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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 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, 1997

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

For the transition period from __________________to____________________

Commission  File No. 33-9030

                             MAGNAVISION CORPORATION
             (exact name of registrant as specified in its charter)

         DELAWARE                                          22-2741313
(State or other jurisdiction                               (IRS Employer
      of incorporation                                   Identification No.)

                      1725 ROUTE 35, WALL, NEW JERSEY 07719
                    (Address of principal executive offices)
                                   (Zip Code)

Registrant's telephone number, including area code:  (732) 449-1200

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

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 [ ]

The aggregate market value of the voting stock held by nonaffiliates of the
registrant is not available due to the unavailability of price quotations for
the Registrant's securities.

The number of shares of Registrant's Common Stock outstanding on March 31, 1998
was 1,154,390.

Documents Incorporated by Reference:  None.





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                                    PART I

ITEM 1.           BUSINESS

All common share amounts and prices reflect the effects of the 20 to 1 split.

GENERAL

                  Magnavision Corporation (the "Registrant" or the "Company")
was incorporated under the name Yardley Ventures Inc. in Delaware on April 3,
1986 for the purpose of acquiring one or more potential businesses. Effective
December 30, 1991, the Registrant acquired all of the issued and outstanding
capital stock of Magnavision Corporation, a New Jersey corporation ("Magnavision
- N.J."), in a tax-free, stock-for-stock acquisition. The shareholders of
Magnavision - N.J. received newly issued shares of common stock in the
Registrant for their Magnavision - N.J. shares. The newly issued shares
constituted approximately 98% of the Registrant's outstanding common stock. In
connection with the acquisition, the Registrant effected a one-for-400 reverse
split of its common stock and changed its name to Magnavision Corporation. In
addition, the board of directors of Magnavision - N.J. became the board of
directors of the Registrant and Magnavision - N.J. became a wholly-owned
subsidiary of the Registrant.

The Registrant does no business and has no significant assets other than its
stock in Magnavision - N.J. Unless otherwise specified herein, the terms
"Magnavision" and the "Company" shall be deemed to refer to the Registrant
and/or Magnavision - N.J.


                  In August 1995, the Company entered into a $5,000,000 lending
facility with a bank and two Small Business Investment Companies. On June 3,
1996, the Company amended the Agreement with its lenders and at various times
during 1996 and 1997, the Company, which had borrowed $4,062,932 and had issued
senior subordinated notes in exchange therefore, had not met several covenants
under this Agreement and failed to make its quarterly interest payment of
$122,095. In May 1997, pursuant to an Exchange Agreement, the Company and its
lenders agreed to exchange the entire $5 million of the lending facility for 8%
redeemable preferred stock due in 2002. The then current loan balance, along
with the unused balance of the $5 million line was exchanged for redeemable
preferred stock which has five year mandatory redemption provisions which are
accelerated upon certain liquidity events. In connection with this transaction,
all covenants and defaults under the former lending facility were waived. At
closing, the Company drew down the balance of its line of approximately $800,000
after expenses. The Company issued redeemable preferred stock in the amount of
$5 million, with an 8% preferred dividend, and issued additional warrants (New
Warrants) to purchase additional shares of common stock, representing
approximately 20% of the common stock at $2.00 per share after a 1-for-20
reverse stock split. The exercise price of the original issued warrants, $.27
and $.38 per share, was reduced to $.10 per share prior to such reverse stock
split. The preferred shareholders received a total of 1,826,932 warrants at an
exercise price of $2.00 per share to purchase 58% of the Company's common stock,
acquired the right to and have elected a majority of the Board of Directors, and
thus have effected a change of control of the Company. In connection with the
exchange, the Company issued a note to its lenders totaling $105,468. This note,
bearing 10% interest, represented the interest due in

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May 1997. Both interest and principal were originally payable on May 8, 1998. At
year end 1997 the redeemable preferred stockholders agreed to extended the
maturity of the note to May 8, 1999.

                  In September 1997, the Company and Access Capital, Inc. agreed
to a $1,250,000 three year revolving line of credit to be used to expand the
Company's private cable business. As of the end of December 1997, the Company
had borrowed approximately $405,000 under the line of credit. Interest is
payable currently at the rate of prime plus 5.5% and is current. The line is
secured by a pledge of private cable contracts and all other Company assets. The
lender received warrants at an exercise price of $2.00 per share to purchase
approximately 4% of the Company's stock on a fully diluted basis.

                  Subsequent to the fiscal year ended December 31, 1997, the
Company was not in compliance with the working capital and other covenants under
the line of credit and such defaults continue through the date hereof. In
connection therewith, the Company requested a waiver thereof together with a
separate working capital advance.

                  By letter dated May 8, 1998 Access Capital proposed a
restructuring of the financial covenants, an increase in the line of credit to
$3 million dollars and an increase in its warrant ownership of the Company. The
Company is currently reviewing such proposal and discussions with the lender are
expected to commence shortly. There is no assurance that such restructuring will
be effected on terms satisfactory to the Company, or at all.

DEVELOPMENT OF BUSINESS

                  The Company was initially formed for the purpose of owning and
operating a multi-channel, wireless cable television system in the New York
market. In August 1990, the Company entered into an agreement to lease channel
capacity (the "Channel Lease Agreement") from the Department of Education of the
Archdiocese of New York (the "Department"). The Channel Lease Agreement
(subsequently amended in January 1994) grants the Company a lease through
January 2004 (with a right to extend for an additional five years, and a right
of first refusal for subsequent renewals), which entitles the Company to use
twenty-eight (28) wireless cable licenses (168 MHZ of spectrum), located on
seven different transmitting towers (24 MHZ per tower) in New York State. Eight
(8) of these channels (48 MHZ of spectrum) are located in New York City.

                  Since entering into the Channel Lease Agreement, the Company
has conducted various marketing and engineering activities to facilitate the
planned operation of a wireless system and, pursuant to the requirements of the
Channel Lease Agreement, made an escrow deposit of approximately $900,000 to the
Department in September 1995 which is to be utilized for system reconstruction.
However, as of the date hereof, the Company has not commenced operation of a
wireless system, and will require substantial additional funding in order to do
so. There is no assurance that such funding will be available. The Company has
recently begun, in conjunction with potential joint venture partners to develop
and explore alternative use of the spectrum available to it under the Channel
Lease Agreement. The Company is pursuing a business plan to develop high speed
Internet access and data delivery. These tests relate to one-way data
transmission for which the Company was granted a developmental license early in
1997 by the Federal Communications Commission ("FCC").

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There can be no assurance that there will be consumer demand for alternative use
of the spectrum including Internet access services, that the Company will be
able to compete against other providers, that the Company can attract and retain
qualified personnel or that the Company will be able to achieve profitability
from such services in future years.

                  Apart from development of its wireless television system, the
Company has been engaged, since 1992, in the business of offering a private
cable television service to colleges, universities, nursing homes and hospitals
throughout the East Coast. As of January 31, 1997, the Company had long term
(generally 5-10 years) agreements with a total of 37 institutions located
primarily in the New York, New Jersey, Pennsylvania area, but extending as far
north as Massachusetts, and as far south as North Carolina. For the year ended
December 31, 1997, the Company generated approximately $1,607,049 of revenues
from this business (which constituted 100% of the Company's total revenues for
the year). For the year ended December 31, 1997, revenues from three
institutions which utilize the Company's private cable television service,
Montclair State University, Seton Hall University, and North Carolina A & T
State University, constituted approximately 14%, 13% and 13% of the Company's
revenues, respectively.

PRIVATE CABLE BUSINESS

                  General

                  Private cable television service is a multi-channel
subscription television service where the programming is received at a facility
by satellite receiver and then transmitted via coaxial cable throughout private
property, often multiple dwelling units ("MDUs"), without crossing public rights
of way. Private cable companies operate under agreements with private landowners
to service a specific MDU, institution, or commercial establishment.

                  Since 1992, the Company has offered private cable television
services to various colleges, universities and nursing home facilities,
primarily in the northeastern United States. To date, the Company has entered
into or been awarded contracts with 37 facilities, of which 34 are currently
receiving programming from the Company. The Company believes that it has
developed the necessary skills and "know-how" over time to deliver a quality
product and that it has achieved a favorable reputation with its existing
customer base. It also believes that this business can be expanded on a national
basis with appropriate funding.

                  Agreements with Institutions

                  The Company has long-term agreements to provide service to 37
facilities (35 of which are currently operational) for students and patients,
with approximately 11,600 outlets.

                  From the date a contract is signed, it generally takes
approximately three months to complete an installation and to make a site
operational or place it "on line". Except for one college and two senior living
facilities, where the Company bills residents directly, the Company receives its
fees on a monthly basis (nine (9) months a year for colleges and universities)
directly from these institutions, which include such charges in the tuition or
other fees to students or residents of the subject facilities. The Company
believes that the potential

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market for this segment of its business is, in the near term, located in the
Eastern portion of the United States and is represented by hundreds of thousands
of potential viewers. None of the Company's revenues to date include fees from
advertisers. However, at such time as the Company's subscriber base achieves
"critical mass", estimated at 15,000 outlets, the Company believes that it will
have the ability, with additional staffing and funding, to obtain revenues from
regional or local advertisers seeking to reach the Company's subscribers who the
Company believes are a favored category of consumer for many product
manufacturers and service providers.

                  Sales and Marketing

                  The Company's sales and marketing efforts in the private cable
business have and will continue to focus primarily upon institutions with
concentrated populations, such as colleges and universities with dormitories,
nursing homes and other MDUs. Institutional subscribers are asked to commit to
long-term agreements. Some state institutions are prohibited from entering into
long term agreements, but the Company expects that once it has wired the subject
facility and provided private cable television service the relationship will
become one of long term duration.

                  Competition

                  The Company's competition in the residential private cable
business consists of numerous private cable operators located throughout the
United States, none of which is deemed to be a dominant factor. Among the
private cable operators, the largest provider to colleges and universities is
presently Campus Televideo. In addition to this competition, any local cable
operator as well as any other cable television programming distributor can
service these institutions in direct competition with the Company. Many of these
competitors are larger, have greater financial resources and have more personnel
to devote to this business than does the Company. The Company believes, however,
that its experience and "know-how" in this field and customer endorsements to
potential clients will greatly assist the Company when competing for this
business.

                  Regulation

                  The Telecommunications Act of 1996 (the "1996 Act") changed
the rules with respect to the 1992 Cable Act's uniform rate requirement and
MDUs. Prior to the adoption of the 1996 Act, franchised cable operators were
required to offer uniform rates within franchise areas and with respect to bulk
service contracts for MDUs. Now franchised cable operators may establish
different rates across franchise areas in which they are subject to effective
competition and may offer bulk service contracts to MDUs without any uniform
pricing requirement, except that the franchised cable operator may not engage in
predatory pricing, which concept is undefined in the 1996 Act. This may result
in the Company experiencing more significant price competition in its private
cable business in the future.


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                  The FCC has adopted a Final Rule and Order on inside wiring
known as ICTA. This rule relates to MDU (multi-housing unit) and delineates
procedures for MDU's to purchase the inside wire at the end of a cable contract.
Under this rule the MDU will notify the current service provider at the end of
the contract and the provider will choose to either sell, abandon or remove the
inside wiring.


WIRELESS CABLE BUSINESS

                  Wireless Technology

                  In 1983 the Federal Communications Commission ("FCC")
reallocated a portion of the electromagnetic radio spectrum located between 2500
and 2700 MHZ and permitted this spectrum to be used for commercial purposes.
Today, there are a maximum of thirty-three microwave channels used for wireless
cable in each market. These include thirteen Multipoint/Multichannel
Distribution Service ("MMDS") channels (Channels 1, 2 or 2A, E1- E4, F1-F4 and
H1-H3) and the excess capacity on up to 20 additional Instructional Television
Fixed Services ("ITFS") channels (Channels A1-A4, B1-B4, C1-C4, D1-D4 and
G1-G4). Grandfathered ITFS stations on the eight E and F channels also lease
excess capacity to wireless cable operators. Except in limited circumstances,
the 20 ITFS channels (120 MHZ) in each market can generally be licensed only to
qualified non-profit educational organizations and, in general, each of these
channels or an equivalent video transmission must be used a minimum of 20 hours
per week for instructional programming. The remaining "excess air time" on an
ITFS Channel may be leased to wireless cable operators for commercial use. In
addition, the 13 MMDS channels (78 MHZ) are made available by the FCC for full
time usage without programming restrictions. The ITFS spectrum is now licensed
by the FCC for one-way video and data transmission.

                  According to industry experts, wireless cable can provide
customers with the same or superior video television, data, and Internet access
services as that of traditional hardwire cable. Wireless systems transmit analog
signals over distances of approximately 25 to 35 miles from their central
transmission point. The transmission of wireless microwave frequencies requires
clear "line-of-sight" between the transmitter and the receiving antenna. Dense
foliage, hilly terrain or tall buildings can cause signal interference which can
diminish or block signals. Certain line-of-sight constraints can be ameliorated
by changing transmission power levels and using engineering techniques,
pre-amplifiers, beambenders and signal repeaters.

                  Wireless Business Plan

                  A typical wireless cable system consists of headend equipment
at transmission locations and reception equipment at each subscriber location.
Headend equipment includes microwave transmitters, antennas and other broadcast
equipment. For video services, headend equipment also includes reception
equipment for satellite programming, such as earth stations and satellite
receivers. For downstream data transmission, headend equipment also includes
routers, servers and Internet access lines, all known as an Internet
Point-of-Presence (PoP). An Internet Service Provider (ISP) must also provide
equipment for upstream data, such as routers and modems. Reception equipment
consists of an antenna and frequency converter.

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A set-top converter is generally required for video reception. For data, a
single or multiport wireless modem is required.

                  The Company intends to develop a digital wireless cable system
with its ITFS leased spectrum as an alternative use of this spectrum including
data and Internet access. Recent developments in technology and regulatory
changes now allow ITFS spectrum to be used for high speed Internet access. The
modem used at a receive site can receive data at speeds up to 27 Mbps, almost
1000 times faster than the typical modem used today (28.8 Kbps). Several
operators are operating one-way Internet over their spectrum using the phone
lines for the less demanding return path. The Company believes there is a market
for businesses which require high speed Internet access and data in the New York
market. However, Internet service over wireless is a newly developed business.
The Company does not currently have the funds to implement such service and
there is no assurance that the proposed service by the Company, if such funds
were available, could be deployed in a commercially viable system.

                  Channel Lease Agreement

                  On August 20, 1990, the Company entered into the Channel Lease
Agreement to lease from the Department the use of a portion of three (6 MHZ)
ITFS channels (a total of 18 MHZ) located on seven different tower locations (a
total of 126 MHZ), with an option to utilize one additional 6 MHZ ITFS channel
also located on each of the seven tower locations when the Department obtains
the necessary FCC approvals for such channels. Under the Channel Lease
Agreement, the Company also leases three operationally-fixed microwave service
("OFS") channels (serving as links between the ITFS tower sites), with an option
for one additional OFS channel. The Channel Lease Agreement expires in January,
2004, although the Company has an option to extend the lease for five years if
the FCC renews the Department's license. Following expiration of the option term
(if extended) in 2009, the Company has a right of first refusal covering the
leased channels. Extension and/or renewal of the Channel Lease Agreement is
contingent upon FCC renewal of the Department's license for the channels, of
which there can be no assurance.

                  The Company also paid a total of $160,000 in monthly royalties
to the Department during 1997 and will be required to pay additional monthly
royalties during 1998 through the expiration of the Channel Lease Agreement,
equal to the greater of $13,200 ($17,606 under certain conditions) plus five
cents ($.05) per subscriber, or five (5) percent of the gross receipts per
month, whichever is higher.

