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  •   -- Access Pharmaceuticals

    -- ACTV
      + Update 05-17-99
      + Update 04-14-99
      + Update 03-03-99
      + Update 01-26-99
      + Initial Opinion
      + Financial Model

    -- Advanced Tissue Sciences, Inc.

    -- AMBI Inc.

    -- ARIAD Pharmaceuticals, Inc.

    -- Cell Therapeutics, Inc.

    -- CTC Communications

    -- Cubist Pharmaceuticals, Inc.

    -- Cypress Bioscience

    -- CytRx Corp.

    -- Exigent International, Inc.

    -- FutureLink Distribution Corp.

    -- Hemacare Corporation

    -- Medarex, Inc.

    -- Valentis, Inc.


     




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    April 14, 1999      RECOMMENDATION: BUY

    ACTV, Inc. (NASDAQ: IATV)

    Liberty Increases Investment In ACTV — Receives Options to Invest an Additional $100 Million over 5 Years; Gives ACTV Strong Financing Plan, Raises Profile of ACTV’s Internet Assets

    Market Data:

    
    Exchange Symbol.....................IATV (NASDAQ)
    Price of Common Stock (04/13/99)............$19.50
    30-Day Average Trading Volume..........1,459,000
    Shares Outstanding.........................33.2M
    52-Week High/Low......................$22.00/$1.37
    
    ACTV Corporate Information:

    
    Address....................1270 Avenue of the Americas
    ...................................New York, NY  10020
    Telephone.................................212-217-1600
    Chairman & CEO......................William C. Samuels
    CFO...............................Christopher C. Cline
    Website...................................www.ACTV.com
    

    Research Update

    ACTV and Liberty Media Group (NYSE: LMGa and LMGb) announced yesterday that the parties had reached an agreement whereby Liberty will invest an additional $9 million in ACTV (through the exercise of previously existing options and the purchase of new shares), and Liberty will receive options to purchase additional interests in ACTV over the next one-to-five years. If fully exercised, these investments will total more than $100 million and Liberty could end up owning approximately 25% of ACTV. We believe this expanded investment reflects Liberty’s commitment to the commercialization of the HyperTV and Individualized Television technologies, and ensures that ACTV’s patented interactive applications will be integrated into the vast operations in which Liberty has an ownership interest. We reiterate our BUY recommendation.

    As part of this transaction, Liberty Media receives a series of options that allows them to make additional equity investments over the next five years. Exercise of the options over the next 24 months would result in investments of approximately $50 million. Liberty must exercise each option sequentially, or the remaining options expire.

     

    Positive aspects of the new ACTV/Liberty Media Partnership

    • Gives ACTV Strong Financing Plan: This agreement, together with the calling of outstanding warrants, has resulted in an inflow of approximately $18 million to ACTV this month. This will enable ACTV to accelerate the build-out of the HyperTV network, as well as invest in additional Individualized Television regional programming facilities (similar to the ACTV facilities in the FOX Sports SouthWest region). The series of options greatly enhances ACTV’s financing flexibility.
    • Liberty Media — Follow the "Smart Money": With the possibility of becoming a 25% ACTV owner, we believe Liberty Media evolves from simply a minority investor to a "real" partner, with a strong incentive to maximize ACTV shareholder value. We view this agreement as validation of ACTV’s technology and strategy and reflective of Liberty’s confidence in the ACTV management and technical teams. Liberty Media has a very well established track record for investing in winners, and growing shareholder value; invest alongside the "smart money."

    • Liberty Digital — Raises ACTV’s Internet Profile: Investors should note that Liberty’s holdings in ACTV securities are contemplated to be included in Liberty Media’s proposed exchange of assets with TCI Music Inc. (NASDAQ: TUNE). As part of this asset swap, Liberty Media intends to contribute all of its directly owned Internet and interactive television assets to TUNE in exchange for an expanded interest in TUNE, which would be renamed Liberty Digital, Inc. In addition to the ACTV interests, Liberty Media will contribute its interests in priceline.com (NASDAQ: PCLN), iVillage (NASDAQ: IVIL), Sportlines USA and drugstore.com. This should give ACTV tremendous visibility and marketing opportunities among leading Internet companies.

     

    Risk Considerations

    This section of the document is provided to remind potential investors to undertake a prudent level of due diligence prior to making an investment in the securities of ACTV, Inc. For a complete description of risks and uncertainties to ACTV’s business, see the "Risk Factors" section in ACTV’s SEC filings, which can be accessed directly from the SEC Edgar filings at www.SEC.gov on the Internet. Other potential risks include:

    • Market risk: Investors should consider technical risks common to many small-cap or micro-cap stock investments, including liquidity levels, small float, risk of dilution, dependence upon key personnel, dependence upon single products or technologies, and the strength of competitors that may be larger, better capitalized and hold dominant market positions.
    • Business risk: ACTV has limited experience in emerging business of interactive television programming and internet educational software and support. Many of its products and services are in the early stage of commercialization. There can be no assurance that ACTV’s business or the markets in which it competes will materialize or achieve the desired levels of revenues or profitability as expected.
    • Competitive risk: The entertainment and software industries are extremely competitive, and many perceive the barriers to entry to be low. Added competition could lead to price competition and lower margins.

    For Additional Information

    Please visit our website at www.SmallCapsOnline.com for copies of our earlier research reports on ACTV, Inc.

    Contact SmallCaps Online LLC — 212-554-4158

    Sources for Additional Information

    The following are website addresses offering related information, and links to other sources of information.

    www.ACTV.com ACTV’s corporate website

    www.SmallCapsOnline.com SmallCaps Online’s site for company information and research

    www.FCC.gov Federal Communications Commission homepage (information on digital TV)

    www.NAB.org National Association of Broadcasters homepage

    www.TCI.com Tele-Communications, Inc.’s homepage

    www.skyconnect.com Skyconnect’s homepage

    www.GI.com General Instrument Corporation’s homepage

    www.Scientific-Atlanta.com Scientific-Atlanta’s homepage

    www.pbs.org/insidepbs/dtv Public Broadcasting System digital television information

    www.SEC.gov U.S. Securities and Exchange Commission, with links to EDGAR filings

     

     

     

    The information in this report has been obtained from sources which we believe to be reliable, but we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by SmallCaps Online LLC for the purchase or sale of any securities. SmallCaps Online LLC has performed investment banking, consulting or other services for and may solicit investment banking, consulting or other business from, any company mentioned in this report. SmallCaps Online LLC or persons associated with SmallCaps Online LLC may at anytime be long or short any of the securities referred to herein and may make purchases or sales thereof while this report is in circulation or posted on the SmallCaps Online LLC website at www.SmallCapsOnline.com. This material, or any portion thereof, may not be reproduced without prior permission from SmallCaps Online LLC. SmallCaps Online LLC is not responsible for the contents of this document which is intended for electronic transmission and could be thus subjected to tampering or alteration. Copyright © 1999 by SmallCaps Online LLC. All rights reserved.