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Hispanic Television Network Inc – ‘10KSB’ for 12/31/98

On: Thursday, 7/29/99 · For: 12/31/98 · Accession #: 1015402-99-741 · File #: 0-23105

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/29/99  Hispanic Television Network Inc   10KSB      12/31/98    4:133K                                   Summit Fin’l Printing/FA

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       38    185K 
 2: EX-10.1     Material Contract                                     14     56K 
 3: EX-21.1     Subsidiaries of the Registrant                         1      5K 
 4: EX-27.1     Financial Data Schedule (Pre-XBRL)                     1      8K

10KSB — Annual Report — Small Business
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Business Certain Relationships and Related Transactions Changes and Disagreements With Accountants on Accounting and Financial Disclosure Description of Property Directors, Executive Officers, Control Persons and Compliance With Section 16(A) of the Exchange Act Executive Compensation Exhibits and Reports on Form 8-K Financial Statements Legal Proceedings Management's Discussion and Analysis Market for Common Equity and Related Stockholder Matters No-Cost Programming Security Ownership of Certain Beneficial Owners And Management Submission of Matters to a Vote of Security Holders
1	1st Page - Filing Submission
4	Item 1. Business
10	No-Cost Programming
13	Item 2. Description of Property
"	Item 3. Legal Proceedings
14	Item 4. Submission of Matters to a Vote of Security Holders
15	Item 5. Market for Common Equity and Related Stockholder Matters
18	Item 6. Management's Discussion and Analysis
22	Item 7. Financial Statements
"	Item 8. Changes and Disagreements With Accountants on Accounting and Financial Disclosure
"	Item 9. Directors, Executive Officers, Control Persons and Compliance With Section 16(A) of the Exchange Act
"	Item 10. Executive Compensation
25	Item 11. Security Ownership of Certain Beneficial Owners And Management
"	Item 12. Certain Relationships and Related Transactions
27	Item 13. Exhibits and Reports on Form 8-K

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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, for the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the transition period from _________________ to _________________

Commission file number: 000-23105

AMERICAN INDEPENDENT NETWORK, INC.
(Exact name of small business issuer in its charter)

DELAWARE 752504551
(State or Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

6125 Airport Freeway, Suite 200
Haltom City, TX 76117
(817) 222-1234
(Address and telephone number of principal executive offices)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock

Check whether the issuer: (I) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge. in the definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent Fiscal year: $377,380.

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State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity as of
a specified date within the past 60 days. The aggregate market value of the
Company's common stock held by non-affiliates as of July 22, 1999 was
approximately $3,387,329.

State the number of shares outstanding of each of the issuer's classes of
common equity. as of the latest practicable date. As of July 22, 1999, there
were approximately 13,318,093 shares of the Company's Common Stock issued and
outstanding.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

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TABLE OF CONTENTS

PART I

Item 1. Business 1

Item 2. Properties 10

Item 3. Legal Proceedings 10

Item 4. Submission of Matters to a Vote of Security Holders 11

PART II

Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 12

Item 6. Management's Discussion and Analysis
of Financial Condition and Results of Operations 15

Item 7. Financial Statements 19

Item 8. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 19

PART III

Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a)
of The Exchange Act 19

Item 10. Executive Compensation 19

Item 11. Security Ownership of Certain Beneficial Owners
And Management 22

Item 12. Certain Relationships and Related Transactions 22

Item 13. Exhibits and Reports on Form 8-K 24

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Part I

ITEM 1 BUSINESS

Introduction

The Company operates a television network called the American Independent
Network. The Company has entered into agreements to provide television broadcast
stations with programming (television shows) for digital television
broadcasting. Such agreements typically provide that the Company retains
certain of the advertising time and advertising revenues generated from the
programming. At July 22, 1999, the Company provides programs to approximately
25 broadcast stations and expects to program additional television stations in
the future either as affiliates of the Company's American Independent Network, a
television network, or through arrangements called Local Marketing Agreements
("LMAs"). Currently, television LMAs are not considered attributable interests
under Federal Communications Commission ("FCC") multiple television station
ownership rules. However, the FCC is considering proposals which would make
LMAs attributable. If the FCC were to adopt an order that makes such interests
attributable, the Company could be prohibited from entering into such LMAs with
other stations in markets in which it already has an LMA with another television
station. The Company also owns a fractional interest in each of three permits to
construct and operate low power t.v. stations.

The Company

The Company was incorporated in the State of Delaware on December 11, 1992
under the name Strictly Business, Inc. On September 16, 1993, the Company
changed its name to American Independent Network, Inc. (the "Company" ). The
Company's principal offices are located at 6125 Airport Freeway, Suite 200,
Haltom City, Texas 76117.

From inception through March 1994, the Company engaged in no substantive
business operations, but was actively seeking and pursuing potential business
opportunities. In March 1994, the Company began providing programming, media
production, and syndication services to television stations.

Broadcast Television

Broadcast television stations, which are licensed and regulated by the
Federal Communications Commission ("FCC"), transmit audio and video signals over
the air-waves within a designated signal area on a designated frequency. There
are three (3) basic types of broadcast television stations operating in the
United States today: (1) full-power network affiliates (ABC; NBC; CBS; FOX; WB
Network; and Paramount) ("Network Affiliate"); (2) full-power independent
stations, such as UHF channels ("Full Power Stations"); and (3) low power
independent stations ("LPTV"). A Network Affiliate receives its programs from
its network provider and is generally only permitted to air programs of that

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particular network, with the exception of FOX, WB Network, and Paramount
affiliates who must obtain additional programming. Network Affiliates may air
programs from other sources, such as local programming, only a few hours per
week and may not broadcast programs of any of the other major networks.
Independent Stations include both full-power and low-power stations which are
not affiliated with one of the major networks and thus, do not have access to
network programming. Instead, they must seek their own programming sources,
such as that provided by the Company.

Cable Television

Cable television was first developed in the 1940's primarily to serve rural
communities unable to receive broadcast television signals. Cable television is
defined by the FCC as a cable system facility consisting of closed transmission
paths and associated signal generation, reception, and control equipment that is
designed to provide cable service, including video programming, to multiple
subscribers within a designated community. To receive cable transmission, a
viewer is required to feed an outside, dedicated wire or cable directly into
their home. By 1995, there were more than 11,200 cable systems serving over 60
million subscribers in over 32,000 communities in the United States. Cable
system operators range from large multiple system operators that own many
systems, to small independent systems that serve as few as several thousand
households.

Company Affiliates

In late 1996, the Company converted from analog transmission to digital in
early compliance with the FCC mandate that all broadcast stations convert to
digital transmission by the year 2006. The Company was the first network to
convert to digital with multi-channels. As a result of the conversion from
analog to digital, the Company's broadcast signal is now transmitted to its
Affiliate Stations in digital format, however, most television stations do not
have the capability to broadcast a digital signal, thus they are required to
decode the Company's digital signal back to analog so that they can rebroadcast
the signal to their viewers through their analog transmitter. To enable the
Affiliate Stations to decompress the digital signal, the Company furnished each
Affiliate Station with digital decoding equipment. However, due to the costs of
providing the decoding equipment, the Company was not able to furnish the
necessary equipment to all of its existing Affiliate Stations. In addition,
Internet users can view the Company's programs on their computers while it is
being aired on the network. The Company's web site is located at www.aini.com.

Program Inventory

The Company acquires its program inventory by various methods, including
licensing the rights from program owners and syndicators, purchasing the rights,
or by producing its own programming.

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The vast majority of the Company's programs are procured via license
agreements with program owners and syndicators (collectively referred to herein
as "Program Owners"). The "National Association of Programers and Television
Executives" ("NAPTE") is an annual industry convention where broadcasters, such
as the Company, are able to view program offerings, meet with Program Owners,
and negotiate licensing terms. The Company's officers have attended several
NAPTE conventions and have been successful in negotiating licensing rights to
many of its family oriented programs. In addition to contacts generated through
the NAPTE convention, the Company has, on occasion, been contacted at its
offices by Program Owners seeking to license their programs to the Company. Due
to the immense array and amount of programming material available, and the large
numbers of Program Owners, the Company has numerous contacts and a variety of
products from which to choose and is not dependent upon any one party for its
programming selections.

The form of agreement utilized by the Company to secure licensing rights
with program owners and syndicators contains barter terms pursuant to which the
Company obtains broadcasting rights to certain identified programming and in
exchange, the Company gives the Program Owner advertising time during the
broadcast of such programs. In a thirty (30) minute program there are normally
eight (8) minutes of commercial time, which time is allocated as follows: three
(3) minutes to the Program Owner; two (2) minutes to the Affiliate Station; and
three (3) minutes to the Company. The Program Owner can then sell the
advertising time to outside parties, thereby earning income on the licensing of
their program to the Company. The contract is generally for a term of 52 weeks
and is cancelable by either party upon two (2) weeks written notice. The
Company has the right to refuse any program, without prior notice, if the
content, subject matter, or production quality does not meet the Company's
standards.

The Company has purchased the rights to select public-domain movies. These
purchase arrangements are generally done pursuant to oral contract and involve a
one-time payment by the Company. The Company has sole discretion in determining
when and how often to run its wholly owned programs. The Company owns
approximately 2,000 shows and movies outright, however the majority of the
Company's current broadcast list continues to be licensed programs.

The Company has the facilities to produce its own programming, but due to
the wide availability and low cost of finished programing and the high cost
associated with producing its own programming, the Company no longer produces
its own programs. However, the Company does lease its production facilities and
certain equipment to third-parties for their production needs.

In 1996, the Company made the conversion from analog to digital
transmission of its programs in early compliance with the Federal Communications
Commission mandate that all broadcast stations convert to digital transmission
by the year 2006. Digital technologies enable the network to compress multiple
digital channels into the bandwidth currently required for a single analog
channel, thereby permitting the network to significantly expand its current
channel capacity with a much lower capital investment than would be required
lease individual analog channels. As a result of the conversion to digital
transmission, the Company was able to expand its single channel to a total of
five (5) channels.

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The Company is negotiating with parties to lease its additional three
channels on the digital compression system uplinking to the satellite.
Broadcast Magazine estimated that there are over 65 new cable channels who have
announced that they are ready to commence broadcasting and are seeking channel
space.

Marketing Strategy; Principal Markets and Customers

The Company generate revenues by: (i) the sale of its programming; and,
(ii) the sale of commercial advertising time within the programming.

