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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, 1998

                                       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 15, 1999
was 1,154,390.

Documents Incorporated by Reference:  None.


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                                    P A R T I

ITEM 1.           BUSINESS

All common share amounts and prices presented in this report reflect the effects
of the 1for 20 reverse split effected May 8, 1997.

THE STATEMENTS CONTAINED IN THIS ANNUAL REPORT ON FORM 10-K, INCLUDING THE
EXHIBITS HERETO, RELATING TO MAGNAVISION CORPORATION'S FUTURE OPERATIONS MAY
CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE "SECURITIES
EXCHANGE ACT OF 1934", AS AMENDED. ACTUAL RESULTS OF THE COMPANY MAY DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AND MAY BE AFFECTED BY A
NUMBER OF FACTORS INCLUDING THE COMPANY'S ABILITY TO EXECUTE ITS PRIVATE CABLE
OR WIRELESS PLAN, THE COMPANY'S ABILITY TO GENERATE REVENUE, THE ABILITY OF THE
COMPANY TO COMPLETE PROJECTS, TO ATTRACT ONE OR MORE NEW STRATEGIC PARTNERS,
THEIR WILLINGNESS TO ENTER INTO ARRANGEMENTS WITH MAGNAVISION CORPORATION ON A
TIMELY BASIS AND THE TERMS OF SUCH ARRANGEMENTS, THE RECEIPT OF REGULATORY
APPROVALS FOR ALTERNATIVE USES OF ITS MMDS SPECTRUM, THE COMMERCIAL VIABILITY OF
ANY ALTERNATIVE USE OF MMDS SPECTRUM CONTEMPLATED BY THE COMPANY'S BUSINESS
PLAN, CONSUMER ACCEPTANCE OF ANY NEW PRODUCTS OFFERED OR TO BE OFFERED BY
MAGNAVISION CORPORATION, SUBSCRIBER EQUIPMENT AVAILABILITY, TOWER SPACE
AVAILABILITY, ABSENCE OF INTERFERENCE AND THE ABILITY OF ITS COMPANY TO REDEPLOY
OR SELL EXCESS EQUIPMENT, THE ASSUMPTIONS, RISKS AND UNCERTAINTIES SET FORTH
BELOW IN THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" AND ELSEWHERE HEREIN, AS WELL AS OTHER FACTORS CONTAINED
HEREIN AND IN THE COMPANY'S OTHER SECURITIES FILINGS. FURTHERMORE, THE FINANCING
OBTAINED BY THE COMPANY TO DATE WILL NOT ENABLE IT TO MEET ITS FUTURE CASH NEEDS
AS CONTEMPLATED IN THE BUSINESS PLAN.

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.



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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 May 1997. Both interest
and principal were originally payable on May 8, 1998. At year end 1997, the
redeemable preferred stockholders agreed to extend the maturity of the note to
May 8, 1999 and at year end 1998 agreed to extend the maturity to May 8, 2000.

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. At December 1997, the Company had borrowed approximately
$405,000 under the line of credit. Interest was payable currently at the rate of
prime plus 5.5% and was current. 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. 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 elected not to accept the offer and paid back the loan on July 3, 1998.

On July 3, 1998 the Company and BSB Bank and Trust Company entered into an
agreement to refinance the Company's existing credit line and supply working
capital.

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Pursuant thereto, Magnavision borrowed the sum of $2.5 million dollars which
bears interest at a fixed rate of 10% per annum and has a 5 year term. The loan
requires monthly installments of interest, plus 9 annual payments of principal,
payable in arrears, in accordance with the agreed upon schedule starting October
1998. The loan was utilized to refinance existing debt and the remaining
approximately $1.9 million was used to finance the completion of outstanding
contracts for private cable television service at various locations and to
complete the Fordham University data distribution system, and for working
capital. BSB Bank & Trust Company also granted the Company a $500,000 line of
credit, to be used for future installations of private cable systems and general
corporate purposes. This line of credit will be at an interest rate of prime
plus 1.5% payable monthly and will mature in 2 years. Interest and principal
payments are current and the Company is in compliance with the loan covenants.

In connection with the above transaction BSB Bank & Trust Company received
146,176 warrants to purchase approximately 4% of Magnavision's issued and
outstanding capital stock on a fully diluted basis at an exercise price of $2.00
per share.

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 is, in conjunction
with potential joint venture partners, exploring 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 private data delivery.
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, that the Company can find a joint venture partner, 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 of the United States.



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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"). Private cable companies operate under
agreements with private landowners to service a specific MDU, institution, or
commercial establishment.

As of January 31, 1998, the Company had long term (generally 5-10 year)
agreements with a total of 41 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, 1998, the
Company generated approximately $3,652,389 of revenues, (which constituted 100%
of the Company's total revenues for the year), from this business which included
the sale of equipment to Fordham University. For the year ended December 31,
1998, revenues from Fordham University which utilized both a data system and the
Company's private cable television services was 20% of the Company's principal
source of revenues; no other institution accounted for more then 10% of the
total revenues.

The Company has started offering a high-speed data system using cable modem
technology to deliver data over the television cable system. The benefit of
using this system is that an Institution can get high-speed data and internet
access without the expense of rewiring the campus. The Company has successfully
implemented this system at Fordham University. The Company intends to offer this
service at other schools.

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 41 facilities. 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 41 facilities used by
students and patients, with approximately 15,000 outlets for television and
3,200 data drops.

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 market for this segment of its business
is, in the near term, located in the Eastern portion of the United States. Only
a small portion of the Company's revenues to date include fees from advertisers.


                                       5
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Sales and Marketing

The Company's sales and marketing efforts in the private cable business, be it
television or data system, have and will continue to focus primarily upon
institutions with concentrated populations, such as colleges and universities
with dormitories, nursing homes and other such locations. 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 appears to be 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 (Multiple
Dwelling Units). 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.

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 MDUs 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.



                                       6
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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.

Two-way Services

In 1998, the FCC issued a report and order on two-way service for MMDS and ITFS.
The order makes provisions for protected service areas for existing licensed
MMDS and ITFS main transmitters, for booster stations, response stations, and
response hubs within protected service areas, and new interference protection
requirements among stations with potential co-channel or adjacent channel
interfaces.

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, and
headend equipment for reception of programming and or data, such as earth
stations and satellite receivers or high-speed data lines. 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. 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 modems 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's business plan calls for one or more
strategic partners to participate in the development and include a large portion
of such expenditures to be borne by such partners. 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 or partner(s)
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.



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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 $180,600 in monthly royalties to the Department
during 1998 and will be required to pay additional monthly royalties during 1999
through the expiration of the Channel Lease Agreement, equal to the greater of
$17,984 plus five cents ($.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 provides for certain content restrictions on transmittal materials.

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.




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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 deployed by the Telcos and CAPS 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.

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.

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: WorldCom, MCI, RCN Corporation, and AT&T.

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.

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 and deploying 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 believed to be offering high speed Internet access to
customers. Cellular Vision, WinStar, and Telegent are also offering wireless
data services in the New York market but are using a higher frequency of at
least 28 GHz or higher.

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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.

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.



                                       10
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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 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.



                                       11
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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 (2 in sales, 5 in
installations and service, 1 in customer service and marketing, 3 in
administration, and 2 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 good.

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 77.5% of the Registrant's outstanding common stock.

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 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. The Company believes that 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.


                                       12
<PAGE>


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 1999.

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.







                                       13

<PAGE>


                                     PART II

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, 1997 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.

