As Seen On TV 10K 2012 Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-K

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þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended:March 31, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________ to _____________

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As Seen On TV, Inc.

(Exact name of registrant as specified in its charter)

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Florida	000-53539	80-0149096
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation or Organization)	File Number)	Identification No.)

14044 Icot Boulevard

Clearwater, FL 33760

(Address of Principal Executive Office) (Zip Code)

727-288-2738

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

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Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
N/A		N/A

Securities registered pursuant to Section 12(g) of the Act:

Common Stock

(Title of Class)

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.¨ Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.¨ Yes þ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes 0 No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes þNo ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).¨ Yes þ No

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 last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $6,989,000 on September 30, 2011.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of June 25, 2012 there were 32,120,784 shares outstanding.

PART I

Item 1.

Business.

Organization and Overview

As Seen On TV, Inc. (the “Company”), a Florida corporation was organized in November 2006 under the name “H&H Imports, Inc.” (“H&H”). On October 27, 2011, we changed our name to “As Seen On TV, Inc.” We operate as a direct response marketing organization. The direct response marketing industry is a large, fragmented and competitive industry. Direct response incorporates various marketing formats including direct mail, telemarketing, television, radio, newspaper, magazines and others. Typically direct response television programs incorporate an infomercial in either short form (30 seconds to 5 minutes) or long form (28.5 minutes) direct response programs. The formats discuss and demonstrate products and provide a toll-free number or website for viewers to purchase featured products. We believe the principal competitive factors include authenticity of information, unique content and distinctiveness and quality of product, brand recognition and price.

On May 28, 2010, we closed a definitive merger agreement to acquire TV Goods Holding Corporation, a Florida corporation (“TV Goods”), organized in October 2009, pursuant to which TV Goods merged with TV Goods Acquisition, Inc., our wholly owned subsidiary. Under the terms of the merger agreement, the TV Goods shareholders received shares of H&H common stock such that the TV Goods shareholders received approximately 98% of the total shares of H&H issued and outstanding following the merger. Due to the nominal assets and limited operations of H&H prior to the merger, the transaction was accorded reverse recapitalization accounting treatment under the provision of FASB ASC 805, whereby TV Goods became the accounting acquirer (legal acquiree) and H&H was treated as the accounting acquiree (legal acquirer). In connection with the recapitalization transaction, TV Goods paid $320,000 consideration in cash to H&H (the legal acquirer). The historical financial records of the Company are those of the accounting acquirer adjusted to reflect the legal capital of the accounting acquiree. As the transaction was treated as a recapitalization, no intangibles, including goodwill, were recognized.

We hold a wholly owned interest in the following subsidiaries:

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TV Goods, Inc., a Florida corporation (“TVG”); and

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Tru Hair, Inc., a Florida corporation.

Primarily all of our historical and current operations are conducted through TVG, which was organized as a wholly owned subsidiary of TV Goods in October 2009. Furthermore, due to the similar nature of the underlying business and the overlap of our operations, we view and manage these operations as one business; accordingly, we do not report as segments.

On May 27, 2011, the Company entered into an agreement to acquire certain assets from Seen on TV, LLC, primarily consisting of the rights to the domain names “asseenontv.com” and “seenontv.com”. This transaction, completed on June 28, 2012 provides the Company with exclusive use of the domain names. The terms or phrases “As Seen On TV” or “Seen on TV” are not subject to trademark protection and has been and will continue to be, used by third parties, including on-line retail outlet applications with no connection with, our benefit to, the Company.

On October 28, 2011, the Company entered into a securities purchase agreement with closings on October 28, 2011 and November 18, 2011, and received total gross proceeds of $12,500,000 and issued 15,625,945 shares of common stock and three series of warrants to purchase up to 15,625,000 shares of common stock. The Company sold the shares at an initial purchase price of $0.80 per share and the warrants are exercisable at either $0.80 or $1.00 per share. Pursuant to the securities purchase agreement, for a period of up to 24 months, the purchasers may receive additional shares of common stock in the event the Company issues additional securities, at an effective price per share that is less than the initial issuance price of the shares under the securities purchase agreement. In addition, if at any time while the warrants are outstanding the Company issues securities at an effective price per share less than the exercise price of the respective warrants, then the exercise price of the warrants may be reduced to such discounted price. If these adjustments occur, our shareholders’ ownership will be diluted.

There is currently a limited public market for our common stock which is quoted on the OTC Markets under the symbol “ASTV”.

Corporate Information

Our executive offices are located at 14044 Icot Boulevard, Clearwater, Florida 33760; our telephone number is 727-288-2738. Our website is located atwww.tvgoodsinc.com. Information on our website is not a part of this report.

Industry

Direct response marketing is a form of marketing designed to solicit a direct response which is specific and quantifiable. The delivery of the response is direct between the viewer and the advertiser, as the customer responds to the marketer directly. In direct response marketing, marketers use broadcast media to get customers to contact them directly. Cable networks represent the traditional conduit for direct response television programming. Historically, direct response television programming has aired on cable networks during off-peak periods. The deregulation of the cable television industry in 1984 and the resulting proliferation of channels dedicated to particular demographic segments, pursuits or lifestyles have created additional opportunities for direct response programming. We believe the continued growth of satellite and cable subscribers has positioned direct response television as an effective marketing channel with significant domestic and international growth prospects.

The leading product categories for direct response television programs are cosmetics, fitness/exercise products, diet/nutrition products, kitchen tools and appliances, self-improvement/education/motivation courses, music and home videos/DVDs. Typically direct response television programs incorporate an infomercial in either short form (30 second to 5 minute) or long form (28.5 minute) direct response programs. The formats discuss and demonstrate products and provide a toll-free number or website for viewers to purchase.

As the industry has developed, the variety of products and services promoted through direct response television programs has steadily increased. Direct response television programs are now routinely used to introduce new products, drive retail traffic, schedule demonstrations and build product and brand awareness for products ranging from automobiles to mutual funds.

Recent years have also seen a convergence of direct response television programs with Internet direct response marketing. Virtually all direct response television programs now display a website in addition to a toll-free telephone number. The addition of an e-commerce component can enhance sales. We believe the principal competitive factors include authenticity of information, unique content and distinctiveness and quality of product, brand recognition and price. There is no guarantee that we will achieve growth or develop profitable products.

Revenue Generation

We generate a significant portion of our revenues from two sources (i) sales of consumer products and (ii) infomercial production fees. We seek to offer, assist and enable inventors to market and sell consumer products. Entrepreneurs pay us fees seeking to leverage our experience in functions such as product selection, marketing development, media buying and direct response television production.

Inventors and entrepreneurs submit products or business concepts for our review. Once we identify a suitable product/concept we negotiate to obtain global marketing and distribution rights. These marketing and distribution agreements stipulate profit sharing, typically a royalty to the inventor or product owner.

Through March 31, 2012, we have marketed several products with limited success.Sales of our Living Pure space heaters, which commenced in November 2011, totaled approximately $5,168,000 for the year ended March 31, 2012, and accounted for approximately 63%, of total revenues for the year ended March 31, 2012. Infomercial production income accounted for approximately $452,000 or 6% of total revenues for the year. Other various products, speaking engagement fees and royalty fees, accounted for approximately $2,545,000 or 31% of our revenues for the year ended March 31, 2012. While we do anticipate our sales to continue to increase, this growth rate should not be viewed as sustainable over the long-term. It should also be noted that our line of heaters is a seasonal product and we have experienced a sharp decline in demand following the end of the winter season. Furthermore, some of our future products may also be seasonal, which would result in fluctuations in our future results of operations. We have also tested several products, which were ultimately not offered to consumers due to poor testing results. As discussed under Management Discussion and Analysis, we have currently generated the majority of our revenues from the sale of products.

Product Development

We provide resources to develop consumer products from initial concepts to global distribution. We do not manufacture products. We solicit product submission through numerous sources including but not limited to inventors, product owners, design companies, manufacturers, advertising and media agencies, production houses, and trade shows. We employ internal methodology utilizing several selection criteria to evaluate product submissions. Each product is graded on our internal system, points are awarded for various factors including but not limited to product design, application, target market, retail price, competitive products, and proprietary nature of the product. The selection process includes market tests in which the potential market demand for a product is quantified on the basis of our performance in certain test markets. Upon acceptance we attempt to negotiate exclusive marketing rights for both domestic and international marketing channels. At this point, we coordinate on product design, create a marketing campaign, obtain fulfillment services, and establish distribution channels.

Once we obtain marketing rights, we typically design a direct response marketing test campaign to gauge potential market demand. Under a test campaign an infomercial spot is placed on a limited basis on local cable outlets. Employing our internal standards we evaluate the spot for market viability. Upon a successful test we coordinate a comprehensive campaign geared to a national audience. In this manner we seek to allot resources to products which appeal to consumers, and limit resources devoted to products which may not prove viable.

We design, create and produce direct response marketing campaigns primarily in the form of infomercial programming. Our typical format is infomercial spots in the form of short form spots (30 seconds to 5 minutes), or long format (28.5 minutes). Direct response television marketing can create rapid customer awareness and brand loyalty. We seek to maintain a low cost structure. We perform product testing, marketing development, media buying and direct response television production and we outsource functions such as manufacturing, order processing and fulfillment. While there are no guarantees that a product will be successful, this allows us to reduce our risk by controlling our variable costs.

We believe media exposure of a direct response television campaign can reduce barriers to gain access to retail outlets which can increase profitability for a consumer product. Viable consumer products possess customer awareness and brand loyalty. We seek to extend product lifecycles through other distribution channels such as home shopping channels and retail outlets. Thereafter we seek to penetrate retail outlets which include the internet, retail, catalog, radio and print.

Supply and Distribution

We typically work with third party distributors, suppliers and manufactures on a per order basis. In the event that a manufacturer is unable to meet supply or manufacturing requirements at some time in the future, we may suffer short-term interruptions of delivery of certain products while we establish an alternative source. In most cases alternative sources are readily available and we have established working relationships with several third party distributors, suppliers and manufacturers. We also rely on third party carriers for product shipments, including shipments to and from distribution facilities. We are therefore subject to the risks, including employee strikes and inclement weather, associated with our carriers’ ability to provide delivery services to meet our fulfillment and shipping needs. Failure to deliver products to our customers in a timely and accurate matter would harm our reputation, our business and results of operations.

As Seen on TV

On May 27, 2011, the Company entered into a binding letter agreement with Seen on TV, LLC, a Nevada limited liability company, with no affiliation with the Company, and Ms. Mary Beth Gearhart (formerly Fasono), its president. The letter agreement provided that we would obtain ownership of certain Seen on TV intangible assets, primarily consisting of the domain names “asseenontv.com” and “seenontv.com”. Upon entering into the binding letter agreement, we issued 250,000 shares of restricted common stock, with a fair value of $500,000 on the contract date, and an initial cash payment of $25,000 to Ms. Gearhart. In addition, we granted 50,000 warrants to issue common shares, initially exercisable at $7.00 per share for a period of three years with a grant date fair value of $162,192. Further, we agreed to make five additional monthly payments of $5,000 to the seller and a $10,000 contribution to a designated charitable contribution, all of which payments were made. All payments made under the initial letter agreement, including the fair value of securities and an additional $7,000 paid to the UK for use of the URL “asseenontv.co.uk” totaled $729,450 at March 31, 2012.

On June 28, 2012, the Company finalized the asset purchase agreement with Seen on TV, LLC, agreeing to (i) pay an additional $1,560,000 in cash, (ii) issue an additional 250,000 shares of restricted stock, (iii) issue 250,000 common stock purchase warrants, exercisable at $0.64 per share for three years from issuance, (iv) modifying the exercise price of the 50,000 common stock purchase warrants issued in May 2011 from $7.00 per share to $1.00 per share and extending their term, and (v) making five annual payments of $10,000 per year to a charitable organization designated by Seen on TV. The Company agreed that so long as the seller owns at least 250,000 common shares received under the purchase agreement, if we were to issue additional shares of common stock, the seller will be entitled to receive additional shares sufficient to maintain their proportional ownership in the Company.

