<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For The Quarterly Period Ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number 000-29249
ONTV, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 16-1499611
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
75 Bermar Park, Suite 5
Rochester, New York 14624
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(Address of principal executive offices)
(716) 426-2290
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(Issuer's Telephone Number)
30 Corporate Woods, Suite 280
Rochester, New York 14623
-------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
15 or 15 (d) or 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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at November 8, 2000
----- -------------------------------
Common Stock, $.001 par value 19,755,583
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE> 2
TABLE OF CONTENTS
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PAGE #
PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10-13
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS 13
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. 13
Item 3. DEFAULTS UPON SENIOR SECURITIES 13
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 13
Item 5. OTHER INFORMATION 14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 14
</TABLE>
<PAGE> 3
ONTV, INC. & SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
Rochester, New York
FINANCIAL REPORTS
AT
SEPTEMBER 30, 2000
ONTV, INC. & SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
Rochester, New York
TABLE OF CONTENTS
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<TABLE>
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Independent Accountants' Report on Interim Unaudited
Financial Information F - 2
Consolidated Balance Sheets at September 30, 2000 (Unaudited) and
June 30, 2000 F - 3
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
June 30, 2000 and 1999 and for the Three Months Ended
September 30, 2000 (Unaudited) F - 4
Consolidated Statements of Operations for the Three Months Ended
September 30, 2000 and 1999 (Unaudited) F - 5
Consolidated Statements of Cash Flows for the Three Months Ended
September 30, 2000 and 1999 (Unaudited) F - 6
Notes to Consolidated Financial Statements F - 7
</TABLE>
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<PAGE> 4
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
ONTV, Inc. & Subsidiaries
Formerly LA Group, Inc. & Subsidiaries
Rochester, New York
We have reviewed the accompanying consolidated balance sheet of ONTV, Inc. &
Subsidiaries (formerly LA Group, Inc. & Subsidiaries, A Delaware Corporation) as
of September 30, 2000 and the related consolidated statements of operations,
changes in stockholders' equity, and cash flows for the three months ended
September 30, 2000 and 1999 in accordance with standards established by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the management of ONTV, Inc.
& Subsidiaries.
A review consists principally of inquiries of company personnel and analytical
procedures applied to the financial data. It is substantially less in scope than
an audit in accordance with generally accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with the generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheets as of June 30, 2000 (presented
herein), and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the three years in the period
ended June 30, 2000, (not presented herein) and in our report dated July 18,
2000, we expressed an unqualified opinion on those financial statements. We
have not performed any auditing procedures subsequent to the date of our
Report.
Rotenberg & Company, LLP
Rochester, New York
October 18, 2000
F-2
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ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
Rochester, New York
CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30,
2000 2000
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ASSETS
Current Assets
Cash and Cash Equivalents $ 82,256 $ 243,897
Accounts Receivable 44,771 16,995
Marketable Securities 52,688 53,096
Investment in Affiliate 36,346 --
Inventory 56,158 38,547
Due from Officer 48,190 40,177
Prepaid Expenses and Deposits 15,008 15,011
--------------------------------------------------------------------------------------------------------------
Total Current Assets 335,417 407,723
Property and Equipment - Net of Accumulated Depreciation 40,271 33,340
Intangible Assets - Net of Accumulated Amortization 5,168,467 5,073,039
--------------------------------------------------------------------------------------------------------------
Total Assets $ 5,544,155 $ 5,514,102
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable $ 128,966 $ 100,612
Accrued Expenses and Accrued Taxes 159,846 109,462
Notes Payable 5,225,000 5,225,000
--------------------------------------------------------------------------------------------------------------
Total Liabilities 5,513,812 5,435,074
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Minority Interest -- --
Stockholders' Equity (Deficit)
Common Stock: $.001 Par; 100,000,000 Shares Authorized,
17,186,138 and 16,777,938 Shares Issued 17,186 16,778
and Outstanding as of September 30 and
June 30, 2000, Respectively
Additional Paid In Capital 581,744 465,630
Accumulated Deficit (557,046) (401,880)
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41,884 80,528
Less: Stock Held in Trust 1,500 1,500
Treasury Stock - 37,500 Shares at Cost 10,041 --
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Total Stockholders' Equity 30,343 79,028
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Total Liabilities and Stockholders' Equity $ 5,544,155 $ 5,514,102
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</TABLE>
The accompanying notes are an integral part of this financial statement.
See Accountants' Review Report.