                  The Channel Lease Agreement includes the Company's right to
use space leased to the Department at the seven transmission sites, including
the Empire State Building, Staten Island, NY, Yonkers, NY, Loomis, NY,
Rhinecliff, NY, Haverstraw, NY and Beacon, NY. Additional space is also
available at all other locations owned or leased by the Department and can be
made available to the Company by the Department for use in providing the
Company's service. The Agreement precludes the Company from transmitting movies
rated "R", "NC-17" or "X" over the Department's channels. The agreement further
precludes the Company from transmitting movies Rated "X" or "NC-17" in the New
York service area, as defined over all channels controlled by the Company or its
affiliates. The Company may,

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however, transmit "R" rated movies over non-Department channels that may be
either controlled by the Company, or the Company's affiliates.

                  Available Market

                  According to latest available data, there are approximately
seven million households located in the New York Area of Dominant Interest
("ADI") market. The Company estimates that approximately 70% of these households
can receive wireless cable transmission. (Approximately 50% of such households
subscribe to cable.) The greater New York City area contains the largest
commercial market in the country with over a half million businesses.

                  Competition

                  The Company faces competition in data services from a number
of sources, some of which have significantly greater resources, both financial
and other. Some of these are traditional providers of data services, such as
local telephone companies. Others are cable television operators and other
wireless data services.

Telephone Companies

Most Internet access today is provided at relatively low data rates through a
local telephone company using dial-up access at speeds of up to 56 Kilobits per
second (Kbps). Local telephone companies ("Telcos") and competitive access
providers ("CAPS") may also offer services using integrated service data network
("ISDN") technology at 128 Kbps. This service requires an improved Telco
connection and special equipment at the subscriber end. ISDN technology allows a
subscriber to simultaneously communicate using voice and data on a single line.
ISDN is not available in all areas.

A new technology being promoted by the Telcos is asynchronous digital subscriber
line (ADSL). ADSL is intended to provide high speed digital voice and data
services over Telco local loop twisted pair service lines. This service requires
a pre-conditioned ("clean") service line. ADSL has been under development for
many years, and has been field tested in some locations. There is some
speculation that existing phone circuits will be unable to support ADSL in many
cases.

Local Telcos, CAPS and Internet service providers ("ISP") may also offer
services using leased lines. These are available at a variety of data rates,
beginning at Frame Relay (256 Kbps), T-1 (1.54 Mbps) and up to T-3 (45 Mbps).
Leased lines may be available on an exclusive or shared use basis. Leased lines
require customer premises equipment ("CPE") for router connections, and may not
be available in all service areas. Leased lines are generally expensive both for
installation and monthly service.

In addition to Bell Atlantic, the local RBOC, there are at least four major CAPS
of telecommunications services that have proprietary fiber optic networks in the
New York Market. Others are MFS Communications Company, Inc., a unit of
WorldCom; TCG (an acquisition of TCG by AT&T is pending); MCI, primarily a long
distance telephone service provider; and, Liberty Cable, a subsidiary of RCN
Corporation.

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Cable Television Operators

Cable television companies have recently been offering cable modem service to
their customers for Internet access. Cable modems operate at speeds similar to
the wireless modems in that it sends data over a "television" channel. Cable
modems may be either unidirectional or bi-directional.

Before offering cable modem service, cable television operators frequently have
to make improvements to their distribution system (or "plant"). Cable modem
service requires increased capacity for data channels, a reverse path for
upstream communications, and general improvements in system performance
(including in home wiring) to carry high speed digital signals. For these
reasons, cable modem service has been developed in limited geographic areas
where the plant has been upgraded.

Cable systems have "passed" virtually all homes in the United States, but
frequently are not available in business locations. Several of the country's
largest cable operators have franchised cable systems in the greater New York
Market. These include Time Warner Cable, Cablevision Systems, TCI Cable and
Comcast Cablesystems. Some of these operators have been upgrading their CATV
plant to prepare for digital video and data transmissions.

Direct Broadcast Satellite

Direct Broadcast Satellite ("DBS") service provider now offers to bring
unidirectional Internet service to customers. Hughes Corporation's DirecPC
service offers this Internet service. Subscribers must purchase and install a
21" satellite dish and a special computer modem adapter card and must maintain a
separate ISP account for the upstream path.

Other Wireless Multichannel Multipoint Distribution

CAI Wireless Systems, Inc. is the only other MMDS/ITFS provider operating in
the New York Market and is offering high speed Internet access to customers.

With appropriate funding, the Company believes that it will have a competitive
advantage over CAI by having multiple transmitter locations with a wider
geographic coverage and overlapping service areas. The Company will be
concentrating exclusively on the commercial market and institutions and
utilizing all of its wireless spectrum capacity to that end.

Local Multi-Point Distribution

Cellular Vision holds a license for local multi-point distribution service
(LMDS) for the New York Market and offers Internet access at 1.5 MBPS. This
spectrum is located at 28GHz. This higher microwave frequency of LMDS has
significantly greater propagation losses, and signals are severely degraded by
precipitation. As a result, LMDS has a much smaller service area and requires
many more cell locations to cover a geographic area.





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38 Ghz - Point-to-Point

WinStar Communications, Inc. is a competitor with spectrum located at 38 Ghz.
WinStar offers local, long distance and Internet service. This is a
point-to-point technology. Point-to-point service has a separate microwave
transmitter directed at each receiver. The costs associated with this system
configuration require the operator to focus exclusively on customers with very
large usage. The 38 GHz spectrum has propagation disadvantages even more severe
than LMDS.

                  Government Regulation

                  General. The wireless cable industry is subject to regulation
by the FCC pursuant to the Communications Act of 1934, as amended. The
Communications Act empowers the FCC, among other things, to issue, revoke,
modify and renew licenses within the spectrum available to wireless cable; to
approve the assignment and/or transfer of control of such licenses; to approve
the location of wireless cable systems; to regulate the kind, configuration and
operation of equipment used by wireless cable systems; and to impose certain
equal employment opportunity and other reporting requirements on wireless cable
operators.

                  The FCC has determined that wireless cable systems are not
"cable systems" for purposes of the Communications Act. Accordingly, a wireless
cable system does not require a local franchise and is subject to fewer local
regulations than a hardwire cable system. Moreover, all transmission and
reception equipment for a wireless cable system can be located on private
property; hence, there is no need to make use of utility poles, dedicated
easements or public rights-of-way. Although wireless cable operators typically
have to lease the right to use wireless cable channels from the holders of
channel licenses, unlike hardwire cable operators they do not have to pay local
franchise fees. Recently, legislation has been introduced in some states to
authorize state and local authorities to impose on all video program
distributors (including wireless cable distributors) a tax on the distributor's
gross receipts comparable to the franchise fees cable operators pay. While the
proposals vary among states, the bills all would require, if passed, as much as
5% percent of gross receipts to be paid by wireless distributors to local
authorities.

                  Under the retransmission consent provisions of the
Communications Act, wireless and hardwire cable operators seeking to retransmit
certain commercial television broadcast signals must first obtain the permission
of the broadcast station in order to retransmit the station's signal. However,
wireless cable and private cable systems, unlike hardwire cable systems, are not
required under the FCC's "must carry" rules to retransmit a specified number of
local commercial television or qualified low power television signals.

                  Under current FCC regulations, a wireless cable operator
generally may broadcast anywhere within the line-of-sight of its transmission
facility, provided that its signal does not violate interference standards in
the FCC-protected area of another wireless license holder. Existing wireless
license holders generally are protected from interference within 35 miles of the
transmission site; however, if that site is moved, the protection remains only
within the original 35 mile zone and approval from the FCC is required before a
transmission site may be moved.

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                  On July 10, 1996, the FCC adopted an Order in which it
authorized the interim use of certain digital compression technologies for the
provision of video, voice and data services over MDS and ITFS frequencies. Such
technologies may be utilized by a wireless cable operator or an MDS or ITFS
licensee, after applying for, and being granted, such an authorization by the
FCC. Upon receiving a digital authorization, a licensee also may transmit
one-way downstream Internet service. The Department has filed and has received
grants of applications for digital authorizations for its ITFS system located at
the Empire State Building.

                  In March 1997, various wireless cable industry companies
petitioned the FCC to permit the grant of applications for two-way transmission
of interactive services over MDS and ITFS frequencies. The petition proposes
rule changes which would allow the FCC to routinely grant such licensees the
right to implement two-way wireless services. There can be no assurance that the
petition will be granted, or if granted, that the Company will be able to
develop commercially successful products using two-way transmission.

                  1996 Telecommunications Act. In February 1996, Congress passed
and the President signed into law the 1996 Act Some of the provisions of the
1996 Act that directly affect wireless cable television operators are discussed
below. Beyond those specific provisions, the 1996 Act contains provisions
intended to increase competition in the telephone, radio, broadcast television,
and hardwire and wireless cable television businesses. The long term effect of
the 1996 Act cannot be determined at this time, although competition in the
video programming delivery industry is likely to increase as a result of the
adoption of the 1996 Act.

                  The 1996 Act may change the competitive environment of the
wireless cable business. The 1996 Act changes the definition of cable television
system so that the definition excludes any systems that serve customers without
using any public right of way. This change will allow wireless cable system
operators to wire together apartment complexes and other similar properties, as
long as the wiring system does not cross a public right-of-way, without the need
to apply for a local cable television franchise. The 1996 Act will also reduce
the regulatory authority over cable company rates, allow telephone companies,
under certain conditions, to distribute video and afford relief to DBS and
wireless cable providers by exempting them from certain local restrictions on
antennas.

                  The 1996 Act also requires all providers of telecommunications
services (as defined by the 1996 Act) to contribute to a national Universal
Service Fund (the "Fund"). The Fund was created to promote the availability of
telecommunications services to those in low income, rural, insular, and high
cost areas at rates that are reasonably comparable to the lower rates charged in
urban areas. The 1996 Act expanded the purpose of the Fund to include provision
of affordable access to advanced telecommunications services for schools,
classrooms, health care facilities, and libraries. Previously, only telephone
companies were required to contribute to the Fund. The FCC is considering
whether and to what extent wireless cable operators, such as the Company, must
contribute to the Fund. This matter remains pending before the FCC.

                  Pursuant to the 1996 Act, video programming distributors,
including wireless cable operators, will be required to provide closed captioned
video programming on a phased-in basis starting on January 1, 2000. Requirements
to pass-through captions already contained

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in programming and to maintain captioning at 1997 levels became effective on
January 1, 1998. Because ITFS programming as a class is exempt from captioning
requirements, wireless cable operators that transmit such programming are not
required to provide closed captioning.

                  Other Regulations. Wireless cable license holders are subject
to regulation by the Federal Aviation Administration with respect to the
construction of transmission towers and to certain local zoning regulations
affecting construction of towers and other facilities. There may also be
restrictions imposed by local authorities. There can be no assurance that the
Company will not be required to incur additional costs in complying with such
regulations and restrictions.

                  Copyright. Under the federal copyright laws, permission from
the copyright holder generally must be secured before a video program may be
retransmitted. Under Section 111 of the Copyright Act, certain "cable systems"
are entitled to engage in the secondary transmission of programming without the
prior permission of the holders of copyrights in the programming. In order to do
so, a cable system must secure a compulsory copyright license. Such a license
comes into existence upon the filing of certain reports with the payment of
certain fees to the U.S. Copyright Office. In 1994, Congress enacted the
Satellite Home Viewer Act of 1994 which enables operators of wireless cable
television systems to rely on the cable compulsory license under Section 111 of
the Copyright Act.


TRADEMARKS, COPYRIGHTS, PATENTS

                  The Company holds no copyrights or patents but has received a
federal service mark registration for the name Magnavision. The Company does not
believe that these proprietary rights are material to its business.

PERSONNEL

                  The Company currently has a staff of 13 full time employees (3
in sales, 4 in installations, 1 in customer service and marketing, 2 in
administration, and 3 in management) and various part time consultants, advisors
and subcontractors, none of whom is a member of a union. The Company does not
plan to expand its staff until it begins to generate sufficient revenue or
receives funding to support expansion. The Company considers its relationship
with its employees to be excellent.

MAJORITY SHAREHOLDER

                  Cacomm, Inc., a New Jersey corporation ("Cacomm"), is the
majority shareholder of the Registrant. As of the date of this Form 10-K, the
Company believes that Cacomm owns approximately 79.6% of the Registrant's
outstanding common stock. Certain officers and directors of the Registrant are
also officers and directors of Cacomm. See "Directors and Executive Officers of
the Registrant".

                  The Registrant has been advised that Cacomm is a 25% partner
in a general partnership known as The Grand MMDS Alliance (the "Alliance"), a
designated selectee of the FCC for four MMDS channels in the New York
metropolitan market. The possibility exists

                                     - 11 -


<PAGE>



that the Alliance could commence business in direct competition with the
Registrant and the Registrant's former Chief Executive Officer, in his letter of
resignation, indicated that he intends to launch such competitive activities.
However, the Alliance has not commenced operations as of the date of this
report. The Company continues periodic discussions with the Alliance (the other
partners of which are unaffiliated with the Registrant) for the purpose of
exploring various alternatives relating to the MMDS channels held by the
Alliance. However, such discussions have not proven fruitful in the past, and
there is no assurance that such discussions will be productive in the future.

ITEM 2.           PROPERTIES

                  The Registrant's principal offices are located at 1725 Highway
35, The Wedgewood Building, Wall, New Jersey, where it occupies approximately
1200 square feet under a lease agreement which expires in May 1998 but expects
to renew for a year.

                  As part of the Channel Lease Agreement with the Department,
the Company acquired the right to use a portion of the Department's transmitting
space at the Empire State Building, in Yonkers, New York and on Staten Island,
New York. The Company pays no additional consideration for this space beyond the
fees due to the Department under the Channel Leasing Agreement.

ITEM 3.           LEGAL PROCEEDINGS

                  None.

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

                  None.

                                          P A R T   I I

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

                  (a) The Common Stock has been trading in the over-the-counter
market under the symbol "MAGV". The following table sets forth for the periods
indicated the range of high and low bid quotations for the Company's Common
Stock since January 1, 1996 as reported by the National Quotation Bureau, Inc.
and as reported by the National Association of Securities Dealers composite feed
or other qualified inter quotation dealer medium. These quotations represent
inter-dealer prices, without retail mark-up, mark-down or commissions and do not
necessarily represent actual transactions. As trading in the Common Stock has
historically been sporadic and in small volumes, the Company cannot assure that
an active public trading market will develop or be sustained. All Closing Bids
have been restated to reflect the effect of the 1 for 20 reverse stock split of
May 1997.





                                     - 12 -


<PAGE>



                           CLOSING BID

1996                                   HIGH               LOW

Jan. 2 thru Mar. 29                   15.00               5.00
Apr. 1 thru June 28                   20.00              10.00
July 1 thru Sept. 30                  15.00               7.50
Oct. 1 thru Dec. 31                   11.25               3.125
1997

Jan. 2 thru Mar. 31                    8.75               1.25
Apr. 1 thru June 30                    8.75               4.60
July 1 thru Sept. 30                   8.75               1.50
Oct. 1 thru Dec. 31                    2.25               1.375
                                    

        (b) As of December 31, 1997, according to the Registrant's transfer
agent, the approximate number of holders of record of the Registrant's common
stock was 526.
        (c) The Registrant has never paid any cash dividends on its Common Stock
and none are presently anticipated. Under the Company's agreements with its
redeemable preferred stockholders and its principal lender, the Company is
prohibited, without their consent, from declaring or paying any dividends on its
Common Stock until the loans made by the lender have been repaid and the
preferred stock is redeemed, in full. As of December 31, 1997, the Company had
accumulated dividends of $257,778 on its 8% redeemable preferred stock . The
Company is not required to pay dividends until the redemption date of May 2002,
unless accelerated by certain liquidity events. The redeemable preferred stock
will have a preference over the common stock as to any dividends that may be
legally available for declaration and payment.

ITEM 6.               SELECTED FINANCIAL DATA

        The following is a summary of selected financial data. This data should
be read in conjunction with "Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Item 8-Financial Statements
and Schedules."