                                             CLOSING BID
                    1997                         HIGH                     LOW
January 2nd through March 31st                   8.75                    1.25
April 1st through June 30th                      8.75                    4.60
July 1st through September 30th                  8.75                    1.50
October 1st through December 31st                2.25                    1.375

                    1998
January 2nd through March 31rd                  1.8125                   .9375
April 1st through June 30th                     1.0625                   .9375
July 1st through September 30th                  1.00                    .625
October 1st through December 31st                .625                    .4375


                  (b)      As of December 31, 1998, according to the
                           Registrant's transfer agent, the approximate number
                           of holders of record of the Registrant's common stock
                           was 505.

                  (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, 1998, the Company had accumulated
                           dividends of $657,778 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.


                                       14
<PAGE>

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."


                                       15
<PAGE>
<TABLE>
<CAPTION>


Income Statement Data
                                                                       Years Ended December 31

                                                 1998           1997           1996          1995           1994
                                                 ----           ----           ----          ----           ----
<S>                                          <C>            <C>            <C>            <C>            <C>  

Revenues                                     $ 3,652,389    $ 1,607,049    $ 1,285,442    $   666,366    $   516,053

Loss Before Extraordinary Item               $  (428,409)   $(1,152,529)   $(1,411,509)   $  (844,493)   $  (531,863)

Extraordinary Item-Loss From
Extinguishment of Debt                       $   165,779    $   275,844    $      --      $      --      $      --   

Net Loss                                     ($  594,188)   $(1,428,373)   $(1,411,509)   $  (844,493)   $  (531,863)


Redeemable Preferred Stock Dividend
Requirement                                  $   400,000    $   257,778    $      --      $      --      $      --

Accretion of Preferred Stock                 $    92,593    $    54,012    $      --      $      --      $      --
Net Loss Applicable to Common Stockholders
                                             $(1,086,781)   $(1,740,163)   $(1,411,509)   $  (844,493)   $  (531,863)


Basic & Diluted Loss Per Common Share From
Continuing Operations                        $      (.80)   $     (1.27)   $     (1.23)   $      (.66)   $      (.40)



Basic & Diluted Weighted Average Common
Shares Outstanding                             1,154,354      1,152,504      1,147,030      1,276,539      1,313,743


Balance Sheet Data                                                        At December 31,        
                                                 1998           1997           1996          1995           1994
                                                 ----           ----           ----          ----           ----

Working Capital (Deficit)                    $  (366,026)   $  (682,031)   $(4,338,083)   $  (213,988)   $  (209,103)
                                          
Total Assets                                 $ 3,953,476    $ 2,427,163    $ 2,196,994    $(2,065,771)   $  (689,593)
                                          
Long Term Debt                               $ 1,899,468    $   111,509    $    10,563    $ 2,678,784    $    58,776
                                          
Redeemable Preferred Stock                   $ 4,591,049    $ 4,498,456    $     -        $     -        $     -        
                                          
Stockholders' Equity (Deficit)               $(4,086,356)   $(3,403,335)   $(2,608,645)   $(1,272,472)   $    12,004
</TABLE>
                               

                                       16
<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, which now include data services. 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 41 facilities
under which it is currently providing service to students and patients through
approximately 15,000 outlets in rooms and common areas at such institutional
facilities.

In the fall of 1998, the Company completed the installation and sale of the Data
System at Fordham University and started to serve the University pursuant to
which the Company has an agreement to serve over 3,200 students located at
certain Fordham facilities with a data service using cable modems and the cable
television network backbone.

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 and as far west as Wisconsin .

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



                                       17
<PAGE>

1998 vs. 1997

Net loss for 1998 was $594,188 compared to a net loss of $1,428,373 in 1997. The
Company had an extraordinary item of $165,779 related to the extinguishment of
debt to Access Capital, Inc. In 1998, the Company refinanced its debt with BSB
Bank & Trust Company. The net loss from the private cable operation was $173,693
in 1998, compared to $889,289 in 1997. The reduction in the loss in 1998 was
partially due to the profit on the sale of equipment to Fordham University. The
loss from the Company's wireless cable for 1998 was $420,495 compared to
$539,084 in 1997. The loss was related to expenses such as the channel lease
expense, professional fees, engineering fees, and salaries.

Revenues increased $2,045,340 and gross profit increased $905,359 over last
year. The increases were primarily a result of increased outlets on line in the
fall of 1998, revenue related to the data contract at Fordham University, and
non-reoccurring revenue from the installed equipment at various sites.

Operating expenses primarily consist of salaries, depreciation and amortization
and general and administrative expenses. Operating expenses for 1998 was
$2,099,008, an increase of $264,177 over 1997. Salaries accounted for $87,708 of
the increase and deprecation represented $185,091 of the increase. The
additional deprecation was related to the purchase of equipment.

Interest expense decreased to $184,425 in 1998 from $280,546 in 1997. The
interest in 1997 includes interest for a partial year of senior debt over $4
million dollars prior to the conversion in June of 1997. In 1998 the Company
incurred interest expense for Access Capital, Inc. and starting in July interest
on $2.5 million for BSB Bank & Trust Company term loan.

The extraordinary item was the write-off of deferred financing cost and a
prepayment penalty after the pay off of the Access Capital, Inc. line of credit
after refinancing the existing debt with BSB Bank & Trust Company.

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.

                                       18
<PAGE>

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 $185,796 to $280,546 in 1997 from $466,342 in 1996
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 for the new Access 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.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

Year Ending 1998

For the year ending December 31, 1998, total cash increased by $85,545. The net
cash used in operating activities increased to $749,723 in 1998 compared to
$447,166 in 1997. The primary reason for the increase was a note from Fordham
for the payment of the data system which, the Company funded and installed.

The cash used in investing activities increased from $674,320 in 1997 to
$1,136,172 in 1998. The funds were used primarily to purchase equipment used to
increase the outlet count on the cable side and for the data system.

Net cash provided by financing activities increased from $1,098,736 in 1997 to
$1,971,440 in 1998. Cash flow from financing activities in 1998 was principally
from the proceeds of the BSB Bank term loan of which a portion was used to
payoff the Access Capital, Inc. loan, both described below.

Year Ending 1997

For the year ending 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.



                                       19
<PAGE>

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.

Liquidity and Capital

Since the inception of service in 1992, the Company has experienced operating
losses, had been in default of certain provisions of its senior debt, and has
negative cash flow. At December 31, 1998, the Company had a working capital
deficiency and a shareholders' deficit.

The Company's capital commitments at December 31, 1998 include additional
capital to construct facilities at the Department of Education of the
Archdiocese of New York, capital to build the Monmouth and Ocean County ITFS
channel sites, and capital to expand the number of institutions the Company is
currently servicing in its private cable business, the payments required under
the BSB Bank & Trust Company term loan, and the payment of the preferred
shareholders principal and accumulated dividend due December 31, 2002 As of the
date hereof, the Company has not commenced operation of a wireless system, and
if it is executed, 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. The Company has access to the BSB Bank & Trust Company line of credit, but
after the line is exhausted, it may require additional funds for continued
growth. 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 develop the ITFS spectrum with a 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 and the expertise of the internet of the business. 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 the BSB Bank & Trust Company line
of credit. In order for the Company's growth to exceed the current plan, it 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.

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 Company's private
cable business.



                                       20
<PAGE>

At December 31, 1997, the Company had borrowed approximately $405,000 under the
line of credit. Interest was payable currently at the default rate of prime plus
8%. The line was secured by a pledge of private cable contracts and other
Company assets.