F-3
<PAGE> 6
ONTV INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
Rochester, New York
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Number Common Paid In Accumulated Stockholders' Minority
of Shares Stock Capital Deficit Equity Interest
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BALANCE - JUNE 30, 1998 15,202,938 $ 15,203 $ 335,705 $ (346,046) $ 4,862
Common Stock Issued 75,000 75 29,925 -- 30,000
Capital Contributed in the form
of Services -- -- 100,000 -- 100,000
Net Loss -- -- -- (94,485) (94,485)
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BALANCE - JUNE 30, 1999 15,277,938 15,278 465,630 (440,531) 40,377
Common Stock Issued as Collateral 1,500,000 1,500 -- -- 1,500
on Note Payable
Net Income -- -- -- 38,651 38,651
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BALANCE - JUNE 30, 2000 16,777,938 $ 16,778 $ 465,630 $ (401,880) $ 80,528
Common Stock Issued 408,200 408 116,114 -- 116,522
Minority Interest (3,400)
Net Loss - Unaudited -- -- -- (155,166) (155,166) (3,400)
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BALANCE - SEPTEMBER 30,2000 17,186,138 $ 17,186 $ 581,744 $ (557,046) $ 41,884 --
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</TABLE>
The accompanying notes are an integral part of this financial statement.
See Accountants' Review Report.
F-4
<PAGE> 7
ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED) (Unaudited)
Three Months Ended September 30, 2000 1999
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REVENUES, NET OF RETURNS $ 223,130 $ 84,203
COST OF GOODS SOLD 79,368 15,337
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GROSS PROFIT 143,762 68,866
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EXPENSES
Amortization 5,337 2,019
Depreciation 1,685 249
Freight and Delivery 29,994 3,317
Interest 6,309 178
Legal and Accounting 35,349 11,766
Payroll and Payroll Taxes 128,745 ---
Other Expenses 92,001 14,837
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TOTAL EXPENSES 299,420 32,366
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INCOME (LOSS) BEFORE TAXES
OTHER INCOME (LOSS) AND
INCOME TAXES (155,658) 36,500
Equity in Income (Loss) of
Unconsolidated Investment (2,908) --
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INCOME (LOSS) BEFORE TAXES (158,566) 36,500
Provision for Income Taxes -- 1,143
------------------------------------------------------------------------------------------------
Income (Loss) Before Minority Interest (158,566) 35,357
Minority Interest 3,400 --
------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (155,166) $ 35,357
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Net Income (Loss) Per Common Share - Basic and Diluted $ (0.0091) $ 0.0023
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Weighted Average of Common Shares Outstanding 17,038,470 15,277,938
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</TABLE>
The accompanying notes are an integral part of this financial statement.
See Accountants' Review Report.
F-5
<PAGE> 8
ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK
CONSOLIDATED STATEMENTS OF CASH FLOWS
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<CAPTION>
September 30, 2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(155,166) $ 35,357
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
Amortization 5,337 2,019
Depreciation 1,685 143
Equity in (Income) Loss of Unconsolidated Investments 2,908 --
CHANGES IN ASSETS AND LIABILITIES:
Accounts Receivable (27,776) (8,411)
Inventory (17,611) (2,566)
Prepaid Expenses and Security Deposits
3 (1,323)
Accounts Payable 28,354 (2,633)
Accrued Expenses and Accrued Taxes 50,384 (1,946)
--------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES (111,882) 20,640
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Marketable Securities (2,500) (16,994)
Acquisition of Affiliate (16,325) --
Acquisition of Notes Receivable -- 4,617
Acquisition of Property and Equipment (8,615) (1,952)
Acquisition of Intangible Assets (4,265) (36,771)
Due To/From Officer (8,013) (8,017)
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NET CASH FLOWS FROM INVESTING ACTIVITIES (39,718) (59,117)
--------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of Treasury Stock (10,041) --
Proceeds from Issuance of Common Stock -- 30,000
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NET CASH FLOWS FROM FINANCING ACTIVITIES (10,041) 30,000
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Net Increase (Decrease) in Cash and Cash Equivalents (161,641) (8,477)
Cash and Cash Equivalents - Beginning of Year 243,897 16,549
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CASH AND CASH EQUIVALENTS - END OF YEAR $ 82,256 $ 8,072
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SUPPLEMENTAL DISCLOSURES
Interest Paid $ -- $ --
Income Taxes Paid $ -- $ --
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NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of Common Stock in Exchange for Marketing Rights $ 96,500 $ --
Issuance of Common Stock in Exchange for Investment in Affiliate $ 20,021 $ --
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</TABLE>
The accompanying notes are an integral part of this financial statement.
See Accountants' Review Report.