Programming--Marketing Strategy: The Company markets its programming to
broadcast and cable television stations on the strength of its quality family
oriented programming and its attractive barter system pursuant to which the
Affiliate Station retains 4 minutes per hour of advertising time. Under this
barter system, an Affiliate Station is not required to spend money to receive
programming ("no-cost programming"). The Nielsen Designated Market Area
Television Households publishes an annual Television Market Rankings which lists
the identity of stations, its market, ranking and estimated number of
households. The Company contacts many of these stations through direct mailings
and other advertisements. In addition, the Company is introduced to potential
Affiliate Stations at industry conventions and through other Affiliates'
recommendations. Stations also hear about the Company at industry conventions
and from other stations, programmers, equipment manufacturers and suppliers, and
then contact the Company to inquire about becoming an Affiliate Station. As the
Company expands into the top 30 markets, it will make personal visits and
telephone calls to the independent stations that it has targeted as good
candidates for affiliation with the Company.

Programming--Customers: The Company's potential customers for its
programming includes all television and cable stations. The Company plans to
concentrate on adding stations located in the top 30 DMAs.

A station which has been added as an affiliate of the Company is generally
required to broadcast a minimum of 12 hours of the Company's broadcast within a
24 hour period. In general, the terms of the Affiliate Agreement between the
Company and each Affiliate Station provides that the Affiliate Station will
receive 24 hours of television programming, during which the Affiliate Station
may use approximately four (4) minutes per hour for local commercials or other
announcements. The Affiliate Agreement also provides that the Affiliate must
broadcast the Company's programs in their entirety, submit a weekly affidavit of
its broadcast logs showing the number of hours per day that the Company's
programming was broadcast on the Affiliate Station, maintain all necessary
permits and licenses, and may not preempt or disrupt the Company's national
advertisements. Either party may cancel the agreement at any time with thirty
(30) days written notice.

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Upon request, the Company also provides its Affiliate Stations with
promotional packages, as well as press releases and recorded audio
announcements. Promotional packages may include: (I) customized station IDs;
(ii) Company Network ID's with a common theme designed to show the
distinctiveness of the Affiliate Station by its association with the Company's
network; (iii) 30 second generic promotions for each element of Company program
content; (iv) 10 second and 30 second program-specific promotions for the
different programs provided by the Company, including movies and shorts; (v)
opening and closing "bumpers" for all programs (a bumper is a short introduction
or closing which provides a smooth transition from program segments to
commercials and vice-versa); (vi) animated promotions; and (vii) 30 second and
60 second radio commercials promoting the station's affiliation with the
Company.

In exchange for providing the Affiliate Stations with programming and
commercial time, the Company retains the remainder of the advertising time which
it sells to advertising firms and independent advertisers, and uses to barter
with third-parties to acquire additional programs. A critical factor in
attracting advertisers is the Affiliate Stations's market since each viewer
comprising such market represents a potential customer for the advertiser's
product. Therefore, the Company's access to the Affiliates' markets is integral
to selling the advertising time.

Advertising Sales, Marketing Strategy and Customers

The Company markets its advertising time to (I) to Program Owners; (ii)
Affiliate Stations; and (iii) advertising agencies and independent advertisers.

Advertising--Program Owners: In exchange for licensing rights to select
programming, the Company gives the Program Owner advertising time during the
broadcast of such programming. The Program Owner is then able to sell the
advertising to outside parties. The Company generally contracts with Program
Owners at the NAPTE convention and accordingly, is not required to actively
market this segment of its advertising time.

Advertising--Affiliate Stations: The Company provides programming and
advertising time to its Affiliate Stations in exchange for retaining advertising
time and access to the Affiliate Stations' markets. In a traditional
broadcasting contract, an affiliate station would retain all available
advertising time, which it would then sell to outside advertisers, and the
network would receive a fee from the affiliate station. However, the Company
believes that by selling retained commercial time to outside advertisers, it is
able to generate higher revenues than it would otherwise receive in fees from
its

Advertising--Affiliate Stations. Advertising time is generally a component
of the programming contract with Affiliate Stations, accordingly, the Company is
not required to separately market the advertising time to Affiliate Stations.

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Advertising--Advertisers: Approximately 25% of the Company's revenues come
from sales of commercial time to advertising agencies and independent
advertisers. The monetary value of this time is based upon the estimated size
of the viewing audience; the larger the audience, the more the Company is able
to charge for the advertising time. To measure the size of a viewing audience,
networks and stations generally subscribe to nationally recognized rating
services, such as Nielsen. Initially, the Company's Affiliate Stations were
located in the smaller market areas of the country. However, the Company's goal
is to enter into Affiliate Agreements with stations located in the top 30
demographic market areas ("DMA") in order to obtain Nielsen ratings to allow the
Company to charge higher rates for their advertising time. Presently, the
Company has Affiliate Stations in 3 of the top 25 DMAs and 5 of the top 50 DMAs.
Sales of the Company's advertising time to advertising agencies and to
independent advertisers is generally by referrals or by advertisers contacting
the Company. In some instances, the Company has solicited advertising agencies.

In addition to sales of its programming and advertising time, the Company
also generates revenues through (I) sales of programming time slots to companies
desiring to air their own programs; (ii) leasing of its digital satellite
channels; (iii) direct response marketing of products advertised on the network;
and (iv) leasing of its production facilities.

Competition

The broadcast industry is highly competitive and, as a result of the wide
range of programming available in both the broadcast and cable formats, the
Company competes with a large number of competitors, many of whom may offer
similar programs. The Company competes for available air time, channel
capacity, advertiser revenue, revenue from license fees, number of viewing
households, and programming material. The Company believes its strongest
competitive advantages are (I) the quality of its family oriented programming;
(ii) its advertising rates; (iii) the markets in which its programming is
broadcast; and (iv) its no-cost programming.

Quality Family Oriented Programming: The Company's programming philosophy
is centered on family viewing and it believes that there is strong public
support (as evidenced by Congress' hearings on appropriate programming and the
recent mandate to add the content ratings symbols on the television screens as
the programs are aired) for rated "G" programming which is appropriate for
viewing by the entire family. As major networks are permitting more violence,
sexual content, and offensive language within their programming, the Company
believes that there is a strong and growing contingent of families who will
demand programs that are more aligned with their family values. The Company
intends to position itself as the "family network" to fill this niche. Although
the Company does not believe that its family oriented programming will put it in
direct competition with the larger and more established networks, it does
believe that its programming, in combination with other factors, will establish
the Company as a premiere network.

Advertising Rates: The Company also competes with other networks on the
basis of its advertising rates. The Company's barter system allows it to keep
its rates low, thereby making advertising with the Company a viable alternative
for many companies whose revenues do not permit them to pay the exorbitant fees
required to advertise on the major networks. In addition, as other networks
increase the cost of producing shows, such as the recently announced $13,000,000
per episode of E.R. on NBC, they must increase the fees charged to advertisers
in order to recoup their expenses. Since the Company does not produce its own
shows and has relatively low overhead, it is able to maintain very competitive
advertising rates.

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Markets: The leading networks, based upon total number of affiliated
stations, are ABC, CBS, NBC, and FOX. Each of these competitors are more
established than the Company, have significantly greater name recognition and
viewer loyalty, as well as greater industry, financial, distribution and
marketing, programming, personnel and other resources than the Company.
Moreover, the television market has seen a continual increase in the number of
networks, including the addition of Warner Brothers Network (WB) and United
Paramount Network (UPN) in 1994. As the number of networks increase, the
Company will face greater competition for available syndicated programs,
viewers, and for affiliates who wish to carry their broadcasts. The Company
also believes that other forms of quasi-networks, including QVC and the Home
Shopping Network and so called "superstations" such as WTBS and WGN, will also
be a significant source of competition. At present, the Company is
approximately the tenth largest network based upon the total aggregate
households covered by the Company's Affiliate Stations. The Company currently
broadcasts in 3 of the top 30 DMAs and broadcasts to an aggregate of
approximately 5,983,060 households. The Company intends to increase its
household viewership by entering into additional markets in the top 30 DMAs.

No-Cost Programming: In a typical broadcasting arrangement, the network
charges the affiliate station a fee to broadcast its programs and the affiliate
retains most, if not all, of the advertising time. The fees charged by the
networks generally represent a large portion of the affiliate's expenses and may
be prohibitive to many of the smaller affiliate stations. The Company is able
to compete with the high fees charged by other networks with its no-cost barter
arrangement which enables affiliate stations to broadcast quality programs
without the usual associated costs. Under the Company's barter system, the
Company provides programming and advertising time to its Affiliate Stations and,
in exchange, the Company retains advertising time and gains access to the
Affiliate Stations' viewing market. The Company earns revenues on its
programming by selling the retained advertising time to outside advertisers.

In addition to the foregoing, the Company believes that the recent
introduction of direct satellite services ("DSS") will directly compete with
cable systems and increase the pressure for additional channels and services.
DSS systems offer their subscribers more than twice as many channels as most
cable systems, with better audio and video quality. The price of satellite
dishes are competitive with premium cable fees and industry analysts expect the
approximately 4.5 million DSS subscribers to increase to 19 million by the year
2000. In December 1997, the Company entered into an agreement with Dominion Sky
Angels to add the Company as one of its 16 channels. The channel is delivered
through EchoStar via the small 18-inch dish.

The Company is not dependant upon any one station for a significant
portions of its revenues, however, the loss of several stations could adversely
effect the Company's results of operations.

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The Company also sells advertising time slots on its programming to various
advertisers. The revenues generated by sale of the advertising slots represents
approximately 25% of the Company's income, however, taken as a whole, no one
company provides a large portion of such income. Accordingly, the Company is
not dependent upon one or a few major advertisers, however, the loss of a
significant number of advertisers could adversely effect the Company's results
of operations.

The Company is negotiating to lease its additional channels on the digital
compression system uplinking to the satellite. Broadcast Magazine has estimated
that there are over 65 new cable channels who have announced they are ready to
commence broadcasting and are seeking channel space. Accordingly, the Company
believes that it will be able to enter into lease agreements for the remaining
channels.

On July 18, 1997, the Company was granted a Radio Station Authorization by
the FCC. The Radio Station Authorization, which authorizes the Company to build
and operate a domestic fixed transmit/receive C-band earth station (uplink
system) on the Company's premises, expires July 18, 2007.