The lender received 138,536 warrants at an exercise price of $2.00 per share to
purchase approximately 4% of the Company's stock on a fully diluted basis. This
loan was paid off in July 1998.

BSB Bank & Trust Company Term Loan

On July 3, 1998, the Company and BSB Bank & Trust Company entered into an
agreement to refinance its existing credit line and supply working capital.
Pursuant thereto, the Company borrowed the sum of $2.5 million dollars which
bears interest at a fixed rate of 10% per annum and has a 5 year term.
Installments of principal plus interest, payable in arrears, will be made in
accordance with the agreed upon schedule of which $634,000 is due in 1999. This
loan was utilized to refinance existing debt and the remaining approximately
$1.9 million was used to finance the completion of outstanding contracts for
private cable television service at various locations, to complete the Fordham
University Internet distribution system, and for working capital. BSB Bank &
Trust Company also granted the Company a $500,000 line of credit, to be used for
future installations of private cable systems and general corporate purposes. At
this time the Company has not used any of this line. This line of credit is at
an interest rate of prime plus 1.5% payable monthly and will mature in 2 years.
In connection with the above transaction BSB Bank & Trust Company received
warrants to purchase 146,176 shares of Magnavision's issued and outstanding
capital stock on a fully diluted basis at an exercise price of $2.00 per share.

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. 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 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 represents a discount to the face value of the redeemable preferred
stock.


                                       21
<PAGE>



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."
Recently Issued Accounting Pronouncements

Statement of Financial Accounting Standards No. 130, "Comprehensive Income"
(SFAS 130), was issued in June 1997. SFAS 130 became effective for the
Corporation's fiscal year 1998, and requires reclassification of earlier
financial statements for comparative purposes. SFAS 130 requires that all items
defined as comprehensive income, including changes in the amounts of certain
items, foreign currency translation adjustments, and gains and losses on certain
securities, be shown in a financial statement. SFAS 130 does not require a
specific format for the financial statement in which comprehensive income is
reported, but does not require that an amount representing total comprehensive
income be reported in that statement. The adoption of SFAS 130 did not have a
material effect on the Corporation's consolidated financial statements.

On January 1, 1998 the Company adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes standards
for disclosures about segments of a Company and provides different information
about the different type of business activities in which a Company engages and
the different economic environments in which it operates. This statement
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise". The adoption of SFAS 131 did not have an effect on the
Corporation's financial statements at it operates in only 1 segment.

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
consolidated financial statements included elsewhere herein.

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.



                                       22
<PAGE>

Year 2000

Management of the Corporation is aware of the issues associated with the
programming code in existing computer systems as the year 2000 approaches. The
"year 2000" problem is the result of computer programs which were written using
two digits rather than four to define the applicable year, which could cause
certain systems to recognize the year 2000 as the year 1900. The Corporation has
assessed its hardware, software, and other non-Information Technology ("IT")
systems, and believes it has a plan in place to address year 2000 issues on a
timely basis. The Corporation's management anticipates using primarily internal
staff to identify, correct, and test the systems for year 2000 compliance,
which, therefore, will not likely result in incremental costs, but rather will
represent a redeployment of existing IT resources.

However, the Company is dependant upon suppliers that have not completed their
review for year 2000 but have indicated that there is a plan in place to address
year 2000 issues on a timely basis. The Company is reviewing alternative
suppliers and is monitoring their progress. Although management of the
Corporation anticipates completion of this project by the end of 1999, there can
be no assurances of this. The Corporation does not expect the amounts required
to be expensed related to correcting the year 2000 problem to have a material
effect on its financial position or results of operations. If the modifications
are not completed timely or suppliers are unable to deliver programming and
alternative sources are not available, the year 2000 problem could have a
material impact on the Corporation's ability to conduct its business.

Certain statements under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" 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.


ITEM 7 (a).       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                  No effect


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.



                                       23
<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> 
Robert E. Hoffman             54        Director, Chairman, President (1) (2)                1998

Nicholas Mastrorilli, Jr.     37        Vice President                                       1991

Jeffrey Haertlein             51        Chief Financial Officer                              1996

Keith Heilos                  36        Vice President                                       1991

Brian Mastrorilli             30        Vice President                                       1991

Evan Wildstein                28        Director (1) (2) (3) (4)                             1997

Geoffrey Thompson             58        Director (4)                                         1997

George Zombek                 35        Director (4)                                         1997

Kevin Falvey                  42        Director (1) (2) (3) (4)                             1997
</TABLE>


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.

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. By
letter dated February 5, 1999 Cacomm recommended the appointment of Mr. Joseph
M. Carlino as director. As of March 31, 1999, Mr. Carlino has not been seated as
a Director.

(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.



                                       24
<PAGE>

(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. 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.

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. 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.


                                       25
<PAGE>

From January of 1993 through June of 1994, Mr. Hoffman was Vice President,
Engineering for Cincinnati Microwave, Inc., a domestic manufacturer of specialty
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, Jr., has been Vice President since April of 1991. Mr.
Mastrorilli, Jr. has also served as Vice President and Director of Cacomm, Inc.
from April 1991 to April 1998. 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 and Project Management responsibilities for the installation
of new systems for the Company. Effective March 26, 1999 Mr. Mastrorilli
resigned from the Company. The Company wishes him well in his pursuits.

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
Midatlantic 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.

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. He has also informed the Company that he has been a Vice President and
Director of Cacomm, Inc. from April 1991 to the present. Mr. Mastrorilli is
responsible for all the company's technical projects, including system design,
construction coordination and FCC licensing of the private cable systems and
design management of the cable modem systems.

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.



                                       26
<PAGE>



Geoffrey Thompson, has been a Director of the Registrant since November 1997 as
a representative of KOCO. Mr. Thompson, joined Kohlberg & Company as Principal
in 1996 and resigned in 1998. Previously, he was managing partner of Norman
Broadbent International (1995-1996), President of Nordeman Grimm (1993-1994) and
President/CEO of Marine Midland Banks, Inc. from 1981-1993. He holds a
bachelor's 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 Whitehall Financial Group. 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 1987 and a B.B.A. degree from the
University of Massachusetts in 1978.


ITEM 11. EXECUTIVE COMPENSATION

Set forth below is the aggregate remuneration paid or accrued by the Company
during the years ended December 31, 1998, 1997 and 1996 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.

The Company currently does not have significant agreement with any of its
officers.

                           SUMMARY COMPENSATION TABLE

   Name and Principal Position            Year             Salary      Bonus
   ---------------------------            ----             ------      -----

Robert E. Hoffman (1)                     1998            $ 74,038     $15,000

Nicholas Mastrorilli, Sr. (2)             1997            $109,800           0

Nicholas Mastrorilli, Sr.                 1996            $112,067           0

(1)   Effective January 8, 1998, the Company entered into an agreement with
      Robert E. Hoffman.



                                       27
<PAGE>


      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 if Mr. Hoffman became an employee on a long term basis.
      These payments are not reflected in the chart above .

      In June Robert E. Hoffman became an employee acting as Chairman,
      President, and Chief Executive Officer at an annual salary of $125,000 per
      year, annual living allowance of $2,000 per month until December 1998 and
      a $15,000 cash payment. Effective starting January 1, 1999, his annual
      salary is $175,000. He will participate in the bonus compensation program
      and he is to receive 150,000 options under the 1999 option plan at $1.00
      per share.