F-6
<PAGE> 9
ONTV, INC. & SUBSIDIARIES
LA GROUP, INC. & SUBSIDIARIES
(A Delaware Corporation)
Rochester, New York
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE A - BASIS OF PRESENTATION
The consolidated financial statements of ONTV, Inc. & Subsidiaries (the
"Company") included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in
conjunction with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. These condensed financial
statements should be read in conjunction with the annual audited
financial statements and the notes thereto included in the Company's
annual report on Form 10-KSB.
The accompanying unaudited interim financial statements reflect all
adjustments of a normal and recurring nature which are, in the opinion
of management, necessary to present fairly the financial position,
results of operations and cash flows of the Company for the interim
periods presented. The results of operations for these periods are not
necessarily comparable to, or indicative of, results of any other
interim period of or for the fiscal year as a whole. Factors that
affect the comparability of financial data from year to year and for
comparable interim periods include non-recurring expenses associated
with the Company's registration with the Securities and Exchange
Commission and costs incurred to raise capital and acquisitions of
patents and trademarks.
The Company registered its common stock with the Securities and
Exchange Commission on January 31, 2000 and received notification of
approval on May 12, 2000.
NOTE B - OTHER MATTERS
In July 2000, the Company entered into an alliance and marketing
agreement with Coastal Sales Associates ("CSA") (an unrelated party)
which grants the Company exclusive marketing rights via the internet
and cable digital television to products owned by CSA. In exchange for
these rights, the Company issued 350,000 shares of common stock having
a total market value of $96,500.
F-7
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with the
Company's interim consolidated financial statements included elsewhere in this
Quarterly Report on Form 10-QSB and with the Company's consolidated annual
financial statements and management's discussion and analysis included in the
Company's Form 10-KSB. This discussion contains forward looking statements that
involve risks and uncertainties
This Report contains "forward-looking" statements regarding potential future
events and developments affecting the business of the Company. These forward
looking statements involve risks and uncertainties and are usually accompanied
by words such as "believes," "anticipates," "plans," "expects," and similar
expressions. Our actual results could differ materially from those expressed or
implied by such forward-looking statements as a result of certain factors,
including the risk factors described above and elsewhere in this Report. Such
statements relate to, among other things, (i) competition for customers for
products and services; (ii) the uncertainty of developing or obtaining rights to
new products that will be accepted by the market and the timing of the
introduction of new products into the market; (iii) the limited market life of
the Company's products; and (iv) other statements about the Company or the
direct response industry.
The Company's ability to predict results or the effects of any pending events on
the Company's operating results is inherently subject to various risks and
uncertainties, including competition for products, customers, and media access,
the uncertainty of developing or obtaining rights to new products that will be
accepted by the market, the limited market life of the Company's products, and
the effects of government regulations.
GENERAL:
ONTV, Inc., formerly known as LA Group, Inc. (the Company) was formed in the
state of Delaware on 2/29/96., in order to create an entity with which to form a
reverse merger with a public, non reporting, company, Kent Toys, Inc. Through a
series of transactions, Kent merged with the Company on 3/15/96. Upon completion
of this transaction, the Company became public and all Kent stock was then
canceled.
The Company presently has two main areas of business. The Company designs and
markets web sites for other businesses and derives income from revenue sharing
agreements with these companies. The major customer for this segment of the
business is Popeil Inventions, Inc., the producer of the product Ronco ShowTime
Rotisserie and BBQ. The domain name, AsSeenOnTV.com will also be operated by the
parent company and management expects to derive revenue from the marketing of
this portal. The second main area of business relates to Seen On TV, Inc. This
wholly owned subsidiary markets and sells products, on the Internet, to the
general public.
Through the Seen On TV, Inc. subsidiary, the Company operates the website
"SeenOnTV.Com". This is a destination website offering "as seen on tv" products
direct to the consumer via the Internet. The "SeenOnTV.com" website currently
derives income from buying at distributor prices and selling products to
wholesale and retail customers. The Company's management has over twelve years
of experience in the direct response television industry and maintains a wide
range of relationships with many direct response television marketing companies
as well as major manufacturers who provide products to the direct response
industry.
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RESULTS OF OPERATIONS
Three months ended September 30, 2000 vs. Three Months Ended September 30, 1999
Revenue for the fiscal quarter ended September 30, 2000 was $223,130, an
increase of 165% over revenue of $84,203 for the quarter ending September 30,
1999. The increase is primarily the result of increases realized in the Seen On
TV, Inc. subsidiary. The sales of the "as seen on tv" products over the Internet
has increased substantially in the last year due to the increased presence of
the Company's domestic website, www.SeenOnTV.com.