The Company has entered into license agreements with several syndicators
and program owners for the use of their programming. Under the agreements,
which are generally non-exclusive, the Company is granted the right to exhibit,
distribute and transmit by means of broadcast or cablecast, a particular
program. In consideration thereof, the Company provides advertising time during
such program to the syndicator. The amount of advertising time, the length, and
other terms of the license agreement vary, depending upon the type of program
being licensed.

The Company has also entered into Affiliate Agreements with each of its
Affiliate Stations pursuant to which the Company provides programming and other
amenities in exchange for advertising time during such programming. The Company
either utilizes such advertising time or sells it to third parties. The terms
of the Affiliate Agreements vary depending upon the type of programming being
provided by the Company, the length of the agreement, as well as other
variables.

Government Regulations

Broadcasting of the Company's programming, both by the Company and its
Affiliates, is subject to the rules and regulations of various federal, state
and local agencies. The Company believes that it currently complies with
applicable laws and regulations governing cable and television broadcasts,
however, in the event that such laws are subsequently modified, there can be no
assurance that the Company will be able to continue to comply with such laws.
Failure to comply could have serious negative implications for the Company.

Employees

The Company has 8 full time employees. The Company's employees are not
represented by any collective bargaining organization, and the Company has never
experienced a work stoppage. The Company believes that its relations with its
employees are satisfactory.

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Year 2000 Issues

The Company has conducted a comprehensive review of its computer systems to
identify any business functions that could be affected by the "Year 2000" issue.
As the millennium ("Year 2000") approaches, businesses may experience problems
as the result of computer programs being written using two digits rather than
four to define the applicable year. The Company has conducted a comprehensive
review of its computer systems to identify those areas that could be affected by
the "Year 2000" issue. Any of the Company's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If not corrected, this could result in extensive miscalculations or a
major system failure.

The Company relies on industry standard software. Certain manufacturers
have already provided the Company with upgraded software to address the "Year
2000" issue and the Company believes that its remaining software manufacturers
will modify their programs accordingly. In the event the remaining
manufacturers do not upgrade their software packages, the Company will replace
such software with programs that address the "Year 2000" issue. The Company
believes that by modifying existing software and converting to new software, the
"Year 2000" issue will not pose significant operational problems and is not
anticipated to require additional expenditures that would materially impact its
financial position or results of operations in any given year.

Going Concern Qualification by Independent Auditors

The Company's independent auditors have reported that the Company has
suffered recurring net operating losses and has a current ratio deficit that
raises substantial doubt about its ability to continue as a going concern.

Subsequent Event

In July, 1999, the Company entered into an agreement with Field of Cotton,
L.P. whereby Field of Cotton, L.P. purchased 6,500,000 shares of common stock of
the Company for a total consideration of $4,250,000, in the form of a promissory
note in the principal amount of $4,022,600, and $227,400 in cash in the form of
funds previously provided to the Company by Field of Cotton, L.P. in 1999. As a
result of this agreement, Field of Cotton, L.P. now owns 48.9% of the common
stock of the Company. Of these 6,500,000 shares, Field of Cotton, L.P. owns
1,000,000 shares outright free and clear, and the remaining 5,500,000 million
shares are subject to an escrow agreement and a security interest agreement in
favor of the Company. The terms of the promissory note are that 11 payments are
due commencing September 1, 1999 in the amount of $100,000 per payment, and a
balloon payment in the amount of $3,190,213 is due September 1, 2000 for the
remaining principal balance. The promissory note bears interest at the rate of
8% per annum in arrears. For each $100,000 payment that Field of Cotton L.P.
makes to the Company, 200,000 shares are released from escrow to Field of
Cotton, L.P. and are no longer subject to the security agreement. This
transaction was the result of negotiations between the Company and Field of
Cotton, L.P.

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ITEM 2. DESCRIPTION OF PROPERTY.

The Company leases its principal offices located at 6125 Airport Freeway,
Haltom City, Texas 76117. The premises measure approximately 13,900 square feet
and are used for the Company's general office and administrative purposes, as
well as for their programming services, warehouse needs and full-service
production studio. The monthly lease cost is $6,368. The lease expires in
February, 2002. The Company believes that its space is adequate for its current
and future needs.

ITEM 3. LEGAL PROCEEDINGS.

1. The Company is a party in litigation styled Bowne of Los Angeles, Inc. v.
American Independent Network, Inc., No. 236-177164-99, 236th Judicial District
Court of Tarrant County, Texas. This is a suit on a sworn account in the amount
of approximately $34,056. Bowne has filed a motion for summary judgment. The
Company intends to mount a vigorous defense.

2. The Company is a party in litigation styled WorldCom Inc. v. American
Independent Network, Inc., No. 98-05447-1. This suit is for breach of contract
for approximately $76,000. This matter is in the discovery phase. The Company
has countersued for $2,500,000. The Company intends to vigorously oppose this
litigation.

3. The Company is a judgment debtor in litigation styled Ira Weingarten
d/b/a Equity Communications v. American Independent Network, Inc., No. 222751,
in Santa Barbara County Superior Court, Anacapa Division, California. A
judgment in the amount of $59,625 has been entered against the Company. This
was a suit for beach of contract.

4. The Company is a party in litigation styled American Independent Network,
Inc. v. Charles Coburn, No. 4-98 CV-784-A, U.S. District Court, Northern
District of Texas, Ft. Worth Division. This suit is for breach of contract and
fraud. This matter has been settled and the Company expects a mutual release to
be signed shortly.

5. The Company is a party in litigation styled American Independent Network,
Inc. v. Knapp Petersen and Clarke, No. 4-99CV-0124P, U.S. District Court,
Northern District of Texas, Ft. Worth Division and the case was recently
transferred to the Southern District of California. This suit relates to fees
for legal services. This matter is subject to a binding arbitration agreement.

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6. As a result of a matter decided in binding arbitration, the Company had
been a judgment debtor in a judgment styled as Showplace Video v. American
Independent Network, Inc., No. 98-2154-E, County Court At Law No. 5, Dallas
County, Texas. In 1998, Alan Luckett purchased the judgment and released it in
exchange for 500,000 shares of common stock of the Company, and for access to
the digital uplink equipment of the Company, certain bandwidth of the satellite
transponder the Company leases, and the right of first refusal on the Company's
transponder rights and equipment leases in the event that the Company ceases
operations. Also in connection with the release of judgment, Randy Moseley
agreed to turnover 728,748 shares, which he owned, to the Company for
cancellation, and, Don Shelton, a former director and executive officer of the
Company, agreed to turnover 669,618 shares, which he owned, to the Company for
cancellation.

7. The Company is a judgment debtor in the amount of $11,921 in favor of
Witwer, Poltraock & Giampietro in a matter styled Witwer, Poltraock & Giampietro
v. American Independent Network, Inc., No. 98M1152998, Circuit Court of Cook
County, Illinois, Municipal Department, First District. This was a suit for
legal fees.

8. The Company is a judgment debtor in the amount of $ 90,000 in favor of
New Image Video, Inc. in a matter styled New Image Video, Inc. v. American
Independent Network, Inc., No. CJ-94-7030-66 in the District Court of Oklahoma
County, Oklahoma. This was a breach of contract suit.

9. The Company is a judgment debtor in the amount of $ 18,000 in favor of
Tarrant County, Texas for unpaid personal property taxes in Tarrant County,
Texas, in a matter styled Tarrant County v. American Independent Network, Inc.
No. E12675-97 236th Judicial District Court of Tarrant County, Texas. This
Company still owes $3,500 of a settlement amount.

10. The Company is a judgment debtor in the amount of $ 29,862 in favor of
Hall, Estill, Hardwick Gable in a matter styled Hall, Estill, Hardwick Gable v.
American Independent Network, Inc. No. CJ-98-1217, in the District Court of
Oklahoma County, Oklahoma. This was a suit for legal fees.

11. During the last quarter of 1998, the Company issued 680,000
(post-reverse-split) shares of common stock to Data West and John Priscella
pursuant to an agreement to arrange for financing for the Company. No
financing was arranged. The Company intends to pursue its claim against Data
West and John Priscella to recover these shares of common stock or have them
paid for pursuant to the agreement.

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

During the fourth quarter of the year ended December 31, 1998, no matter
was submitted to the vote of security holders through the solicitation of
proxies or otherwise.

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PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Company's common stock had been traded on the OTCBB under the symbol
"AINW" until the symbol was changed to "AINWE" pursuant to the phase in of new
listing requirements by the OTCBB. The Company has been notified that will it be
delisted from the OTCBB unless its files all reports required to be filed with
the Securities and Exchange Commission. The delisting is scheduled for August
2, 1999. In the event that this Form 10-KSB and the Form 10-QSB for the quarter
ended March 31, 1999 are not filed with the Commission by that deadline and the
delisting takes place, the Company will have to become compliant with the
Commission's reporting rules before it is eligible to be re-listed on the OTCBB.
If this Form 10-KSB and the Form 10-QSB for the quarter ended March 31, 1999 are
filed with the Commission by before deadline, the symbol may revert back to
"AINW". No trades were reported prior to October, 1998.

COMMON STOCK PRICE RANGE

HIGH LOW

1998 Fourth Quarter $1.00 $ 1/8

On July 22, 1999, the bid price of the Company's common stock on the OTCBB
was $5/8. On July 22, 1999, there were approximately 843 stockholders of record
of the common stock.

In November, 1998, the Company effectuated a 1:5 reverse stock split which
also had the effect of changing the par value per share to $0.05 par value per
share.

Transfer Agent

The transfer agent and registrar for the Company's Common Stock is Liberty
Transfer Company, 191 New York Avenue, Huntington, NY 11743, tel. (516)
385-1616.

Dividend Policy

The Company has not paid, and the Company does not currently intend to pay
cash dividends on its common stock in the foreseeable future. The current
policy of the Company's Board of Directors is to retain all earnings, if any, to
provide funds for operation and expansion of the Company's business. The
declaration of dividends, if any, will be subject to the discretion of the Board
of Directors, which may consider such factors as the Company's results of
operations, financial condition, capital needs and acquisition strategy, among
others.