This transaction did not meet the criteria of a business combination within the guidelines of ASC 805—Business Combinations, and therefore will be accounted for as an asset purchase. The transaction contained no contingent consideration and no liabilities were assumed contingent or otherwise. Accordingly, the assets acquired, all identifiable intangible assets, will be recognized based on our cost, including transactions costs, of the asset acquired.

The Company will account for the intangible assets in accordance with the provisions of ASC 350—Intangibles-Goodwill and Other. As the intangibles we acquired are not subject to legal, regulatory, contractual or other factors which limit their useful life, the potential economic benefits to the Company are considered indefinite within the meaning of the related guidance. Accordingly, no amortization of the related costs will be recognized. However, the Company recognizes the intangible assets acquired are subject to review for potential impairment and if impairment were to be noted, an appropriate reduction in the carrying value of the assets would be recorded.

In addition to the above we also paid $7,000 for the use of the URL “asseenontv.co.uk.”

Living Pure Heater Systems

During our year ending March 31, 2012, the Company began marketing a line of electric space heaters, under the trademark“Living Pure”, specifically the Living Pure basic model and the Living Pure Pro Series 4-in-1 System. Moving forward the Company intends to market the heaters under a different trademark. The single unit heaters are designed to provide heating, air filtration, air purification and humidification, for up to 1,000 square feet. During our third fiscal quarter 2012, the Company began its marketing efforts in direct response channels and intends to expand its marketing and distribution channels to wholesale and retail distributions.

During our year ended March 31, 2012, the Company recorded sales of the Living Pure line of heaters of approximately $5,168,000 representing 63% of total revenues for the year. In connection with the marketing of the product line, the Company has entered into an agreement with Montel Williams Enterprises, Inc. for Montel Williams to serve as a product spokesperson. Under this agreement, Montel Williams Enterprises received 2-1/2% of adjusted gross revenues related to the product line. It should be noted that future sales of this product, while promising, are seasonal and the Company has experienced a sharp decline in demand at the end of the winter season. All Living Pure heaters sold to date were supplied by Presser Direct, LLC under individual order requests, advance payment and order invoice. Purchases next year, if any, shall be made under a Purchasing and Marketing Agreement with Presser Direct, LLC, dated March 27, 2012. Unless otherwise terminated for cause by either party, the agreement provides for a term of ten years and shall renew for additional three year terms unless either party terminates the agreement upon six months prior written notice of the end of the term. Under the agreement the Company shall receive 51% of the net revenues from the sale of any heaters sold in retail, live shopping or international sales. Furthermore, we shall also pay Presser Direct 1% of the adjusted gross receipts from domestic direct response sales but do not pay profit participation on this channel. Pursuant to the agreement the Company and Presser have agreed to irrevocably license to each other during the term of the agreement any and all intellectual property rights that each may have relating to the heaters.

TruHair by Chelsea Scott^TM

In October 2011, as amended in November 2011, we entered into a product line purchase agreement with Tru Beauty, LLC, to exclusively market and distribute a line of proprietary hair care products under the name TruHair by Chelsea Scott^TM. The agreement provides the Company exclusive use of applicable copyrights, trademarks, formulas and know how necessary to manufacture, market and sell the products. The Company has agreed to pay a royalty to Tru Beauty, LLC of 20% of adjusted gross receipts, as defined in the agreement, on all

covered TruHair by Chelsea Scott™ products sold under the agreement. We began marketing the TruHair by Chelsea Scott™ line on the teleshopping network, HSN, during our fourth calendar quarter. Sales of TruHair by Chelsea Scott™ totaled approximately $618,000 for the year ended March 31, 2012.

Instant Zipper^TM

On December 18, 2010, we obtained exclusive marketing and distribution rights for the Instant Zipper^TMproduct line from Zip Clip Solutions AB (“Zip Clip”). The agreement was for an initial term of three years, subject to certain minimum purchase requirements, with one-year renewal provisions. During calendar 2011, the Company elected not to purchase the minimum number of zipper units from Zip Clip required to maintain its exclusivity. On May 23, 2012, the Company entered into a Settlement and General Release Agreement with Zip Clip. Under the terms of the settlement agreement, the parties terminated the agreement entered into on December 18, 2010, relinquished all claims each may have had against the other, and agreed that the Company shall retain the right to sell the Instant Zipper™ product on a non-exclusive basis throughout the entire world in all channels of distribution. Sales of the Instant Zipper^TM through March 31, 2012, totaled approximately $364,000. The Instant Zipper^TMis a zipper replacement that is designed to replace any broken zipper, including, but not limited to zippers on clothing, luggage and handbags. We currently market the product on the Home Shopping Network and through other wholesale channels.

SMS Audio Products

The Company has entered into a distribution and marketing agreement dated March 15, 2012 with SMS Audio relating to the promotion and sale of SMS Audio products via major live television shopping networks and their related websites and AsSeenOnTV.com in the U.S. The initial term of the agreement is 12 months. The agreement includes, but is not limited to, the product lines of SYNC by 50 Over-Ear Headphones, STREET by 50 Over-Ear Headphones and STREET by 50 In-Ear Headphones. SMS and the Company agree that Curtis Jackson III (aka 50 Cent) may appear for certain television airings for the products as agreed upon by the parties and Mr. Jackson. The agreement does not provide for any minimum purchases or sales commitments by either party and may be terminated by SMS Audio without cause upon 60 days notice. In June 2012, the Company sold approximately $162,000 of the headphones on the live shopping network, QVC.

Competition

The direct response marketing industry is a large, fragmented and competitive industry. The United States direct response marketing industry has a diverse set of channels, including direct mail, telemarketing, television, radio, newspaper, magazines and others. The list of market leaders fluctuates constantly. Companies marketing popular products dominate the airwaves and control media time. Furthermore, established brick-and-mortar retail competitors have recently made efforts to sell products through direct response marketing channels.

Intellectual Property

We have applied for U.S. trademark registration with the United States Patent and Trademark Office (the USPTO) for U.S. trademarks for “TV Goods”, “TruHair by Chelsea Scott”, and “Kevin Harrington”. The mark PITCH TANK® is registered in the Company’s name with the USPTO. We intend that all product intellectual property rights will be jointly held by us and our clients who submit products for our development.

Research and Development

Generally, product concepts are developed by independent third parties. Inventors submit product concepts for our input and advice. Accordingly our research and development efforts are extremely limited in scope. In certain cases inventors may submit a raw product concept. In most cases further investment in research and development would be the responsibility of the inventor. However, there are products which the Company is developing internally on a limited basis and such costs are not significant to date.

Regulation of Products and Services

Our business is subject to a number of governmental regulations, including the Mail or Telephone Order Merchandise Rule and related regulations of the Federal Trade Commission. These regulations prohibit unfair methods of competition and unfair or deceptive acts or practices in connection with mail and telephone order sales and require sellers of mail and telephone order merchandise to conform to certain rules of conduct with respect to shipping dates and shipping delays. We are also subject to regulations of the U.S. Postal Service and various state and local consumer protection agencies relating to matters such as advertising, order solicitation, shipment deadlines

and customer refunds and returns. In addition, imported merchandise is subject to import and customs duties and, in some cases, import quotas. We believe the Company (and the products we represent) to be in compliance with all applicable provisions of those laws and rules.

Employees

At May 31, 2012, we employed 20 full-time employees and contract personnel; four of which are management. We maintain a satisfactory working relationship with our employees and have not experienced any labor disputes or any difficulty in recruiting staff for operations.

Item 1A.

Risk Factors.

Not applicable to smaller reporting companies. However, our principal risk factors are described under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 1B.

Unresolved Staff Comments.

Not applicable to smaller reporting companies.

Item 2.

Properties.

Our corporate offices are located in Clearwater, Florida. This location is approximately 10,500 square feet which includes approximately 5,000 square feet of studio production space. We sub-leased the facility under a 38-month lease agreement with escalating lease payments through February 2013. The minimum rental payments, escalating from $6,000 per month to $16,182 per month under the lease terms, increase over the lease term with no provisions for increases dependent upon contingent occurrences. In accordance with the provisions of ASC 840-Leases, the Company recognized lease expense on a straight-line basis, totaling $10,642 per month over the initial lease term.

On February 1, 2012, the Company entered into a new 36-month lease agreement on our existing headquarters facility. Terms of the lease provide for a base rent payment of $7,875 per month for the first twelve months, increasing 3% per year thereafter. The lease contains no provisions for a change in the base rent based on future events or contingent occurrences. In accordance with the provisions of ASC 840-Leases, the Company recognizes lease expenses on a straight-line basis, which total $8,114 per month over the lease term. In connection with the entering into new leases, the Company recognized income of approximately $71,000 attributable to the recovery of the deferred rent obligation under the previous lease and wrote-off to lease expense $12,420 in security deposits attributable to the prior lease.

This location is sufficient to support current and anticipated operations.

Item 3.

Legal Proceedings.

In February 2012, SCI Direct, LLC (“SCI”), filed suit against TV Goods, Inc. in the United States District Court, Northern District of Ohio, Eastern Division. The complaint alleges trademark infringement by TV Goods arising from our Living Pure™ space heater as it relates to SCI’s EDENPURE™ space heater. The plaintiff is seeking monetary and injunctive relief claiming TV Goods committed trademark infringement, unfair competition and violation of the Ohio Deceptive Trade Practices Act. The amount of damages the plaintiff is seeking is unspecified. We believe that the legal basis of the allegations is completely without merit and intend to vigorously defend the lawsuit. The potential monetary relief, if any, is not probable and cannot be estimated at this time. We believe that any amount ultimately recoverable by the plaintiff would be immaterial. Accordingly, we have not recorded any amount as a potential loss reserve in this matter. As of June 21, 2012, TV Goods, Inc. has executed a settlement agreement with SCI Direct, LLC. Under the terms of the agreement, SCI has agreed to dismiss the complaint and TV Goods, Inc. has agreed to cease marketing any products under the Living Pure Trademark. The settlement agreement is contingent upon SCI’s review of TV Goods, Inc. financial statements relating to Living Pure sales, which has not been completed.

Item 4.

Mine Safety Disclosures.

None.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Stock

There is a limited public market for the shares of our common stock. Since our inception, our stock has been thinly traded. There can be no assurance that a liquid market for our common stock will ever develop. Transfer of our common stock may also be restricted under the securities or blue sky laws of various states and foreign jurisdictions. Consequently, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.

Our common stock is currently quoted on the OTC Markets under the symbol ASTV. The range of closing prices for our common stock, as reported on the OTC Market was as provided below, as adjusted for our 1-for-20 (1:20) reverse split which was effectuated during October 2011. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.


Quarter Ended	High		Low
March 31, 2010	$	10.00	$	10.00
June 30, 2010	$	10.20	$	10.00
September 30, 2010	$	10.00	$	2.00
December 31, 2010	$	4.00	$	1.00
March 31, 2011	$	25.40	$	0.80
June 30, 2011	$	15.40	$	1.40
September 30, 2011	$	2.10	$	1.00
December 31, 2011	$	1.25	$	0.70
March 31, 2012	$	1.05	$	0.71

On June 25, 2012, our common stock had a closing price of $0.95. As of June 25, 2012, we had approximately 340 shareholders of record.

Dividend Policy

We have not paid any cash dividends on our common stock and do not plan to pay any such dividends in the foreseeable future. We currently intend to use all available funds to develop our business. We can give no assurances that we will ever have excess funds available to pay dividends.

Recent Sales of Unregistered Securities

Except for those unregistered securities previously disclosed in reports filed with the Securities and Exchange Commission, during the period covered by this report, we have not sold securities without registration during the period covered by this report.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 6.