                                     - 13 -


<PAGE>

<TABLE>
<CAPTION>


Income Statement Data
                                                                Years Ended December 31,
                                       -------------------------------------------------------------------------
                                       1997             1996              1995             1994             1993
                                       ----             ----              ----             ----             ----

<S>                                 <C>              <C>              <C>               <C>             <C>        
Revenues                            $1,607,049       $  1,285,442     $   666,366       $   516,053     $   385,512
                                  ============       ============     ===========       ===========     ===========  
Loss Before
Extraordinary Item                 $(1,152,529)      $ (1,411,509)    $  (844,493)      $  (531,863)    $  (805,120)
                                  ============       ============     ===========       ===========     =========== 

Extraordinary Item-
Loss From Extinguishment
of Debt                           $    275,844       $          -        $      -       $         -     $         -
                                  ============       ============     ===========       ===========     ===========

Net Loss                          $ (1,428,373)      $ (1,411,509)    $  (844,493)      $  (531,863)    $  (805,120)
                                  ============       ============     ===========       ===========     =========== 

Redeemable Preferred
Stock Dividend
Accumulated                       $    257,778       $          -        $      -       $         -     $         -
                                  ============       ============     ===========       ===========     =========== 

Net Loss Applicable to (1)
Common Stockholders               $ (1,686,151)      $ (1,411,509)    $  (844,493)      $  (531,863)    $  (805,120)
                                  ============       ============     ===========       ===========     =========== 


Basic & Diluted Loss Per
Common Share                      $      (1.46)      $      (1.23)    $      (.66)      $      (.40)    $      (.63)
                                  ============       ============     ===========       ===========     =========== 

Basic & Diluted Weighted
Average Common Shares
Outstanding                          1,152,504          1,147,030       1,276,539          1,313,743      1,281,378
                                  ============       ============     ===========       ===========     =========== 

Balance Sheet Data
                                                                    At December 31,
                                       -------------------------------------------------------------------------
                                       1997             1996              1995             1994             1993
                                       ----             ----              ----             ----             ----


Working Capital (Deficit)           $ (787,499)       $(4,338,083)    $  (213,988)      $  (209,103)     $ (385,948)
                                  ============       ============     ===========       ===========     =========== 

Total Assets                        $2,427,163        $ 2,196,994     $(2,065,771)      $  (689,593)     $ (569,970)
                                  ============       ============     ===========       ===========     =========== 

Long Term Debt                    $      6,041        $    10,563     $ 2,678,784       $    58,776      $  142,898
                                  ============       ============     ===========       ===========     =========== 

Redeemable Preferred Stock        $  4,498,456        $        --     $        --       $        --      $       --
                                  ============       ============     ===========       ===========     ===========
Stockholders' Equity (Deficit)    $ (3,403,335)       $(2,608,645)    $(1,272,472)      $    12,004      $ (111,133)
                                  ============       ============     ===========       ===========     =========== 
</TABLE>

(1)  The 1993 net loss includes a bad debt of $407,722 relating to a
     non-management shareholder loan.


                                            - 14 -


<PAGE>



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

                  Certain statements under the captions "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business"
and elsewhere in this Form 10-K constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements of the Company, or industry
results expressed or implied by such forward-looking statements. Such factors
include among others, general economic and business conditions, which will,
among other things, impact demand for the Company's services; changes in public
taste, trends and demographic changes; competition from other SMATV and/or cable
companies, which may affect the Company's ability to generate revenues;
political, social and economic conditions and laws, rules and regulations, which
may affect the Company's results of operations; timely completion of
construction projects for new systems; changes in business strategy or
development plans; the significant indebtedness of the Company; quality of
management; availability of qualified personnel; changes in, or the failure to
comply with, government regulations; and other factors referenced in the Form
10-K.

RESULTS OF OPERATIONS

                  All of the Company's current revenues are derived from its
private cable operations. The wireless channel capacity operations have not
commenced; therefore, no revenue has been derived from the wireless operation.

                  The Registrant and its wholly owned subsidiary began service
in February 1992 to various colleges, nursing homes, and hospital facilities in
the New York/New Jersey area utilizing direct satellite technology. This
involves the use of antennas which are installed at the facility and then
separately wired on a room-by-room basis. The Company has long-term agreements
with 37 facilities (34 currently built) under which it is currently providing
service to students and patients through approximately 11,700 outlets in rooms
and common areas at such institutional facilities. On April 1, 1998, the Company
announced the entering into of a "Binding Letter of Intent" with Fordham
University pursuant to which the Company has agreed to serve 3,050 students
located at certain Fordham facilities. This agreement is Phase 1 of a four phase
project, the later three phases are not yet awarded. The Company expects
additional contracts to be signed in the near future and will attempt to have
these and other signed but unbuilt facilities on line in 1998. The majority of
the facilities using the Company's private cable service are in New Jersey and
New York, but the market area currently reaches from North Carolina to
Massachusetts.

                  Many colleges and senior living and nursing homes in the
United States do not have cable television, but the current trend is for these
institutions to install cable television. Management feels that this trend,
coupled with the fact that the Company can offer cable services normally not
provided by traditional wired cable companies, should permit significant
subscriber expansion in the future. Each installation is comprised of a number
of billing outlets. A billing outlet represents a hookup for a television. The
Company collects revenue from each television on-line. For the most part, the
colleges are on a nine month billing cycle

                                            - 15 -


<PAGE>



starting in September and ending in June of the subsequent year. The nursing
homes and hospitals are on a 12 month billing cycle.

1997 vs. 1996

                  The net loss for 1997 was $1,428,373 compared to $1,411,509
for 1996. The Company had an extraordinary item of $275,844 related to the
extinguishment of debt to its then principal lenders pursuant to an Exchange
Agreement, whereby its senior lending facility was converted into 5 year 8%
redeemable preferred stock. The net loss from the private cable operation was
$889,289 in 1997, compared to $443,940 in 1996. The loss from the Company's
wireless cable business for 1997 was $539,084 compared to $967,569 for 1996,
which related to expenses such as professional fees, engineering fees, salaries
and channel lease expenses.

                  Revenues in 1997 increased to $1,607,049 from $1,285,442 in
1996. The increase was attributable to the addition of approximately 3,250
outlets in 1997 and the inclusion of a full year's income for the college
installations built over the summer and put on line in September of 1996.

                  Cost of sales increased to $677,565 in 1997 from $526,654 in
1996, reflecting the increase in programming expense for outlets in 1997 and the
full year's programming expense from the additional outlets added in 1996.

                  Operating expenses primarily consist of salaries, depreciation
and amortization and general and administrative expenses. Total operating
expenses for 1997 increased $87,498 to $1,834,831 from $1,747,333 in 1996. The
increase was primarily due to increased salaries because of increased staff and
increased depreciation and amortization expenses.

                  Interest expense decreased $175,796 to $280,546 in 1997 from
$366,342 due to the conversion of debt to Redeemable Preferred Stock in May
1997. This has been slightly offset by a higher loan balance in 1997 prior to
the conversion and interest for the new Access Capital, Inc. line of credit in
the fourth quarter.

                  The extraordinary item was for the write off of the deferred
costs upon the extinguishment of the debt after the conversion to Redeemable
Preferred Stock.

1996 vs. 1995

                  The net loss for 1996 was $1,411,509, compared to $844,493 for
1995. The net loss from the private cable operation was $443,940 in 1996,
compared to $245,111 for 1995. The loss from the Company's wireless cable
business for 1996 was $967,569 compared to $599,382 for 1995, which related to
expenses such as professional fees, engineering fees, salaries and channel lease
expenses.

                  Revenues in 1996 increased by 93% to $1,285,442 from $666,366
in 1995. The increase was due to the addition of approximately 3,400 outlets in
1996 and the inclusion of a full year's income for the outlets added in 1995.


                                     - 16 -


<PAGE>



                  Cost of sales increased by 48% to $526,654 from $355,001
reflecting the increase in outlets in 1996 and a full years' programming expense
from the outlets added in 1995.

                  Operating expenses primarily consist of salaries, depreciation
and amortization and general and administrative expenses. General and
administrative expenses primarily consist of salary payroll taxes, insurance,
professional expenses and channel lease costs. Operating expenses increased 59%
to $1,747,333 in 1996 from $1,098,693 in 1995.

                  The increase was attributable to, among other things; higher
salaries due to increased staffing and increases in wages to bring staff up to
market rate; depreciation and amortization which was increased due to
amortization of the capitalized debt acquisition costs and the increased
depreciation due to increased outlets. Of such operating expenses, general and
administrative expenses accounted for an increase of $387,576 due to, among
other things, increased professional fees for consulting concerning the
performance of a strategic analysis of the Company's businesses, legal and
accounting fees related to the amended lending facility, and increased channel
lease costs.

                  Interest expense increased to $466,342 in 1996 from $149,279
in 1995. This increase is attributable to the senior debt for a full year in
1996.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

Year Ending 1997

                  For the year end December 31, 1997, total cash decreased by
$22,750. The net cash used in operating activities decreased to $447,166 in 1997
from $1,036,351. The primary reason for the decrease was decreased losses from
operations and an increase in outstanding payables.

                  The cash used in investing activities increased from $503,408
in 1996 to $674,320 in 1997. The funds were used primarily to purchase equipment
used to increase the outlet count.

                  Net cash provided by financing activities decreased from
$1,468,728 in 1996 to $1,098,736 in 1997. Cash flow from financing activities in
1997 was principally from the proceeds of the Redeemable Preferred Stock and the
Access Capital, Inc. loan, both described below.

Year Ending 1996

                  For the year ending December 31, 1996, the total cash
decreased by $71,031. The net cash used in operating activities increased from
$589,685 in 1995 to $1,036,351 in 1996, primarily due to increased losses in
operations.

                  The cash used in investing activities decreased from
$1,176,683 in 1995 to $503,408 in 1996. The funds for 1996 were used primarily
to purchase equipment used to increase the outlet count.

                                     - 17 -


<PAGE>

                  Cash flow provided by financing activities decreased from
$1,758,664 in 1995 to $1,468,728 in 1996. Cash flow provided by financing
activities was principally from the proceeds of senior indebtedness.

Liquidity and Capital

                  Since the inception of service in 1992, the Company has
experienced operating losses, was in default of certain provisions of its senior
debt, and has negative cash flow. At December 31, 1997, the Company had a
working capital deficiency and a shareholders' deficit.

                  The Company's capital commitments at December 31, 1997 include
additional capital to construct facilities at the Department of Education of the
Archdiocese of New York and capital to expand the number of institutions the
Company is currently servicing in its private cable business. As of the date
hereof, the Company has not commenced operation of a wireless system, and will
require substantial additional funding in order to do so.

                  Both the private cable and the wireless cable industry require
significant capital. The Company's plan for continued expansion requires
substantial capital investments and the availability of sufficient financing is
essential to its plan. Funds are required for start-up costs related to the
wireless asset and are necessary to continue to build new institutional sites.
The Company has incurred operating losses since inception and its cash flow from
operating activities has been insufficient to cover its expenses.

                  Management plans to mitigate the uncertainties related to the
Company's ability to continue as a going concern, by exploring alternative uses
of its ITFS spectrum and pursuing longer term financing through obtaining
strategic partner(s) willing to participate with the Company in the development
of alternative uses of its ITFS spectrum. The Company's business plan related to
ITFS spectrum is dependent upon the Company securing a strategic partner(s) for
the capital resources required. There is no assurance that the Company will be
able to secure additional financing or strategic relationships on terms or
conditions satisfactory to the Company, or at all. Failure to obtain financing
will have a material adverse effect on the Company. Also, there can be no
assurance that, even with additional financing, the Company will be able to
launch its alternative use of ITFS spectrum in a commercially successful manner.

                  The Company plans to meet short term liquidity requirements
for the private cable business through funds available under Access Capital,
Inc. line of credit. The line will not support the extra expense of the wireless
plan. The Company must find additional financing for both the private cable
operations and its wireless plan. There can be no assurance that the Company
will be able to obtain additional financing on a timely basis or at all.

                  In September 1997, the Company and Access Capital, Inc. agreed
to a $1,250,000 three year revolving line of credit to be used to expand the
Company's private cable business. As of the end of December 1997, the Company
had borrowed approximately $405,000 under the line of credit. Interest is
payable currently at the default rate of prime plus 8% and is current. The line
is secured by a pledge of private cable contracts and other Company

                                     - 18 -


<PAGE>



assets. The lender received warrants at an exercise price of $2.00 per share to
purchase approximately 4% of the Company's stock on a fully diluted basis.

                  Subsequent to the fiscal year ended December 31, 1997, the
Company was not in compliance with the working capital and other covenants under
the line of credit and such defaults continue through the date hereof. In
connection therewith, the Company requested a waiver thereof together with a
separate working capital advance.

                  By letter dated May 8, 1998 Access Capital proposed a
restructuring of the financial covenants, an increase in the line of credit to
$3 million dollars and an increase in its warrant ownership of the Company. The
Company is currently reviewing such proposal and discussions with the lender are
expected to commence shortly. There is no assurance that such restructuring will
be effected on terms satisfactory to the Company, or at all.

Exchange of Debt for Redeemable Preferred Stock

                  In August 1995, the Company entered into a $5 million lending
facility with a bank and two small business investment companies. On June 3,
1996, the Company amended the agreement with the lenders and as of the year
ended December 31, 1996, the Company had borrowed $4,062,932 under this
agreement. See "Item 13- Certain Relationships and Related Transactions" for
further information with regard to the transactions described above.

                  As of December 31, 1996 the Company was not in compliance with
several covenants under its senior debt agreement and as of March 31, 1997 the
Company did not make its quarterly interest payment of $122,095. On May 8, 1997,
the Company agreed with its lenders to exchange its senior subordinated notes
into redeemable preferred stock. Under the terms thereof, the Company's
outstanding subordinated notes, aggregating approximately $4.1 million, together
with accrued interest and detachable warrants, were exchanged for $5 million of
8% redeemable preferred stock due December 31, 2002. In connection with the
exchange, the lenders also funded the Company the remaining balance on the
existing line. In addition, the note holders received 1,826,932 warrants to
purchase up to 58% of the common stock on a fully diluted basis at an exercise
price of $2.00 per share after the Company effected a 1-for-20 reverse stock
split, and have the right, which they have exercised, to elect the majority of
the Board of Directors. This resulted in a change in control of the Company. The
agreement also requires the warrant holders to surrender up to 10% of their
stock in a fully diluted basis, if, as and when certain liquidity events occur.
In addition, warrant holders have the right to require the Company to repurchase
the warrants under certain conditions. This option can only be exercised upon
the sale of an asset of the Company. The value of the warrants was estimated at
$555,556 and represents a discount to the face value of the redeemable preferred
stock. The cost of the put can not be determined at this time since it is based
upon the value of a sale of a significant asset which cannot be assured. Also,
one of the warrant holders has entered into a management service agreement with
the Company. See Item 10. Directors and Executive Officers of the Registrant.

Inflation

                  Management believes that inflation and changing prices will
have a minimal effect on operations. The above should be read in conjunction
with the Company's financial statements included elsewhere herein.



                                     - 19 -


<PAGE>



Seasonality of Installation Activities

                  The Company installs most of its college and university
subscribers over the summer because the institutions are, for the most part,
vacant. Therefore, the Company experiences lower revenues and higher capital
expenditures during the summer.

Year 2000

The Company recognizes the potential problems that may arise if its systems and
operations are adversely impacted by problems related to "year 2000" system and
software failures which can arise when dates go beyond the year 1999. The
Company is in the process of assuring that its purchased software will be year
2000 compliant. In addition, the Company is surveying all major suppliers to
determine the status and schedule for their year 2000 compliance. Where it
believes that a particular supplier's situation poses unacceptable risk, the
Company plans to find alternate sources during fiscal 1998 and 1999. There can
be no assurance, however, that there will not be a delay in, or increased cost
associated with, the implementation of such changes which could have a material
adverse effect on future operations.