Recent Sales of Unregistered Securities

The following transactions were effected by the Company in reliance upon
exemptions from registration under the Securities Act of 1933 as amended (the
"Act") as provided in Section 4(2) thereof. Each certificate issued for
unregistered securities contained a legend stating that the securities have not
been registered under the Act and setting forth the restrictions on the
transferability and the sale of the securities. No underwriter participated in,
nor did the Company pay any commissions or fees to any underwriter in connection
with any of these transactions. None of the transactions involved a public
offering.

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During the last quarter of 1998, the Company issued 680,000
(post-reverse-split) shares of common stock to Data West and John Priscella
pursuant to an agreement to arrange for financing for the Company. No
financing was arranged. The Company intends to pursue its claim against Data
West and John Priscella to recover these shares of common stock or have them
paid for pursuant to the agreement. This transaction was the result of
negotiations between the Company and Data West and John Priscella. The Company
believes that they had knowledge and experience in financial and business
matters which allowed them to evaluate the merits and risk of the receipt of
these securities of the Company. The Company believes that they were
knowledgeable about the Company's operations and financial condition.

In December, 1998, the Company issued 30,000 shares of common stock to Bob
Bryant as part of the consideration for his making a loan of $90,000 to the
Company. This transaction was the result of negotiations between the Company
and Mr. Bryant. The Company believes that he had knowledge and experience in
financial and business matters which allowed him to evaluate the merits and risk
of the receipt of these securities of the Company. The Company believes that he
was knowledgeable about the Company's operations and financial condition.

During the last quarter of 1998, one person who was a bridge loan creditor
and a preferred stock holder converted its debt and holdings into a total of
348,121 shares of common stock of the Company. As a result of this transaction,
approximately $100,000 of debt was extinguished, and approximately $100,000 in
stated value of preferred stock was extinguished. These conversions were the
result of negotiations between the Company and the creditors and the holders.
The Company believes that each of the persons had knowledge and experience in
financial and business matters which allowed them to evaluate the merits and
risk of the purchase of these securities of the Company. The Company believes
that each of these persons were knowledgeable about the Company's operations and
financial condition.

During the quarter ended March 31, 1999, one person who as a bridge loan
creditor converted its debt into a total of 62,500 shares of common stock of the
Company. As a result of this transaction, approximately $50,000 of debt was
extinguished. These conversions were the result of negotiations between the
Company and the creditors and the holders. The Company believes that each of
the persons had knowledge and experience in financial and business matters which
allowed them to evaluate the merits and risk of the purchase of these securities
of the Company. The Company believes that each of these persons were
knowledgeable about the Company's operations and financial condition.

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In July, 1999, the Company entered into an agreement with Field of Cotton,
L.P. whereby Field of Cotton, L.P. purchased 6,500,000 shares of common stock of
the Company for a total consideration of $4,250,000, in the form of a promissory
note in the principal amount of $4,022,600, and $227,400 in cash in the form of
funds previously provided to the Company by Field of Cotton, L.P. in 1999. As a
result of this agreement, Field of Cotton, L.P. now owns 48.9% of the common
stock of the Company. Of these 6,500,000 shares, Field of Cotton, L.P. owns
1,000,000 shares outright free and clear, and the remaining 5,500,000 million
shares are subject to an escrow agreement and a security interest agreement in
favor of the Company. The terms of the promissory note are that 11 payments are
due commencing September 1, 1999 in the amount of $100,000 per payment, and a
balloon payment in the amount of $3,190,213 is due September 1, 2000 for the
remaining principal balance. The promissory note bears interest at the rate of
8% per annum in arrears. For each $100,000 payment that Field of Cotton L.P.
makes to the Company, 200,000 shares are released from escrow to Field of
Cotton, L.P. and are no longer subject to the security agreement. The Company
believes that Field of Cotton, L.P. had knowledge and experience in financial
and business matters which allowed it to evaluate the merits and risk of the
purchase of these securities of the Company. The Company believes that Field of
Cotton, L.P. had knowledgeable about the Company's operations and financial
condition.

In April, 1999, the Company issued 500,000 shares of common stock to
Richard Halden as compensation as an employee of the Company. The Company
believes he had knowledge and experience in financial and business matters which
allowed him to evaluate the merits and risk of the receipt of these securities
of the Company. Mr. Halden is the operations manager of the Company in such
capacity he was were knowledgeable about the Company's operations and financial
condition.

In April, 1999, the Company issued 500,000 shares of common stock to Fred
Hoelke as compensation for professional services he provided to the Company.
The Company believes he had knowledge and experience in financial and business
matters which allowed him to evaluate the merits and risk of the receipt of
these securities of the Company. Mr. Hoelke provided professional services to
the Company and in such capacity he was knowledgeable about the Company's
operations and financial condition.

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In April, 1999, the Company issued 150,000 shares of common stock to
Jonathan Moseley, the son of Randy Moseley. As a result of a matter decided in
binding arbitration, the Company had been a judgment debtor in a judgment styled
as Showplace Video v. American Independent Network, Inc., No. 98-2154-E, County
Court At Law No. 5, Dallas County, Texas. In 1998, Alan Luckett purchased the
judgment and released it in exchange for 500,000 shares of common stock of the
Company, and for access to the digital uplink equipment of the Company, certain
bandwidth of the satellite transponder the Company leases, and the right of
first refusal on the Company's transponder rights and equipment leases in the
event that the Company ceases operations. Also in connection with the release
of judgment by Alan Luckett, Randy Moseley agreed to turnover 728,748 shares
which he owned to the Company for cancellation in 1999, and, Don Shelton, a
former director and executive officer of the Company, agreed to turnover 669,618
shares which he owned to the Company for cancellation in 1999. Further in
connection with the release of judgment, the Company agreed to issue 150,000
shares of common stock of the Company to Jonathan Moseley, the son of Randy
Moseley. The Company believes that Jonathan Moseley was being advised in this
matter by his father, Randy Moseley and that he had knowledge and experience in
financial and business matters which allowed him to evaluate the merits and risk
of the receipt of these securities of the Company and he was knowledgeable about
the Company's operations and financial condition.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with the financial
statements and notes thereto for the years ended December 31, 1998 and 1997.

Forward Looking Statement and Information

This Management Discussion and Analysis contains various forward looking
statements which represent the Company's expectations or beliefs concerning
future events and involve a number of risks and uncertainties. Important
factors that could cause actual results to differ materially from those
indicated include risks and uncertainties relating to demographic changes;
existing government regulations and changes in, or the failure to comply with
government regulations; competition; the loss of any significant numbers of
subscribers or viewers; changes in business strategy or development plans;
technological developments and difficulties (including any associated with the
Year 2000); the ability to attract and retain qualified personnel; significant
indebtedness; the availability and terms of capital to fund the expansion of our
businesses. The Company has no obligation to update or revise these forward
looking statements to reflect the occurrence of future events or circumstances.

General

The Company was founded on December 11, 1992 and provides programming,
media production and syndication services to television arid cable stations, as
well as satellite uplink services to certain cable channels. The Company has a
wholly-owned subsidiary, Eureka Media & Trading, Inc., formed in the State of
Nevada on September 6, 1995, which has not commenced operations. In 1998, the
Company changed the name of its subsidiary to "Senior Channel, Inc."

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The Company originally broadcast its programs via analog transmission and,
in 1996, had Affiliate Agreements with over 150 Affiliate Stations. However, in
late 1996, the Company converted from analog to digital transmission and in
connection with the conversion, was required to provide digital decoding
equipment to each of its Affiliate Stations. Due to the cost of providing the
decoding equipment, the Company was not able to furnish the equipment to all of
its then existing Affiliate Stations. Accordingly, upon conversion, the Company
initially entered into Affiliate Agreements with 33 Affiliate Stations. The
Company has since entered into Affiliate Agreements to provide family-oriented
television to a network of 25 broadcast television stations and cable systems
nationwide. The stations serviced by the Company are primarily "independent"
broadcast stations, meaning that they have no affiliation with the major network
organizations (NBC; ABC; CBS; Fox; WB Network; and Paramount). The Company
maintains a library of over 2,000 programs covering a wide array of topics and
interests, and includes cartoons, sports, sitcoms, movies, news and weather,
comedy, science and health shows, documentaries, and public interest programs.
The Company also offers original programs, celebrity golf tournaments,
professional boxing, fishing expeditions and interactive programming

Result of Operations

Revenues. Revenues are primarily derived from the Company's programming
services, sales of advertising and programming time, and leasing of digital
satellite channels. Revenues for 1998 were $377,380 compared to $1,243,145 for
1997, a decrease of $865,765 or 69.6%. The decrease in revenues resulted from a
decrease in leasing out of digital channels.

Cost of Operations. Costs of operations were $772,512 for the 1998 fiscal
year and $957,715 for the 1997 fiscal year, a 19.3% decrease. The decrease in
1998 was due to a decrease in up-linking and programming expenses. The $221,861
(38%) decrease in up-linking expenses resulted from the reduction of the
Company's spectrum space on the satellite transponder. Programming expenses,
which include costs for program development, editing, videotapes and other
miscellaneous expenses, increased by $5,022 (4.1%) for fiscal year ended 1998 as
compared to the 1997 fiscal year. Programming costs increased as the Company's
cost of certain programs increased. Net rental expenses, which include office
space, office equipment, and company vehicles decreased by 4.3% in 1998 due to
the decrease in office equipment rental cost. Amortization of the Senior
Channel increased by $137,936 as 1998 was the first year of the Senior Channel.
The reserve for trade credits decreased by $125,138 as no addition to the
reserve established in 1997 was deemed necessary in 1998. Depreciation and
amortization of leasehold expenses increased by $21,743 (36.7%) in 1998 due to
the first full year of depreciation being taken on the digital compression
equipment.

General and Administrative. General and administrative expenses for the
fiscal year ended December 31, 1998 were $557,367, an increase of $118,135 or
26.9% more than administrative expenses of $439,232 for fiscal year 1997. The
general and administrative expenses represent 147.7% and 35.3% of revenues for
fiscal years 1998 and 1997, respectively. The Company's general and
administrative expenses consist of operating costs for the Company's
headquarters, the salaries of corporate officers and office staff, travel,
accounting, legal and other professional expenses, and advertising and
promotional costs.

Interest expense for the fiscal year 1998 was $231,788 and for fiscal year
1997 was $381,654, a decrease of $149,866 or 39.3%. This decrease was due to
reduction in the outstanding balance on various bridge loans and Series B
Preferred Stock.