Selected Financial Data.

Not required for smaller reporting companies.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Annual Report on Form 10-K and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. A list of factors that could cause our actual results of operations and financial condition to differ materially is set forth below.

Company Overview

We are a direct response marketing company. We identify, advise in development and market consumer products. We employ three primary channels: Direct Response Television (Infomercials), Television Shopping Networks and Retail Outlets. We have identified several candidate products for marketing which actively began in our third fiscal quarter of 2012.

We hold a wholly owned interest in TV Goods, Inc., a Florida corporation (“TVG”) and Tru Hair, Inc., a Florida corporation. Although we hold an interest in these various entities, primarily all of our operations are conducted through TVG. TVG was formed in October 2009 and as a result has a limited operating history. Due to the similar nature of the underlying business and the overlap of our operations, we view and manage these operations as one business, accordingly we do not report as segments. On May 27, 2011, the Company entered into an agreement to acquire the rights to the domain names “asseenontv.com” and “seenontv.com”. This transaction, completed on June 28, 2012, did not meet the criteria of a business combination within the guidelines of ASC 805 –Business Combinations, and therefore will be accounted for as an asset purchase. This transaction provides the Company with exclusive use of the domain names “asseenontv.com” and “seenontv.com”. The term or phrase “As Seen On TV” is not subject to trademark protection and has been, and will continue to be, used by others including on-line and retail outlet applications with no connection with, or benefit to, the Company.

Revenue Generation

We generate revenues primarily from two sources: sales of consumer products and infomercial production fees. Inventors and entrepreneurs seek to leverage our experience in functions such as product selection, marketing development, media buying and direct response television production. We seek to offer, assist and enable inventors and entrepreneurs to market and sell consumer products.

Results of Operations

Revenue for the year ending March 31, 2012, totaled $8,165,470, representing a significant increase over the preceding year. Revenues for the year ending March 31, 2011, totaled $1,354,238. This increase is due in large part to the prior year’s “start up” phase, with the Company having commenced operations in October 2009, and the commencement of the Company’s marketing of its Living Pure line of space heaters commencing in the third fiscal quarter of the fiscal year ending March 31, 2012. Accordingly, traditional period-over-period comparisons of revenues and related costs would be of limited value. Sales of the Living Pure space heaters, which commenced in November 2011, accounted for approximately 63% of total revenues for the year ending March 31, 2012. While we do anticipate our sales to continue to increase, this growth rate should not be viewed as sustainable over the long-term. It should also be noted that our line of heaters is a seasonal product and we have experienced a sharp decline in demand following the end of the winter season.

Major customers are those customers that account for more than 10% of revenues. For the year ended March 31, 2012, 37% of revenues were derived from two major customers and the accounts receivable from these major customers represented 67% of total accounts receivable as of March 31, 2012. The loss of these customers would have a material adverse affect on the Company’s operations.

There were no major customers for the year ended March 31, 2011.

In December 2011, the Company began marketing a line of proprietary hair and beauty products under the name of TruHair by Chelsea Scott™. These sales are being managed and controlled through our wholly-owned subsidiary, TruHair, Inc., formed in November 2011. Sales of TruHair by Chelsea Scott™ totaled approximately $618,000 for the year ended March 31, 2012.

A comparative summary of the source of our revenues generated for the periods presented is as follows:


	Year Ended March 31,
	2012		2011

Living Pure Heater	$	5,168,192	$	--
Other product sales		2,044,617		348,271
Speaking engagement fees and royalty fees		500,457		20,469
Infomercial production income		452,204		985,498
	$	8,165,470	$	1,354,238

Our ability to fund such a sharp expansion in operations, including the funding of necessary media purchases, inventories and related logistics and administrative support was made possible through a funding completed in October and November 2011 with gross proceeds of $12,500,000.

Our revenue model also includes providing infomercial production for others as well as marketing specific products for which we have contractual right to the revenue stream such as our Living Pure line. As detailed above, for the year ending March 31, 2012, approximately 6% of our revenue was attributable to infomercial production income, with the balance being generated by specific product sales for which we contracted marketing and distribution rights. For the year ended March 31, 2011, revenues were $1,354,238, primarily resulted from infomercial production revenue billed, which represented 73% of total revenues for the year. We expect this trend in product mix to continue in the future. While there can be no assurance, management believes that developing a marketing strategy based upon distributing developed products for which the Company has ownership or the licensing rights, will ultimately prove a successful strategy.

Cost of revenue for the year ended March 31, 2012, represented 77% of revenues for the period. These costs consist primarily of the direct costs to the Company of products sold including related shipping. The Company does not manufacture any products in-house and relies on third-party suppliers, located primarily outside of the United States, for its inventory. Accordingly, our cost of products acquired for sale could vary significantly if fuel and transportation costs were to increase in the future. Cost of revenue for the year ended March 31, 2011 was $1,838,367 and represented 136% of revenues for the period. These costs primarily consisted of fees charged for the shooting and editing of infomercials primarily for our clients.

Selling and marketing expenses are comprised of promotional costs incurred related to sales of the Company’s own products. These costs totaled $3,517,765 for the year ended March 31, 2012. The prior year did not contain these costs as prior year revenues were primarily related to fees for our planning, shooting and editing of promotional materials for others. Components of these costs include:


	Year Ended March 31, 2012

Media purchases		$	2,700,687	77%
Production design costs			147,040	4%
Call center support			587,238	17%
Other			82,800	2%
		$	3,517,765	100%

The Company operates in a very competitive environment, competing in different media with products that may be very similar to those of our competitors. Accordingly, management will often test a product, on a limited basis, in a targeted market and attempt to assess the products potential prior to investing in a larger “roll-out.” The Company attempts to price the product at a level that will prove both attractive to our customer while providing the Company with a reasonable return. Often the test marketing will indicate that a particular product is not well received by a Direct Response program and the project will be dropped. This practice can, and sometimes does, as with the year ending March 31, 2011, result in the recognition of costs in excess of related revenues.

General and administrative expenses consist primarily of administrative labor costs, consulting fees, marketing related travel expenses, business development costs and legal and accounting fees. Included in the costs in the year ended March 31, 2012, are certain non-cash expenses including stock based compensation of $356,702 and other equity based compensation to consultants totaling approximately $316,707 and the impairment of the $150,000 investment in the Military Shopping Channel. While there can be no assurance, the Company anticipates that selling, general and administrative expenses will decline as a percentage of revenues as it continues to increase sales through the implementation of its marketing and growth plans. General and administrative expenses totaled $4,271,965 in 2011 and consist primarily of administrative labor costs, marketing related travel, business development and investor relations related fees. In addition, the Company recognized a $432,100 loss in an investment in Sleek Audio, LLC. The investment in Sleek Audio was made under an October 2010 three party agreement which provided the Company would invest up to $500,000 to include $250,000 in tooling for a proprietary ear phone product. During our fourth fiscal quarter of 2011, the contract was terminated by one of the three participants with small likelihood of the Company recovering its investment. Accordingly, the investment was fully written-off during the fourth quarter of 2011. Also included in these costs are certain non-cash expenses including stock based compensation expenses of $560,880 and the fair value of shares issued for consulting services of $365,000.

Other Income and Expenses

For the year ended March 31, 2012, we recognized approximately $5,452,000 in income resulting from the revaluation of the fair value of warrants outstanding which were recorded as a liability on our balance sheet. This periodic revaluation could also result in a significant expense being recognized at the end of any given period depending on the market value of our stock. The warrants were issued in connection with a series of financings completed during the year and are revalued at the end of each reporting period to their fair value. In addition during the current fiscal year, we recognized income in the form of a change in a derivative liability of approximately $209,000. It should be noted that absent the revaluation of our warrants outstanding at March 31, 2012, the Company would have recognized a net loss of approximately $13,529,000 for the year ending March 31, 2012.

As a result of the series of amendments and waivers related to the Company’s August 29, 2011, 12% convertible financing and the financing itself, the Company recognized certain fair value related entries indicated under the related guidance includingASC 470-Debt.

The Company’s $750,000 convertible debenture held by Octagon Capital Partners was given extinguishment of debt recognition resulting in:

revaluation of the related derivative which, following revaluation, was reclassified to equity;

recognition of a loss on extinguishment of the debt of $2,950,513;

the expensing, to interest expense, of the unaccreted balance in the related debt issuance costs of $277,524; and

The recognition of the fair value of the note obligation on the extinguishment date of $3,144,163, subsequently converted into our Unit offering completed in October 2011.

As a result of the extinguishment of debt treatment, the Company did not recognize interest expense going forward on accretion related to the Octagon note discount or debt issuance costs balances as they were expensed in total concurrent with the extinguishment recognition in our second fiscal quarter ended September 30, 2011.

In connection with the recording of the August 28, 2011, $1,800,000 12% convertible debt financing, the Company recorded:

a debt discount equal to $1,800,000 which was accreted to interest expense over a two month period, approximately $900,000 per month, being fully expensed at its exchange conversion into the October 28, 2011 financing; and

recognition of debt issuance costs associated with transaction related warrants totaling $1,522,784 was accreted to interest expense over a two month period.

During the quarter ended December 31, 2011, in connection with our $1,800,000 debenture financing, we recognized approximately an additional $900,000 and $887,000 in accretion to interest expense related to the note discount and issuance related costs recognized. In addition, the Company marks-to market the fair value of the related warrants issued.

In connection with our $1,800,000 12% convertible debenture issuance in August 2011, the Company issued warrants to the investors and placement agent which contained provisions that protect holders from a decline in the issue price of our common stock or “down-round” provisions. The warrants also contained net settlement provisions. Accordingly, the Company accounted for these warrant as liabilities instead of equity. In addition, we considered the dilution and repricing provisions triggered by the Company’s October 2011 follow-on offering which impacted the accounting recognition of this financing during our second fiscal quarter.

Interest expense related to note payable increased significantly for the year ending March 31, 2012, totaling approximately $4,182,000 compared to $63,000 in the previous year. These increases reflect the accretion to interest expense of the note discounts and debt issuance costs attributable to the Company’s convertible notes outstanding to Octagon Capital and other note holders. These notes were converted into the Company’s unit offering with National Securities completed in October 2011. Interest expense for the year ending March 31, 2011, consisted primarily of interest accrued and paid on the Company’s 12% Senior Working Capital Notes which were converted in May 2010. The decrease in interest expenses to related parties between the periods was due to the accretion of the beneficial conversion feature attributable to the $107,000 note payable to the Company’s CEO.

Liquidity and Capital Resources

At March 31, 2012, we had a cash balance of approximately $4.7 million, a working capital deficit of approximately $18.2 million and an accumulated deficit of approximately $17.3 million. Included in our current liabilities at March 31, 2012is approximately $25.8 million representing the fair value of warrants outstanding. For operating capital, we have relied primarily on a series of debt and equity transactions with proceeds to the Company in fiscal 2012 of approximately $14 million, reduced by operational losses. Since inception, we have continued to operate at a loss. Management believes the Company has sufficient cash resources to sustain operations through at least June 2013. The Company plans to increase revenues in order to reduce, or eliminate, its operating losses. In the event the Company incurs further losses, the Company may seek additional capital from external sources in order to enable it to continue to meet its financial obligations until it achieves profitability. There can be no assurance that the Company will be able to raise additional capital on favorable terms, or at all.

In April 2011, we consummated the issuance and sale of $750,000 in aggregate principal amount of convertible debentures. The Company paid $90,000, plus warrants with a fair value of approximately $284,000, in issuance costs related to these debentures. The convertible debentures have no stated interest rate. The debentures were convertible at $4.00 per share, subject to adjustment, and matured on December 1, 2011 unless earlier exchanged or converted.