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                  See pages F-1 through F-15.


ITEM 9            CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURES

                  None.  See Form 10-K for the fiscal year ended December 31,
                          1995.




















                                     - 20 -


<PAGE>



                                        PART III



ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                  The following table sets forth certain information with
respect to the directors and officers of the Registrant. These individuals serve
in the same capacities with Magnavision - N.J.
<TABLE>
<CAPTION>

                                                                                       Director or
Name                                   Age             Position                       Officer Since
----                                   ---             --------                       -------------

<S>                                    <C>       <C>                                     <C> 
Robert E. Hoffman *                    53        Director, Chairman,                        1998
                                                       President (1) (2)

Nicholas Mastrorilli, Jr.**            35        Director, Vice President                   1991

Patrick Mastrorilli**                  33        Director, Vice President                   1991

Jeffrey Haertlein                      49        Chief Financial Officer                    1996

Keith M. Heilos                        35        Vice President                             1991

Brian Mastrorilli                      29        Vice President                             1991

Evan Wildstein                         27        Director (1) (2) (3) (4)                   1997

Geoffrey Thompson                      57        Director (4) (5)                           1997

George Zombek                          34        Director (1) (2) (3) (4) (5)               1997

Kevin Falvey                           41        Director (4) (5)                           1997

</TABLE>

*    Mr. Hoffman succeeded Nicholas Mastrorilli, Sr. as Chairman, Chief
     Executive Officer and Director effective January 8, 1998 upon Mr.
     Mastrorilli's resignation on such date from such positions. Mr. Hoffman
     also agreed to assume the additional duties of President of the Registrant.
     Mr. Mastrorilli, Sr. was an officer and director of the Registrant since
     1989.

**   Pursuant to the Exchange Agreement of May 8, 1997 and the related
     Stockholders Agreement of such date, Cacomm retained the right to designate
     three (3) out of the Registrant's seven (7) member Board of Directors.
     Pursuant thereto Cacomm appointed Messrs. Nicholas Mastrorilli, Sr.,
     Nicholas Mastrorilli, Jr. and Patrick Mastrorilli to the Registrant's Board
     of Directors. Effective upon Mr. Mastrorilli Sr.'s resignation, Cacomm
     designated Mr. Hoffman as one of its designees. Subsequent thereto, the
     Registrant received a letter dated April 24, 1998 from Cacomm removing
     Nicholas Mastrorilli, Jr. and Patrick Mastrorilli as designees of Cacomm to
     the Registrant's Board of Directors. The letter indicated that Cacomm
     would, in the near future, appoint replacement designees. Such designees,
     if not from existing management, must be reasonably acceptable to the
     preferred stockholders. To date Cacomm has not submitted the names of its
     proposed designees.

(1)  Member of Executive Committee.

(2)  Member of Audit Committee. The Audit Committee assists the Board of
     Directors in fulfilling its responsibilities with respect to the Company's
     accounting and financial reporting activities.

(3)  Member of Compensation Committee. The Compensation Committee determines the
     compensation to be paid by the Company to its officers.

(4)  Messrs. Wildstein and Thompson and Messrs. Zombek and Falvey are
     representatives of KOCO Capital Company, LP ("KOCO") and IBJS Capital
     Company, Inc. ("IBJS") respectively, and serve on the Registrant's Board of
     Directors pursuant to the terms of a certain Stockholders Agreement dated
     as of May 8, 1997 between the Registrant, KOCO, IBJS, Cacomm and Nicholas
     Mastrorilli, Sr. The Stockholders Agreement provides for the Registrant to
     have a Board of Directors consisting of not more than seven (7) persons, of
     which, so long as KOCO and IBJS own 20% or more of the fully diluted common
     stock, such investors shall each have the right to designate two (2)
     directors and so long as Cacomm holds 20% or more of the fully diluted
     common stock, it has the right to designate three (3) directors that are
     members of the Registrant's management or are approved by KOCO and IBJS.
     Cacomm, pursuant to such agreement, previously designated Robert E.
     Hoffman, Nicholas Mastrorilli, Jr. and Patrick Mastrorilli its designees to
     serve on Registrant's Board of Directors. As noted above, by letter dated
     April 24, 1998, Cacomm removed Nicholas Mastrorilli, Jr. and Patrick
     Mastrorilli as its designees to be members of the Board of Directors
     stating that it would appoint alternate members at a later date. Should
     there be an increase in the size of the Board of Directors, KOCO and IBJS
     have the right to designate additional directors such that their nominees
     at all times constitute a simple majority of the Board of Directors. The
     parties to the Stockholders Agreement also agreed to appoint one KOCO
     director and one IBJS director to serve on the Audit, Compensation and
     Executive Committees of the Board of Directors and one management director
     to serve on the Compensation and Executive Committees of the Board of
     Directors. As a result of the implementation of the Stockholders Agreement,
     a change in control of the Registrant has been effected. Reference is made
     to the Exhibits attached as part of this Form 10-K for additional
     information contained in the Exchange Agreement and the Stockholders
     Agreement of May 8, 1997.

(5)  Such persons were elected to the Registrant's Board of Directors to replace
     Mr. Paul Echausse and Messrs. Rick Krueger and Larry Zilavy, as
     representatives of KOCO and IBJS, respectively, each of whom served on
     Registrants Board of Directors briefly during 1997.



                                     - 21 -


<PAGE>



     The directors and officers, other than Mr. Hoffman, who serves pursuant to
the terms of the Employment Agreement described in Item 11, Executive
Compensation, will hold office until the next annual meeting of shareholders and
directors, respectively, or until their successors are duly elected and
qualified. Nicholas Mastrorilli, Jr., Patrick Mastrorilli and Brian Mastrorilli
are brothers. Nicholas Mastrorilli, Sr. is their father and is the controlling
shareholder of Cacomm.

     Robert E. Hoffman, became Chairman and Chief Executive Officer of the
Registrant and its subsidiaries on January 8, 1998, effective upon the
resignation from such positions by Nicholas Mastrorilli, Sr. Mr. Hoffman was
also elected President on such date. Prior thereto, and from August 1996, Mr.
Hoffman was a self-employed technology consultant to telecommunications
businesses in wireless cable, television, communications products and DTH
satellite television. Prior thereto and concurrent therewith, Mr. Hoffman was
President of Wireless America, Inc., a private company which held and leased
frequency licenses for use in wireless cable television systems. Wireless
America, Inc. sold all the assets and was liquidated in February 1997. From June
of 1994 through July of 1996, Mr. Hoffman was Vice President, Engineering for
C-COR Electronics, a manufacturer of cable television distribution equipment.
From January of 1993 through June of 1994, Mr. Hoffman was Vice President,
Engineering for Cincinnati Microwave, Inc., a domestic manufacturer of
speciality consumer electronics and communication products. Prior thereto and
from July of 1986 through December 1992, he was President of Comband
Technologies, Inc., a supplier of systems, equipment and services to the
wireless (microwave) cable television industry. Mr. Hoffman received a Bachelors
and a Masters degree in Electrical Engineering from Rensselaer Polytechnic
Institute in 1966 and 1971, respectively.

     Nicholas Mastrorilli, Sr., was Chairman of the Board and Chief Executive
Officer of the Registrant from the Company's inception in June 1989 to January
8, 1998. He has been Chairman and President of Cacomm, Inc., a Company in the
business of producing television programming and video commercials since April
1991 and Executive Vice President from 1981 to 1991. Mr. Mastrorilli, as
Executive Vice President of Cacomm, Inc, directed all of such Company's video
production and distribution business as well as its research and development in
wireless communications. Mr. Mastrorilli was responsible for the successful
acquisition of wireless cable channel capacity for the Registrant from the
Department of Education of the Archdiocese of New York.

     Nicholas Mastrorilli, Jr., has been Vice President of administration since
April of 1991. Mr. Mastrorilli, Jr. has also served as Vice President and
Director of Cacomm, Inc. from April 1991 to the present. He also served as
director of administration of Cacomm, Inc. from January 1986 to April of 1991.
He was responsible for all the Company's financial matters until December 1995.
He is now responsible for marketing and sales to senior living facilities with
respect to the Company's private cable television service.

     Patrick F. Mastrorilli, has been Vice President of Marketing since April
1991. He has also served as Vice President and Director of Cacomm, Inc. from
April 1991 to the present. He also served as Director of Sales and Marketing of
Cacomm, Inc. from January 1986 to April of 1991. Mr. Mastrorilli is responsible
for advertising campaigns designed to attract additional subscribers to
Magnavision's services, and oversees all right-of-entry negotiations with
building owners, management companies, colleges, and nursing homes.

                                            - 22 -


<PAGE>



     Jeffrey Haertlein, was elected as the Company's Chief Financial Officer
effective as of January 1, 1996 with responsibility for all of the Registrant's
financial matters. Mr. Haertlein was previously Assistant Vice President of
Midlantic Corporation from 1978 to 1995 with responsibility for financial
planning and reporting for such bank holding company and its various
subsidiaries. Prior thereto and from 1977 to 1978 Mr. Haertlein was employed by
Chase Manhattan Bank in the capacity of Internal Auditor. Mr. Haertlein received
a B.A. degree from Monmouth College in accounting/marketing and is currently
attending such institution in pursuit of a Masters Degree in Business
Administration.

     Keith M. Heilos, has been Vice President, Customer Relations for the
Registrant since April 1991. Prior to 1991, Mr. Heilos served as Director of
Video Production for Cacomm, Inc. from July of 1987 to April 1991. Mr. Heilos is
directly responsible for customer relations and is the liaison between the
Company and its client base. Mr. Heilos received a B.A. degree from Montclair
State College in 1986.

     Brian J. Mastrorilli, has been Vice President, Technical Operations since
April 1991. Prior to 1991, Mr. Mastrorilli served as Director of Technical
Operations for Cacomm, Inc. from May of 1988 to April 1991 and Vice President of
Cacomm, Inc. from April 1991 to the present. He previously served as Technical
Director for Video and Audio operations for Cacomm, Inc. Mr. Mastrorilli is
presently responsible for all the company's technical projects, including system
design, construction coordination and FCC licensing.

     Arnold Dauer, age 61, performs services in a senior executive capacity that
would otherwise be performed by an officer of the corporation. Mr. Dauer was an
advisor to the President of Magnavision regarding all aspects of the
Registrant's business from June 1989 to January 8, 1998, and has provided
general business consulting services to Cacomm, Inc. (the major shareholder of
Magnavision Corporation) from 1985 to January 8, 1998. Mr. Dauer currently
provides consulting services to the Company concerning all aspects of its
business. Mr. Dauer was creator and founder of various businesses, including
Allaire State Bank, where he also served on the Board of Directors until the
bank merged into The National Community Bank. Mr. Dauer was co-founder and
served as Vice President in charge of operations of "Cathy Arnold", a small
chain of retail apparel stores, and previously served as Vice President of Reid
Manufacturing, Inc., a manufacturer of apparel, from 1959 until the businesses
were sold in 1980.

     Evan Wildstein, has been a director of the Registrant since June 1997 as a
representative of Koco Capital Company, LP ("KOCO"), a Small Business Investment
Company. Mr. Wildstein is President of Kisco Capital Corporation, the general
partner of KOCO, and is an associate at Kohlberg & Company, LLC which he joined
in October 1994. Prior to that Mr. Wildstein was a financial analyst at Dean
Witter Reynolds, Inc. from August 1993 to October 1994. Mr. Wildstein received a
bachelor's degree in Business Administration from the University of Michigan in
1993.

     Geoffrey Thompson, has been a Director of the Registrant since November
1997 as a representative of KOCO. Mr. Thompson, a principal at Kohlberg &
Company, L.L.C. joined the firm in 1996. Previously, he was managing partner of
Norman Broadbent International (1995-1996), President of Nordeman Grimm
(1993-1994) and President/CEO of Marine

                                            - 23 -


<PAGE>



Midland Banks, Inc. from 1981-1993.  He holds a bachelors degree from Columbia
College (1963) and an MBA degree from Harvard University (1967).

     George Zombek, has been a Director of the Registrant since June 1997 as a
representative of IBJS, a Small Business Investment Company and a wholly-owned
subsidiary of IBJ Schroder Bank & Trust Co. Mr. Zombek is Chief Operating
Officer of IBJS and joined such firm in 1997. Prior thereto and from its
inception in 1995, Mr. Zombek was a principal at Canterbury Mezzanine Capital, a
mezzanine finance fund. From 1992 through 1995, Mr. Zombek was affiliated with
the BZW Mezzanine Group and briefly during such period with its Mergers and
Acquisitions Group. Mr. Zombek received an MBA degree in Finance from University
of Chicago in 1989 and a BA degree from New York University in 1985.

     Kevin Falvey, has been a Director of the Registrant since November 1997 as
a representative of IBJS. Mr. Falvey joined IBJS in November 1997. From 1992 to
February 1997 Mr. Falvey was a Vice President of CIT Group/Equity Investments,
Inc. Prior thereto and from 1986 to 1991, he was Managing Director of
Manufacturers Hanover Capital Partners, Inc. Mr. Falvey received an MBA degree,
with distinction, from New York University in 1978 and a B.B.A. degree from the
University of Massachusetts in 1987.

ITEM 11.          EXECUTIVE COMPENSATION

     Set forth below is the aggregate remuneration paid or accrued by the
Registrant during the years ended December 31, 1997, 1996 and 1995 to the
Company's Chief Executive Officer. No other executive officer of the Company
received salary and bonus aggregating in excess of $100,000 in any of those
years.


                                            SUMMARY COMPENSATION TABLE

Name & Principal Position                     Year            Salary
-------------------------                     ----            ------

Nicholas Mastrorilli, Sr., CEO                1997           $109,800
                                              1996           $112,067
                                              1995            111,771

Employment Agreement

Effective as of January 8, 1998, Nicholas Mastrorilli, Sr. resigned as an
officer, director and employee of the Registrant and its subsidiaries. In
connection therewith, the Registrant agreed to continue Mr. Mastrorilli's base
salary of $105,000 per annum, including all health benefits up to the sum of
$500.00 per month, for the period ending January 8, 1999.

Also effective January 8, 1998, the Registrant entered into an agreement with
Robert E. Hoffman. Pursuant thereto, Mr. Hoffman has agreed to act as Chairman,
President and Chief Executive Officer of the Registrant, for which service an
executive search firm will be paid the sum of $17,500 monthly together with
additional amounts should Mr. Hoffman become an employee on a long term basis,
or upon achievement of mutually agreed goals. The Registrant has the right to
terminate such agreement by giving thirty (30) days advance written notice. The
Agreement was

                                     - 24 -


<PAGE>



scheduled to terminate on April 30, 1998 with the Registrant having the option
to continue such employment. To date no termination notice has been issued, and
no mutually agreed upon goals have been established which would trigger bonus
fees. Discussions are ongoing between the Registrant and Mr. Hoffman regarding
the continuation of his employment but no definitive agreements have been
reached or implemented.

ITEM 12.            SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                    MANAGEMENT

                    (a)     Security Ownership of Certain Beneficial Owners:

                    The following table contains information as of December 31,
1997 as to the beneficial ownership of shares of Common Stock of the Registrant
of each person who, to the knowledge of the Registrant at that date, was the
beneficial owner of 5% or more of its outstanding shares.


Name and Address                 Amount and Nature
of Beneficial Owner            of Beneficial Ownership             % of Class
-------------------            -----------------------             ----------

Cacomm, Inc.                        917,889                           79.6
P.O. Box 163
Sea Girt, NJ 08750

KOCO Capital Company, LP            730,773 (1)                       38.8
111 Radio Circle
Mt. Kisco, NY  10549

IBJS Capital Company, Inc.        1,096,159 (2)                      48.75
One State Street
New York, NY  10004

Access Capital, Inc.                138,536 (3)                      10.73
405 Park Avenue
New York, NY 10022


(1)       Constitutes shares subject to currently exercisable warrants issued to
          KOCO Capital Company, LP.