During 1998, at the election of the note holders, the Company converted an
aggregate approximate amount of $333,750 in outstanding debt and accrued
interest into Common Stock of the Company. As a result of the conversions, the
Company expects interest expense for 1999 to be correspondingly reduced.

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Operating Results. The Company had a net operating loss of $2,172,507 for
fiscal year ended December 31, 1998. The loss for 1998 was primarily attributed
to the decrease of $860,000 in lease revenues from satellite channel space and
programming time sales, the provision for doubtful accounts in the amount of
$1,584,594, and the amortization of the Senior Channel investment of $137,936.

The Company had a net operating loss of $2,640,982 for fiscal year ended
December 31, 1997. The loss for 1997 was primarily attributed to a provision
for doubtful accounts in the amount of $l,584,594, a non-recurring expense in
the amount of $380,260 resulting from the conversion of Bride Loans to Common
Stock, and a reserve in the amount of $125,138 for trade credits.

Earnings Per Share of Common Stock

The net earnings per common share are based upon the weighted average of
outstanding common stock and convertible preferred stock. The outstanding
warrants that accompany the preferred stock are not dilutive, therefore, they
are not included in the weighted average. In 1998, the net loss per of common
stock was $0.59. The loss is reflective of the decrease in revenues and the
provision for doubtful accounts and amortization of the Senior Channel
investment.

For fiscal 1997, net loss per share of common stock was $0.18. The loss
for fiscal year 1997 is reflective of the provision for doubtful accounts and
the costs of converting Bridge Loans to Common Stock.

Liquidity and Capital Resources

The Company has financed its operations through a combination of the
issuance of equity securities to private investors, issuance of private debt,
loans from affiliates, and cash flow from operations. The Company has
cumulative losses of $6,308,230 from inception through December 31, 1998.

In December 1997, the Company entered into an agreement with Media Fund,
Inc. ("MFI") pursuant to which MFI would have received 1,875,000 shares of the
Company's Common Stock, assets with a book value of $2,818,933 and 20% of the
commercial time slots on the Company's channels for a period of four (4) years
in exchange for up to 12 hours of network quality programming and $5,000,000 to
be paid to the Company in installments over a five year period.

Media Fund, Inc. did not perform on the terms of the agreement with the
Company and the Company terminated the agreement in September 1998 by reversing
the shares allocated to MFI and the assets and commercial time slots agreed to
in the agreement.

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Current liabilities for fiscal year 1998 were $2,508,921, which exceed
current assets of $42,595 by $2,466,326. For fiscal year ended 1997, current
liabilities exceeded current assets by $1,886,269. The decrease in current
assets in 1998 as compared to 1997 was primarily the result of the removal of
the note receivable. The current liabilities for 1998 decreased by $144,365 as
compared to 1997 due primarily to decreases in notes payable and accrued
interest of $370,953 and increase in accounts payable of $205,151.

The Company has been able to generate funds from private placements to
finance operations, however, in the event the Company requires additional
capital investments, there can be no assurance that a sufficient amount of the
Company's securities can be sold to fund the continuing operating needs of the
Company.

Financing activities during 1997 and 1996 consisted of Bridge Loans in the
cumulative amount of $2,057,750 and sales of Preferred Stock in the cumulative
amount of 2,110,015. Of the combined amount of $4,167,765, approximately
$2,205,963 was used for operating expenses, $1,402,802 was paid in issue costs,
and $559,000 for debt repayment.

Management believes that anticipated cash flows from operations will be
sufficient to meet the Company's expected cash needs and to finance future
operations, however, in the event that future revenues are not sufficient, the
Company will conduct private and/or public offerings of its equity stock or
enter into bridge loan financing to raise the necessary capital.

Impact of inflation

Management does not believe that general inflation has had or will have a
material effect on operations.

Year 2000 Issues

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The Company relies on industry standard software. Certain manufacturers
have already provided the Company with upgraded software to address the "Year
2000" issue and the Company believes that its remaining software manufacturers
will modify their programs accordingly. In the event the remaining
manufacturers do not upgrade their software packages, the Company will replace
such software with programs that address the "Year 2000" issue. The Company
believes that by modifying existing software and converting to new software, the
"Year 2000" issue will not pose significant operational problems and is not
anticipated to require additional expenditures that would materially impact its
financial position or results of operations in any given year.

ITEM 7. FINANCIAL STATEMENTS

The financial statements pursuant to this item are set forth beginning on
page F-1.

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

None.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, CONTROL PERSONS AND COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.

DIRECTORS AND EXECUTIVE OFFICERS

Directors are elected annually and hold office until the next annual
meeting of the stockholders of the Company or until their successors are elected
and qualified. Officers are elected annually and serve at the discretion of the
Board of Directors. There is no family relationship between or among any of the
directors and executive officers of the Company. The Company's Board of
Directors consists of one person.

Randy Moseley, age 51, is the Director, President and Chief Financial
Officer of the Company. Mr. Moseley is a founder of the Company and has served
as its President, Chief Financial Officer, Secretary and as a Director since its
inception in 1993. Mr. Moseley received his Bachelor of Business Administration
degree, majoring in accounting, from Southern Methodist University in Dallas,
Texas. Mr. Moseley is a certified public accountant and worked for a national
public accounting firm for the six years following his graduation from college.
Mr. Moseley has over twenty-five years of fiscal management experience in such
industries as insurance, mortgage and real estate, hospital services and
agriculture, as well as the television broadcasting and media industries. Mr.
Moseley has been part owner and operator of six television stations.

Mr. Moseley has timely filed all reports pursuant to Section 16(a) of the
Exchange Act.

The Board of Directors had three meetings and took action by unanimous
consent three times during 1998. All directors took part in all of the meetings
and consents.

ITEM 10. EXECUTIVE COMPENSATION

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The following table reflects all forms of compensation for services to the
Company for the fiscal years ended December 31, 1998, 1997, 1996 of the chief
executive officer of the Company. No other executive officer of the Company
received compensation which exceeded $100,000 during 1998.

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[Download Table]

Summary Compensation Table

Annual Compensation

Name
Principal Position Year Salary All Other Compensation

Randy Moseley 1998 $34,902 $ 0
President and CFO 1997 $20,000 $ 0
1996 $27,780 $ 5,805

Directors do not receive compensation except reimbursement for costs of
attending meetings.

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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information at July 22, 1999, with
respect to the beneficial ownership of shares of Common Stock by (I) each person
known to the Company who owns beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director of the Company, (iii) each executive
officer of the Company and (iv) all executive officers and directors of the
Company as a group. As of July 22, 1999, there were 13,318,903 shares of
common stock outstanding. To the best of the Company's knowledge, each person
set forth below has sole voting and sole dispositive power with respect to their
shares.

[Download Table]

Name and Number of Title of Percent
Address Shares Class of Class
-------------------------- --------- ------------- -------------

Field of Cotton, L.P. 6,500,000 Common Stock 48.9%
and its General Partner
Mr. Kris Lamans
16167 Lost Canyon Road
Canyon Country, CA 91351

Randy Moseley -0- (1) Common Stock 0.0%
6125 Airport Freeway
Suite 200
Haltom City, TX 76117

All Directors and Officers
as a group-one person -0- (1) Common Stock 0.0%
_________________________
<FN>
(1) Randy Moseley formerly owned 728,748 shares which he agreed to turnover
to the Company for cancellation in 1999. These shares have not been canceled
yet. The Company has possession of some of these shares.

Don Shelton, a former director and executive officer of the Company,
formerly owned 669,618 shares which he agreed to turnover to the Company for
cancellation in 1999. These shares have not been canceled yet. The Company has
possession of some of these shares.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

At one time, Mr. Moseley had ownership interests in six television stations
which had have contracted with the Company to broadcast as Affiliates of the
Company. The terms of the Affiliate Agreements with the foregoing television
stations are the same as those with other non-related Affiliates. Mr. Moseley
disposed of his interests in these television stations in 1998.

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In 1995, the Company borrowed $52,531 from Shelly Media Marketing ("SMM")
at an interest rate of 10%. Mr. Moseley is a principal of SMM. At July 1,
1999, this loan had a remaining principal balance of $97,229. Mr. Moseley has
agreed to give the Company an indeterminate forebearance on repayment of this
loan.

In 1994, the Company borrowed $141,152 from ATN Network Inc. ("ATN") at an
interest rate of 10%. Mr. Moseley had been a principal of ATN until December,
1998. In September 1996, Mr. Moseley exercised options to purchase 2,000,000
shares of the Company's Common Stock at $0.10 per share, for a combined purchase
price of $200,000. Of this amount, $100,000 was paid directly to ATN in partial
payment of the outstanding debt. In December 1997, the Company borrowed an
additional $243,090 pursuant to a written Promissory Note. ATN subsequently
forgave all of these debts.

As a result of a matter decided in binding arbitration, the Company had
been a judgment debtor in a judgment styled as Showplace Video v. American
Independent Network, Inc., No. 98-2154-E, County Court At Law No. 5, Dallas
County, Texas. In 1998, Alan Luckett purchased the judgment and released it in
exchange for 500,000 shares of common stock of the Company, and for access to
the digital uplink equipment of the Company, certain bandwidth of the satellite
transponder the Company leases, and the right of first refusal on the Company's
transponder rights and equipment leases in the event that the Company ceases
operations. Also in connection with the release of judgment by Alan Luckett,
Randy Moseley agreed to turnover 728,748 shares which he owned to the Company
for cancellation in 1999, and, Don Shelton, a former director and executive
officer of the Company, agreed to turnover 669,618 shares which he owned to the
Company for cancellation in 1999. Further in connection with the release of
judgment, the Company agreed to issue 150,000 shares of common stock of the
Company to Jonathan Moseley, the son of Randy Moseley.

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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits.

Exhibit Number Title of Exhibit
2.1 (*) Articles of Incorporation of the Company, as amended.
2.2 (*) Bylaws of the Company, as amended.
10.1 (**) Stock Purchase Agreement with Field of Cotton, L.P.
21.1 (**) Subsidiaries of the Company
27.1 (**) Financial Data Schedule for the year ended December 31, 1998.
_____________________
(*) Previously filed as an exhibit to the Company's Registration Statement
on Form 10-SB as amended.
(**) Filed herewith.

(b) No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.

10KSB 28th Page of 38 TOC 1st Previous Next ↓Bottom Just 28th
SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

American Independent Network, Inc.