Cost of goods sold, as a percentage of revenue, was 35.6% for the quarter ending
September 30, 2000, as compared with 18.2% for the comparable period in 1999.
The low cost percentages in the prior period resulted from the sale of product
which was acquired at less than normal cost. Management believes that the
current percentages are in line with expectations in the future.
Gross profit, as a percentage of revenue, was 64.4% for the quarter ending
September 30, 2000, as compared with 81.8% for the comparable period in the
prior year ending September 30, 1999. This decrease in margin resulted from the
sale of "seen on tv" products in the prior period, which was acquired at the
previously described less than normal cost. It is the belief of management that
the lower margins realized in the current quarter are reflective of gross profit
expectations in subsequent reporting periods.
Operating expenses, as a percentage of revenue, were 134.2% for the current
quarter ending September 30, 2000, as compared with 38.4% for the comparable
quarter ending September 30, 1999. Included in operating expenses for the
current period were costs associated with the audit for the prior fiscal year,
increased legal expenses resulting form retaining a new law firm to better
advise and assist us in filing SEC documents and the completion of strategic
alliances and, as yet, unannounced future business relationships. In addition,
management and staff employees were hired to carry out the business plan of the
Company. Other operating costs included the start up costs of the new
subsidiary, Net e-Vantage, Inc., which has not yet realized any revenues.
Management feels that although additional staff will be necessary to support
growth, this operating expense ratio will decrease in future reporting periods
as anticipated increased revenues are realized.
The net loss for the three months ended September 30, 2000 was $155,166, or
$(0.0091) per share, compared with net income of $35,357, or $0.0023 per share,
for the quarter ended September 30, 1999.
IMPACT OF INFLATION
Management believes inflation has not had a material effect on the Company's
operations or on its financial condition. The Company believes that it will be
able to offset any future effects of inflation. The Company does not purchase,
by contract, any product for resale. The Company sells products on an individual
basis, and, therefore, management believes that any increase in costs to the
Company can be immediately passed on to the customer. Although inflation could
have an impact on the volume of sales, the Company could combat this by
adjusting product mix, or by the change of product offered for sale.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at September 30, 2000 was ($5,178,395), a decline of $151,044
since the beginning of the current fiscal year. Cash flow from operating
activities decreased to ($111,882) for the current fiscal quarter, an decline of
$132,552 since June 30, 2000. The decrease in working capital and cash flow is
primarily the result of the net loss of $155,166 for the current quarter.
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<PAGE> 12
The negative working capital deficiency is primarily attributable to the note
balance of $4,975,000 for the purchase of the AsSeenOnTV.com domain name. On
January 14, 2000, the Company purchased this domain name for the amount of
$5,000,000, agreeing to pay the balance of the note on April 18, 2001. Over a
period of months, the Company and the seller agreed to reduce the purchase price
of the asset to $2,500,000 plus 2,500,000 restricted shares of ONTV, Inc. common
stock. The transaction was consummated on October 20, 2000, and the Company
issued the restricted shares of common stock to the seller. The current balance
of the note is $2,460,000, which will be paid monthly over five years. The
specific amount of payment will be based on 5% of product sales. Thus, the
Company has eliminated nearly $2.5 in debt, and increased cash flow through the
current fiscal year. The results of this transaction will be reflected in the
financial statements for the fiscal quarter ending December 31, 2000.
In addition, in order to fund the costs for establishing the new subsidiary, Net
e-Vantage, Inc., the Company, on June 16, 2000, entered into a note agreement
with an unrelated third party, in the amount of $250,000. The note, becoming due
December 16, 2000, is secured by 1,500,000 restricted shares of the Company's
common stock. Net e-Vantage, Inc., has recently issued a private placement
memorandum, with the intent to raise up to $4,000,000 in gross proceeds. A
portion of these funds is anticipated to be used to satisfy the $250,000 note.
The Seen On TV, Inc. segment of the Company continues to show strong growth. As
the busy holiday sales season commences, sales orders are being placed at over
three times the rate as compared to the prior year. With the new warehouse
location, this subsidiary is well placed to handle the increased business, with
the only variable being picking and packing labor.
On July 31, 2000, the Company entered into an Acquisition Agreement with
What-a-Product, Ltd., a product development and manufacturing company, organized
in the Province of Alberta, Canada. For total consideration of $15,000 in cash,
and $20,000 in restricted shares of Common Stock of the Company, ONTV, Inc.
acquired 85% of the issued and outstanding shares of capital stock of
What-a-Product, Ltd. As a result of this stock purchase, the Company now owns
100% of the issued and outstanding shares of What a-Product, Ltd. Common stock.