(2)   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 and all health benefits up to the sum of
      $500.00 per month, until January 8, 1999.


                                       28
<PAGE>


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, 1998 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 of                     Amount and Nature of 
 Beneficial Owner                       Beneficial Ownership         % of Class
-------------------                     --------------------         ----------
                                    
Cacomm, Inc.                                  894,889                   77.5
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 Whitehall Capital Corporation          1,096,159 (2)               48.7
One State Street
New York, NY  10004

Access Capital, Inc.                          138,536 (3)               10.7
405 Park Avenue
New York, NY  10022

BSB Bank & Trust Company                      146,176 (4)               11.2
58-68 Exchange Street
Binghamton, NY  13902-1056


(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 Whitehall Capital Corporation

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

(4)   Constitutes shares subject to currently exercisable warrants issued to BSB
      Bank & Trust Company.



                                       29
<PAGE>



          (b)     Security Ownership of Management:

Set forth below is certain information, as of December 31, 1998, 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 of Nature of
     Beneficial Owner                  Beneficial Ownership         % of Class
     ----------------                  --------------------         ----------

Robert E. Hoffman                              5,000                     .4

Nicholas Mastrorilli, Jr.                     14,500 (1)                1.2

Brian Mastrorilli                             14,880 (2)                1.3

Keith Heilos                                  16,832 (3)                1.4

All officers and directors
    as a group (6 persons)                    51,212 (4)                4.3

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

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

(3)   Includes shares subject to currently exercisable warrants held by Mr.
      Heilos.

(4)   Includes 46,132 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 Whitehall Capital
      Corporation 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.


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 Whitehall
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.



                                       30
<PAGE>

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 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, 2000.


                                       31
<PAGE>

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.

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.



                                       32
<PAGE>



                                     PART IV

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, 1998 and 1997  .........   F-2
Consolidated Statements of Operations for years ended
December 31, 1998, 1997 and 1996.......................................   F-3
Consolidated Statements of Stockholders' Deficiency for years
  ended December 31, 1998, 1997 and 1996 ..............................   F-4
Consolidated Statements of Cash Flows for years ended
  December 31, 1998, 1997 and 1996 ....................................   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

<TABLE>
<CAPTION>

                                                                                  Page or
                                                                                  Document  
                                                                                  Incorporated
 No.        Description of Document                                               by Reference
 ---        -----------------------                                               ------------
<S>         <C>                                                                   <C>
(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

(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
</TABLE>



                           33
<PAGE>
<TABLE>
<CAPTION>

                                                                                  Page or
                                                                                  Document  
                                                                                  Incorporated
 No.        Description of Document                                               by Reference
 ---        -----------------------                                               ------------
<S>         <C>                                                                   <C>
       (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                          Form 10-K      
            10-K dated December 15, 1993 dated 12/31/93                           dated 12/31/93 
                                                                                  
       (d)  Securities Purchase Agreement dated as of  August 25, 1995            Form 10-K
            among the Registrant, Magnavision  Corporation (N.J.),                dated 4/19/96
            IBJS Whitehall 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                                 Form 10-K      
            Registrant's Form 10-K Common Stock expiring                          dated 12/31/93 
            on August 26, 2003 dated 4/19/96                                      

       (g)  Security Agreement and Collateral Assignment                          Form 10-K    
            dated as of August 25, 1995 among                                     dated 4/19/96
            Magnavision Corporation (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                            Form 10-K    
            25, 1995 among the Registrant, the investors                          dated 4/19/96
            and the other 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                          Form 10-K    
            25, 1995 between the Registrant, Cacomm,                              dated 4/19/96
            Inc., and the investors listed therein                                

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

</TABLE>


                           34
<PAGE>


<TABLE>
<CAPTION>

                                                                                  Page or
                                                                                  Document  
                                                                                  Incorporated
 No.        Description of Document                                               by Reference
 ---        -----------------------                                               ------------
<S>         <C>                                                                   <C>


       (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 Whitehall Capital Corporation, IBJ Schroder Bank & Trust
            Company and Koco Capital Company, L.P.

       (n)  Amended and Restated Stockholders' Agreement                          Form 10-K    
            dated as of June 3, 1996 among the                                    dated 4/19/96
            Registrant, Magnavision 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 to                           Form 10-K    
            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 Whitehall Capital Corporation,
            as agent

       (q)  Amended and Restated Lockbox Service Agreement Form 10-K              Form 10-K    
            dated as of June 3, 1996 among Magnavision dated 4/19/96              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           Form 10-K    
            Magnavision Corporation (N.J.) and IBJS Capital dated 4/19/96         dated 4/19/96
            Corporation as agent                                                  

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

       (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.


</TABLE>

                           35
<PAGE>
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<CAPTION>

                                                                                  Page or
                                                                                  Document  
                                                                                  Incorporated
 No.        Description of Document                                               by Reference
 ---        -----------------------                                               ------------
<S>         <C>                                                                   <C>
       (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                           Form 10-K    
            by Magnavision Corporation (N.J.) to IBJS                             dated 4/19/96
            Capital Corporation as agent                                          

       (y)  Form of Amended and Restated Senior                                   Form 10-K    
            Subordinated Notes dated June 3, 1996                                 dated 4/19/96
                                                                                  
       (z)  Form of Warrant to Purchase Shares of                                 Form 10-K    
            Registrant's Common Stock expiring on June                            dated 4/19/96
            4, 2004                                                               

       (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 George S. Callas               dated 4/19/96

       (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        Form 10-K
              directors                                                           dated 6/5/98

       (ee)   Exchange Agreement dated May 8, 1997 among the Registrant and       Form 10-K
              the investors listed therein.                                       dated 6/5/98

       (ff)   Stockholders Agreement dated May 8, 1997 among the Registrant       Form 10-K
              and the other parties listed therein.                               dated 6/5/98

       (gg)   Registration Rights Agreement dated May 8, 1997 among the           Form 10-K
              Registrant and the other parties listed therein.                    dated 6/5/98

       (hh)   Warrant to purchase shares of Common Stock                          Form 10-K    
              dated May 8, 1997 among the Registrant and                          dated 6/5/98 
              the other parties listed therein                                    

       (ii)   Employment Agreements dated May 8 1997                              Form 10-K    
              between the Registrant and Nicholas                                 dated 6/5/98 
              Mastrorilli, Sr., Nicholas Mastrorilli,                             
              Jr., and Patrick Mastrorilli,
              respectively.

</TABLE>


                           36
<PAGE>
<TABLE>
<CAPTION>

                                                                                  Page or
                                                                                  Document  
                                                                                  Incorporated
 No.        Description of Document                                               by Reference
 ---        -----------------------                                               ------------
<S>         <C>                                                                   <C>
       (jj)   Management Agreement dated May 8, 1997                              Form 10-K    
              between the Registrant and KOCO Capital                             dated 6/5/98 
              Company, L.P.                                                       

       (kk)   Common Stock Purchase Warrant dated                                 Form 10-K    
              September 10, 1997 issued by the                                    dated 6/5/98 
              Registrant to the Lender listed therein.                            

       (ll)   Loan and Security Agreement dated                                   Form 10-K    
              September 10, 1997 by and among the                                 dated 6/5/98 
              Registrant, Access Capital, Inc. and the                            
              other parties listed therein.