July 26, 1999 /s/ Randy Moseley
---------------------------------
Randy Moseley
Director, President
and Chief Financial Officer

In accordance with the Exchange Act, this report has been signed below by
the following person on behalf of the registrant and in the capacities and on
the dates indicated.

July 26, 1999 /s/ Randy Moseley
---------------------------------
Randy Moseley
Director, President
and Chief Financial Officer

10KSB 29th Page of 38 TOC 1st Previous Next ↓Bottom Just 29th
AMERICAN INDEPENDENT NETWORK, INC.

AUDITED FINANCIAL STATEMENTS

DECEMBER 31, 1998 AND 1997

Financial Statements: Page

Report of Independent Certified Public Accountants F-1

Balance Sheet at December 31, 1998 and
December 31, 1997 F-2

Statement of Operations for the Twelve Months
ended December 31, 1998 and 1997 F-4

Stockholders' Equity for the
Twelve Months ended December 31, 1998 and 1997 F-5

Statement of Cash Flows for the Twelve Months
ended December 31, 1998 and 1997 F-6

Notes to Financial Statements F-7

10KSB 30th Page of 38 TOC 1st Previous Next ↓Bottom Just 30th
JACK F. BURKE, JR.
CERTIFIED PUBLIC ACCOUNTANT
P. O. BOX 15728
HATTIESBURG, MISSISSIPPI 39404

REPORT OF INDEPENDENT AUDITOR

The Board of Directors
American Independent Network, Inc.
Haltom City, Texas 76117

I have audited the accompanying balance sheets of American Independent Network.
Inc. as of December 31, 1998 and 1997, and the related statements of
operations, stockholder's equity and cash flows for the years then ended. These
financial statements are the responsibility of American Independent Network Inc.
management. My responsibility is to express an opinion on these financial
statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of American Independent Network, Inc.
at December 31, 1998 and 1997 and the results of its operations and its cash
flows for the years ended in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 19 to the
financial statements, the company has suffered recurring net operating losses
and has a current ratio deficit which raises substantial doubts about its
ability to continue as a going concern. Management's plans in regard to the
matters are also described in Note 19. The financial statements do not include
any adjustments that might result from the outcome of the uncertainty.

Sincerely,

/s/ Jack F. Burke, Jr.
June 7,1999

F-1

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[Download Table]

AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE BALANCE SHEET
DECEMBER 31, 1998 AND 1997

ASSETS 1998 1997

CURRENT ASSETS

Cash and Cash Equivalents . . . . . . . . . . . . $ 9,807 $ 34,768
Accounts Receivable . . . . . . . . . . . . . . . 2,788 2,250
Trade Credits Receivable. . . . . . . . . . . . . 30,000 30,000
Note Receivable Net (Doubtful Accounts $700,000). 0 700,000
---------- ----------
TOTAL CURRENT ASSETS . . . . . . . . . . . . 42,595 767,018
---------- ----------

PLANT, PROPERTY AND EQUIPMENT

Leasehold Improvements. . . . . . . . . . . . . . 22,851 22,851
Less Amortization . . . . . . . . . . . . . . . . -8,608 -8,028
Equipment and Furnishings . . . . . . . . . . . . 130,642 125,096
Digital Compression Equipment . . . . . . . . . . 845,092 831,391
Accumulated Depreciation. . . . . . . . . . . . . -184,400 -103,954
---------- ----------
TOTAL PLANT, PROPERTY AND EQUIPMENT. . . . . 805,577 867,356
---------- ----------

OTHER ASSETS

Trade Credits Receivable Net (Allowance $125,138) 231,990 261,990
Other Investments . . . . . . . . . . . . . . . . 564,489 893,658
Note Receivable Net (Doubtful Accounts $884,595). 0 884,595
---------- ----------
TOTAL OTHER ASSETS . . . . . . . . . . . . . 796,479 2,040,243
---------- ----------

TOTAL ASSETS . . . . . . . . . . . . . . . . $1,644,651 $3,674,617
---------- ----------

The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements

F-2

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[Download Table]

AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE BALANCE SHEET
DECEMBER 31, 1998 AND 1997

LIABILITIES AND STOCKHOLDER'S EQUITY 1998 1997

CURRENT LIABILITIES

Accounts Payable. . . . . . . . . . . . . . $ 382,555 $ 177,404
Notes Payable . . . . . . . . . . . . . . . 1,603,529 2,133,930
Accrued Interest - Notes. . . . . . . . . . 278,979 119,530
Advances from Affiliates. . . . . . . . . . 31,038 9,602
Interest Due Preferred Shareholders . . . . 37,440 37,440
Equipment Lease Payments. . . . . . . . . . 175,380 175,380
----------- -----------
TOTAL CURRENT LIABILITIES. . . . . . . 2,508,921 2,653,286
----------- -----------

LONG TERM DEBT

Deferred Income Tax . . . . . . . . . . . . 0 661,824
Equipment Lease Payments. . . . . . . . . . 109,003 216,407
----------- -----------
TOTAL LONG TERM DEBT . . . . . . . . . 109,003 878,231
----------- -----------

TOTAL LIABILITIES. . . . . . . . . . . 2,617,924 3,531,517
----------- -----------

STOCKHOLDER'S EQUITY

Preferred Stock - 1,000,000 shares $1 Par
Authorized - 1997 53,427 shares issued
1998 42,427 shares issued. . . . . . . 42,427 53,427
Common Stock - 20,000,000 shares authorized
1997 issued 18,232,505 @ $.01Par . . . 182,325
1998 issued 4,375,623 @ $.05 Par . . . 218,780
Additional Paid in Capital. . . . . . . . . 5,073,750 4,511,821
Retained Earnings . . . . . . . . . . . . . -6,308,230 -4,135,723
Note Receivable . . . . . . . . . . . . . . 0 -468,750
----------- -----------
Total Stockholder's Equity . . . . . . -973,273 143,100
----------- -----------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY . . . $ 1,644,651 $ 3,674,617
----------- -----------

The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements

F-3

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[Download Table]

AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998 AND 1997

1998 1997

REVENUES
INCOME FROM NETWORK OPERATIONS . . . . . . . . . $ 377,380 $ 1,243,145
------------ ------------

COST AND EXPENSES:
Satellite Rental. . . . . . . . . . . . . . 360,000 581,861
Programming Expenses. . . . . . . . . . . . 24,992 12,162
Productions Expenses. . . . . . . . . . . . 103,750 111,558
Depreciation. . . . . . . . . . . . . . . . 80,445 54,692
Amortization of Leasehold . . . . . . . . . 580 4,590
Amortization of Senior Channel. . . . . . . 137,936 0
Rental Expense (Net). . . . . . . . . . . . 64,809 67,714
Provision for Doubtful Accounts . . . . . . 1,584,595 1,584,595
Administrative Expenses . . . . . . . . . . 557,367 439,232
Reserve for Trade Credits . . . . . . . . . 0 125,138
------------ ------------
TOTAL COST AND EXPENSES. . . . . . . . 2,914,474 2,981,542
------------ ------------

NET INCOME (LOSS) FROM OPERATIONS. . . -2,537,094 -1,738,397
------------ ------------

OTHER INCOME - GAIN ON SALE OF ASSETS. 0 785,257
------------ ------------

OTHER EXPENSES
Interest Expense (Net). . . . . . . . . . . 231,789 381,654
Amortization of Debt Issue Cost. . . . . . . 0 250,135
Loss on Sale of Assets. . . . . . . . . . . 31,798 13,969
------------ ------------
TOTAL OTHER EXPENSES . . . . . . . . . 263,587 645,758
------------ ------------

GAIN (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM. . . . . . . . . . . . -2,800,681 -1,598,898

INCOME TAX BENEFIT (EXPENSE) . . . . . . . . . . 661,824 -661,824
------------ ------------

NET (LOSS) BEFORE EXTRAORDINARY ITEM . . . . . . -2,138,857 -2,260,722

EXTRAORDINARY ITEM
Cost of Conversion of Bridge Loans
To Common Stock . . . . . . . . . . . . . -33,650 380,260
------------ ------------

NET (LOSS) . . . . . . . . . . . . . . . . . . . -$2,172,507 -$2,640,982
------------ ------------

EARNINGS PER SHARE OF COMMON STOCK . . . . . . . -$0.59 -$0.18

WEIGHTED AVERAGE SHARES. . . . . . . . . . . . . 3,705,036 14,834,322

The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements

F-4

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[Enlarge/Download Table]

AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE ANALYSIS OF STOCKHOLDER'S EQUITY
FOR THE TWELVE MONTH ENDED DECEMBER 31, 1998 AND 1997

ADDITIONAL
PREFERRED STOCK COMMON STOCK PAID-IN NOTE RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE EARNINGS

Balance December 31, 1996 . . . . . 107,546 $ 107,546 14,045,268 $140,453 $ 2,513,734 $ 0 -$1,494,741
Preferred A Shares Issued . . . . . 175,154 175,154 963,347
Issued Cost of Preferred B -547,999
Preferred Stock Conversions . . . . -229,273 -229,273 458,546 4,585 224,688
Bridge Loan Conversions 1,653,691 16,537 810,051
Sale of Common Stock 200,000 2,000 98,000
Sale of Common Stock for
Note Receivable. . . . . . . . 1,875,000 18,750 450,000 -468,750
Net Loss for the Year Ended
December 31, 1997. . . . . . . -2,640,982
-----------
BALANCE DECEMBER 31, 1997 . . . . . 53,427 53,427 18,232,505 182,325 4,511,821 -468,750 -4,135,723

Preferred Stock Conversions . . . . -11,000 -11,000 22,000 220 10,780
Bridge Loan Conversions 208,021 2,080 85,805
Reverse Sale of Common Stock
for Note Receivable. . . . . . -1,875,000 -18,750 -450,000 468,750
Common Issued for Financing. . . . 3,400,000 34,000 -34,000
Adjustment to reflect reverse split
of Common of 1 for 5 . . . . . -15,990,005
Affiliate Debt Forgiveness. . . . . 688,726
Net Loss for the Year Ended
December 31, 1998. . . . . . . -2,172,507
Post Split Bridge Loan
Conversions. . . . . . . . . . 378,102 18,905 260,618
----------- -------- -----------
BALANCE DECEMBER 31, 998. . . . . . 42,427 $ 42,427 4,375,623 $218,780 $ 5,073,750 $ 0 -$6,308,230
--------- --------- ----------- -------- ----------- ----------- -----------