(2)       Constitutes shares subject to currently exercisable warrants issued to
          IBJS Capital Company, Inc..

(3)       Constitutes shares subject to currently exercisable warrants issued to
          Access Capital, Inc.



                                            - 25 -


<PAGE>



          (b)     Security Ownership of Management:

                  Set forth below is certain information, as of December 31,
1997, concerning the number and percentage of shares of Common Stock of the
Registrant owned of record and beneficially by each officer and director of the
Registrant and by all officers and directors as a group.

    Name of                             Amount and Nature of
Beneficial Owner                        Beneficial Ownership     % of Class
----------------                        --------------------     ----------

  Nicholas Mastrorilli, Sr.               49,350 (1)                 4.28

  Nicholas Mastrorilli, Jr.               14,750 (1) (2)             1.28

  Patrick Mastrorilli                     14,979 (1) (3)             1.30

  Brian Mastrorilli                       14,880 (4)                 1.29

  Keith Heilos                            16,511 (5)                 1.43
 
  Arnold Dauer                            17,082 (6)                 1.48

  All officers and directors
      as a group (6 persons)             127,551 (7)                 3.88


(1)   Includes 49,350 shares subject to currently exercisable warrants held by
      Mr. Mastrorilli, Sr., but does not include 917,889 shares held by Cacomm,
      Inc., of which Mr. Mastrorilli, Sr. owns approximately 31% of the
      outstanding shares (and, with members of his family, has the right to
      acquire an additional 19% on a fully diluted basis) and is the president
      and a director. Nicholas Mastrorilli, Jr. and Patrick Mastrorilli are also
      directors and own an insignificant amount of Cacomm, Inc. stock. Mr.
      Mastrorilli, Sr. disclaims any beneficial ownership of the shares of the
      Company owned by Cacomm, Inc. As noted in Item 10, Directors and Executive
      Officers of the Registrant, each of the three Messrs. Mastrorilli were
      officers and directors of the Registrant as at the year end December 1997.

(2)   Constitutes shares subject to currently exercisable warrants held by Mr.
      Mastrorilli, Jr.

(3)   Includes 14,829 shares subject to currently exercisable warrants held by
      Mr. Mastrorilli.

(4)   Constitutes shares subject to currently exercisable warrants held by Mr.
      Mastrorilli.

(5)   Includes 14,879 shares subject to currently exercisable warrants held by
      Mr. Heilos.

(6)   Includes 14,777 shares subject to currently exercisable warrants held by
      Mr. Dauer.

(7)   Includes 123,464 shares subject to currently exercisable warrants held by
      all officers and directors. Excludes 1,826,932 shares subject to currently
      exercisable warrants held in the aggregate by IBJS Capital Company, Inc.
      and KOCO Capital Company, L.P., beneficial ownership of which is
      disclaimed by Messrs. Zombek and Falvey and by Messrs. Wildstein and
      Thompson, respectively, on behalf of IBJS Capital Company, Inc. and KOCO
      Capital Company, L.P.

                                      -26-

<PAGE>


ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  As described in Part I of this Form 10-K, in August 1995, the
Company obtained a $5,000,000 lending facility from IBJ Schroder Bank & Trust
Co., IBJS Capital Corporation and KOCO Capital Company, L.P. (the "Lenders").
Approximately $2,637,000 of that amount was furnished to the Company at the time
the facility was entered into, and the remainder was to be advanced based on the
present value of the projected cash flow from new contracts with purchasers of
the Company's private cable television service, with the funds advanced to be
used for equipment and construction costs incurred in connection with
installation of the new outlets and for working capital. In connection therewith
the Company executed 12% interest-only promissory notes, the principal of which
was due on February 26, 2001. The proceeds furnished at the time the lending
facility was entered into were utilized to fund an escrow deposit for system
configuration required under the Channel Lease Agreement, to repurchase
approximately 18% of the Company's issued and outstanding capital stock and to
provide working capital. In connection with obtaining the lending facility, the
Company issued to the Lenders warrants expiring on August 27, 2003 to purchase
approximately 27% of the Company's Common Stock on a fully diluted basis at
exercise prices of $7.60 and $5.40 per share. Under the terms of the lending
facility, the Lenders also had the right to designate two of the Company's five
directors and the Company had agreed to various covenants. In connection
therewith the Company was also required to issue additional warrants to purchase
18,000 shares of its Common Stock at an exercise price of $7.60 in satisfaction
of certain investment banking and finder fees.

                  On June 3, 1996 the Company and its Lenders amended the terms
of the lending facility. Pursuant thereto, the Lenders agreed to continue to
waive existing defaults and provide up to $1,200,000 toward the Company's
working capital requirements (of which approximately $1,000,000 had been
advanced to the Company by December 31, 1996) without regard to the present
value formula referred to above. In exchange therefor, the Company agreed to
issue warrants ("New Warrants") to purchase additional shares of Common Stock,
representing approximately 12% of the Company's Common Stock on a fully diluted
basis, at an exercise price of $5.40 per share. The New Warrants expire on June
4, 2004. The amended agreements required the Lenders to surrender to the Company
warrants representing the right to purchase certain shares if, as and when the
Company complied with certain conditions outlined in the amended agreements. In
addition, the Lenders each had the right to require the Company to repurchase
certain, and the Company had the right to repurchase all, of the warrants held
by the Lenders under certain conditions. The Lenders also had the right to
designate three out of the five directors of a subsidiary which owns the
Company's rights under the Channel Lease Agreement and under such circumstances,
would receive a proxy to vote the shares thereof. No such rights were ever
exercised.

                  On May 8 1997 the Company and its lenders reached an agreement
("Exchange Agreement") to exchange their existing senior subordinated note
financing for redeemable preferred stock ("Redeemable Preferred Stock"). The
Registrant's outstanding subordinated notes, approximately $4,000,000, together
with accrued interest and detachable warrants, were

                                     - 27 -


<PAGE>



exchanged for $5,000,000 of 8% Redeemable Preferred Stock due December 31, 2002
and at the close thereof, the Company received the cash balance of the remaining
line of credit (approximately $800,000). The Redeemable Preferred Stock can be
redeemed at the Company's option and has a mandatory redemption feature upon the
occurrence of certain liquidity events. The holders of the Redeemable Preferred
Stock have received warrants to purchase up to 58% of the common stock on a
fully diluted basis at an exercise price of $2.00 per share after giving effect
to a 1-for-20 reverse stock split. In addition, the warrant holders have the
right to require the Company to repurchase certain of the warrants under certain
conditions. In connection with the agreement, the warrant holders have the right
to designate the majority of the directors of the Company and have exercised
their right, which resulted in a change of control of the Registrant. As part of
the Exchange Agreement, the prior lenders converted the accrued interest in the
amount of $105,468 to one year notes at 10% interest, with interest and
principal due and payable May 8, 1998. At year end the preferred stockholders
agreed to extend the maturity of notes to May 8, 1999.

                  The Company also entered into a two year management service
agreement with one of the preferred stockholders to provide management services
at $24,000 per year plus expenses. From May 8 to year end such fees were
$15,654.23.

                  The description of the terms and conditions of the 1995 and
1996 agreements with the Lenders is qualified in its entirety by reference to
the entire agreements, copies of which have been filed as exhibits to Form 10-K
dated July 19, 1996 and is incorporated herein in full by reference thereto. The
description of the May, 1997 Exchange Agreement and related documents is
qualified in entirety by reference to the entire agreement, copies of which have
been filed as an exhibit to this Form 10-K.

                                     - 28 -


<PAGE>



                                   P A R T  I V


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

     (a) (1)Financial Statements. The following financial statements are
included in Part II, Item 8:
                                                                           Page

Report of Independent Auditors . . .    . . . . . . . . . . . . . . . . .   F-1

Consolidated Balance Sheets as of December 31, 1997 and 1996  . . . . . .   F-2

Consolidated Statements of Operations for years ended
     December 31, 1997, 1996 and 1995             . . . . . . . . . . . .   F-3

Consolidated Statements of Stockholders' Deficiency for years ended
     December 31, 1997, 1996 and 1995             . . . . . . . . . . . .   F-4

Consolidated Statements of Cash Flows for years ended
     December 31, 1997, 1996 and 1995             . . . . . . . . . . . .   F-5

Notes to Consolidated Financial Statements      . . . . . . . . . . . . .   F-6

     (a) (2) Schedules. All schedules are omitted since the required information
is either not applicable or not present in amounts sufficient to require
submission of the schedule.

     (a)  (10)   Exhibits


                                                                 Page or
                                                                 Document
Item                                                           Incorporated
 No.        Description of Document                            by Reference
 ---        -----------------------                            ------------

(2)         Merger Agreement dated September 13,                 Form 8-K
            1991 between Yardley Ventures, Inc.                  dated 9/17/91
            and Magnavision Corporation

(3)  (a)    Articles of Incorporation and By Laws                Form S-1
                                                                 dated 12/29/86

(3)  (b)    Amendment to Certificate of Incorporation            Form 8-K
                                                                 dated 9/17/91




                                            - 29 -


<PAGE>



(10) (a)  License Agreement dated August 20, 1990                 Form 10-K     
          between Magnavision Corporation and                     dated 12/31/91
          Department of Education, Archdiocese                    
          of New York                                             
                                                                  
     (b)  Amended License Agreement dated January                 Form 10-K
          6, 1994 between Magnavision Corporation                 dated 12/31/93
          and Department of Education, Archdiocese                
          of New York                                             
                                                                  
     (c)  Microcell Systems Corporation Agreement                 Form 10-K
          dated December 15, 1993                                 dated 12/31/93
                                                                  
     (d)  Securities Purchase Agreement dated as of               Form 10-K     
          August 25, 1995 among the Registrant, Magnavision       dated 4/19/96
          Corporation (N.J.), IBJS Capital Corporation,           
          IBJ Schroder Bank & Trust Company and Koco              
          Capital Company, L.P.                                   
                                                                  
     (e)  Form of Senior Subordinated Note of the                 Form 10-K
          Registrant and Magnavision Corporation (N.J.)           dated 4/19/96
          due February 26, 2001                                   
                                                                  
     (f)  Form of Warrant to Purchase Shares of Registrant's      Form 10-K
          Common Stock expiring on August 26, 2003                dated 4/19/96
                                                                  
     (g)  Security Agreement and Collateral Assignment dated      Form 10-K
          as of August 25, 1995 among Magnavision Corporation     dated 4/19/96
          (N.J.), University Connection, Inc. and IBJS Capital    
          Corporation as agent                                    
                                                                  
     (h)  Registration Rights Agreement dated as of               Form 10-K 
          August 25, 1995 among the Registrant and the            dated 4/19/96
          investors listed therein                                
                                                                  
     (i)  Stockholders' Agreement dated as of August 25, 1995     Form 10-K
          among the Registrant, the investors and the other       dated 4/19/96
          parties listed therein                                  
                                                                  
     (j)  Non-Competition Agreement dated as of August 25, 1995   Form 10-K
          between Magnavision Corporation (N.J.) and              dated 4/19/96
          Nicholas Mastrorilli, Sr.                               
                                                                  
     (k)  Indemnification Agreement dated as of August 25, 1995   Form 10-K
          between the Registrant, Cacomm, Inc., and the           dated 4/19/96 
          investors listed therein                               



                                           - 30 -


<PAGE>



     (l)    Lockbox Service Agreement dated as of August 25,      Form 10-K
            1995 among Magnavision Corporation (N.J.),            dated 4/19/96
            University Connection, Inc., IBJS Capital
            Corporation and IBJ Schroder Bank & Trust Company

     (m)    Amendment No. 1 dated as of June 3, 1996 to           Form 10-K
            Securities Purchase Agreement dated as of August      dated 4/19/96
            25, 1995 among the Registrant, Magnavision
            Corporation (N.J.), Magnavision Wireless Cable, Inc.,
            IBJS Capital Corporation, IBJ Schroder Bank & Trust
            Company and Koco Capital Company, L.P.

     (n)    Amended and Restated Stockholders' Agreement dated    Form 10-K 
            as of June 3, 1996 among the Registrant, Magnavision  dated 4/19/96 
            Corporation (N.J), Magnavision
            Wireless Cable, Inc. and the investors and
            other parties listed therein

     (o)    Amendment No. 1 dated as of June 3, 1996              Form 10-K
            to the Registration Rights Agreement dated as         dated 4/19/96
            of August 25, 1995 among the Registrant and
            the investors listed therein

     (p)    Amendment No. 1 dated as of June 3, 1996 to           Form 10-K
            the Security Agreement and Collateral Assignment      dated 4/19/96
            dated as of August 25, 1995 among Magnavision
            Corporation (N.J.) Magnavision Wireless Cable,
            Inc., Magnavision Private Cable, Inc., University
            Connection, Inc. and IBJS Capital Corporation,
            as agent

     (q)    Amended and Restated Lockbox Service Agreement        Form 10-K 
            dated as of June 3, 1996 among Magnavision            dated 4/19/96
            Corporation (N.J.), University Connection, Inc.,
            Magnavision Private Cable, Inc., IBJS Capital
            Corporation and IBJ Schroder Bank & Trust Company

     (r)    Pledge Agreement dated as of June 3, 1996 between     Form 10-K
            Magnavision Corporation (N.J.) and IBJS Capital       dated 4/19/96
            Corporation as agent

     (s)    Pledge Agreement dated as of June 3, 1996 between     Form 10-K
            Magnavision Corporation (N.J.) and IBJS Capital       dated 4/19/96
            Corporation as agent

     (t)    General Indenture of Conveyance, Assignment and       Form 10-K
            Transfer dated as of June 3, 1996 from Magnavision    dated 4/19/96
            Corporation (N.J.) and University Connection, Inc.
            to Magnavision Private Cable, Inc.

                                     - 31 -


<PAGE>



     (u)    General Indenture of Conveyance, Assignment and       Form 10-K
            Transfer dated as of June 3, 1996 from Magnavision    dated 4/19/96
            Corporation (N.J.) to Magnavision Wireless Cable,
            Inc.

     (v)    Indenture of Assumption of Liabilities dated          Form 10-K
            as of June 3, 1996 from Magnavision Private           dated 4/19/96
            Cable, Inc. to Magnavision Corporation (N.J.) and
            University Connection, Inc.

     (w)    Indenture of Assumption of Liabilities dated          Form 10-K
            as of June 3, 1996 from Magnavision Wireless          dated 4/19/96
            Cable, Inc. to Magnavision Corporation (N.J.)

     (x)    Irrevocable Proxy dated June 3, 1996 issued by        Form 10-K
            Magnavision Corporation (N.J.) to IBJS Capital        dated 4/19/96
            Corporation as agent

     (y)    Form of Amended and Restated Senior Subordinated      Form 10-K
            Notes dated June 3, 1996                              dated 4/19/96

     (z)    Form of Warrant to Purchase Shares of Registrant's    Form 10-K
            Common  Stock expiring on June 4, 2004                dated 4/19/96

     (aa)   Letter Agreement dated July 11, 1995 between the      Form 10-K
            Registrant, Cacomm, Inc. and George S. Callas         dated 4/19/96

     (bb)   Letter Agreement dated August 25, 1995 among the      Form 10-K
            Registrant, Midlantic Bank, N.A. and                  dated 4/19/96
            George S. Callas

     (cc)   Letter Agreement dated April 3, 1997 between the      Form 10-K
            Registrant, KOCO Capital Company, L.P. and IBJS       dated 4/19/96
            Capital Corporation

     (dd)   Form of Indemnification Agreement for executive officers and
            directors

     (ee)   Exchange Agreement dated May 8, 1997 among the Registrant and
            the investors listed therein.

     (ff)   Stockholders Agreement dated May 8, 1997 among the Registrant and
            the other parties listed therein.

