(A COMPONENT OF TACONIC TECHNOLOGY CORP.)
>NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999 IS
(1) BASIS OF PRESENTATION
The accompanying financial statements present the assets and liabilities,
operating results and cash flows of the cable television component of Taconic
Technology Corp. On July 10, 1998 the ultimate parent company of Taconic
Technology Corp. signed a letter of intent with Avalon Cable of New England, LLC
for the purchase of the assets of the cable component of Taconic Technology
Corp. ("Taconic CATV"). The asset purchase agreement, requires that separate
financial statements be presented for Taconic CATV without giving effect to
purchase accounting adjustments. The accompanying financial statements of
Taconic CATV have been prepared on a going concern basis and reflect all
activity as if Taconic CATV were a separate operating unit. The accompanying
balance sheets have been prepared assuming that all available cash has been used
to reduce the payable to related entities or transferred to related entities.
The accompanying statements of operations include an allocation of general
administrative costs incurred by the parent of Taconic Technology Corp. This
allocation is based upon cost studies.
Taconic CATV operates a cable television service and derives substantially
all of its revenue from providing cable services to residential subscribers.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue Recognition
Taconic CATV recognizes cable television revenue as services are provided
to subscribers. Revenue derived from other sources are recognized when services
are provided or events occur.
Inventories are stated at the lower of average cost or market and consist
primarily of materials and supplies.
(c) Property and Equipment
Property and equipment are stated at cost. Major expenditures for property
and those substantially increasing the useful lives of assets are capitalized.
Maintenance and repairs are expensed as incurred.
For book purposes, depreciation is provided on a straight line basis over
the estimated useful lives which range from five to twenty years.
(d) Income Taxes
For the accompanying financial statements, income tax expense have been
calculated as if Taconic CATV were a separate tax paying entity. Income taxes
are provided based upon the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes," which requires the
liability method of accounting for deferred income taxes and permits the
recognition of deferred tax assets, subject to an ongoing assessment of
(e) 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 reported