The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements

F-5

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[Download Table]

AMERICAN INDEPENDENT NETWORK, INC.
COMPARATIVE STATEMENT OF CASH FLOW
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998 AND 1997

1998 1997

CASH FLOWS PROVIDED (USED)
BY OPERATING ACTIVITIES
Net Gain (Loss) . . . . . . . . . . . . . . . . -$2,172,507 -$2,640,982
Adjustment to reconcile net income to net
cash from operating activities:
Amortization of Leasehold . . . . . . . . . . . 580 4,570
Depreciation. . . . . . . . . . . . . . . . . . 80,445 54,712
Amortization of Senior Channel. . . . . . . . . 137,936 0
Sale of Assets with Note Receivable . . . . . . 1,584,595 1,584,595
Provision for Doubtful Accounts . . . . . . . . 0 -785,257
Reserve for Trade Credits . . . . . . . . . . . 0 125,138
Non Cash Operating Expenses . . . . . . . . . . 0 3,991
Accounts Receivable . . . . . . . . . . . . . . -538 8,480
Non Cash Revenues . . . . . . . . . . . . . . . 0 -120,000
Cost of Loan Conversion to Common Stock . . . . 33,650 380,260
Trade Credits Receivable. . . . . . . . . . . . 30,000 45,000
Deferred Tax Benefit. . . . . . . . . . . . . . -661,824 0
Deferred Tax Credit . . . . . . . . . . . . . . 0 661,824
Investment in Stocks. . . . . . . . . . . . . . 196,455 0
Accounts Payable. . . . . . . . . . . . . . . . 205,152 -106,932
Accrued Interest. . . . . . . . . . . . . . . . 159,449 -1,964
Conversion of Interest Payable to Common Stock. 0 165,612
Advances from Affiliates. . . . . . . . . . . . 21,436 4,561
Customer Deposits . . . . . . . . . . . . . . . 0 -20,000
Investment in Senior Channel. . . . . . . . . . 0 -689,680
------------ ------------
TOTAL CASH USED BY OPERATING ACTIVITIES. . . . . . . -385,171 -1,326,072
------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Equipment . . . . . . . . . . . . -19,247 -99,915
Investment in Film Library. . . . . . . . . . . -5,222 -7,523
------------ ------------
TOTAL CASH FLOW FROM INVESTING ACTIVITIES. . . . . . -24,469 -107,438
------------ ------------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Note Payable (Decrese) Increase . . . . . . . . -196,651 819,580
Long Term Lease (Decrease). . . . . . . . . . . -107,404 -101,650
Preferred Stock Increase. . . . . . . . . . . . 0 175,154
Common Stock Increase . . . . . . . . . . . . . 0 2,000
Debt Forgiviness by Affiliate . . . . . . . . . 688,734 0
Additional Paid-In Capital Increase . . . . . . 0 513,348
------------ ------------
TOTAL CASH PROVIDED BY FINANCING ACTIVITIES. . . . . 384,679 1,408,432
------------ ------------

Net Cash Increase (Decrease) . . . . . . . . . . . . -24,961 -25,078

Cash, Beginning of Period. . . . . . . . . . . . . . 34,768 59,846

CASH AT END OF YEAR. . . . . . . . . . . . . . . . . $ 9,807 $ 34,768
------------ ------------

The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements

F-6

10KSB 36th Page of 38 TOC 1st Previous Next ↓Bottom Just 36th
AMERICAN INDEPENDENT NETWORK, INC.
NOTES TO COMPARATIVE FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS - Consist of cash balances. Cash and cash equivalents
consist of highly liquid investments with an original maturity date of ninety
days or less. The company does not have any cash equivalents.

TRADE CREDITS RECEIVABLES - The company owns trade credits in the amount of
$387,128 at December 31,1998 and $417,128 at December 31, 1997. As defined by
the International Reciprocal Trade Association, a trade dollar is a unit of
account that denotes the right to receive (receivable) or the obligation to pay
(a payable), one US dollar worth of goods and services within a barter system or
network. While all of the trade credits may be used by the company at any time,
the company has shown a pattern of using $25,000 to $30,000 worth of the credits
in each of the past two years. Therefore the company's trade credits are being
classified as current $30,000 and other assets of $231,990 at December 31, 1998.
The trade credits were obtained in 1994 in exchange for an investment in common
stock and was valued at the fair value of the investment in common stock. The
company uses the credits primarily for travel expense. The company, has also
exchanged trade credits for computer equipment and legal services. Management
does not consider impairment under FAS 121 is appropriate as management intends
to fully utilize the credits and the credits do not have an expiration date. Due
to the slow rate of usage, the company has established a valuation account of
$125,138. The trade group, the company is a member of, currently has over twenty
four hundred participants.

F-7

10KSB 37th Page of 38 TOC 1st Previous Next ↓Bottom Just 37th
ACCOUNTS RECEIVABLE - Allowance for doubtful accounts. The company has accounts
receivable at December 31, 1998 of $2,788 owed by regular customers. Management
deems this amount to be fully collectible. No allowances for doubtful accounts
is necessary. At December 31, 1997 the total accounts receivable was $2,250.

PLANT, PROPERTY AND EQUIPMENT - Plant, property and equipment is recorded at
cost.

DEPRECIATION AND AMORTIZATION - The cost of plant, property and equipment is
depreciated over the estimated useful life of the assets ranging from equipment
at 5 years to leasehold improvements at 20 years. Book depreciation and income
tax depreciation are on a straight line basis. For income tax information see
Note 3.

INCOME TAXES - The company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109).
SFAS 109 is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the company's financial statements or tax
returns. In estimating future tax consequences, SFAS 109 generally considers all
expected future events other than enactments of changes in the tax law or rates.
Income tax accounting information is disclosed in Note 3 to the comparative
financial statements.

USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.

OTHER ASSETS - Consist of the following:

1998 1997
---- ----
Investment in Stocks $0
$196,455
Film Library
12,745 7,523
Investment in Senior Channel 551,744
--------
689,680
--------
Total Other Assets $564,489
$893,658

OTHER COMPREHENSIVE INCOME - The company does not have any other comprehensive
income. Other comprehensive income and net income (loss) are the same.

F-8

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NOTE 2 - NOTES PAYABLE

Notes Payable at December 31, 1998 consist of the following notes:

[Download Table]

DUE ACCRUED
CREDITOR DATE INTEREST PRINCIPAL INTEREST

Shelley Media Marketing* 9/30/98 10% $ 85,279 $ 5,100
Cleveland Broadcasting* 9/30/98 10% 1,632 1,000
Pacific Acquisition Group 12/31/98 11% 250,500 25,050
Bridge Loans 10/31/97 15% 1,266,118 242,534
---------- ---------
Total $1,603,529 $ 273,684
---------- ---------

Advances from Other
Affiliated Companies Demand 10% 31,038 5,295
---------- ---------
Total $1,634,567 $ 278,979
---------- ---------
<FN>
*Affiliated Companies

Notes Payable at December 31, 1997 consist of the following notes:

[Download Table]

DUE ACCRUED
CREDITOR DATE INTEREST PRINCIPAL INTEREST

Shelley Media Marketing* 9/30/98 10% $ 51,100 $ -
Cleveland Broadcasting* 9/30/98 10% 26,089 -
ATN Network, Inc.* 9/30/98 10% 284,241 -
Pacific Acquisition Group 12/31/98 11% 250,500 -
Bridge Loans 10/31/97 15% 1,522,000 119,530
---------- ---------
Total 2,133,930 119,530

Advances from Other
Affiliated Companies Demand 10% 9,602 2,295
---------- ---------
Total $2,143,532 $ 121,825
---------- ---------
<FN>
*Affiliated Companies

NOTE 3 - INCOME TAXES

DEFERRED INCOME TAX LIABILITY CONSIST OF THE FOLLOWING COMPONENTS:

[Download Table]

Provision for Income Taxes: 1998 1997

Current $ - $ -
Deferred Liability 1,137,548 (1,137,548)
Less Tax Asset - Carryover (475,724) 475,724
----------- ------------
Total Provision for Income Taxes $ 661,824 $ (661,824)
----------- ------------

Installment sale in 1997 which created deferred
tax liability of $1,137,548 and a current 1997
tax expense of $661,824 has been canceled reducing
the tax liability to $0.

The tax effects of temporary differences that give rise to deferred income by
Assets and liabilities at December 31, are as following:

[Download Table]

DEFERRED INCOME TAX ASSETS 1998 1997

Net operating loss $ 698,290 $ 683,201
Valuation account 698,290 (207,477)
---------- -----------
$ - $ 475,724
---------- -----------

DEFERRED INCOME TAX LIABILITIES
Installment sale method on Notes Payable $1,137,548
Valuation allowance (475,724)
-----------
Net deferred tax asset liability $ (661,827)

The company has net operating losses (NOLs) at
December 31, 1998 of approximately $4,730,842.
These NOLs expire as follows:

2010 $ 70,912
2011 1,191,269
2012 635,367
2018 2,833,294
----------
$4,730,842
----------

The company has capital loss carryover of $46,036
Capital loss carryover will expire as follows:

2002 $ 14,238
2003 31,798
----------
$ 46,036
----------

Realization of deferred tax assets associated with the NOLs and net capital
loss carryovers is dependent on generating sufficient taxable income prior
to their expiration. Due to the uncertainty of the company's ability to generate
such income with the possibility that these carryovers may expire unused,
management has established a valuation account against them.

NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION

[Download Table]

1998 1997
CASH USED FOR:

Interest $63,441 $127,861
Taxes $ - $ -

NOTE 5 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
Each class of financial instrument where it is practicable to estimate that
value:

NOTE RECEIVABLE - The carrying amount approximates fair value because each is
valued at estimated discounted future cash flows.

LONG TERM INVESTMENTS - The fair value of these investments are estimated based
on quoted market prices for those and similar investments.

NOTES PAYABLE - The carrying value approximates fair value because of the short
Maturity date of these investments.

