>       <C>
On Command Corp.                   $100      $ 67      $ 54      $ 38      $ 78
NASDAQ Index                       $100      $104      $128      $180      $333
Peer Group Index                   $100      $ 84      $ 81      $112      $312
</TABLE>


Assumes $100 invested on October 10, 1996 in the Common Stock of On Command
Corp., the NASDAQ Index and Peer Group Index (weighted by market
capitalization). Total return assumes reinvestment of dividends and common stock
equivalents.


(1)  The Company-constructed peer group is weighted annually by market
     capitalization and consists of publicly-traded companies including Advanced
     Radio Telecom Corporation, Ascent Entertainment Group, LodgeNet
     Entertainment Corporation and Youthstream Media Networks. United Pan-Europe
     Communications (an ADR) acquired @Entertainment in August 1999.
     @Entertainment was included in the peer group through July 1999 after which
     their data was no longer available.



                                       61
<PAGE>   64

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                        DESCRIPTION
-------                       -----------

<S>      <C>
3.1      Certificate of Amended and Restated Certificate of Incorporation of On
         Command Corporation, which is incorporated by reference to Exhibit 3.1
         of Form S-4.

3.2      Bylaws of On Command Corporation, which is incorporated by reference to
         Exhibit 3.3 of Form S-4.

3.3      Amendment to Bylaws dated as of November 23, 1998, which is
         incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the
         Company's Annual Report on Form 10-K for the year ended December 31,
         1998.

3.4      Amendment to Bylaws dated as of August 5, 1999.

4.1      Registration Rights Agreement by and among On Command Corporation and
         the other parties named therein, which is incorporated by reference to
         Exhibit 4.1 of Form S-4.

4.2      Warrant Agreement by and among On Command Corporation and the other
         parties named therein, which is incorporated by reference to Exhibit
         4.2 of Form S-4.

10.1     Master Services Agreement, dated as of August 3, 1993, by and between
         Marriott International, Inc., Marriott Hotel Services, Inc. and On
         Command Video Corporation (confidential treatment granted), which is
         incorporated by reference to Form S-4, (Incorporated by reference to
         Exhibit 10.6 of the Registration statement on Form S-1 (File No.
         33-98502) of Ascent Entertainment Group, Inc.).

10.2     Hilton Hotels Corporation-On Command Video Agreement, dated April 27,
         1993, by and between Hilton Hotels Corporation and On Command Video
         Corporation, which is incorporated by reference to Exhibit 10.4 of Form
         S-4 (confidential treatment granted).

10.3*    Amended and Restated Employment Agreement between On Command
         Corporation and Robert Kavner, dated as of December, 1998, which is
         incorporated by reference to Exhibit 10.3 to the Company's Annual
         Report on Form 10-K for the year ended December 31, 1998.

10.4*    Amendment to Employment Agreement between On Command Corporation and
         Brian Steel, dated as of December 31, 1998, which is incorporated by
         reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K
         for the year ended December 31, 1998.

</TABLE>



<PAGE>   65

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                        DESCRIPTION
-------                       -----------

<S>      <C>
10.5*    Employment and Consulting Agreement, dated November 20, 1991, between
         Robert Snyder and On Command Video Corporation which is incorporated by
         reference to Exhibit 10.9 of Form S-4.

10.6     Standard Lease, dated June, 1996, between Berg & Berg Developers, and
         On Command Video Corporation (Incorporated by reference to Exhibit
         10.10 of the Annual Report on Form 10-K for the year ended December 31,
         1996 ("OCC 1996 Form 10-K")).

10.7     Corporate Agreement dated as of October 8, 1996, between On Command
         Corporation and Ascent Entertainment Group, Inc. (Incorporated by
         reference to Exhibit 10.22 of the Annual Report on Form 10-K for the
         year ended December 31, 1996 at Ascent Entertainment Group, Inc.
         (Commission File No. 0-27192)).

10.8*    1996 Key Employee Stock Plan (Incorporated by reference to Exhibit
         10.13 of the OCC 1996 Form 10-K).

10.9*    1997 Employee Stock Purchase Plan (Incorporated by reference to Exhibit
         4(c) of Form S-8 filed August 8, 1997).

10.10*   Amended and restated 1997 Non-Employee Directors Stock Plan.

10.11    First Amended and Restated Credit Agreement dated as of November 24,
         1997, between On Command Corporation and the Lenders Named Therein and
         NationsBank of Texas, N.A., which is incorporated by reference to
         Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year
         ended December 31, 1997.

10.12    Change of Control Severance Plan for Executive Officers. (Incorporated
         by reference to Exhibit 10.12 of the Annual Report on Form 10-K for the
         year-ended December 31, 1998).

21.1     Subsidiaries of On Command Corporation.

23.1     Independent Auditors' Consent.

23.2     Independent Auditors' Consent.

23.3     Independent Auditors' Consent.

27       Financial Data Schedule.

*        Indicates compensatory plan or arrangement.
</TABLE>