On May 27, 2011 and June 15, 2011 the Company and approximately twenty accredited investors entered into a securities purchase agreement and completed a closing of a private offering of 292,500 shares of the Company’s common stock and three series of warrants to purchase up to 585,000 shares of common stock, in the aggregate, for aggregate gross proceeds of $1,170,000. The Company sold the shares at an initial purchase price of $4.00 per share, which may be adjusted downward, but not to less than $2.00 per share, under certain circumstances. In addition to the shares, the Company issued: (i) Series A common stock purchase warrants to purchase up to 292,500 shares of common stock at an exercise price of $3.00 per share; (ii) Series B common stock purchase warrants to purchase up to 146,250 shares of common stock at an exercise price of $5.00 per share and (iii) Series C common stock purchase warrants to purchase up to 146,250 shares of common stock at an exercise price of $10.00 per share.

In August 2011, the Company raised gross proceed of $1,800,000 through the private placement issuance of a series of 12% convertible debentures. The debentures were convertible into common stock and warrants.

In October 2011 the Company, entered into and consummated a securities purchase agreement with certain accredited investors for the private sale of 243.1 units at $50,000 per unit. Each unit consisted of (i) 62,500 shares of common stock, and (ii) warrants to purchase 62,500 shares of common stock at an initial exercise price of $1.00 per share. The Company received gross proceeds of $12,155,000 and issued an aggregate of 15,194,695 shares of common stock and 15,193,750 warrants to the investors pursuant to the securities purchase agreement. In November 2011, the Company sold an additional 6.9 Units under the securities purchase agreement, receiving an additional $345,000 in gross proceeds, issuing an additional aggregate of 431,250 shares of common stock and 431,250 warrants to investors. The October 28, 2011 and November 18, 2011 closings brought the total raised under the securities purchase agreement to $12,500,000.

Commitments

On January 20, 2010, the Company entered into a 38-month lease agreement for our 10,500 square foot headquarters facility in Clearwater, Florida. Terms of the lease provide for base rent payments of $6,000 per month for the first six months; a base rent of $7,500 per month for the next 18 months and $16,182 per month from January 2012 through February 2013. The increase in minimum rental payments over the lease term is not dependent upon future events or contingent occurrences. In accordance with the provisions of ASC 840 - Leases, the Company recognized lease expenses on a straight-line basis, which total $10,462 per month over the lease term.

On February 1, 2012, the Company entered into a new 36-month lease agreement on our existing headquarters facility. Terms of the lease provide for a base rent payments of $7,875 per month for the first twelve months, increasing 3% per year thereafter. The lease contains no provisions for a change in the base rent based on future events or contingent occurrences. In accordance with the provisions ASC 840-Leases, the Company is recognizing lease expenses on a straight-line basis, which total $8,114 per month over the lease term. In connection with the entering into the new leases, the Company recognized income of approximately $71,000 attributable to the recovery of the deferred rent obligation under the previous lease and wrote-off to lease expense $12,420 in security deposits attributable to the prior lease.

The following is a schedule by year of future minimum rental payments required under our lease agreement on March 31, 2012:


	Operating Leases
Year 1	$	94,973
Year 2		97,822
Year 3		83,546
Year 4		—
Year 5		—
	$	276,341

Base rent expense recognized by the Company, all attributable to its headquarters facility, totaled $47,515 and $125,544 for the years ended March 31, 2012 and 2011, respectively.

Under the terms of the 2010 Private Placement, the Company provided that it would use its best reasonable efforts to cause the related registration statement to become effective within 180 days of the termination date, July 26, 2010, of the offering. We have failed to comply with this registration rights provision and are obligated to make pro rata payments to the subscribers under the 2010 Private Placement in an amount equal to 1% per month of the aggregate amount invested by the subscribers up to a maximum of 6% of the aggregate amount invested by the subscribers. The maximum amount of penalty to which the Company may be subject is $156,000. The Company had recognized an accrued penalty of $156,000 at March 31, 2012 and 2011, respectively.

terminated by either party upon written notice. In consideration of providing the services, Stratcon shall receive $12,500 per month. In addition, the Company has agreed to issue Stratcon an aggregate of 500,000 shares of restricted common stock, such shares vesting over a period of two years in four equal traunches. The closing price of the Company’s common stock as reported on the OTC Markets on the Effective Date was $1.00. The Company has agreed to provide Stratcon rent reimbursement up to $2,500 per month for the New York office.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with accounting principles generally accepted in the United States. We are required to make estimates and judgments in preparing our financial statements that affect the reported amounts of our assets, liabilities, revenue and expenses. We base our estimates on our historical experience to the extent practicable and on various other assumptions that we believe are reasonable under the circumstances and at the time they are made. If our assumptions prove to be inaccurate or if our future results are not consistent with our historical experience, we may be required to make adjustments in our policies that affect our reported results. Our most critical accounting policies and estimates include our allowance for doubtful accounts, share based compensation and estimated sales returns. We also have other key accounting policies that are less subjective and therefore, their application would not have a material impact on our reported results of operations. The following is a discussion of our most critical policies, as well as the estimates and judgments involved.

Revenue Recognition

We recognize revenue from product sales in accordance with FASB ASC 605 —Revenue Recognition. Following agreements or orders from customers, we ship product to our customers often through a third party facilitator. Revenue from product sales is only recognized when substantially all the risks and rewards of ownership have transferred to our customers, the selling price is fixed and collection is reasonably assured. Typically, these criteria are met when our customers order is received by them and we receive acknowledgment of receipt by a third party shipper.

We also offer our customers services consisting of planning, shooting and editing infomercials to aid in the Direct Response marketing of their product or service. In these instances, revenue is recognized when the contracted services have been provided and accepted by the customer. Deposits, if any, on these services are recognized as deferred revenue until earned. Costs associated with a given project are deferred until the related revenues are recognized. As of March 31, 2012 and 2011, we had recognized deferred revenue of $33,750 and $88,652, respectively.

The Company has a return policy whereby the customer can return any product within 60-days of receipt for a full refund, excluding shipping and handling. However, historically the Company has accepted returns past 60-days of receipt. The Company provides an allowance for returns based upon specific product warranty agreements and past experience and industry knowledge. All significant returns for the periods presented have been offset against gross sales. The Company also provides a reserve for warranty, which is not significant and is included in accrued expense.

Share-Based Payments and Warrants

We recognize share-based compensation expense on stock option awards. Compensation expense is recognized on that portion of option awards that are expected to ultimately vest over the vesting period from the date of grant. All options granted vest over their requisite service periods as follows: 6 months (50% vesting); 12 months (25% vesting) and 18 months (25% vesting). We granted no stock options or other equity awards which vest based on performance or market criteria. We had applied an estimated forfeiture rate of 10% to all share-based awards as of our second fiscal quarter, 2011, which represents that portion we expected would be forfeited over the vesting period. We reevaluate this analysis periodically and adjust our estimated forfeiture rate as necessary.

We utilized the Black-Scholes option pricing model to estimate the fair value of our stock options. Calculating share-based compensation expense requires the input of highly subjective judgment and assumptions, including estimates of expected life of the award, stock price volatility, forfeiture rates and risk-free interest rates. The assumptions used in calculating the fair value of share-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future.

Subsequent Events

During June 2012 the Company issued 125,000 vested and restricted shares of common stock to Stratcon Partners, LLC pursuant to the terms of an independent contractor agreement. In addition, during June 2012 the Company issued 25,000 shares of restricted common stock to Mediterranean Securities Group, LLC in consideration of financial consulting services.

On June 28, 2012, the Company finalized the asset purchase agreement with Seen on TV, LLC, agreeing (i) to pay an additional $1,560,000 in cash, (ii) issue an additional 250,000 shares of restricted stock, (iii) issue 250,000 common stock purchase warrants, exercisable at $0.64 per share for three years from issuance, (iv) modifying the exercise price of the 50,000 common stock purchase warrants issued in May 2011 from $7.00 per share to $1.00 per share and extending their term, and (v) making five annual payments of $10,000 per year to a charitable organization designated by See on TV.

This transaction did not meet the criteria of a business combination within the guidelines of ASC 805—Business Combinations, and therefore will be accounted for as an asset purchase. The transaction contained no contingent consideration and no liabilities were assumed contingent or otherwise. Accordingly, the assets acquired, all identifiable intangible assets, will be recognized based on our cost, including transactions costs, of the asset acquired.

In addition to the above we also paid $7,000 for the use of the URL “asseenontv.co.uk.”

Off Balance Sheet Arrangements

None.

Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

Recent Accounting Pronouncements

For a discussion of new accounting pronouncements affecting the Company, refer to Note 4 to the Consolidated Financial Statements.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors before deciding whether to invest in the Company. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations or our financial condition. If any of the events discussed in the risk factors below occur, our business, consolidated financial condition, results of operations or prospects could be materially and adversely affected. In such case, the value and marketability of the common stock could decline.

Risks Related to Our Business and Industry

We may never achieve or sustain profitability.

We may continue to incur losses as we attempt to develop and expand our operations and to market and sell our products. From inception, we have operated at a loss and at March 31, 2012, we had an accumulated deficit of $17,268,608. At March 31, 2011, we had an accumulated deficit of $7,897,323. No assurance can be given that we will achieve or sustain profitability. As a result of our limited operating history and the nature of the market in which we compete, it is difficult to forecast revenues or earnings accurately. No assurance can be given that we will be successful in accomplishing our goals or that we will generate sufficient revenue to become profitable or to sustain profitability.

We have operated at a loss since inception and we cannot anticipate with any degree of certainty what our revenues will be in future periods.

At March 31, 2012, we had a cash balance of $4,683,186, a working capital deficit of $18,184,861 and an accumulated deficit of $17,268,608. Substantially all of the cash balance was due to the completion of a series of private placements beginning in May 2011. However, since inception, we have continued to operate at a loss. Our ability to generate future revenues will depend on a number of factors, many of which are beyond our control. These factors include the rate of market acceptance of our products, competitive efforts, and general economic trends. Due to these factors, we cannot anticipate with any degree of certainty what our revenues will be in future periods. You have limited historical financial data and operating results with which to evaluate our business and our prospects. As a result, you should consider our prospects in light of the early stage of our business in a new and rapidly evolving market.

The Company has failed to satisfy registration rights provisions under the 2010 private placement and is obligated to make pro rata payments to the subscribers of the 2010 private placement in an amount equal to 1% per month of the aggregate amount invested by such subscriber up to a maximum amount of 6% of the amount invested.

Under the terms of the 2010 Private Placement, the Company provided that it would use its best reasonable effort to cause a registration statement to become effective within 180 days of the termination date of the offering. We have failed to comply with the registration rights provision and are obligated to make pro rata payments to the subscribers under the 2010 Private Placement in an amount equal to 1% per month of the aggregate amount invested by the subscribers up to a maximum of 6% of the aggregate amount invested by the subscribers. The maximum amount of penalty to which the Company may be subject is $156,000 which has been recognized in full in fiscal 2011.

Uncertain general economic conditions in the United States could adversely affect us.

We are subject to the risks arising from adverse changes in general economic market conditions or any failure of the U.S. economy to recover from its recent recession. The U.S. economy remains extremely sluggish as it seeks to recover from a severe recession. The U.S. economy continues to suffer from market volatility, difficulties in the financial services sector, tight credit markets, softness in the housing markets, concerns of inflation, reduced corporate profits and capital spending, significant job losses, reduced consumer spending, and continuing economic uncertainties. The uncertainty about future economic conditions could negatively impact our current and prospective customers, including those in the direct response markets, adversely impact our expenses and ability to obtain financing of our operations, cause delays or other problems with key suppliers and increase the risk of counterparty failures. We cannot predict the timing, strength or duration of this severe global economic downturn or subsequent recovery. Consumer spending in the United States has been, and is expected to continue to be, negatively affected by

these economic trends which, in turn, will negatively impact our results of operations. Furthermore, the uncertainty about future economic conditions could negatively affect our ability to obtain financing, which we will require to fund our operations in the event we do not increase our revenues.