     (gg)   Registration Rights Agreement dated May 8, 1997 among the
            Registrant and the other parties listed therein.

     (hh)   Warrant to purchase shares of Common Stock dated May 8, 1997
            among the Registrant and the other parties listed therein


                                     - 32 -


<PAGE>



     (ii)   Employment Agreements dated May 8 1997 between the Registrant and
            Nicholas Mastrorilli, Sr., Nicholas Mastrorilli, Jr., and Patrick
            Mastrorilli, respectively.

     (jj)   Management Agreement dated May 8, 1997 between the Registrant and
            KOCO Capital Company, L.P.

     (kk)   Common Stock Purchase Warrant dated September 10, 1997 issued by the
            Registrant to the Lender listed therein.

     (ll)   Loan and Security Agreement dated September 10, 1997 by and among
            the Registrant, Access Capital, Inc. and the other parties listed
            therein.

     (mm)   Resignation letter from Nicholas Mastrorilli, Sr. to the Registrant
            dated January 8, 1998.

     (nn)   Employment Agreement dated January 9, 1998 between the Registrant
            and IMCOR concerning Robert E. Hoffman.

     (oo)   Letter from Cacomm, Inc. to the Registrant dated April 24,1998.

(21) Subsidiaries of Registrant

(27) Financial Data Schedule


(b)  Form 8-K

     None

                                     - 33 -


<PAGE>



                                   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 the Company's behalf by the undersigned, thereunto duly authorized.

                                     MAGNAVISION CORPORATION


DATE: June 5, 1998                   By: /s/
                                         ------------------------------------
                                          ROBERT E. HOFFMAN
                                          Principal Executive Officer


                                     By: /s/
                                         ------------------------------------
                                          JEFFREY HAERTLEIN
                                          Principal Financial and
                                            Accounting 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/ Robert E. Hoffman                  CEO, President, Director        June 5, 1998
---------------------------                 
Robert E. Hoffman

/s/ George Zombek                      Director                        June 5, 1998
--------------------                                
George Zombek

/s/ Evan Wildstein                     Director                        June 5, 1998
------------------------          
Evan Wildstein

/s/ Kevin Falvey                       Director                        June 5, 1998
-------------------------      
Kevin Falvey

/s/ Geoffrey Thompson                  Director                        June 5, 1998
----------------------         
Geoffrey Thompson

</TABLE>








                                            - 34 -


<PAGE>


                                    EXHIBITS



(10)   (ee)    Exchange Agreement dated May 8, 1997 among the Registrant and the
               investors listed therein.

       (ff)    Stockholders Agreement dated May 8, 1997 among the Registrant and
               the other parties listed therein.

       (gg)    Registration Rights Agreement dated May 8, 1997 among the
               Registrant and the other parties listed therein.

       (hh)    Warrant to purchase shares of Common Stock dated May 8, 1997
               among the Registrant and the other parties listed therein.

       (ii)    Employment Agreements dated May 8 1997 between the Registrant and
               Nicholas Mastrorilli, Sr., Nicholas Mastrorilli, Jr., and Patrick
               Mastrorilli, respectively.

       (jj)    Management Agreement dated May 8, 1997 between the Registrant and
               KOCO Capital Company, L.P.

       (kk)    Common Stock Purchase Warrant dated September 10, 1997 issued by
               the Registrant to the Lender listed therein.

       (ll)    Loan and Security Agreement dated September 10, 1997 by and among
               the Registrant, Access Capital, Inc. and the other parties listed
               therein.

       (mm)    Resignation letter from Nicholas Mastrorilli, Sr. to the
               Registrant dated January 8, 1998.

       (nn)    Employment Agreement dated January 9, 1998 between the Registrant
               and IMCOR concerning Robert E. Hoffman.

       (oo)    Letter from Cacomm, Inc. to the Registrant dated April 24,1998.

       Supplemental Information to be furnished with reports filed pursuant to
Section 15(d) of the Act by Registrants which have not registered securities
pursuant to Section 12 of the Act.

                  As of the date hereof, the Registrant has never sent any
annual report or proxy material to its security holders. If and when such annual
report or proxy material is furnished to its stockholders, the Registrant shall
furnish to the Commission for its information copies of such material. Such
material, when furnished, shall not be deemed to be "filed" with the Commission
or otherwise subject to liabilities of Section 18 of the Act (except to the
extent that the Registrant specifically incorporates such material by reference
in its Form 10-K).

                                     - 35 -






<PAGE>


                           Independent Auditors Report


To the Board of Directors and Shareholders of:
         Magnavision Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Magnavision    
Corporation and Subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders deficiency, and cash flows
for each of the years in the three year period ended December 31,1997. These
consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Magnavision
Corporation and Subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the three year
period ended December 31, 1997, in conformity with generally accepted accounting
principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses
from operations, is in default of certain covenants under its line of credit,
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Managements plans in regard to these matters are
also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.



                              KPMG PEAT MARWICK LLP


New York, New York
April 16, 1998



<PAGE>



PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL INFORMATION

MAGNAVISION CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER  31,1997 AND 1996
<TABLE>
<CAPTION>

ASSETS                                                                                            1997              1996
                                                                                        -------------------------------------
<S>                                                                                              <C>                 <C>    
CURRENT ASSETS
     Cash                                                                                        141,546             164,296
     Trade Accounts and Other Receivables, net of allowance for doubtful accounts                236,375             156,252
     Prepaid Expenses                                                                              8,516               8,059
                                                                                        -------------------------------------
          Total Current Assets                                                                   386,437             328,607
                                                                                        -------------------------------------

PROPERTY AND EQUIPMENT
     Property and Equipment at Cost                                                            1,944,558           1,269,887
     Less:  Accumulated Depreciation                                                            (748,375)           (501,178)
                                                                                        -------------------------------------
          Net Property and Equipment                                                           1,196,183             768,709

OTHER ASSETS
     Shareholder Loans Receivable                                                                 43,810              44,161
     Prepaid lease expense                                                                       650,684             757,652
     Deferred financing cost,  net of accumulated amortization                                   145,496             293,445
     Deposits                                                                                      4,553               4,420
                                                                                        -------------------------------------

TOTAL ASSETS                                                                                   2,427,163           2,196,994 
                                                                                        -------------------------------------
     




LIABILITIES AND SHAREHOLDERS' DEFICIENCY 

CURRENT LIABILITIES
     Accounts Payable and Accrued Expenses                                                       443,717             284,094
     Due to Shareholders                                                                              --             139,889
     Deferred Revenues                                                                           214,490             175,348
     Current Portion of Long-Term Debt                                                             4,225               3,686
     Income Taxes Payable                                                                            741                 741
     Term Loan                                                                                   105,468                  --
     Line of Credit                                                                              405,295                  --
     Notes Payable - Senior Debt                                                                      --           4,062,932
                                                                                        -------------------------------------
          Total Current Liabilities                                                            1,173,936           4,666,690

LONG-TERM LIABILITIES
     Accounts Payable and Accrued Expenses                                                            --               2,000
     Security Deposits                                                                           152,065             126,386
     Long-Term Debt                                                                                6,041              10,563
                                                                                        -------------------------------------



Commitments and contingencies

     Series A Preferred Stock 9,850,000
          shares authorized; issued and outstanding, 5,000,000
          shares, net of unamortized warrant discount                                          4,498,456                  --
SHAREHOLDERS' DEFICIENCY
     Series B Preferred Stock,  150,000 shares                                                   131,889                  --
         authorized; issued and outstanding, 131,889 shares.
     Common Stock, $0.08 par value - 10,000,000 shares
          authorized; issued and outstanding, 1,152,510 shares
          in December 31,1997 and 1,152,222 shares December 31, 1996                              92,200              92,178
     Additional Paid-In Capital                                                                3,876,991           3,321,207
     Accumulated Deficit                                                                      (7,504,415)         (6,022,030)
                                                                                        -------------------------------------
Total Shareholder's Deficiency                                                                (3,403,335)         (2,608,645)
                                                                                        -------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY                                                 2,427,163           2,196,994 
                                                                                        -------------------------------------

</TABLE>


        See accompanying notes to consolidated financial statements.

                                       F-2

<PAGE>




                     MAGNAVISION CORPORATION & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED DECEMBER 31,1997, 1996 AND 1995
<TABLE>
<CAPTION>

                                                                                 1997               1996              1995
                                                                                 ----               ----              ----

<S>                                                                          <C>                 <C>                <C>  
REVENUES
     Gross Revenues                                                           1,607,049           1,285,442          666,366
     Cost of Sales                                                              677,565             526,654          355,001 
                                                                             ----------          ----------       ---------- 
     GROSS PROFIT                                                               929,484             758,788          311,365

OPERATING EXPENSES
     Salaries                                                                   627,356             595,358          383,884
     Depreciation                                                               197,198             168,896          119,306
     General and Administrative Expenses                                      1,010,277             983,079          595,503 
                                                                             ----------          ----------       ----------

TOTAL OPERATING EXPENSES                                                      1,834,831           1,747,333        1,098,693

OPERATING LOSS                                                                 (905,347)           (988,545)        (787,328)

OTHER INCOME (expense)
     Interest expense                                                          (280,546)           (466,342)        (149,279)
     Interest Income                                                             35,824              35,383            8,913
     Other                                                                        1,529               8,705           84,653 
                                                                             ----------          ----------       ----------
          Total other income (expense)                                         (243,193)           (422,254)         (55,713)


LOSS BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM                (1,148,540)         (1,410,799)        (843,041)

PROVISION FOR INCOME TAX                                                          3,989                 710            1,452 
                                                                             ----------          ----------       ---------- 
LOSS BEFORE EXTRAORDINARY ITEM                                               (1,152,529)         (1,411,509)        (844,493)
                                                                             ----------          ----------       ---------- 

EXTRAORDINARY ITEM -LOSS ON EXTINGUISHMENT OF DEBT                              275,844                 --               -- 
                                                                             ----------          ----------       ---------- 
NET LOSS                                                                     (1,428,373)         (1,411,509)        (844,493)
                                                                             ----------          ----------       ---------- 
Preferred Stockholders Dividend Requirement                                     257,778                 --               -- 
                                                                             ----------          ----------       ---------- 
Net loss to Common Stockholders                                              (1,686,151)         (1,411,509)        (844,493)
                                                                             ----------          ----------       ---------- 

Net Loss per Share:
Basic
Loss before extraordinary item                                                    (1.22)              (1.23)           (0.66)
Extraordinary item                                                                (0.24)                --               --
Net loss                                                                          (1.46)              (1.23)           (0.66)

Weighted Average Shares used to Compute net loss per share:
Basic                                                                         1,152,504           1,147,030        1,276,539


</TABLE>


                                       F-3

See accompanying notes to consolidated financial statements.                  

<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIENCY
                THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
                                                                      Series B                       Common          Common     
                                                                  Preferred Stock                    Stock           Stock      
                                                                       Shares          Amount       Shares(1)        Amount     

<S>                                                                <C>               <C>            <C>             <C>         
Balances, December 31,1994                                                               --         1,340,844        107,268    
                                                                                                                                
Common Stock Issued                                                                                                             
Jan 1,1995 to December 31,1995                                                           --            27,628          2,210    
                                                                                                                                
Repurchase of Shares                                                                                                          
of Common Stock, net (note 11)                                                           --              --                        

Net loss                                                                                 --                                      
                                                                                                                                
                                                                  --------------------------------------------------------------
Balance, December 31,1995                                                --              --         1,368,473        109,478   
                                                                                                                                
Common Stock Issued                                                                                                             
Jan 1,1996 to December 31,1996                                           --              --            15,067          1,205   
                                                                                                                                
Retirement of Common Stock held in Treasury                              --              --          (231,318)       (18,505)  
                                                                                                                                
Net loss                                                                                                                        
                                                                                                                                
                                                                  --------------------------------------------------------------
Balance, December 31,1996                                                --              --         1,152,222         92,178   
                                                                                                                                
Common Stock Issued                                                                                                             
Jan 1,1997 to December 31,1997                                           --              --               354             28   
                                                                                                                                
Conversion of Shareholder loan to Series B Preferred Stock            131,889          131,889                                   
                                                                                                                                
Allocation to Warrants Issued                          
                                                                                                                                
Purchase of Fractional Shares                                                                             (66)            (6)  
                                                                                                                               
Net loss                                                                                                                        
                                                                                                                                
Accretion of Redeemable Preferred Stock     
                                                                                                                                
                                                                  --------------------------------------------------------------
Balance, December 31, 1997                                            131,889          131,889      1,152,510         92,200   
                                                                                                                                
</TABLE>

<PAGE>

                          [RESTUBBED FROM TABLE ABOVE]
<TABLE>                                                                 
<CAPTION>                                                               
                                                                 Additional                                                       
                                                                  Paid in          Accumulated        Treasury           Total    
                                                                  Capital             Deficit           Stock            Equity   
                                                                                                                                  
<S>                                                               <C>              <C>             <C>                <C>         
Balances, December 31,1994                                         3,670,764       (3,766,028)                            12,004  
                                                                                                                                  
Common Stock Issued                                                                                                               
Jan 1,1995 to December 31,1995                                       317,807                                             320,017  
                                                                                                                                  
Repurchase of Shares                                                                                                            
of Common Stock, net (note 11)                                                                        (760,000)         (760,000)  
                                                                                                                                  
Net loss                                                            (844,493)                         (844,493)                   
                                                                                                                                  
                                                               -------------------------------------------------------------------
Balance, December 31,1995                                          3,988,571       (4,610,521)        (760,000)       (1,272,472) 
                                                                                                                                  
Common Stock Issued                                                                                                               
Jan 1,1996 to December 31,1996                                        74,131                                              75,336  
                                                                                                                                  
Retirement of Common Stock held in Treasury                         (741,495)                          760,000                 0  
                                                                                                                                  
Net loss                                                                           (1,411,509)                        (1,411,509) 
                                                                                                                                  
                                                               -------------------------------------------------------------------
Balance, December 31,1996                                          3,321,207       (6,022,030)            --          (2,608,645) 
                                                                                                                                  
Common Stock Issued                                                                                                               
Jan 1,1997 to December 31,1997                                           679            --                --                 707  
                                                                                                                                  
Conversion of Shareholder loan to Series B Preferred Stock                                                               131,889  
                                                                                                                                  
Allocation to Warrants                                               555,556                                             555,556  
                                                                                                                                  
Purchase of Fractional Shares                                           (451)                                               (457) 
                                                                                                                                  
Net loss                                                                           (1,428,373)                        (1,428,373) 
                                                                                                                                  
Accretion of Warrants                                                                 (54,012)                           (54,012) 
                                                                                                                                  
                                                               -------------------------------------------------------------------
Balance, December 31, 1997                                         3,876,991       (7,504,415)               --       (3,403,335) 
                                                                                                                                  
</TABLE>     

                                       F-4

See accompanying notes to consolidated financial statements.              