The estimated Fair Values of the company's Financial Instruments are as follows:

[Download Table]

1998 1997
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE

Notes Receivable $ - $ - $1,584,595 $1,584,595
Long Term Investments - - 196,455 390,910
Accounts Payable 382,555 382,555 177,404 177,404
Equipment Lease Payments 284,383 255,945 391,787 354,219
Notes Payable $1,603,529 $1,603,529 $2,133,930 $2,133,930

NOTE 6 - LEASE OBLIGATIONS AND LONG TERM DEBT DISCLOSURE

The company is obligated on three leases. The leases are as follows:

BUILDING - The company utilizes the spaces as both corporate offices and
studios. The lease is $5,400 per month and expired May 31, 1998.The lease was
renewed for 36 months at $6,368 per month and expires Febuary 2002.

EQUIPMENT - The company has entered a master equipment lease (digital
compression equipment) for a period of thirty-six months ending December 31,
1999. The lease has a fairmarket value purchase option at the end of the lease.
Total lease obligation is $390,996 and the lease has been treated as a capital
lease. In May 1997, the company entered into a lease for additional digital
equipment for a period of 36 month with payments of $4,302 per month. The
lease period is from June 1, 1997 to May 1, 2000. The lease has been
capitalized.

SATELLITE - The company leased satellite transponder space under an initial
Operating lease. The lease is for three years ending July 31, 1999 with a
total lease obligation of $2,250,000. The company has modified its lease
reducing its satellite band width from 24 MHz to 8 MHz which reduces its future
lease cost from $1,187,500 to $619,848 under the ease modification. The company
pays the new lease balance at the rate of $30,000 per month during
the period January 1, 1998 through July 1, 1999 when the lease terminates.

Details of lease obligations are as follows:

[Download Table]

CAPITALIZED CAPITALIZED OPERATING
EQUIPMENT EQUIPMENT TRANSPONDER BUILDING
LEASE #1 LEASE #2 LEASE LEASE

1999 $ 123,756 $ 51,624 $ 210,000 $ 76,200
2000 87,493 21,510 76,200
2001 31,750

NOTE 7 - SALE OF ASSETS

AIN entered into an agreement with Media Fund, Inc. dated December 10, 1997.
This agreement materially affects the financial statements and AIN daily
operations.

Media Fund, Inc., under the provisions of the above agreement, gave to AIN a
promissory note in the amount of $5,000,000. The agreement has certain
restrictions as to the use of funds received from Media Fund, Inc. (see below).

AIN exchanged the following assets of the company for the $5,000,000 promissory
note.

[Download Table]

Note Receivable (Present Value) $ 3,637,940
Common Stock 1,875,000 shares @ $.25 468,750
------------
$ 3,169,190
------------

BOOK VALUE OF ASSETS SOLD
Prepaid Television Inventory $ 1,426,933
Other Long Term Assets (Trade Due Bills) 837,000
Accounts Receivable (Inet, Inc.) 120,000
------------
Total Asset Book Value 2,383,933
------------
Gain on Sale $ 785,257
------------

AIN canceled this transaction in September 1998 for
non-payment by Media Fund ,Inc. and the following
accounts were affected by the cancellation:

Note Receivable, Net of Reserves $(2,053,345)
Deferred Tax Liability 1,137,548
Deferred Tax Benefit 447,047
Common Stock 18,750
Paid in Capital 450,000

NOTE 8 - RELATED PARTIES

The company has engaged in transactions with certain other enterprises that are
Affiliated companies. These companies are controlled by the management and
Principals stockholders of American Independent Network Inc.. The controlled
companies transactions are as follows:

[Download Table]

1998 1997
FUNDS FUNDS
BORROWED REPAID BORROWED REPAID

Cleveland Broadcasting $ 24,457 $ 12,185
San Antonio $ 10,000 11,064 2,200
Broadcasting (3)
TV Channel 22 (3) 22,500 - 12,310 5,500
LYN Broadcasting - - (1) 4,500
ATN Network - 255,812 $ 579,250 (2) $320,376
Shelley Media Marketing $ 707,896 $673,717
<FN>
(1) Repaid with common stock issued at $3.25 per share
(2) Repaid $100,000 with common stock at $0.10 per share
(3) Other affiliated companies

NOTE - 9 PREFERRED STOCK

Preferred stockholder's may convert one share of preferred stock into two shares
Of common stock. Preferred stockholder's also receive nine percent interest per
annum in lieu of dividends. Summary of preferred stock transactions are
as follows:

[Download Table]

Number of Preferred B Shares sold in 1996 per Comparative
Analysis of Stockholder's Equity 107,546
Number of Preferred B Shares sold in 1997 per Comparative
Analysis of Stockholder's Equity 175,154
---------
Total number of Preferred B Shares Sold 282,700

Number of Preferred B Shares converted to common stock in 1997
at the rate of two common for each Preferred B,
which would equal 480,546 shares of common stock. (229,273)
---------
Number of Preferred B Shares outstanding at December 31, 1997 53,427

Number of Preferred B Shares converted to common stock in 1998
at the rate of two common for each Preferred B, which would
equal 22,000 shares of common stock (11,000)
---------
Number of Preferred B Shares outstanding at December 31, 1998 43,427
---------

NOTE 10 - SENIOR CHANNEL

The company acquired the Copyright to the Senior Channel in exchange for
accounts receivable in the amount of $689,680 due to the company from the owners
of the Senior Channel Copyright. The Senior Channel has twenty-four hour
programming per day. There was no gain or loss recognized when accounts
receivable for the Senior Channel was converted into Investment in Senior
Channel. The company's projections indicate that the cost will be recovered in
four to to five years. The company continues to evaluate this asset quarterly
and will amortize the cost over five years and at December 31, 1998 had
amortized $137,936 of the cost.

NOTE 11 - INVESTMENT IN COMMON STOCK

The company owned 368,100 shares of Quick Tent, Inc. (NASD Small Cap QTNT) at
December 31, 1997. The company sold Quick Tent, Inc. stock in 1998 resulting in
a loss of $31,748. This investment is included in Other Investments at
December 31, 1997.

NOTE 12 - FILM LIBRARY

The film library consist of approximately 2,000 films and television produced
Tapes at a cost of $12,745.

NOTE 13 - BRIDGE LOAN

In 1997 Bridge Loan holders had the right to convert their loan to common stock
at $3.25 per share, $431,118 of loans were converted into 132,652 shares in
that year. To equate the the difference between market price of $0.25 per share
and the conversion price of $3.25 an additional 1,521,039 common shares were
issued in 1997. In 1998 $333,750 of bridge loans was converted to 450,731 shares
of common stock at an as average price of $0.74 per share. An additional 134,602
shares were issued to equalized with the market.

NOTE 14 - RECONCILIATION OF CHANGES IN NOTES PAYABLE TO CASH FLOW GENERATED BY
INCREASE IN NOTES PAYABLE

[Download Table]

Notes Payable 1998 $1,603,529
Notes Payable 1997 2,133,930
-----------
Net Change (530,401)

Notes Paid by Conversion to Common Stock 333,750
-----------
Net Cash Used by Notes Payable $ (196,651)
-----------

NOTE 15 - CAPITAL STOCK

During 1998, the company declared a 1 for 5 reverse split in its common stock.
At the time of the reverse split in November 1998, there were 19,987,526 shares
outstanding. After adjusting the outstanding shares for the 1 for 5 reverse
split, there were 3,997,521 shares outstanding.

NOTE 16 - STOCK ISSUED FOR FINANCING

The company issued 3,400,000 shares of common stock for no consideration for
which the company was to receive financing. As financing has not materialized,
the company is in the process of retrieving the stock. After the split the stock
amount is 680,000 shares.

NOTE 17 - DEBT FORGIVENESS BY AFFILIATE

An affiliated company has forgiven its debt from American Independent Network in
the amount of $688,734. Pursuant to Accounting Principal Board Opinion Number
26, this has been treated as a contribution to capital. There are no tax effects
as the company has no tax asset or liability.

NOTE 18 - LEGAL MATTERS

The company has had several judgments rendered against it. One judgement has
Resulted in a receivership in 1999. Judgments in place at December 31, 1998
are as follows:

[Download Table]

JUDGEMENT ENTERED FOR AMOUNT

Witner, Poltrck & Giampietro $ 11,921
Hall, Estill, Hardwick & Gable 29,862
New Image Video 90,000
Tarrant County Appraisal District 18,000
Ira Weingarten/Equity Communications 60,000
Showplace Video 56,000 Converted to receivership in 1999
Bowne of Los Angeles, Inc. 34,056
WorldCom Inc. 76,000
Knapp Petersen and Clarke __________ In arbitration
$ 375,839

These amounts are included in accounts payable.

NOTE 19 - GOING CONCERN

As shown in the accompanying financial statements the company has had recurring
net operating losses resulting in cash flow problems. All of the company's debt
is short term resulting in a substantial current ratio deficit (current
liabilities and long term liabilities due within twelve months are greater than
current assets and assets available for use within twelve months). These
circumstances raise substantial doubt as to the company's ability to continue
as a going concern. Such conditions may prevent the company from meeting its
liabilities within a timely manner.

Management is seeking and believes it will succeed in attracting new debt and
equity capital. Management believes that it will obtain sufficient capital to be
able to fund an agreement with its creditors and revitalize its sales efforts
which it is believed will internally generate sufficient funds for continued
operations.

The financial statements do not include any adjustments that might be necessary
if the company is unable to continue as a going concern.

F-9

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10KSB’ Filing	Date	First	Last	Other Filings

	7/18/07	11
	9/1/00	12	26
	5/1/00	38
	12/31/99	38		10KSB40, 10KSB40/A, 3, NT 10-K
	9/1/99	12	26
	8/2/99	15
	7/31/99	38
Filed on:	7/29/99			10QSB
	7/26/99	28
	7/22/99	2	25
	7/1/99	26	38
	3/31/99	15	16	10QSB
For Period End:	12/31/98	1	38
	5/31/98	38
	1/1/98	38
	12/31/97	18	38	10KSB40, 10KSB40/A
	12/10/97	38
	7/18/97	11
	6/1/97	38
	12/31/96	23	34
	9/6/95	18
	9/16/93	4
	12/11/92	4	18
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Filing Submission 0001015402-99-000741 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Hispanic Television Network Inc – ‘10KSB’ for 12/31/98

On: Thursday, 7/29/99 · For: 12/31/98 · Accession #: 1015402-99-741 · File #: 0-23105

Annual Report — Small Business — Form 10-KSBFiling Table of Contents

10KSB — Annual Report — Small BusinessDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents

10KSB — Annual Report — Small Business
Document Table of Contents