       (mm)   Resignation letter from Nicholas                                    Form 10-K    
              Mastrorilli, Sr. to the Registrant dated                            dated 6/5/98 
              January 8, 1998.                                                    

       (nn)   Employment Agreement dated January 9, 1998                          Form 10-K    
              between the Registrant and IMCOR                                    dated 6/5/98 
              concerning Robert E. Hoffman.                                       

       (oo)   Letter from Cacomm, Inc. to the Registrant                          Form 10-K    
              dated April 24,1998.                                                dated 6/5/98 
                                                                                  
</TABLE>

(21)   Subsidiaries of Registrant

(27)   Financial Data Schedule


       (b)    Form 8-K

              None



                                   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:   April 6, 1999                       By: /s/ Robert E. Hoffman   
                                                ----------------------------- 
                                                 ROBERT E. HOFFMAN
                                                 Principal Executive Officer


                                            By: /s/ Jeffrey Haertlein   
                                                -----------------------------  
                                                 JEFFREY HAERTLEIN
                                                 Principal Financial and
                                                   Accounting Officer



                                       37
<PAGE>


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        April 6, 1999
-------------------------
Robert E. Hoffman

/s/ George Zombek               Director                        April 6, 1999
-------------------------
George Zombek

/s/ Evan Wildstein              Director                        April 6, 1999
-------------------------
Evan Wildstein

/s/ Kevin Falvey                Director                        April 6, 1999
-------------------------
Kevin Falvey

/s/ Geoffrey Thompson           Director                        April 6, 1999
-------------------------
Geoffrey Thompson


</TABLE>

<PAGE>


                                    EXHIBITS

(10)   (pp)    Form of Promissory Note of the Company to BSB Bank & Trust 
               Company Dated July 3, 1998

       (qq)    Form of Loan Agreement dated as of July 3, 1998 between the 
               Company and BSB Bank & Trust Company

       (rr)    Form of Commercial Security Agreement dated July 3, 1998 between
               the Company and BSB Bank & Trust Company

       (ss)    Form of Commercial Pledge and Security Agreement  between the 
               Company and BSB Bank & Trust Company dated July 3, 1998

       (tt)    Form of Warrant to purchase shares of the Company's
               Common Stock expiring on July 3, 2008

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).



                                       39
<PAGE>






                          Independent Auditors' Report



The Board of Directors and Shareholders 
Magnavision Corporation:



We have audited the accompanying consolidated balance sheets of Magnavision
Corporation and subsidiaries as of December 31, 1998 and 1997, 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, 1998. these
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit included 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, 1998 and 1997, and results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998 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 operation, and has a shareholders' deficiency which raises substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are described in note 1. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                                             KPMG LLP
Short Hills, New Jersey
March 5, 1999



                                      F-1



<PAGE>

ITEM 1.  FINANCIAL INFORMATION

MAGNAVISION CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER  31,1998 AND 1997
<TABLE>
<CAPTION> 

ASSETS                                                                        1998         1997
                                                                         -------------------------
<S>                                                                      <C>           <C>   
CURRENT ASSETS
     Cash                                                                    227,091       141,546
     Trade Accounts and Other Receivables                                    276,203       236,375
     Notes receivable from customer                                          467,000          --
     Shareholder Loans Receivable                                             38,707          --
     Prepaid Expenses                                                          1,986         8,516
                                                                         -------------------------
          Total Current Assets                                             1,010,987       386,437
                                                                         -------------------------

PROPERTY AND EQUIPMENT
     Property and Equipment at Cost                                        3,077,185     1,944,558
     Less:  Accumulated Depreciation                                      (1,122,022)     (748,375)
                                                                         -------------------------
          Net Property and Equipment                                       1,955,163     1,196,183

OTHER ASSETS
     Shareholder Loans Receivable                                               --          43,810
     Notes receivable from customer , net of current portion                 441,271          --
     Prepaid lease expense                                                   543,716       650,684
     Deferred financing costs,  net of accumulated amortization                 --         145,496
     Deposits                                                                  2,339         4,553
                                                                         -------------------------

TOTAL ASSETS                                                               3,953,476     2,427,163



LIABILITIES AND SHAREHOLDERS' DEFICIENCY

CURRENT LIABILITIES
     Accounts Payable                                                        212,390       190,101
     Accrued Expenses                                                        169,384       136,616
    Accrued sevarance payments                                                  --         117,000
     Deferred Revenues                                                       354,596       214,490
     Current Portion of Long-Term Debt                                       640,642         4,225
     Income Taxes Payable                                                       --             741
     Line of Credit                                                             --         405,295
                                                                         -------------------------
          Total Current Liabilities                                        1,377,012     1,068,468


Security Deposits                                                            172,303       152,065
Long-Term Debt, net of current portion                                     1,899,468       111,509

Commitments and contingencies

Series A Preferred Stock, $1 par value, 9,850,000
       shares authorized; issued and outstanding, 5,000,000
        shares, net of unamortized discount                                4,591,049     4,498,456
SHAREHOLDERS' DEFICIENCY
     Series B Preferred Stock, $1 par value , 150,000 shares                 131,889       131,889
         authorized; issued and outstanding, 131,889 shares 
     Common Stock, $0.08 par value - 10,000,000 shares
          authorized; issued and outstanding, 1,154,390 shares
          at December 31,1998 and 1,152,510 shares at December 31, 1997       92,350        92,200
     Additional Paid-In Capital                                            3,880,601     3,876,991
     Accumulated Deficit                                                  (8,191,196)   (7,504,415)
                                                                         -------------------------
Total Shareholder's Deficiency                                            (4,086,356)   (3,403,335)
                                                                         -------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY                             3,953,476     2,427,163


</TABLE>


          See accompanying notes to consolidated financial statements.

                                       F-2



<PAGE>

MAGNAVISION CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,1998, 1997 AND 1996
<TABLE>
<CAPTION>


                                                                         1998           1997           1996

REVENUES
<S>                                                                  <C>              <C>            <C>      
     Gross Revenues                                                  $ 3,652,389      1,607,049      1,285,442
     Cost of Sales                                                     1,817,546        677,565        526,654
                                                                     -----------------------------------------
     GROSS PROFIT                                                      1,834,843        929,484        758,788


     Salaries                                                            715,064        627,356        595,358
     Depreciation                                                        382,289        197,198        168,896
     General and Administrative Expenses                               1,001,655      1,010,277        983,079
                                                                     -----------------------------------------

TOTAL OPERATING EXPENSES                                               2,099,008      1,834,831      1,747,333

OPERATING LOSS                                                          (264,165)      (905,347)      (988,545)

OTHER INCOME (EXPENSES)
     Interest expense                                                   (184,425)      (280,546)      (466,342)
     Interest Income                                                      25,032         35,824         35,383
     Other                                                                  --            1,529          8,705
                                                                     -----------------------------------------
          Total other income (expense)                                  (159,393)      (243,193)      (422,254)


LOSS BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY ITEM           (423,558)    (1,148,540)    (1,410,799)

PROVISION FOR INCOME TAXES                                                 4,851          3,989            710
                                                                     -----------------------------------------

LOSS BEFORE EXTRAORDINARY ITEM                                          (428,409)    (1,152,529)    (1,411,509)

EXTRAORDINARY ITEM -LOSS ON EXTINGUISHMENT OF DEBT                       165,779        275,844           --
                                                                     -----------------------------------------

NET LOSS                                                                (594,188)    (1,428,373)    (1,411,509)

Preferred Stockholders Dividend Requirement                              400,000        257,778           --
Accretion of preferred stock                                              92,593         54,012           --
                                                                     -----------------------------------------

Net loss to Common Stockholders                                      ($1,086,781)   ($1,740,163)    (1,411,509)


Net Loss per Common Share:

Loss from continuing operations                                           ($0.80)        ($1.27)        ($1.23)
Extraordinary item - loss on extinguishment of debt                       ($0.14)        ($0.24)          --
Net loss per common share: basic                                          ($0.94)        ($1.51)        ($1.23)

Weighted Average Common Shares used to Compute net loss per share:
Basic                                                                  1,154,354      1,152,504      1,147,030

</TABLE>



See accompanying notes to consolidated financial statements.        