<PAGE>
MAGNAVISION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 
<TABLE>
<CAPTION>

                                                                                 1997                1996              1995
                                                                                 ----                ----              ----
<S>                                                                           <C>                <C>                 <C>   
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Loss                                                                 (1,428,373)         (1,411,509)        (844,493)
     Adjustments to Reconcile Net Loss to Net Cash used
            in Operating activities
         Extraordinary item                                                      275,844                  --               --
          Depreciation and Amortization                                          197,198             168,896          119,306
          Amortization of deferred financing cost                                 80,475              70,404           23,474
          Amortization of channel lease prepayments                              106,968             106,969           35,656
          (Gain) Loss on sale of Assets                                               --              (1,583)              --
          Changes in Assets and Liabilities:
               Increase in Trade Accounts and
                     Other Receivables                                           (80,123)            (48,096)         (23,130)
               (Increase) Decrease in prepaid expenses                              (457)              4,569            9,876
               (Decrease) increase in Deposits                                       133                  --              (75)
               (Decrease) Increase in Accounts Payable and                            --                  --               --
                    Accrued Expenses                                             336,348             (66,520)           6,419
               Increase  in Security Deposits Payable                             25,679              67,565           36,229
               (Decrease) Increase  Income Taxes Payable                              --                (150)              50
               Increase Deferred Charges                                              --              73,104           15,019
               Increase in Deferred Revenues                                      39,142                  --           31,984
                                                                           ---------------------------------------------------
                              Net cash used in operating activities             (447,166)         (1,036,351)        (589,685)

CASH FLOWS FROM INVESTING ACTIVITIES
              Decrease (increase) loan to  shareholders                              351                (300)           5,185
              Purchase property and equipment                                   (674,671)           (503,108)        (281,641)
              Investment in channel lease                                             --                  --         (900,227)
                                                                           ---------------------------------------------------
                            Net cash used in investing activities               (674,320)           (503,408)      (1,176,683)

CASH FLOW FROM FINANCING ACTIVITIES
     Payments of Long-Term Debt                                                   (3,983)             (3,910)          15,281
     Payments of Obligation under Capital leases                                      --             (23,411)         (32,492)
     Decrease in Due to Shareholders                                              (8,000)             (5,000)         (34,036)
     Proceeds from Issuance of Preferred Stock, net                              863,811                --               --
     Proceeds from Issuance of Common Stock                                          707              75,336          320,017
     Proceeds from Issuance Debt                                                 405,295           1,425,713        2,637,219
     Payment of financing fees                                                  (158,637)                 --         (387,325)
     Purchase of Common Stock                                                       (457)                 --         (760,000)
                                                                           ---------------------------------------------------
                          Net cash provided by financing activities            1,098,736           1,468,728        1,758,664

                                  Net decrease in cash                           (22,750)            (71,031)          (7,704)
    Cash beginning of year                                                       164,296             235,327          243,031
    Cash end  of year                                                            141,546             164,296          235,327

Supplemental schedule of cash paid during year for:
Interest                                                                          84,161             479,915           41,828
Income Tax                                                                         3,989                 710            1,402

NON CASH ITEMS:
Exchange of Senior Debt to Redeemable Preferred Stock                          4,062,932                  --               --
Conversion of Senior Debt Accrued interest to term loan                          105,468                  --               --
Conversion of amounts Due to Share holder to Preferred Stock                     131,889                  --               --
Value Assigned to Warrants Issued                                                555,556                  --               --

</TABLE>

                                       F-5


See accompanying notes to consolidated financial statements. 




<PAGE>
                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995


1 - OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES

     a.   Consolidated Financial Statements - The accompanying financial
          statements present the consolidated accounts of Magnavision
          Corporation, a Delaware corporation (formerly Yardley Ventures, Inc.),
          and its wholly owned subsidiary, Magnavision Corporation, a New Jersey
          corporation, and its wholly owned subsidiaries, University Connection,
          Inc., a New Jersey corporation, Accu-Trek, Inc., a New Jersey
          corporation and Magnavision Laboratories, Inc., a Delaware Corporation
          ("the Company"). As required by the amended senior debt agreement of
          June 4, 1996, Magnavision Corporation, a New Jersey corporation,
          formed two additional wholly owned subsidiaries, Magnavision Private
          Cable, Inc., established to hold the private cable contracts and
          Magnavision Wireless Cable, Inc., established to hold the wireless
          lease. The consolidated financial statements include all of the
          assets, liabilities, income, expenses and cash flows for these
          companies. All significant intercompany transactions and balances have
          been eliminated, in consolidation.

     b.   Organization, Operations and Liquidity- Magnavision Corporation
          (formerly Yardley Ventures, Inc.) was incorporated in Delaware on
          April 3, 1986, to seek to acquire one or more potential businesses.
          Magnavision Corporation and its subsidiaries were established to
          conduct the business of providing wireless and private cable
          television, which is now the business purpose of the Company, to
          segments where cable television is not available and as an alternative
          to cable television. Magnavision Corporation of New Jersey was formed
          on June 15, 1989, pursuant to the laws of the State of New Jersey. As
          a result of the amended lending agreement, the Company created two new
          subsidiaries, Magnavision Private Cable and Magnavision Wireless
          Cable.

          The accompanying consolidated financial statements have been prepared
          assuming the Company will continue as a going concern, which
          contemplates the realization of assets and the satisfaction of
          liabilities in the normal course of business. However, the Company has
          suffered recurring losses from operations, is in default of certain
          provisions of its line of credit with Access Capital, and has a net
          capital deficiency at December 31, 1997. In the absence of alternative
          financing, sales of assets, or restructuring of its existing debt, the
          Company will have insufficient liquidity to pay principal and interest
          on its existing debt and may experience liquidity shortfalls in
          meeting its ongoing obligations.

          The Company plans to meet short term liquidity requirements with a
          working capital loan from Access Capital described in Note 9. On a
          long term basis, the Company is seeking longer term arrangements with
          a strategic partner(s) for financing. Management believes this partner
          will participate in the Companys development of the alternative use of
          its rights to wireless spectrum. This business plan is dependent upon
          the Company securing the necessary capital resources, as well as
          engineering and other expertise required to offer this alternative
          service. There can be no assurance that the Company will be able to
          secure financing or other strategic relationships on terms and
          conditions satisfactory, if at all.

                                       F-6


<PAGE>
                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995

          Failure to obtain such financing will have a material adverse impact
          on the Company. Also, there can be no assurance that, even with
          financing, and receipt of necessary regulatory authorization, the
          Company will be able to launch this alternative service or that it
          will be commercially successful.

     c.   Property and Equipment - Property and equipment are stated at cost.
          Depreciation, for financial reporting purposes, is provided on the
          straight-line method over the estimated useful lives of the related
          assets, which are:

                    Office Equipment                            5 years
                    Furniture and Fixtures                      10 years
                    Transportation Equipment                    5 years
                    Machinery and Equipment                     5 to 10 years
                    Leasehold Improvements                      7 years

          The Company uses accelerated methods and lives, as allowed by the
          Internal Revenue Code, to calculate depreciation for income tax
          purposes.

     d.   Deferred Revenues - The Company records subscriptions received in
          advance of the service being provided as a current liability.

     e.   Income Taxes - Deferred tax assets and liabilities are recognized for
          the expected tax consequences of temporary differences between the
          financial statement carrying amount of existing assets and liabilities
          and their respective tax bases and operating loss and tax credit carry
          forwards.

          Deferred tax assets and liabilities are measured using enacted tax
          rates expected to apply to taxable income in the years in which those
          temporary differences are expected to be recovered or settled. The
          effect on deferred tax assets and liabilities of a change in tax rates
          is recognized in income in the period that includes the enactment
          date.

     f.   Use of Estimates- Management of the Company has made a number of
          estimates and assumptions relating to the reporting of assets and
          liabilities and revenue and expenses and the disclosure of contingent
          assets and liabilities to prepare these consolidated financial
          statements in conformity with generally accepted accounting
          principles. Actual results could differ from these estimates.

     g.   Fair Value of Financial Instruments - Statement of Financial
          Accounting Standards No. 107, Disclosures about Fair Value of
          Financial Instruments (Statement 107), requires disclosure of fair
          value information about financial instruments, whether or not
          recognized in the balance sheet, for which it is practicable to
          estimate that value. In many cases, fair value estimates cannot be
          substantiated by comparison to independent market information and
          could not be realized in immediate settlement of the instrument.
          Statement 107 excludes certain financial instruments and all
          nonfinancial instruments from its disclosure requirements.
          Accordingly, the aggregate fair value amounts presented do not
          represent the underlying value of the Company.

                                      F-7

<PAGE>
          In managements opinion, cash, trade accounts and other receivables,
          shareholder loans receivable, deposits, accounts payable and accrued
          expenses, equal or approximate fair market value. The long-term debt
          and notes payable, and term loans and line of credit are at market
          rates, therefore equal or approximate fair value.

     h.   Impairment of Long-Lived Assets - The Company reviews long-lived
          assets and certain identifiable intangibles for impairment whenever
          events or changes in circumstances indicate that the carrying amount
          of an asset may not be recoverable. Recoverability of assets to be
          held and used is measured by a comparison of the carrying amount of an
          asset to future net cash flows expected to be generated by the asset.
          If such assets are considered to be impaired, the impairment to be
          recognized is measured by the amount by which the carrying amount of
          the assets exceeds the fair value of the assets. Assets to be disposed
          of are reported at the lower of the carrying amount or fair value less
          costs to sell.

     i.   Prepaid Lease Expense - Prepaid lease expense represents the Companys
          deposit relating to the Channel Lease Agreement (see note 7). The
          amount is being amortized over the term of the lease agreement.

     j.   Deferred Financing Costs - Deferred financing costs at December 31,
          1997 represent expenditures relating to the Access Capital, Inc. Debt
          financing (see note 9). The amount is being amortized over the term of
          the loan and security agreement.

     k.   Earnings Per Share of Common Stock - The Company adopted SFAS 128
          Earnings Per Share (SFAS 128") effective for the Company in 1997. SFAS
          128 replaced the calculation of primary and fully diluted net income
          per share with basic and diluted net income per share. Net income per
          common share amounts for 1997, 1996 and 1995 have been restated to
          conform to SFAS 128 requirements. In calculating diluted earnings per
          share, no potential shares of Common Stock are to be included in the
          calculation when there is a loss from continuing operations available
          to Common Stock Holders.

     l.   Accounting for Stock Issued to Employees - Prior to January 1, 1996,
          the Company accounted for its warrants in accordance with the
          provisions of Accounting Principles Board (APB) Opinion No. 25
          Accounting for Stock Issued to Employees and related interpretations.
          As such, compensation expense would be recorded on the date of grant
          only if the current market price of the underlying stock exceeded the
          exercise price. On January 1, 1996, the Company adopted SFAS No. 123,
          Accounting for Stock-Based Compensation, which permits entities to
          recognize as expense over the vesting period the fair value of all
          stock-based awards on the date of grant. Alternatively, SFAS No. 123
          also allows entities to continue to apply the provisions of APB
          Opinion No.25 and provide pro forma net income disclosure for employee
          stock option grants made in 1995 and future years as if the
          fair-value- based method defined in SFAS No. 123 had been applied. The
          Company has elected to continue to account for stock options granted
          under the provisions of APB 25 and to provide the pro forma
          disclosures required by SFAS 123. The pro forma disclosures required
          by SFAS 123 for 1997, 1996 and 1995 have not been presented on the
          basis of materiality.
                                      F-8
<PAGE>


     m.   New Accounting Pronouncements - In June 1997, the FASB issued
          Statement of Financial Accounting Standard No. 130, Reporting
          Comprehensive Income (SFAS 130). This statement requires businesses to
          disclose comprehensive income and its components in general purpose
          financial statement, with reclassifications of prior period financial
          statements. SFAS 130 is effective for fiscal periods beginning after
          December 15, 1997. The Company is currently evaluating the impact this
          statement will have on its financial statements; however, because the
          statement requires only additional disclosure, the Company does not
          expect it to have material impact on its financial position or results
          of operations.


NOTE 2 - RELATED PARTY TRANSACTIONS-CONFLICTS OF INTEREST

                  The following transactions occurred between the Company and
related parties:

     a.   Shareholder loans receivable of $43,810 and $44,161 at December 31,
          1997 and 1996 are payable after May 1999 and are interest free.

     b.   In May 1997, the Companys majority shareholder converted its payables
          of $131,889 to preferred stock. Previously this was recorded as a
          current liability. At December 31, 1996, the payable to the Companys
          majority shareholder related to expenses paid by this shareholder on
          behalf of the Company in prior years.

     c.   The Company has been informed that Cacomm, Inc., the Companys majority
          shareholder, is a partner in a general partnership known as the Grand
          MMDS Alliance. The Grand MMDS Alliance claims to hold the licenses to
          certain MMDS channels, as a designated selectee of the FCC. These
          channels cover similar broadcast areas as the Company, and the
          possibility exists that The Grand MMDS Alliance could commence
          business in direct competition with the Company. The Company has no
          reliable information as to whether the Grand MMDS Alliance has
          commenced business operations as of the date of this report. Certain
          officers of the Company are also believed to be officers and directors
          of Cacomm, Inc.

     d.   The prior lenders converted the accrued interest in the amount of
          $105,468 to one year notes at 10% interest, with interest and
          principal payable May 8, 1998. After year end the preferred 
          stockholders agreed to extend the maturity of the above mentioned 
          notes to May 8, 1999.

NOTE 3 - PROPERTY AND EQUIPMENT

         Property and equipment at December 31, 1997 and 1996 are summarized by
         major classification as follows:

                                       F-9


<PAGE>


                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995


                                                1997               1996
Office Furniture and Equipment             $    67,771        $    55,505
Transportation Equipment                        46,224             46,224
 Machinery and Equipment                     1,830,563          1,168,158
                                           -----------        -----------
                                             1,944,558          1,269,887
Less:  Accumulated Depreciation               (748,375)          (501,178)
                                           -----------        -----------
                                           $ 1,196,183        $   768,709
                                           ===========        ===========

Machinery and equipment relate principally to assets owned by the Company
located at the various college and nursing home sites serviced by the Company.


NOTE 4 - INCOME TAXES

         Income tax expense attributable to loss from operations consists of:

Current

 Year ended December 31,
                                  1997              1996              1995
                                  ----              ----              ----

Federal                               0                 0                 0
State                             3,989               710             1,452
                                 ------            ------           -------
TOTAL                            $3,989            $  710           $ 1,452
                                 ======            ======           =======

Income tax expense attributable to net loss before provision for income taxes
was $3,989, $710 and $1,452 for the years ended December 31, 1997, 1996 and
1995 and differed from the amounts computed by applying the U.S. Federal
income tax rate of 34 percent to pretax income from operations as a result of
the following:
<TABLE>
<CAPTION>

                                                  1997              1996             1995
                                                  ----              ----              ----

<S>                                            <C>               <C>               <C>       
Computed expected tax benefit                  $(485,647)        $(479,672)        $(286,634)
         Increased (reduction) in income                                         
                  taxes resulting from:                                          
Increase in valuation                                                            
allowance for Federal                                                            
& state deferred tax assets                      462,815           467,009           282,179
Book vs. tax depreciation                         19,200            11,153              --
   State and local income taxes, net of                                          
                  Federal income tax benefit       2,633               469               958
   Non-deductible portion of                                                     
                  meals and entertainment          2,775               736               303
   Other, net                                      2,213             1,015             4,646
                                               ---------         ---------         ---------
                                               $   3,989         $     710         $   1,452
                                               =========         =========         =========
</TABLE>
                                                                            
                                      F-10


<PAGE>


                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995


The temporary differences and carry forwards which give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1997 and
1996 are presented below:

<TABLE>
<CAPTION>
    
                                                            1997                   1996
                                                            ----                   ----
<S>                                                     <C>                   <C>   
   Deferred tax assets:
         Net operating loss carry forward               $3,160,701             $2,558,782
         Compensation paid with Company stock               28,123                 28,123
         Organization and construction costs
         capitalized for tax purposes                      305,197                320,138
         Less valuation allowance                       (3,441,851)            (2,874,083)
                                                        ----------             ---------- 
                          Net deferred tax assets           52,170                 32,970
                                                        ----------             ---------- 
         Deferred tax liabilities:
         Property and equipment, principally
         due to differences in depreciation                (52,170)               (32,970)
                                                        ----------             ---------- 
         Net deferred tax asset (liability)             $       -              $        -
                                                        ==========             ==========

</TABLE>

At December 31, 1997, the Company has net loss carry forwards for federal income
tax purposes of approximately $7,100,00 which are available to offset future
taxable income. These carry forwards expire in varying amounts through 2011. The
net change in the total valuation allowance for 1997, 1996 and 1995 was an
increase of $567,768, $563,636, and $334,062 respectively.