Our operations are subject to the general risks of the direct response television industry including, but not limited to product liability claims, which could exceed our insurance coverage.

Our operations could be impacted by both genuine and fictitious claims regarding products we market. Although primarily all of the consumer products we market are not our property, we could potentially suffer losses from a significant product liability judgment against it. A significant product liability judgment could also result in a loss of consumer confidence in our products and furthermore an actual or perceived loss of value of our brand, materially impacting consumer demand. Although TV Goods carries a limited amount of product liability insurance, the amount of liability from product liability claims may exceed the amount of any insurance proceeds received by TV Goods. We rely upon trademark, copyright and trade secret laws to protect our proprietary rights, which might not provide adequate protection.

Our business is subject to a variety of laws, rules and regulations that could subject us to claims or otherwise harm our business.

Government regulation of direct response, internet and e-commerce is evolving and unfavorable changes could substantially harm our business and results of operations. We are subject to a variety of laws, including the Mail or Telephone Order Merchandise Rule and related regulations of the Federal Trade Commission. These regulations prohibit unfair methods of competition and unfair or deceptive acts or practices in connection with mail and telephone order sales and require sellers of mail and telephone order merchandise to conform to certain rules of conduct with respect to shipping dates and shipping delays. We are also subject to regulations of the U.S. Postal Service and various state and local consumer protection agencies relating to matters such as advertising, order solicitation, shipment deadlines and customer refunds and returns. In addition, imported merchandise is subject to import and customs duties and, in some cases, import quotas. The failure to comply with any of these laws, rules or regulations may subject us to consumer claims or result in delays in marketing products or changes in product marketing, which may reduce our revenues, increase our expenses and adversely affect our profitability.

We are not affiliated with any of the “As Seen On TV” or “Seen On TV” retail stores and “As Seen On TV” and “Seen On TV” are not subject to trademark protection and therefore have been, and will continue to be used by third parties, including online and retail applications with no connections, nor benefits, to our company.

We are not affiliated with any of the “As Seen On TV” or “Seen on TV” retail stores. While we rely on “As Seen On TV” and “Seen On TV” for name recognition and marketing, such terms are not subject to trademark registration or common law protection. Therefore, our competitors have, and will continue, to use such terms in the market. The inability to register the terms may subject our company to negative public perception in the event that one of our competitors sells or distributes a negatively received product under an “As Seen On TV” or “Seen On TV” label. Furthermore, the inability to register “As Seen On TV” or “Seen On TV” may prevent our company from developing a unique brand that exclusively benefits our company.

We rely upon trademark, copyright and trade secret laws to protect our proprietary rights, which might not provide adequate protection.

Our success and ability to compete depends to a significant degree upon the protection of intellectual property rights, including without limitation our trademarks, trade names and trade secrets. We have applied for registration of the trademark “TVGoods”, “Kevin Harington” and TruHair by Chelsea Scot” and have been granted registration for PITCH TANK® mark. While we intend to jointly hold intellectual property rights on products we develop with third parties, we may not be successful in protecting intellectual property rights. We rely on trademark, copyright and trade secret laws, each of which affords only limited protection. Our inability to protect intellectual property rights could seriously harm business, operating results and financial condition.

Litigation could become necessary in the future to enforce intellectual property rights.

Any litigation could be time consuming and expensive to prosecute or resolve, result in substantial diversion of management attention and resources, and materially harm our business, financial condition and results of operations.

Claims that TV Goods infringes upon third parties’ intellectual property rights could be costly to defend or settle.

From time to time, we may encounter disputes over rights and obligations concerning intellectual property. Such claims may be with or without merit. Any litigation to defend against claims of infringement or invalidity could result in substantial costs and diversion of resources. Furthermore, a party making such a claim could secure a judgment awarding substantial damages. A judgment could also include an injunction or other court order that could prevent us from selling products. Our business, operating results and financial condition would be harmed if any of these events occurred.

We could incur substantial costs in our defense against infringement claims. In the event of a claim of infringement, we might be required to obtain one or more licenses from third parties. We might be unable to obtain necessary licenses from third parties at a reasonable cost, if at all. Defense of any lawsuit or failure to obtain any such required licenses could harm our business, operating results and financial condition.

We depend on the services of our Chairman.

Our success largely depends on the efforts, reputation and abilities of Kevin Harrington. TV Goods was established by Kevin Harrington to leverage the exposure from his appearance as an investor on the ABC reality television series, theShark Tank. While we carry $3 million of key man life insurance on Mr. Harrington, the loss of the services of Mr. Harrington could materially harm our business.

Failure to retain and attract qualified personnel could harm our business.

Aside from Mr. Harrington, our success depends on our ability to attract, train and retain qualified personnel. Competition for qualified personnel is intense and we may not be able to hire sufficient personnel to support the anticipated growth of our business. If we fail to attract and retain qualified personnel, TV Goods’ business will suffer. Additionally, companies whose employees accept positions with competitors often claim that such competitors have engaged in unfair hiring practices. We may receive such claims in the future as we seek to hire qualified employees. We could incur substantial costs in defending against any such claims.

We may have difficulty managing any future growth.

While we may need to grow rapidly to implement our business objectives; brisk growth would lead to increased responsibility for both existing and new management personnel. In an effort to manage such growth, we must maintain and enhance our financial and accounting systems and controls, hire and integrate new personnel and manage expanded operations. Despite systems and controls, growth is expected to place a significant strain on our management systems and resources. We will need to continue to improve our operational, managerial and financial controls, reporting systems and procedures, and will need to continue to expand, train and manage our work force. Failure to manage our future growth would have a material adverse effect on the quality of our operations, ability to retain customers and key personnel and operating results and financial condition.

We may not be successful in finding or marketing new products.

Our business operations and financial performance depends on the ability to attract and market new products on a consistent basis. In the direct marketing industry, the average product life cycle varies from six months to four years, based on numerous factors, including competition, product features, distribution channels utilized, cost of goods sold and effectiveness of advertising. Less successful products have shorter life cycles. The majority of products are submitted by inventors. There can be no assurance that we will be successful in acquiring rights to quality products. We select new products based upon management’s expertise and limited market studies. As a result, we need to acquire the rights to quality products with sufficient margins and consumer appeal to justify the acquisition costs. There can be no assurance that chosen products will generate sufficient revenues to justify the acquisition and marketing costs.

Our financial performance is dependent on the disproportionate success of a small group of products.

Our business and results of operations are dependent on the disproportionate success of a small group of products, which we do not produce or manufacture. It is likely that the majority of the products we market may fail to generate sufficient revenues. Furthermore it is likely we will market more products which fail to generate

significant revenues as opposed to products which generate significant revenues. Our sales and profitability will be adversely affected if we are unable to develop a sufficient number of successful products.

Our financial performance may be harmed if unfavorable economic conditions adversely affect consumer spending.

Our success depends to a significant extent upon a number of factors relating to discretionary consumer spending, including economic conditions affecting disposable consumer income such as employment, business conditions, taxation and interest rates. Other events that adversely affect the economy may diminish consumer spending. There can be no assurance that consumer spending will not be affected by adverse economic conditions, thereby adversely affecting our business, financial condition and results of operations.

We face competition from many other types of companies for customers.

We face significant competition within each merchandise category. The markets for our merchandise are highly competitive, and the recent growth in these markets has encouraged the entry of many new competitors as well as increased competition from established companies. There are no significant barriers to entry in the direct marketing industry. Our competitors include large and small retailers, other direct marketing companies, including some with direct response television programs. Furthermore, established brick-and-mortar retail competitors have recently made efforts to sell products through direct response marketing methods. Many of these competitors are larger and have significantly greater financial, marketing and other resources. Increased direct response marketing programs may adversely affect response rates to our direct response television marketing efforts, which would directly affect margins. Our failure to compete successfully would materially and adversely affect our financial condition and results of operations.

We may not be able to respond in a timely and cost effective manner to changes in consumer preferences.

Our merchandise is subject to changing consumer preferences. A shift in consumer preferences away from the merchandise we offer could have a material adverse effect on our financial condition and results of our operations. Our future success depends in part on our ability to anticipate and respond to changes in consumer preferences and there can be no assurance that we will respond in a timely or effective manner. Failure to anticipate and respond to changing consumer preferences could lead to, among other things, lower sales of products, significant markdowns or write-offs of inventory, increased merchandise returns and lower margins, which would have a material adverse effect on our financial condition and results of operations.

Our business would be harmed if manufacturers and service providers are unable to deliver products or provide services in a timely and cost effective manner.

We have entered into an agreement with Presser Direct, LLC to provide the Company with a line of space heaters in the future. During our year ended March 31, 2012, the Company recorded sales of the Living Pure line of heaters of approximately $5,168,000 representing 63% of total revenues for year. We do not have any other long-term contracts with manufacturers, supplies or other service providers. We do not produce or manufacture products we market. In addition, we utilize third party companies to fulfill consumer orders and provide telemarketing services. If Presser Direct, LLC or any other manufacturers or suppliers are unable, either temporarily or permanently, to manufacture or deliver products or provide services in a timely and cost effective manner, it could have an adverse effect on our financial condition and results of operations.

Disruption in our ability to fulfill orders would harm our financial performance.

Our ability to provide effective customer service and efficiently fulfill orders for merchandise depends, to a large degree, on the efficient and uninterrupted operation of the manufacturing and related call centers, distribution centers, and management information systems run by third parties. Furthermore we are dependent on the timely performance of other third party shipping companies. Any material disruption or slowdown in manufacturing, order processing or fulfillment systems resulting from strikes or labor disputes, telephone down times, electrical outages, mechanical problems, human error or accidents, fire, natural disasters, adverse weather conditions or comparable events could cause delays in our ability to receive and fulfill orders and may cause orders to be lost or to be shipped or delivered late. As a result, these disruptions could adversely affect our financial condition or results of operations.

We may experience merchandise returns or warranty claims in excess of our expectations.

Actual merchandise returns and warranty claims may exceed allowances. Any significant increase in merchandise returns or warranty claims would adversely affect our financial condition and results of operations.

Ineffective media purchases may inhibit our ability to sell products, build customer awareness and brand loyalty.

We purchase direct response television programming on cable and broadcast networks, network affiliates and local stations. Significant increases in the cost of media time or significant decreases in the available access to media could adversely affect our financial condition and results of operations.

Our management has limited experience as a reporting company.

Our management team may not successfully or efficiently manage our transition to a reporting company subject to significant regulatory oversight and reporting obligations under federal securities laws. In particular, these new obligations will require substantial attention from our executive officers and may divert their attention from the day-to-day management of our business, which would materially and adversely impact our business operations. We will seek to hire additional executive level employees with experience as a reporting company, however there can be no assurance that our current or future management team will be able to adequately respond to such increased legal, regulatory compliance, and reporting requirements. Our failure to do so could lead to penalties, loss of trading liquidity, and regulatory actions and further result in the deterioration of our business through the redirection of resources.

We may need additional capital, which, if obtained, could result in dilution or significant debt service obligations. We may not be able to obtain additional capital on commercially reasonable terms, which could adversely affect our liquidity and financial position.

We may require additional cash resources; and may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Any failure to raise additional funds on favorable terms could have a material adverse effect on our liquidity and financial condition.

Risks Related to Our Common Stock

Because the market for our common stock is limited, persons who purchase our common stock may not be able to resell their shares at or above the purchase price paid for them.

Our common stock trades on the OTC Markets which is not a liquid market. There is currently only a limited public market for our common stock. We cannot assure you that an active public market for our common stock will develop or be sustained in the future. If an active market for our common stock does not develop or is not sustained, the price may continue to decline.

Because we are subject to the “penny stock” rules, brokers cannot generally solicit the purchase of our common stock which adversely affects its liquidity and market price.