The Company's controlling interest now permits it to use certain manufacturing
equipment and inventory, primarily related to the What-a Saw product which it
will now have the full capability to produce. This acquisition continues the
implementation of the Company's business strategy, which includes the expansion
of What-a-Product, Inc. (WAPI) into a product development and manufacturing
company. In furtherance of this strategy, the Company is seeking inventions and
new products to market under its What-a-Product brand name for direct response
and traditional retail distribution.
On July 26, 2000, the Company entered into a Joint Venture and Strategic
Alliance Agreement with Coordinated Strategic Alliances (CSA), a major product
developer and supplier to QVC Television. The agreement grants the Company
Internet and interactive digital cable marketing rights for all products
marketed, developed or acquired in the future by CSA. In exchange for these
rights, the Company issued 350,000 restricted shares of Common Stock to CSA.
Additionally, the agreement calls for both companies to expand product
development through the Company's subsidiary, WAPI. WAPI has begun to develop a
unique product and invention submission program designed to present consumer
products for introduction to various CSA distribution lines, including QVC and
Infomercial companies. In addition, the Company will feature the newly developed
products through its websites, including www.AsSeenOnTV.com, www.SeenOnTV.com,
www.AsSeenOnTV.ws, and www.SeenOnTV.ws.
On August 4, 2000, the Company entered into an Strategic Alliance/Joint Venture
Agreement with Commerce.TV Corporation, of Braintree, MA. Commerce.TV, an
interactive TV developer, and the Company have aligned to offer a product to
make shopping at home more convenient than has, in the past, been available.
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<PAGE> 13
This product will be available, in specific, nationally diverse test markets
throughout the United States during November 2000, to digital cable and
satellite TV subscribers. The product will enable the subscriber to easily and
quickly purchase consumer products that are viewed on a television screen, by
using their remote control. Management feels this will be an area of growth for
the Company in the future.
During the current fiscal quarter, the Company purchased 37,500 shares of
Company stock on the open market, for a total cost of $10,041. These shares have
been placed in treasury, and management anticipates selling these shares in the
future.
Management is relatively confident of the success of the private placement
memorandum of Net e-Vantage, Inc. With the successful closing of that
transaction, the wholly owned facility will be self-sufficient and will no
longer need infusions of cash from the parent
Management believes that profits generated from operations may not be sufficient
to finance the growth of the sales segment of the business company. Working
capital requirements, primarily related to increased inventory requirements,
will increase as a result of the new alliances entered into by the Company.
Management has begun negotiations with a traditional lender to provide a line of
credit which may be necessary to fund this growth. There can be no assurance
that financing will be available in amounts or on terms acceptable to the
Company, if at all.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In April 1998, the Company was named party to an action by Charles Schwab & Co.
This action, as fully described in the Company's previous filings, resulted in
the Company accruing $16,500, in its financial statement, which is expected to
be a likely settlement amount.
In addition, as fully described in the Company's Form 10 KSB for the previous
fiscal year, the company was named in an action filed by the provider of
accounting services for the Company's predecessor company, Kent Toys, Inc. A
settlement was reached on October 16, 2000, in which the claimant agreed to
accept shares of the Company's common stock, which has a value of $25,000, as a
complete settlement. 69,445 shares, having a market value of $8,333.33 were
issued on October 19, 2000 with the balance to be issued November 16, 2000 and
December 16, 2000. The number of shares issued on these dates will each reflect
a market value of $8,333.33.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In October 2000, the Company contacted its shareholders to announce the annual
meeting, to be held in
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<PAGE> 14
Rochester, NY on November 10, 2000. Proxies were sent to the shareholders asking
them to vote on three items: (1) The election of three directors; (2) Ratify the
designation of independent auditors for the fiscal year ending June 30, 2001;
and (3) to transact such other business as may properly come before the annual
meeting.
As of the preparation of this filing, the results of the proxy vote have not yet
been tabulated.
Item 5 OTHER MATTERS
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
November 9, 2000 ONTV, Inc.
By: /s/ Daniel M. Fasano
------------------------------------
Daniel M. Fasano
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Chief Executive Officer
And Chairman of the
/s/ Daniel M. Fasano Board of Directors November 9, 2000
------------------------
Daniel M. Fasano
Chief Financial Officer
And Treasurer (Principal
Accounting and Financial
/s/ Curt B. Westrom Officer) November 9, 2000
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Curt B. Westrom
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