                                       F-3

<PAGE>

MAGNAVISION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIENCY
THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                        Series B                                        Additional  
                                                                     Preferred Stock               Common Stock          Paid in    
                                                                  Shares        Amount       Shares         Amount       Capital    
<S>                                                            <C>         <C>              <C>           <C>           <C>         

Balance, December 31,1995                                                                   1,368,473    $109,478       $3,988,571  


Common Stock Issued                                                 --           --            15,067       1,205           74,131  

Retirement of Common Stock held in Treasury                         --           --          (231,318)    (18,505)        (741,495) 

Net loss                                                                                                                            

                                                             -----------------------------------------------------------------------
Balance, December 31,1996                                           --           --         1,152,222      92,178        3,321,207  

Common Stock Issued
                                                                    --           --               354          28              679  

Conversion of Shareholder loan to Series B Preferred Stock     131,889     $131,889                                                 

Allocation to Warrants Issued                                                                                              555,556  

Purchase of Fractional Shares                                                                     (66)         (6)            (451) 

Net loss                                                                                                                            

Accretion of preferred stock                                                                                                        

                                                             -----------------------------------------------------------------------
Balance, December 31, 1997                                     131,889      131,889         1,152,510      92,200        3,876,991  

Common Stock Issued
                                                                                                1,880         150            3,610  

Net loss                                                                                                                            

Accretion of preferred stock                                                                                                        

                                                             -----------------------------------------------------------------------
Balance, December 31, 1998                                     131,889     $131,889         1,154,390     $92,350       $3,880,601  





</TABLE>



<PAGE>                                                                       
                                                                             
MAGNAVISION CORPORATION AND SUBSIDIARIES                                     
CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIENCY                            
THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996                             
                                                                             
                                                                             
<TABLE>                                                                      
<CAPTION>                                                                    
                                                                             
                                                                             
                                                                                                           Total          
                                                                  Accumulated          Treasury        Stockholders       
                                                                     Deficit            Stock            Equity           
<S>                                                               <C>                  <C>            <C>                 
                                                                                                                          
Balance, December 31,1995                                         ($4,610,521)        ($760,000)      ($1,272,472)        
                                                                                                                          
                                                                                                                          
Common Stock Issued                                                                                        75,336         
                                                                                                                          
Retirement of Common Stock held in Treasury                                             760,000                 0         
                                                                                                                          
Net loss                                                           (1,411,509)                         (1,411,509)        
                                                                                                                          
                                                             -------------------------------------------------------      
Balance, December 31,1996                                          (6,022,030)              --         (2,608,645)        
                                                                                                                          
Common Stock Issued                                                                                                       
                                                                          --                --                707         
                                                                                                                          
Conversion of Shareholder loan to Series B Preferred Stock                                                131,889         
                                                                                                                          
Allocation to Warrants Issued                                                                             555,556         
                                                                                                                          
Purchase of Fractional Shares                                                                                (457)        
                                                                                                                          
Net loss                                                           (1,428,373)                         (1,428,373)        
                                                                                                                          
Accretion of preferred stock                                          (54,012)                            (54,012)        
                                                                                                                          
                                                             -------------------------------------------------------      
Balance, December 31, 1997                                         (7,504,415)              --        ($3,403,335)        
                                                                                                                          
Common Stock Issued                                                                                                       
                                                                                                            3,760         
                                                                                                                          
Net loss                                                             (594,188)                           (594,188)        
                                                                                                                          
Accretion of preferred stock                                          (92,593)                            (92,593)        
                                                                                                                          
                                                             -------------------------------------------------------      
Balance, December 31, 1998                                        ($8,191,196)                        ($4,086,356)        
                                                                                                                          
           

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

                                       F-4





<PAGE>


MAGNAVISION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>


                                                                                      1998          1997          1996
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                 <C>         <C>           <C>        
     Net Loss                                                                       (594,188)   (1,428,373)   (1,411,509)
     Adjustments to Reconcile Net Loss to Net Cash used in Operating activities
         Extraordinary item                                                          165,779       275,844          --
          Depreciation and Amortization                                              382,289       197,198       168,896
          Amortization of deferred financing costs                                    31,123        80,475        70,404
          Amortization of channel lease prepayments                                  106,968       106,968       106,969
          Gain on sale of assets                                                        --            --          (1,583)
          Changes in Assets and Liabilities:
               Increase in Trade Accounts and
                     Other Receivables                                               (39,828)      (80,123)      (48,096)
               Increase in Deferred Revenues                                         140,106        39,142          --
               (Increase) Decrease in prepaid expenses                                 6,530          (457)        4,569
               Decrease in Deposits                                                    2,214           133          --
               (Decrease) Increase in Accounts Payable and                            22,291       206,769       (62,241)
               (Decrease) Increase in Accrued Expenses                                32,768        12,579        (4,279)
               (Decrease) Increase in Accrued severance payment                     (117,000)      117,000          --
               Increase in note receivable from customer                            (908,271)         --
               Increase  in Security Deposits Payable                                 20,238        25,679        67,565
               (Decrease) Income Taxes Payable                                          (741)         --            (150)
               Increase Deferred Charges                                                --            --          73,104
                                                                                 ----------------------------------------
                              Net cash used in operating activities                 (749,723)     (447,166)   (1,036,351)

CASH FLOWS FROM INVESTING ACTIVITIES
              Decrease (increase) shareholder loans receivable                         5,103           351          (300)
             Purchases of property and equipment                                  (1,141,275)     (674,671)     (503,108)
                                                                                 ---------------------------------------- 
                            Net cash used in investing activities                 (1,136,172)     (674,320)     (503,408)

CASH FLOW FROM FINANCING ACTIVITIES
     Payments of Long-Term Debt                                                       (3,624)       (3,983)       (3,910)
     Payments of Obligation under Capital leases                                        --            --         (23,411)
     Decrease in Due to Shareholders                                                    --          (8,000)       (5,000)
     Proceeds from Issuance of Preferred Stock, net                                     --         863,811          --
     Proceeds from Issuance of Common Stock                                            3,760           707        75,336
     Proceeds from Issuance Debt                                                   2,428,000       405,295     1,425,713
    Payment of Access Capital line of credit, including penalty                     (456,696)         --
     Payment of financing fees                                                          --        (158,637)         --
    Purchase of Common Stock                                                            --            (457)         --
                                                                                 ---------------------------------------- 
                          Net cash provided by financing activities                1,971,440     1,098,736     1,468,728

                                  Net increase (decrease) in cash                     85,545       (22,750)      (71,031)
    Cash beginning of year                                                           141,546       164,296       235,327
    Cash end  of year                                                                227,091       141,546       164,296
                                                                                 ---------------------------------------- 

Supplemental schedule of cash paid during year for :
Interest                                                                              91,129        84,161       479,915
Income Tax                                                                             4,851         3,989           710


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 Shareholder to Preferred Stock                             --         131,889          --
Value assigned to warrants issued                                                       --         555,556          --

</TABLE>

See accompanying notes to consolidated financial statements.         