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock on the Bulletin Board has been substantially less than $5.00 per share and therefore we are currently considered a “penny stock” according to SEC rules. This designation requires any broker-dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities.

Due to factors beyond our control, our stock price may be volatile.

Any of the following factors could affect the market price of our common stock:

Our failure to increase revenue in each succeeding quarter;

Our failure to achieve and maintain profitability;

The loss of distribution relationships;

The sale of a large amount of common stock by our shareholders;

Our announcement of a pending or completed acquisition or our failure to complete a proposed acquisition;

Adverse court ruling or regulatory action;

Our failure to meet financial analysts’ performance expectations;

Changes in earnings or loss estimates and recommendations by financial analysts;

Changes in market valuations of similar companies;

Short selling activities;

Our announcement of a change in the direction of our business;

Actual or anticipated variations in our quarterly or in our forecasted results of operations; or

Announcements by us, or our competitors, of significant contracts, acquisitions, commercial relationships, joint ventures or capital commitments.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.

Because we may not be able to attract the attention of major brokerage firms, it could have a material impact upon the price of our common stock.

It is not likely that securities analysts of major brokerage firms will provide research coverage for our common stock since the firm itself cannot recommend the purchase of our common stock under the penny stock rules referenced in an earlier risk factor. The absence of such coverage limits the likelihood that an active market will develop for our common stock. It may also make it more difficult for us to attract new investors at times when we are attempting to acquire additional capital.

Shares eligible for sale or convertible into shares in the future could negatively affect our stock price and dilute shareholders.

The market price of our common stock could decline as a result of sales of a large number of shares of our common stock or the perception that these sales could occur. This might also make it more difficult for us to raise funds through the issuance of securities. As of June 15, 2012, we had 32,120,784 issued and outstanding shares of common stock of which our officers and directors hold or control 4,046,061 shares of common stock. We may also issue and/or register additional shares, options, or warrants in the future in connection with acquisitions, compensation or otherwise. We cannot predict what effect, if any, market sales of shares held by any stockholder or the availability of these shares for future sale will have on the market price of our common stock.

The exercise of the warrants and options will result in dilution to existing shareholders and could negatively affect the market price for our common stock.

At March 31, 2012, we have outstanding warrants to purchase an aggregate of 40,859,253 shares of common stock exercisable at various prices and options to purchase an aggregate of 1,025,000 shares of common stock exercisable at various prices. If all the warrants and options are exercised, based on 31,970,784 shares of common stock issued and outstanding as of March 31, 2012, our issued and outstanding shares would increase by over 131%. In the event that a market for our common stock develops, to the extent that holders of our warrants and options exercise such convertible securities, our existing shareholders will experience dilution to their ownership interest in our company. In addition, to the extent that holders of convertible securities convert such securities and then sell the underlying shares of common stock in the open market, our common stock price may decrease due to the additional shares in the market.

The purchase price protection features of the Company’s securities issued under its Securities Purchase Agreement dated October 28, 2011 could require the Company to issue a substantially greater number of shares of common stock, which will cause dilution to the Company’s stockholders.

Under a securities purchase agreement effective October 28, 2011, the Company issued an aggregate of 15,625,945 shares of common stock and three series of warrants to purchase up to 15,625,000 shares of common stock under a private placement. The Company sold the shares at an initial purchase price of $0.80 per share and the warrants are exercisable at either $0.80 or $1.00 per share. Pursuant to the securities purchase agreement, for a period of up to 24 months, the purchasers may receive additional shares of common stock in the event the Company issues additional securities, at an effective price per share that is less than the initial issuance price of the shares under the securities purchase agreement. In addition, if at any time while the warrants are outstanding the Company issues securities at an effective price per share less than the exercise price of the respective warrants, then the exercise price of the warrants may be reduced to such discounted price.

The change in value of our derivative liabilities could have a material effect on our financial results.

In connection with our recent financings we have issued a significant number of warrants and other securities that each contain derivative liabilities. At each of our financial reporting periods, we are required to determine the fair value of such derivatives and record the fair value adjustments as non-cash unrealized gains or losses. The share price of our common stock represents the primary underlying variable that impacts the value of the derivative instruments. Additional factors that impact the value of the derivative instruments include the volatility of our stock price, our credit rating, discount rates, and stated interest rates. Due to the volatile nature of our share price, we expect that we will recognize non-cash gains or losses on our derivative instruments each reporting period and that the amount of such gains or losses could be material.

The issuance of preferred stock could change control of the company.

Our articles of incorporation authorize the Board of Directors, without approval of the shareholders, to cause shares of preferred stock to be issued in one or more series, with the numbers of shares of each series to be determined by the Board of Directors. Our articles of incorporation further authorize the Board of Directors to fix and determine the powers, designations, preferences and relative, participating, optional or other rights (including, without limitation, voting powers, preferential rights to receive dividends or assets upon liquidation, rights of conversion or exchange into common stock or preferred stock of any series, redemption provisions and sinking fund provisions) between series and between the preferred stock or any series thereof and the common stock, and the qualifications, limitations or restrictions of such rights. In the event of issuance, preferred stock could be used, under certain circumstances, as a method of discouraging, delaying or preventing a change of control of our company. Although we have no present plans to issue any series or shares of preferred stock, we can give no assurance that we will not do so in the future.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 8.

Financial Statements and Supplementary Data.

The requirements of this Item can be found beginning on page F-1 found elsewhere in the Annual Report.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Accountant.

None.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of March 31, 2012. Disclosure controls and procedures are those controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports it files under the

Exchange Act is recorded, processed, summarized and reported within required time periods specified by the rules and forms promulgated by the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or furnish under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As a result of this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2012.

Remediation

Changes in our internal controls over financial reporting have resulted in the remediation of many of the material weaknesses in our control environment which were disclosed in previous filings. This remediation section details the activities which contributed to the remediation.

Our management team is committed to achieving and maintaining a strong control environment, high ethical standards, and financial reporting integrity and transparency. Over the past year, we have strengthened our control over financial reporting to ensure timely and accurate financial reporting. While we have detailed the specific remedial actions taken to address our material weaknesses existing as of March 31, 2011 below, certain broad measures have contributed to a significant improvement in our overall control environment and the effectiveness of our internal control over financial reporting. We have also provided formal training on a variety of financial topics and continue to develop our key accounting policies to provide better guidance on U.S. GAAP requirements.

Following are our material weaknesses reported as of March 31, 2011 and the associated remedial actions we have taken to remediate these material weaknesses as of that date. We have concluded that the material weaknesses are remediated as of March 31, 2012.

U.S. GAAP reporting relating to reverse merger transaction. We did not have the proper policies in place to properly identify and record a reverse recapitalization transaction completed in May 2010.

Remedial actions. We have hired a Chief Financial Officer experienced in properly indentifying and recording reverse merger transactions and have established review policies designed to properly identify criteria and differentiate under U.S. GAAP guidance the differences between a reverse acquisition and reverse recapitalization transaction.

Expense recognition under U.S. GAAP. We did not design or maintain adequate policies and procedures to properly account for rent expense under U.S. GAAP.

Remedial actions. The accounting department has developed policies and procedures to provide guidance to employees with respect to proper recording of expenses consistent with U.S. GAAP guidance. Additionally, we now have in place review procedures relating to proper expense recognition.

Adequate footnote disclosures. We did not design and implement adequate policies and procedures regarding the content of financial statement footnote disclosures.

Remedial actions. We have developed policies and review procedures to ensure that financial statement footnote disclosures are compliant with U.S. GAAP and SEC guidelines. These procedures include a review process and use of current disclosure checklists.

Improper treatment of complex debt and equity transactions. We failed to maintain adequate controls to ensure equity related transactions including required fair value calculations were recorded and properly disclosed.

Remedial actions. We have implemented a sustainable process for indentifying and properly reporting complex equity transactions in accordance with U.S. GAAP. Specifically, we have developed corresponding policies and trained accounting personnel as well as those now responsibly for the review process in the proper identification and recording of equity based transactions.

Insufficient resource restricting ability to report timely. We lacked sufficient resources to complete our financial statements and meet our reporting requirements in a timely manner.

Remedial actions. Due primarily to successful fund raisings, we have been expanding our financial staff, including the hiring of a Chief Financial Officer, implemented a policy of reimbursed training for financial staff and have added additional computer hardware and software resources. This process has also provided for enhanced segregation job responsibilities, provided limited system user access and significantly improved controls relating to our financial statement closing process.

The Company has timely filed its quarterly financial statements on Form 10-Q for the quarters ending September 31, 2011 and December 31, 2011.

Lack of an audit committee resulting in insufficient financial oversight. We failed to have in place an audit committee, including, a designated financial expert, to provide financial oversight to our accounting and financial reporting.

Remedial actions. We have added two independent directors to our board of directors who have formed an audit committee including the appointment of a financial expert. The committee is charged with, and has been, developing financial policies and controls, reviewing and providing oversight to our financial reporting processes, financial statements and public filings.

Based upon the above remedial actions, including testing of new or modified controls, we have concluded that our material weaknesses related to the financial statement closing and reporting processes have been remediated.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our internal control over financial reporting as of March 31, 2012, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future period are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Our management, including the Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of its internal control over financial reporting as of March 31, 2012, based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The COSO framework summarizes each of the components of a company’s internal control system, including (a) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2012.

This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to rules of the SEC that permit the company to provide only management's report in this annual report.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not

limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

Other than the remediation efforts described above, there have been no changes in our internal control over financialreporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.

Other Information.

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

The following table sets forth certain information regarding our executive officers, key employees and directors as of the date of this report. Directors are elected annually and serve until the next annual meeting of shareholders or until their successors are elected and qualify. Officers are elected by our board of directors and their terms of office are at the discretion of our board.


Name	Age	Position

Kevin Harrington	55	Chairman and Senior Executive Officer
Steven Rogai	35	Chief Executive Officer and Director
Dennis Healey	63	Chief Financial Officer
Adrian Swaim	30	Controller
Greg Adams	50	Director
Randolph Pohlman, PhD	68	Director

Kevin Harrington, Senior Executive Officer, Chairman of the Board of Directors

Kevin Harrington has served as Senior Executive Officer and Chairman of the Board of Directors since May 2010. In October 2009 Mr. Harrington formed TV Goods, Inc., a wholly owned subsidiary. He has been involved in the infomercial industry since 1984. Mr. Harrington is an original investor shark on the ABC television series “Shark Tank”, a reality television series produced by reality TV producer Mark Burnett, which premiered August 9, 2009. In 2009 Mr. Harrington published a book entitled “Act Now: How I Turn Ideas into Million-Dollar Products” which chronicles his life and experiences in the direct response industry. In 2008, Mr. Harrington formed TVGoods.com, LLC which was dissolved in 2009. From 1997 to 2008 Mr. Harrington served as CEO of Reliant International, LLC (formerly Reliant Interactive Media, LLC) a direct response marketing company. From 2007 to 2008 Mr. Harrington served as CEO of ResponzeTV, PLC, holding both positions simultaneously. From 1994 to 1997 Mr. Harrington served as CEO of HSN Direct a joint venture Mr. Harrington formed with HSN, Inc. From 1988 to 1994 Mr. Harrington served as President of Quantum Marketing International, Ltd., an electronic retailing company. In 1991 Quantum Marketing International, Ltd. merged with National Media Corporation and renamed as Quantum International, Ltd. In 1984, Kevin produced one of the industry’s first 30 minute infomercials. Mr. Harrington was a co-founder of two global networking associations, the Entrepreneur's Organization (formerly the Young Entrepreneurs Organization) in 1997, and the Electronic Retailing Association in 2000. Mr. Harrington was appointed to serve on the board due to his experience in the infomercial industry.