NOTE 5 - LONG-TERM DEBT

         Long-term debt at December 31, 1997 and 1996 consisted of the
following:
<TABLE>
<CAPTION>

                                                                                           1997                 1996
                                                                                           ----                 ---- 
                 <S>                                                                     <C>                  <C> 
                  Note payable to a financing company, payable in monthly
                  installments of $436, including interest at 12.25%, final
                  payment due April 2000 collateralized
                  by a vehicle with a book value of $10,479                               $10,266             $14,249
                  Less Current Portion                                                      4,225               3,686
                                                                                          -------             -------
                  Long-Term Debt                                                            6,041              10,563
                                                                                          =======             =======
</TABLE>


         At December 31, 1997 maturities of long-term debt are as follows:

                                   1998              4,225
                                   1999              4,760
                     Thereafter    2000              1,281
                                                   -------
                                                   $10,266
                                                   =======

                                      F-11


<PAGE>


                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995


NOTE 6 - OPERATING LEASES

The Company leases office space and automobiles for use in continuing operations
for terms of 1 to 3 years. Minimum lease payments over the remaining lease terms
are as follows:

                                   1998              17,281
                                   1999               3,624
                                                  ---------
                                                  $  20,905
                                                  =========

Expenses under operating leases amounted to $47,464, $40,127, and $24,468 for
the years ended December 31, 1997,1996 and 1995, respectively.


NOTE 7 - LICENSE AGREEMENT

         On August 20, 1990, the Company entered into an agreement with the
         Department of Education, Archdiocese of New York ("the Archdiocese")
         which would permit the Company to use the transmission capacity of the
         Archdiocese. The agreement, which was amended in January 1994, grants
         the Company a lease through January 2004 with a right to extend for an
         additional five years and a right of first refusal for subsequent
         renewals. Pursuant to the agreement, the Company must also pay to the
         Archdiocese a royalty fee for the use of the Transmission Capacity, in
         accordance with the terms and amounts described in the amended
         agreement. In connection with the amended agreement the Company had a
         contingent obligation to fund the reconstruction of the Archdioceses
         system. In 1995, the Company deposited $900,277 in an escrow account
         for the purpose of system reconstruction upgrades. The Company recorded
         the deposit as prepaid lease expense, and is amortizing the amount over
         the life of the agreement through January 2004.

At December 31, 1997, the minimum royalty payments over the remaining license
term are as follows:

                  For the Year Ended  -        1998           $ 167,200
                                      -        1999             158,400
                                      -        2000             158,400
                                      -        2001             158,400
                                      -        2002             158,400
                                      -      Thereafter         171,600
                                                              ---------
                                                                972,400
                                                              =========

NOTE 8 - NET INCOME (LOSS) PER SHARE

The Company computes basic and diluted earnings per share in accordance with
SFAS 128 Earnings Per Share which the Company adopted as of December 31, 1997.
The table reconciles the numerator and denominator of the basic earnings per
share computations shown on the Consolidated Statements of Operations.


                                      F-12


<PAGE>


                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995
<TABLE>
<CAPTION>


For the Years Ended  December 31                       1997               1996               1995
                                                       ----               ----               ----

<S>                                                 <C>                  <C>                 <C>  
Basic EPS
      Numerator:
      Net loss to common stockholders               (1,686,151)          (1,411,509)           (844,493)
      Redeemable preferred stockholders dividend       257,778                   --                  --
      Net Loss                                      (1,428,373)          (1,411,509)           (844,493)

Denominator:
      Weighted Averge Common shares outstanding      1,152,504            1,147,030           1,276,539
                               
      Basic EPS                                          (1.46)               (1.23)               (.66)
</TABLE>

Warrants to purchase 2,134,774, 1,025,150 and 639,321 of common stock
outstanding as of December 31, 1997, 1996 and 1995, respectively, were excluded
from the calculation of diluted net loss per share as the effect of their
inclusion would have been anti-dilutive.

Earnings per share data has been restated for all periods preceded to reflect
the adoption of SFAS 128.

NOTE 9 - ACCESS CAPITAL, INC. LINE OF CREDIT

In September 1997 the Company and Access Capital, Inc. agreed to a $1,250,000
three year revolving line of credit to be used to expand the Companys private
cable business. As of year end the Company had borrowed $405,295 under the line
of credit. Interest is payable currently under the line of credit at prime rate
plus five and one-half percent and all outstanding amounts are payable in
September 2000. The line is secured with the lender by a pledge of private cable
contracts and all other Company assets. In addition the lender received 138,536
warrants at an exercise price of $2.00 per share to purchase approximately 4% of
the Companys stock on a fully diluted basis. The warrants contain a put and call
option in the event that the Company sells a significant asset. The put option
requires the Company to purchase a percentage of the lenders warrants as
required by a formula outlined in the amended agreement. This option can only be
exercised upon the sale of a significant asset of the Company or change of
control. Conversely, the call option allows the Company to purchase all the
outstanding warrants at a price set by the formula stated above. The cost of
either the put or call option can not be determined at this time since it is
based upon the value of a sale of a significant asset which cannot be assured.

Subsequent to the fiscal year ended December 31, 1997, the Company had not met
certain non-monetary working capital covenants under the Agreement and the
lender instituted a default interest rate, equivalent to two and one-half
percent over the contract rate. As a result, the outstanding balance has been
classified as a current liability in the accompanying balance sheet. The lender
has continued to lend funds under the Agreement. The Company requested a waiver
thereof together with a separate working capital advance.

The Company is evaluating a proposed restructuring of its financial covenants,
an increase in the line of credit to $3 million dollars and an increase in its
warrant ownership of the Company. The Company is currently reviewing such
proposal and discussions with the lender are expected to commence shortly. There
is no assurance that such restructuring will be effected on terms satisfactory
to the Company, or at all.



                                      F-13


<PAGE>


                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995


NOTE 10.    EXCHANGE OF DEBT TO REDEEMABLE PREFERRED STOCK

In August 1995, the Company obtained a $5,000,000 lending facility from IBJ
Schroder Bank & Trust Co., IBJS Capital Corporation (collectively IBJS) and KOCO
Capital Company, L.P. (KOCO), with interest at 12% payable quarterly on any
outstanding balance. The final maturity date of any outstanding amount under the
lending facility was February 2001. Approximately $2,637,000 of that amount was
furnished to the Company at the time the lending facility was entered into, and
the remainder was to be advanced based on the present value of the projected
cash flow from new contracts with purchasers of the Companys private cable
television service. Funds advanced were to be used for equipment and contract
costs incurred in connection with installation of the service at the new
locations and for working capital. The proceeds furnished at the time the
lending facility was entered into were utilized to fund an escrow deposit of
$900,000 for system configuration required under the Channel Lease Agreement, to
repurchase approximately 18% of the Companys issued and outstanding capital
stock and to provide working capital. In connection with obtaining the lending
facility, the Company issued to its lenders 361,965 and 121,909 warrants,
respectively, to purchase approximately 27% of the Companys Common Stock on a
fully diluted basis at exercise prices of $7.60 and $5.40 per share,
respectively. These warrants expire on August 27, 2003.

On June 3, 1996, the terms of the lending facility were amended. Pursuant to the
amendment, the lenders agreed to waive existing defaults and provide up to the
sum of $1,200,000 toward the Companys working capital requirements without
regard to the present value formula referred to above, with the remaining
balance of the $5 million to be advanced based on the present value of projected
cash flow from the contracts for new outlets with institutions. In exchange
therefore, the Company agreed to issue warrants to purchase an additional
370,547 shares, representing 12% of the Companys Common Stock on a fully diluted
basis at an exercise price of $5.40 per share. These warrants expire on June 4,
2004. The amendment required the lenders to surrender to the Company warrants
for the purchase of up to 344,245 shares if, as and when the Company complied
with certain conditions outlined in the agreement. The amendment had a put/call
option in the event that the Company sold a significant asset. The put option
required the Company to purchase a percentage of the lenders warrants as
required by a formula outlined in the amended agreement. This option was only
exercisable upon the sale of a significant asset of the Company or a change of
control. Conversely, the call option allowed the Company to purchase all the
outstanding warrants at a price set by the formula stated above. The cost of
either the put or call option can not be determined at this time since it is
based upon the value of a sale of a significant asset which cannot be assured.

In connection with the June 3, 1996 amendment, the Companys rights under the
Channel Lease Agreement were transferred to a subsidiary whose stock was pledged
to the Lenders as security for amounts advanced under the lending facility. The
agreement was secured by the License Agreement and the Companys institutional
cable contracts. The agreement contained a prepayment penalty for the first two
years and placed limits on stock sales and payment dividends, and also contained
several financial covenants.

At December 31, 1996, the Company was in default of certain provisions of
certain covenants of its senior debt agreement, and at the end of the first
quarter of 1997, had not made its required interest payment on such debt. As a
result, the outstanding balance has been classified as a current liability in
the accompanying balance sheet.

On May 8, 1997, the Company agreed with its lenders to exchange its senior
subordinated notes into redeemable preferred stock. Under the terms thereof, the
Companys outstanding subordinated notes, aggregating approximately $4.1 million,
together with accrued interest and detachable warrants, were

                                      F-14


<PAGE>


                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995


exchanged for $5 million of 8% redeemable preferred stock due December 31, 2002.
In connection with the exchange, the lenders also funded the Company the
remaining balance on the existing line. In addition, the note holders received
1,826,932 warrants to purchase up to 58% of the common stock on a fully diluted
basis at an exercise price of $2.00 per share after the Company effected a
1-for-20 reverse stock split, and have the right, which they have exercised, to
elect the majority of the Board of Directors. This resulted in a change in
control of the Company. The agreement also requires the warrant holders to
surrender up to 10% of their stock on a fully diluted basis, if, as and when
certain liquidity events occur. In addition, warrant holders have the right to
require the Company to repurchase the warrants under certain conditions. This
option can only be exercised upon the sale of an asset of the Company. The value
of the warrants was estimated at $555,556 and has been assigned to the warrant 
and represents a discount to the face value of the redeemable preferred stock. 
The cost of the put can not be determined at this time since it is based upon 
the value of a sale of a significant asset which cannot be assured. Also, one 
of the warrant holders has entered into a management service agreement with the
Company.

In connection with the exchange, the lenders agreed to issue one year unsecured
notes totaling $105,468 with interest at 10% payable at maturity. The Company
and the Preferred Stockholders further agreed to extend the maturity of the
unsecured notes to May 8, 1999. The Company wrote off the unauthorized deferred
finance cost related to the subordinated notes, which has been classified as an
extraordinary item in the accompanying financial statement.

NOTE 11.  REDEEMABLE PREFERRED STOCK

During the second quarter of 1997 the Company authorized 10,000,000 shares of
Preferred Stock. The Company also issued 5,000,000 shares of the authorized
amount as Series A Preferred Stock and 150,000 shares as Series B Preferred
Stock concurrent with the designation of the Preferred Stock. The then senior
subordinated notes along with the remaining balance of the line was exchange for
5,000,000 shares of 8% cumulative redeemable preferred stock. At closing, the
Company received cash of approximately $800,000 after expenses.

Holders of Series A Preferred Stock are entitled to receive, when and as
declared by the Companys Board of Directors, cash dividends cumulative at the
rate of 8% per share. Cumulative and unpaid dividends amounted to approximately
$257,778 at December 31, 1997.

NOTE 12 - STOCKHOLDERS EQUITY TRANSACTION

On May 8,1997 the Company effected a 1-for-20 reverse split of its common stock
such that each outstanding share of common stock was, effective May 9, 1997,
converted into .05 shares of post split common stock and the par value of common
stock was changed from $.004 to $.08 per share. All periods have been restated
to reflect the split.

During the fourth quarter of 1997, the Company purchased 66 shares which
represented fractional shares purchased in the execution of the 1 for 20 reverse
stock split for shareholders.

During the second quarter of 1997, the Company also converted a shareholder loan
into shares of Series B Preferred Stock (See Related Party Transactions - Note
2).

During the first quarter of 1997 a management warrant holder exercised warrants
to purchase 354 shares of common stock at $2.00 per share.

                                      F-15


<PAGE>


                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995


During the first quarter of 1996, the Company issued 10,000 shares of common
stock at $5.00. These shares were issued to non-management shareholders who
assisted in facilitating the redemption of the 231,318 shares of common stock
held in treasury.

During the second quarter of 1996 the Company retired the 231,318 shares of
common stock held as treasury stock as was required by its lenders.

During the third quarter of 1996 non-management and management warrant holders
exercised warrants for 5,067 shares of common stock at an exercise price of
$5.00 per share.

During 1996 and 1995, the Company granted 370,546 and 499,874 warrants to
purchase shares of its common stock at exercise prices ranging from $5.00 to
$20.00 per share. At December 31, 1996, the Company has 1,025,150 unexercised
warrants outstanding to purchase 1,025,150 shares of its common stock, which
expire at various dates through May 25, 2005.

Pursuant to the Securities Purchase Agreement of August 1995 with its Senior
Lenders, the Company was required to issue additional warrants to purchase
18,000 shares of its common stock at an exercise price of $7.60 in satisfaction
of certain investment banker and finders fees previously agreed to. In February
1997, the Company reduced the exercise price of 123,464 warrants held by
officers and directors of the Registrant from an exercise price of $5.00 to
$2.00. Such reduction was effected to more accurately reflect the market value
of the underlying shares.

NOTE 13- SALES TO MAJOR CUSTOMERS

For the year ending December 31, 1997, 1996 and 1995, revenue from three
customers represented 40%, 50%, and 62% respectively, of total revenues.

NOTE 14 - CONCENTRATION OF CREDIT RISK

The Company maintains its cash at a financial institution. The Federal Deposit
Insurance Corporation only insures up to $100,000 at any one financial
institution. The Company rarely if ever maintains cash of more than $100,000 in
any one institution.











                                      F-16


<PAGE>


                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1997, 1996 AND 1995

(21) SUBSIDIARIES OF REGISTRANT

      Magnavision Corporation, a Delaware Corporation

            Subsidiaries

                    Magnavision, a New Jersey Corporation

            Wholly owned subsidiaries:

                    University Connection, Inc., a New Jersey Corporation

                    Accu-Trek, Inc., a New Jersey Coporation

                    Magnavision Laboratories, Inc., a Delaware Corporation

                    Magnavision Private Cable, Inc., a Delaware Corporation

                    Magnavision Wireless Cable, Inc., a Delaware Corporation




                                                    
                                      F-17




<PAGE>





                                  EXHIBIT INDEX



(10)   (ee)    Exchange Agreement dated May 8, 1997 among the Registrant and the
               investors listed therein.

       (ff)    Stockholders Agreement dated May 8, 1997 among the Registrant and
               the other parties listed therein.

       (gg)    Registration Rights Agreement dated May 8, 1997 among the
               Registrant and the other parties listed therein.

       (hh)    Warrant to purchase shares of Common Stock dated May 8, 1997
               among the Registrant and the other parties listed therein.

       (ii)    Employment Agreements dated May 8 1997 between the Registrant and
               Nicholas Mastrorilli, Sr., Nicholas Mastrorilli, Jr., and Patrick
               Mastrorilli, respectively.

       (jj)    Management Agreement dated May 8, 1997 between the Registrant and
               KOCO Capital Company, L.P.

       (kk)    Common Stock Purchase Warrant dated September 10, 1997 issued by
               the Registrant to the Lender listed therein.

       (ll)    Loan and Security Agreement dated September 10, 1997 by and among
               the Registrant, Access Capital, Inc. and the other parties listed
               therein.

       (mm)    Resignation letter from Nicholas Mastrorilli, Sr. to the
               Registrant dated January 8, 1998.

       (nn)    Employment Agreement dated January 9, 1998 between the Registrant
               and IMCOR concerning Robert E. Hoffman.

       (oo)    Letter from Cacomm, Inc. to the Registrant dated April 24,1998.