                                       F-5

<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996




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. Effective at the end of June 1998,
          the Company merged Accu-Trek, Inc. and University Connection, Inc.
          into Magnavision Corporation (New Jersey). These subsidiaries had no
          assets, liabilities or operations and therefore, the transaction had
          no impact on the Company's financial statements.

     b.   Organization, Operations and Liquidity- Magnavision Corporation 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 and has a shareholder's
          deficiency at December 31, 1998. To execute its current business plan
          the Company requires additional funding, and if the plan is not
          executed, may still require additional funding. If the Company
          requires additional funding and can not execute the sale of assets,
          restructuring of the Company, or restructuring of it's existing debt,
          the Company will have insufficient liquidity to pay principal and
          interest on it's existing debt and may experience liquidity shortfalls
          in meeting it's ongoing obligations.

                                      F-6

<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


          The Company plans to meet short-term liquidity requirements with its
          loan from BSB Bank & Trust Company described in Note 6. On a long-term
          basis for its wireless business plan, the Company is currently seeking
          long-term arrangements with a strategic partner(s) for financing and
          Management believes this partner will participate in the Company's
          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 a
          strategic relationship or partnership on terms and conditions
          satisfactory to the Company, if at all.

          Failure to obtain such financing and the expertise required to develop
          the wireless business plan would result in the Company not being able
          to implement the wireless business plan. This may have a significant
          impact on the Company's future performance.

          Also, there can be no assurance that, even with financing, and receipt
          of necessary regulatory authorization, the Company will be able to
          launch this wireless 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 or life of lease

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

     d.   Revenue Recognition - Revenue is recognized as services are provided
          to subscribers. The Company records subscriptions received in advance
          of the service being provided as a deferred revenue.

     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.

                                      F-7

<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


     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 may not
          represent the underlying value of the Company. In management's
          opinion, cash, trade accounts receivables, shareholder loans
          receivable, notes receivable from customers, deposits, accounts
          payable, accrued expenses and deferred revenue, equal or approximate
          fair market value due to their current nature. The long-term debt,
          term loans and line of credit are at market rates, which equal or
          approximate fair value. The prepaid lease expense approximates its
          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 Company's
          deposit relating to the Channel Lease Agreement (see note 8). 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 10). The amount was being amortized over the term
          of the loan and security agreement and was expensed as an
          extraordinary item in 1998.

     k.   Earnings Per Share of Common Stock - The Company adopted SFAS 128
          "Earnings Per Share" ("SFAS 128") which establishes standards for
          computing and presenting earning per share and is effective for
          financial statements for both interim and annual periods ending after
          December 15, 1997. SFAS 128 replaced the calculation of primary and
          fully diluted net income per share with basic and diluted net income
          per share. Net loss per common share amounts for 1996 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 stockholders.

                                      F-8

<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


NOTE 2 - RELATED PARTY TRANSACTIONS-CONFLICTS OF INTEREST

                  The following transactions occurred between the Company and
related parties:

     a.   Shareholder loans receivable of $38,707 and $43,810 at December 31,
          1998 and 1997 are payable after May 1999 and are interest free.

     b.   In May 1997, the Company's majority shareholder converted its payables
          of $131,889 to preferred stock. Previously this was recorded as a
          current liability.

     c.   The Company has been informed that Cacomm, Inc., the Company's
          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.

     d.   During 1997, the prior lenders converted their accrued interest in the
          amount of $105,468 to one year notes at 10% interest, with interest
          and principal originally payable May 8,1998. The preferred
          stockholders agreed to extend the maturity of the above mentioned
          notes to May 8, 2000.



NOTE 3 - PROPERTY AND EQUIPMENT

         Property and equipment at December 31, 1998 and 1997 are summarized by
major classification as follows:

                                     1998            1997
                                     ----            ----
Office Furniture and Equipment    $    73,683    $    67,771
Transportation Equipment               37,582         46,224
Machinery and Equipment             2,965,920      1,830,563
                                  -----------    -----------
                                    3,077,185      1,944,558
Less:  Accumulated Depreciation    (1,122,022)      (748,375)
                                  -----------    -----------
                                  $ 1,955,163    $ 1,196,183
                                  ===========    ===========

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

                                      F-9


<PAGE>
                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


NOTE 4 - INCOME TAXES

         Income tax expense attributable to loss before provision for income
taxes and extraordinary item:

         Current

        Year ended December 31,          1998          1997           1996
                                         ----          ----           ----
        Federal                             0             0              0
        State                           4,851         3,989            710
                                        -----         -----            ---

        TOTAL                          $4,851        $3,989           $710
                                       ======        ======           ====

          Income tax expense attributable to loss before provision for income
          taxes and extraordinary item 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>

                                                    1998            1997                1996
                                                    ----            ----                ----

<S>                                              <C>             <C>                <C>       
   Computed expected tax benefit                 $(202,024)      $(485,647)         $(479,672)

   Increase (reduction) in income taxes
      resulting from:

   Increase in valuation allowance for
   federal & state deferred tax assets                                        
                                                    180,794         462,815            467,009

   Book vs. tax depreciation                         11,310          19,200             11,153

   State and local income taxes, net of                                       
   federal income tax benefit                         3,202           2,633                469


   Non-deductible portion of meals and
   entertainment                                      1,867           2,775                736

   Other, net                                         9,702           2,213              1,015
                                                    -------         -------              -----
                                                    $ 4,851         $ 3,989              $ 710
                                                    =======         =======              =====

</TABLE>
                                      F-10


<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


          The temporary differences and carry forwards which give rise to
          significant portions of the deferred tax assets and liabilities at
          December 31, 1998 and 1997 are presented below:
<TABLE>
<CAPTION>

                                                              1998                1997
                                                              ----                ----
Deferred tax assets:
<S>                                                        <C>            <C>        
Net operating loss carry forwards                          $ 3,359,823    $ 3,160,701
Compensation paid with Company stock                            28,123         28,123
Organization and construction costs capitalized for tax
purposes                                                       256,359        305,197
Less valuation allowance                                    (3,622,645)    (3,441,851)
                                                           -----------    -----------
                                 Net deferred tax assets        21,660         52,170
                                                           -----------    -----------

Deferred tax liabilities:
Property and equipment, principally due to differences
in depreciation                                                (21,660)       (52,170)
                                                           -----------    -----------
Net deferred income taxes                                  $      --      $      --
                                                           ===========    ===========
</TABLE>

          At December 31, 1998, the Company has net operating loss carry
          forwards for federal income tax purposes of approximately $7,606,000
          which are available to offset future taxable income which expire in
          varying amounts through 2013.

          The Company's ability to use such net operating losses is limited by
          change of control provisions under the Internal Revenue Code section
          382.


NOTE 5 - NOTES RECEIVABLE  FROM CUSTOMER

          As part of the purchase of equipment by Fordham University for its
          data system Fordham issued two non-interest bearing notes for $467,000
          and $441,271 due May 15, 1999 and May 15, 2000, respectively. These
          notes are secured by a security interest in the equipment at the
          University for the data system.