Steven Rogai, Chief Executive Officer, member of the Board of Directors

Mr. Rogai has served as our Chief Executive Officer since May 2010. In 2009 Mr. Rogai, along with Mr. Harrington cofounded Inventors Business Center, as resource to assist entrepreneurs in product development. From inception Mr. Rogai was Director of Business Development at TV Goods. Mr. Rogai has over 15 years of retail experience. From 2004 to 2008 Mr. Rogai served as President and CEO of Florida Select Mortgage Corp., a mortgage brokerage firm. In 2005 Mr. Rogai created Titan 1 Developments, LLC, a real estate development company, serving as President and CEO from 2005 through 2009. From 2000 to 2004, Mr. Rogai served as branch manager for Florida Mortgage Funding, a national brokerage firm. In May 2008, Steven Rogai filed for protection under Chapter 11 of the U.S. Bankruptcy code in relation to the liquidation of real estate holdings of Titan 1 Developments, LLC.

Dennis Healey, Chief Financial Officer

Dennis Healey is a certified public accountant. Since November 2007, Mr. Healey has provided accounting and financial reporting services to various private and public companies. Commencing first quarter 2010 through the date of his appointment as Chief Financial Officer of our Company on October 28, 2011, Mr. Healey has provided accounting and financial consulting services to the Company. From 1980 until October 2007, Mr. Healey served as Vice President of Finance and Chief Financial Officer of Viragen, Inc., a public company specializing in the research and development of biotechnology products. Viragen filed for an assignment for the benefit of creditors in October 2007.

Adrian Swaim, Controller

Adrian Swaim has served in various capacities with TV Goods, Inc., the Company’s operating subsidiary, since January 2010. Effective March 31, 2012, he was appointed Controller. From 2004 through 2007 Mr. Swaim served as a loan officer in the mortgage financing field. From 2007 through 2009 Mr. Swaim served as the Branch Manager of Florida Select Mortgage Corp. and also concurrently served as the Operations Manager for Titan 1 Developments, LLC. Mr. Swaim filed for bankruptcy protection in 2008.

Greg Adams, Director

Mr. Adams has served as our director since December 22, 2011. He has served as chief operating officer of Green Earth Technologies, Inc. (“Green Earth”) since September 2010, and chief financial officer and secretary of Green Earth since March 2008. Green Earth markets, sells and distributes branded, environmentally-friendly, bio-based performance and cleaning products to the automotive aftermarket, outdoor power equipment and marine markets. Green Earth’s common stock is quoted on the Over-the-Counter Bulletin Board (OTCBB) under symbol “GETG”. From 1999 to 2008, he served as a chief financial officer, a chief operating officer and a director of EDGAR Online Inc., a provider of business information. From 1994 to 1999, he was also chief financial officer and senior vice president, finance of PRT Group Inc., a technology solutions company and the Blenheim Group Plc., U.S. Division, a conference management company. Mr. Adams began his career in 1983 at KPMG in the audit advisory practice where he worked for 11 years. Mr. Adams is a Certified Public Accountant, a member of the New York State Society of Certified Public Accountants and the American Institute of Certified Public Accountants, and served as vice chairman of Financial Executives International’s committee on finance and information technology. He received a B.B.A. degree in Accounting from the College of William & Mary. He was appointed to the board due to his corporate finance and public company management experience.

Randolph Pohlman, PhD

Randolph Pohlman, PhD has served as our director since March 31, 2012. He is Professor and the Dean Emeritus of the H. Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University, the largest independent institution of higher education in the state of Florida and among the top 20 largest independent institutions nationally. He served as the Dean of the H. Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University from 1995 through 2009. Prior to his arrival at Nova Southeastern University, Dr. Pohlman was a senior executive at Koch Industries, the second largest privately held company in the United States. He was recruited to Koch via Kansas State University (KSU), where for more than ten years, he served KSU in a variety of administrative and faculty positions, including holding the L.L. McAninch Chair of Entrepreneurship and Dean of the College of Business. Dr. Pohlman also served as a Visiting Research Scholar at the University of California, Los Angeles, and was a member of the Executive Education Advisory Board of the Wharton School of the University of Pennsylvania. From 2003 through 2007 he served on the board of directors of Viragen, Inc., a public company specializing in the research and development of biotechnology products. Viragen filed for an assignment for the benefit of creditors in October 2007. He has served on a variety of corporate and not for profit boards.

Directors

Our Board of Directors consists of four members: Kevin Harrington as Chairman, Steven Rogai, Randolph Pohlman and Greg Adams.

Committees of the Board of Directors

We have established two committees; an Audit Committee and a Compensation Committee. Our board of directors consists of four members. Greg Adams and Randolph Pohlman serve on our Audit Committee and Compensation Committee. The Audit Committee reviews the professional services provided by our independent auditors, the independence of our auditors from our management, our annual financial statements and our system of internal accounting controls. We do not have a policy regarding the consideration of any director candidates which may be recommended by our shareholders, including the minimum qualifications for director candidates. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our shareholders, including the procedures to be followed. Our board has not considered or adopted any of these policies as we have never received a recommendation from any shareholder for any candidate to serve on our Board of Directors. Given the nature of our operations, we do not anticipate that any of our shareholders will make such a

recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.

Mr. Greg Adams has been designated as our “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:

–

understands generally accepted accounting principles and financial statements;

–

is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves;

–

has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements;

–

understands internal controls over financial reporting; and

–

understands audit committee functions.

While the OTC Markets do not impose any qualitative standards requiring companies to have independent directors, currently two of our directors are “independent,” as defined under the NASDAQ Stock Market Listing Rules. It is our intent to expand our Board of Directors to include a majority of independent directors.

Director Compensation

Pursuant to independent director agreements, the Company has agreed to pay its independent directors an annual fee of $18,000 for serving on the board of directors and an additional $3,000 per year for serving as a committee chairperson and $2,000 per year for serving on a committee in a non chairperson position. In addition, the Company has issued each independent director options to purchase up to 25,000 shares of the Company’s common stock. The independent director options are exercisable at 100% of the closing price of our common stock as reporting on the OTC Markets on the date prior to such director’s appointment to the board. Options to purchase 12,500 shares of common stock vest 12 months from date of appointment to the board, and options to purchase 12,500 shares vest 24 months from date of appointment. The options are issued pursuant and subject to the Company’s equity incentive plan.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics to provide guiding principles to all of our employees, which is filed as an exhibit to our annual report for the fiscal year ended February 28, 2009, filed with the SEC on May 28, 2009. Our Code of Business Conduct and Ethics does not cover every issue that may arise, but it sets out basic principles to guide our employees and provides that all of our employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. Any employee who violates our Code of Business Conduct and Ethics will be subject to disciplinary action, up to an including termination of his or her employment.

Generally, our Code of Business Conduct and Ethics provides guidelines regarding:

–

compliance with laws, rules and regulations;

–

conflicts of interest;

–

insider trading;

–

corporate opportunities;

–

competition and fair dealing;

–

discrimination and harassment;

–

health and safety;

–

record keeping;

–

confidentiality;

–

protection and proper use of company assets;

–

payments to government personnel;

–

waivers of the Code of Business Conduct and Ethics;

–

reporting any illegal or unethical behavior; and

–

compliance procedures.

We have also adopted a Code of Ethics for our Senior Financial Personnel who are also subject to specific policies regarding:

–

disclosures made in our filings with the Securities and Exchange Commission;

–

deficiencies in internal controls or fraud involving management or other employees who have a significant role in our financial reporting, disclosure or internal controls;

–

conflicts of interests; and

–

knowledge of material violations of securities or other laws, rules or regulations to which we are subject.

Family Relationships

There are no family relationships among any of our executive officers or directors.

Involvement in Certain Legal Proceedings

None of our directors or executive officers have been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions”, none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Shareholder Communications

Although we do not have a formal policy regarding communications with our Board, shareholders may communicate with the Board by writing to us at As Seen On TVC, 14044 Icot Boulevard, Clearwater, Florida 33760, Attention: Chief Executive Officer, or by facsimile (727) 330-7843. Shareholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and the other equity securities. Officers, directors and 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of the forms furnished to us, and written representations from reporting persons that no Form 5’s were required, we believe that all filing requirements were complied with during fiscal year ended March 31, 2012.

Item 11.

Executive Compensation.

2012 Summary Compensation Table

The following table summarizes all compensation recorded by us in the last two completed fiscal years for:

–

our principal executive officer or other individual serving in a similar capacity;

–

our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at March 31, 2012, as that term is defined under Rule 3b-7 of the Securities Exchange Act of 1934; and

–

up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at March 31, 2012.

For definitional purposes, these individuals are sometimes referred to as the “named executive officers”.


Name A	Year B		Salary (S) C		Bonus ($) D		Stock Awards ($) E		Option Awards ($) F			Non Equity Incentive Plan Compensation ($) G		Nonqualified Deferred Compensation (S) H		All Other Compensation ($) I		Total (S) J
Kevin Harrington¹	2012		$	300,000	$	150,000	$	—	$	—		$	—	$	—	$	—	$	450,000
	2011	⁴	$	300,000	$	—	$	—	$	—		$	—	$	—	$	22,018	$	322,018
	2010		$	113,000	$	—	$	—	$	—		$	—	$	—	$	4,761	$	117,761

Steven Rogai²	2012		$	177,404	$	100,000	$	—	$	129,700	⁵	$	—	$	—	$	—	$	407,104
	2011	⁴	$	150,000		—	$	—	$	280,000	⁶	$	—	$	—	$	10,500	$	440,500
	2010		$	3,900	$	—	$	—	$	—		$	—	$	—	$	—	$	3,900

Dennis Healey³	2012		$	110,539	$	50,000	$	—	$	43,200	⁷	$	—	$	—	$	—	$	203,739

Adrian Swaim	2012		$	67,846	$	25,000	$	—	$	64,900		$	—	$	—	$	—	$	157,746

———————

Mr. Harrington currently serves as Senior Executive Officer and Chairman of our Board of Directors. Compensation paid by TV Goods.

Mr. Rogai currently serves as our Chief Executive Officer and as a member of the Board of Directors. Compensation paid by TV Goods.

Mr. Healey commenced serving as chief financial officer on October 28, 2011. Salary scheduled includes approximately $52,000 earned as a consultant prior to his employment, which commenced October 28, 2011.

⁴

Excludes shares of common stock issued pursuant to the merger agreement with TV Goods.

⁵

Option awards to Mr. Rogai totaling $129,700 reflect the aggregate fair value of 150,000 stock options, exercisable at $0.96 per share, granted September 26, 2011. The fair value of the options granted was determined in accordance with the provisions of FASB ASC Topic 718.

⁶

Option Awards to Mr. Rogai totaling $280,000 reflect the aggregate fair value of 350,000 stock options, exercisable at $1.50 per share, granted on May 26, 2010. The fair value of the options granted was determined in accordance with the provisions of FASB ASC Topic 718 with assumptions as detailed in Note 2 to our audited financial information for the year ending March 31, 2011.

⁷

Option awards to Mr. Healey totaling $43,200 reflect the aggregate fair value of 50,000 stock options, exercisable at $0.96 per share, granted September 26, 2011. The fair value of the options granted was determined in accordance with the provisions of FASB ASC Topic 718.

Grants of Plan Based Awards

The following chart reflects the number of stock options we awarded in fiscal 2012 to our executive officers and directors.


Name	Number of Options		Exercise Price per Share		Expiration Date

Steve Rogai		150,000	$	0.96	9/26/2016
Dennis Healey		50,000	$	0.96	9/26/2016
Adrian Swaim		75,000	$	0.96	9/26/2016
Greg Adams		25,000	$	1.00	12/22/2016
Dr. Randolph Pohlman		25,000	$	0.82	3/31/2017

Equity Compensation Plan Information

The following chart reflects the number of awards granted under equity compensation plans approved and not approved by shareholders and the weighted average exercise price for such plans as of March 31, 2012.