                                      F-11
<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


NOTE 6 - LONG-TERM DEBT

Long-term debt consists of the following at December 31,

Senior Debt                              1998          1997
-----------                              ----          ----
10% Term Loan  (a)                     $2,428,000         --
12.25% Term Note Due April 2000  (b)        6,642   $   10,266
10% Note related to conversion  (c)       105,468      105,468
                                       ----------   ----------
                                       $2,540,110   $  115,734
Less Current Portion                      640,642        4,225
                                       ----------   ----------
Long-Term Debt                         $1,899,468   $  111,509
                                       ==========   ==========

          Scheduled maturies of long-term debt at December 31, 1998 are as
          follows:

                              Years Ending December 31,
                                         1999                     640,642
                                         2000                     799,468
                                         2001                     363,000
                                         2002                     426,000
                                         2003                     311,000
                                                                ---------
                                                                2,540,110
                                                                =========

     a.   10% Term BSB Bank & Trust Company Loan - On July 3, 1998, the Company
          and BSB Bank and Trust Company ("BSB") entered into an agreement to
          refinance the Company's existing credit line and supply working
          capital. Pursuant thereto, Magnavision borrowed the sum of $2.5
          million dollars which bears interest at a fixed rate of 10% per annum
          and has a 5 year term. The loan requires monthly installments of
          interest, plus 9 monthly payments of principal, payable in arrears, in
          accordance with the agreed upon schedule starting October 1998. The
          loan was utilized to refinance existing debt, (see note 10) and the
          remaining approximate $1.9 million was used to finance the completion
          of outstanding contracts for private cable television service at
          various locations and to complete the Fordham University data
          distribution system and for working capital. BSB also granted the
          Company a $500,000 line of credit, to be used for future installations
          of private cable systems and general corporate purposes. This line of
          credit will be at an interest rate of prime plus 1.5% payable monthly
          and will mature in 2 years. No amount was outstanding on the line of
          credit at December 31, 1998.

          In connection with the above transaction BSB received 146,176 warrants
          to purchase approximately 4% of Magnavision's issued and outstanding
          capital stock on a fully diluted basis at an exercise price of $2.00
          per share.


         (b)      12.25% Term note due April 2000 - Note payable to 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 $5,985.

         (c)      10% Note Related to Conversion - In 1997, the prior lenders
                  converted their accrued interest in the amount of $105,468 to
                  one year notes at 10% interest, with interest and principal
                  originally payable May 8,1998. The preferred stockholders
                  agreed to extend the maturity of the above mentioned notes to
                  May 8, 2000.

                                      F-12
<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


NOTE 7 - 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:

                                   1999              $12,302
                                   2000                4,490
                                   2001                  594
                                                     -------
                                                     $17,386


      Rent expense under operating leases amounted to $38,998, $47,464 and
      $40,127 for the years ended December 31, 1998, 1997 and 1996,
      respectively.


NOTE 8 - 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 Archdiocese's system and
      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, 1998, the minimum royalty payments over the remaining
      license term are as follows:

                                            For the Year Ended
                                              1999     $ 215,808
                                              2000       215,808
                                              2001       215,808
                                              2002       215,808
                                              2003       215,808
                                        Thereafter        17,984
                                                      ----------
                                                      $1,097,024
                                                      ==========

                                      F-13
<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


NOTE 9 - 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.

<TABLE>
<CAPTION>

For the years ended December 31,                 1998               1997             1996
                                                 ----               ----             ----
<S>                                             <C>               <C>              <C> 
Basic and Diluted EPS
      Numerator:
      Extraordinary loss from early
         extinguishment of debt                 $  165,779        $  275,844              -
      Net loss                                    (594,188)       (1,428,373)      (1,411,509)
      Redeemable preferred stockholders
         dividend                                  400,000           257,778              -
      Accretion of Preferred Stock                  92,593            54,012
                                                   -------            ------      -----------
      Net Loss to common stockholder            (1,086,781)       (1,740,163)      (1,411,509)
                                               ===========       ===========      ===========

Denominator:
      Weighted Average
      Common shares outstanding                  1,154,354         1,152,504        1,147,030

      Basic and Diluted EPS                          ($.94)           ($1.51)          ($1.23)
</TABLE>

      Warrants to purchase 2,279,040, 2,134,774, and 1,025,150 of common stock
      outstanding as of December 31, 1998, 1997 and 1996, 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 1996 to reflect the adoption
      of SFAS 128.



NOTE 10 - 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
      Company's private cable business. At December 31, 1997 the Company had
      borrowed $405,295 under the line of credit. Interest was payable currently
      under the line of credit at prime rate plus five and one-half percent and
      all outstanding amounts were payable in September 2000.

      The line was 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 Company's 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.

                                      F-14
<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


      At December 31, 1997, the Company had not met certain non-monetary working
      capital covenants under this 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 was classified as a current
      liability in the accompanying consolidated balance sheet. The lender
      continued to lend funds under the agreement.

      The Company paid off this loan with the proceeds of the BSB Bank & Trust
      loan on July 3, 1998 as discussed in note 6. The Company incurred a
      penalty in connection with this termination together with the write-off of
      the unamortized deferred financing costs have been classified as an
      extra-ordinary item in the accompanying consolidated statement of
      operations. The Warrant remains outstanding and expires May 8, 2008.


NOTE 11 - 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 Whitehall 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 Company's 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 Company's 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 Company's 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 Company's 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 Company's 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 Company's 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 Company's institutional cable contracts. The agreement contained a
      prepayment penalty for the first two years and placed limits on stock
      sales and payment of dividends, and also contained several financial
      covenants.

                                      F-15
<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


      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 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 these
      warrants was determined to have a fair value of $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.

      In connection with the exchange, the lenders agreed to issue one year
      unsecured notes totaling $105,468 with interest at 10% payable at
      maturity. (see note 6)

      During 1997, the Company wrote off the unamortized deferred financing
      costs related to the subordinated notes, which has been classified as an
      extraordinary item in the accompanying consolidated statement of
      operations.


NOTE 12 - REDEEMABLE PREFERRED STOCK

      During 1997, the Company authorized 10,000,000 shares of Preferred Stock.
      The Company also designated 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 Series A
      Preferred Stock has a mandatory redemption due December 31, 2002 and an
      optional redemption at face value at the Company's option. The then senior
      subordinated notes along with the remaining balance of the line was
      exchanged for 5,000,000 shares of 8% cumulative redeemable Series A
      Preferred Stock, (see note 11). 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 Company's Board of Directors, cash dividends cumulative at
      the rate of 8% per share. Cumulative and unpaid dividends amounted to
      approximately $657,778 at December 31, 1998.

                                      F-16
<PAGE>

                    MAGNAVISION CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31,1998, 1997 AND 1996


NOTE 13 - STOCKHOLDERS EQUITY TRANSACTION

      During 1998, warrant holders exercised warrants to purchase 1,880 shares
      of common stock at $2.00 per share.

      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 reinstated to reflect the stock split.

      During 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 1997, the Company also converted a shareholder loan into shares of
      Series B Preferred Stock (see note 2).

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

      During 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. The treasury stock was subsequently retired as required by its
      lenders.

      During 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, the Company granted 370,546 warrants to purchase shares of
      its common stock at exercise prices ranging from $5.00 to $20.00 per
      share.

      In February 1997, the Company reduced the exercise price of 123,464
      warrants held by officers and directors of the Company 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 14 - SIGNIFICANT CUSTOMERS

      For the years ending December 31, 1998, 1997 and 1996, revenue from three
      customers represented 33%, 40%, and 50% respectively, of total revenues.


NOTE 15 - CONCENTRATION OF CREDIT RISK

      The Company has notes receivable from Fordham University. The notes are
      secured by equipment at the University.

      Also, 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-17