Name Of Plan	Number of shares of common stock to be issued upon exercise of outstanding options (a)		Weighted-average exercise price of of outstanding options (b)		Number of shares remaining available for future issuance under equity compensation plans (excluding the shares reflected in column (a)) (c)
Equity compensation plans approved by security holders		1,025,000		1.41		675,000

Equity compensation plans not approved by security holders		—	$	—		—

Total		1,025,000	$	1.41		675,000

Outstanding Equity Awards At March 31, 2012 Fiscal Year-End

Listed below is information with respect to unexercised options for each Named Executive Officer as of March 31, 2012.


Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price ($)	Option Expiration Date

Kevin Harrington	—	—	—	—

Steve Rogai	350,000	—	1.50	5/25/2015
	75,000	—	0.96	9/26/2016
		75,000	0.96	9/26/2016

Dennis W. Healey	50,000	—	1.50	5/26/2015
	37,500	—	2.20	12/20/2015
	25,000	—	0.96	9/26/2016
	—	12,500	2.20	12/20/2015
	—	25,000	0.96	9/26/2016

Adrian Swaim	50,000	—	1.50	5/26/2015
	37,500	—	2.20	12/20/2015
	37,500	—	0.96	9/26/2016
	—	12,500	2.20	12/20/2015
	—	37,500	0.96	9/26/2016

Employment Agreements

Effective on October 28, 2011, the Company entered into a three year services agreement with Kevin Harrington and Harrington Business Development, Inc. to provide executive services and for Mr. Harrington to serve as Chairman of the Board of Directors of the Company. Under the agreement Mr. Harrington shall receive base compensation per annum of $300,000. This agreement supersedes all prior oral and written agreements between the Company and Mr. Harrington, including, but not limited to that certain executive services agreement dated April 30, 2010. Furthermore, on the Closing Date the Company also entered into three-year employment agreements with Steve Rogai and Dennis Healey. Mr. Rogai shall serve as the Company’s Chief Executive Officer and President and will receive an annual base salary of $225,000. Mr. Healey shall serve as the Company’s Chief Financial Officer and will receive an annual base salary of $140,000.

Under the agreements, Harrington, Rogai and Healey (collectively, the “Executives” and each, an “Executive”) shall, in addition to base compensation, be entitled to such bonus compensation as determined by the Company’s Board of Directors from time to time. In addition, each Executive shall be entitled to receive reimbursement for all reasonable travel, entertainment and miscellaneous expenses incurred in connection with the performance of his duties. Furthermore, each Executive is entitled up to a vacation of two weeks per annum and is entitled to participate in any pension, insurance or other employment benefit plan as maintained by the Company for its executives, including programs of life and medical insurance and reimbursement of membership fees in professional organizations. The Company has agreed to maintain a minimum of $5,000,000 of directors and officers liability coverage during each Executive’s employment term and the Company shall indemnify each Executive to the fullest extent permitted under Florida law. In the event of termination for death or disability, the Executives’ estate shall receive three months base salary at the then current rate, payable in a lump sum and continued payment for a payment of one year following Executives’ death of benefits under any employee benefit plan extended from time to time by the Company to its senior executives. In the event the Executive is terminated for cause or without good reason, as defined under the agreement, the Executive shall have no right to compensation or reimbursement or to participate in any benefit programs, except as may otherwise be provided by law, for any period subsequent to the effective date of termination. In the event of termination without cause, for good reason or change of control, as defined under the agreement, the Company shall pay the Executive 12 months base salary at the then current rate, to be paid from the date of termination until paid in full, any accrued benefits under any employee benefit plan extended to the Executive, and Executive shall be entitled to immediate vesting of all granted but unvested options and the payment on a pro rate basis of any bonus or other payments earned in connection with any bonus plan to which the Executive was a participant. Each agreement also contains a non-competition and non-solicitation provision for a period of up to nine months from the date of termination.

Except as otherwise disclosed above, we have not entered into employment agreements with, nor have we authorized any payments upon termination or change-in-control to any of our executive officers or key employees.

How Compensation for our Directors’ and Executive Officers’ was Determined

Our Board of Directors, consisting of such members serving on the date of the subject compensatory arrangement, determined the amount of compensation payable to our Directors and Executive Officers.

Limitation on Liability

Under our articles of incorporation, our directors are not liable for monetary damages for breach of fiduciary duty, except in connection with:

–

breach of the director's duty of loyalty to us or our shareholders;

–

acts or omissions not in good faith or which involve intentional misconduct, fraud or a knowing violation of law;

–

a transaction from which our director received an improper benefit; or

–

an act or omission for which the liability of a director is expressly provided under Florida law.

In addition, our bylaws provides that we must indemnify our officers and directors to the fullest extent permitted by Florida law for all expenses incurred in the settlement of any actions against such persons in connection with their having served as officers or directors.

Insofar as the limitation of, or indemnification for, liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling us pursuant to the foregoing, or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such limitation or indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table shows the number of shares and percentage of all shares of common stock issued and outstanding as of June 25, 2012, held by any person known to the Company to be the beneficial owner of 5% or more of the Company’s outstanding common stock, by each executive officer and director, and by all directors and executive officers as a group. The persons named in the table have sole voting and investment power with respect to all shares beneficially owned. Unless otherwise noted below, each beneficial owner has sole power to vote and

dispose of the shares and the address of such person is c/o our corporate offices at 14044 Icot Boulevard, Clearwater, Florida 33760. Pursuant to Rule 13d-3 under the Exchange Act, a person has beneficial ownership of any securities as to which such person, directly or indirectly, through any contract, arrangement, undertaking, relationship or otherwise has or shares voting power and/or investment power or as to which such person has the right to acquire such voting and/or investment power within 60 days. Applicable percentage of ownership is based on 32,120,784 shares of common stock outstanding as of June 25, 2012 together with securities exercisable or convertible into shares of common stock within sixty (60) days of June 25, 2012 for each stockholder.


Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		% of Class

Kevin Harrington	3,137,311	¹	9.8%
Steven Rogai	1,649,235	²	5.1%
Dennis Healey	125,000	³	*
Adrian Swaim	137,500	⁴	*
Randolph Pohlman	0	⁶	—
Greg Adams	0	⁵	—

All Directors and Executive Officers as a Group (6 Persons)	5,049,046		15.5%

———————

* less than 1%

The number of shares beneficially owned by Mr. Harrington includes 3,122,311 shares held by Harrington Business Development, Inc., an entity controlled by Mr. Harrington and 15,000 shares held in his own name. Mr. Harrington has voting and dispositive control over securities held by Harrington Business Development.

Includes 1,224,235 shares of common stock presently outstanding, of which 340,485 shares are held by SAR TV, Inc., an entity owned and controlled by Mr. Rogai. Also includes 425,000 shares of common stock underlying options exercisable at prices ranging from $0.96 per share to $1.50 per share. Does not include 75,000 shares of common stock underlying options subject to vesting requirements.

The number of shares beneficially owned by Mr. Healey includes 12,500 shares of common stock and 112,500 shares underlying options exercisable at prices ranging from $0.96 per share to $2.20 per share. Does not include 37,500 shares of common stock underlying options subject to vesting requirements.

⁴

The number of shares beneficially owned by Mr. Swaim includes 12,500 shares of common stock and 125,000 shares underlying options exercisable at prices ranging from $0.96 per share to $2.20 per share. Does not include 37,500 shares of common stock underlying options subject to vesting requirements.

⁵

Excludes 12,500 shares of common stock underlying options that vest on March 31, 2013 and 12,500 shares of common stock underlying options that vest on March 31, 2014.

⁶

Excludes 12,500 shares of common stock underlying options that vest on December 23, 2012 and 12,500 shares of common stock underlying options that vest on December 23, 2013.

Stock Option Plans

We presently have two stock option plans:

–

2010 Executive Equity Incentive Plan, as amended (“2010 Executive Plan”); and

–

2010 Non Executive Equity Incentive Plan, as amended (“2010 Non Executive Plan”).

The purpose of the each of the plans is to advance the interests of our company by providing an incentive to attract, retain and motivate highly qualified and competent persons who are important to us and upon whose efforts and judgment the success of our company is largely dependent, including our officers and directors, key employees, consultants and independent contractors. Our officers, directors, key employees and consultants are eligible to receive awards under the each of the plans.

Our plans are administered by the Board of Directors which determines, from time to time, those of our officers, directors, employees and consultants to whom plan options will be granted, the terms and provisions of the plan options, the dates such plan options will become exercisable, the number of shares subject to each plan option, the purchase price of such shares and the form of payment of such purchase price.

Options granted may either be options qualifying as incentive stock options (“Incentive Options”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or options that do not so qualify (“Non-Qualified Options”).

The price per share issuable upon exercise of an option shall be determined by the Board of Directors at the time of the grant and shall (i) in the case of an ISO, not be less than the fair market value of the shares on the date of grant; (ii) in the case of an ISO granted to a holder of more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary, be at least 110% of the fair market value of the shares on the date of grant; or (iii) in the case of an NQSO, shall be no less than ninety percent (90%) of the fair market value per share on the date of grant. For the purposes of the Plan, the “fair market value” of the shares shall mean (i) if shares are traded on an exchange or over-the-counter market, the mean between the high and low sales prices of shares on such exchange or over-the-counter market on which such shares are traded on that date, or if such exchange or over-the-counter market is closed or if no shares have traded on such date, on the last preceding date on which such shares have traded or (ii) if shares are not traded on an exchange or over-the-counter market, then the fair market value of the shares shall be the value determined in good faith by the Board of Directors, in its sole discretion. All other questions relating to the administration of our plans and the interpretation of the provisions thereof are to be resolved at the sole discretion of the Board of Directors.

The Board of Directors may amend, suspend or terminate either the 2010 Executive Plan or the 2010 Non Executive Plan at any time, except that no amendment shall be made which:

–

increases the total number of shares subject to the plan or changes the minimum purchase price therefore (except in either case in the event of adjustments due to changes in our capitalization);

–

affects outstanding options or any exercise right thereunder;

–

extends the term of any option beyond 10 years; or

–

extends the termination date of the plan.

Unless suspended or terminated by the Board of Directors, each plan terminates 10 years from the date of the plan's adoption. Any termination of the plan does not affect the validity of any options previously granted thereunder.

The per share purchase price of shares subject to options granted under the Plan may be adjusted in the event of certain changes in our capitalization, but any such adjustment shall not change the total purchase price payable upon the exercise in full of options granted under the Plan. Officers, directors and key employees of and consultants to us and our subsidiaries will be eligible to receive Non-Qualified Options under the Plan. Only our officers, directors and employees who are employed by us or by any of our subsidiaries thereof are eligible to receive Incentive Options.

2010 Executive Equity Incentive Plan

In May 2010, our Board of Directors adopted the 2010 Executive Equity Incentive Plan, as amended (“2010 Executive Plan”). We have reserved 900,000 shares of common stock under the 2010 Executive Plan. As of June 25, 2012, we have outstanding options to purchase 550,000 shares of common stock under the 2010 Executive Plan exercisable at prices ranging from $0.96 per share to $1.50 per share. As of June 25, 2012, there are 350,000 shares available for issuance under this plan.

2010 Non Executive Equity Incentive Plan

In May 2010, our Board of Directors adopted the 2010 Non Executive Equity Incentive Plan, as amended (“2010 Non Executive Plan”). We have reserved 800,000 shares of common stock under the 2010 Non-Executive Plan. As of June 25, 2012, we have outstanding options to purchase 475,000 shares under the Non-Executive Plan exercisable at prices ranging from $0.96 per share to $2.20 per share. As of June 25, 2012, there are 325,000 shares available for issuance under this plan.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

We describe below certain transactions and series of similar transactions that have occurred since TV Goods’ inception to which we were a party or will be a party, including transactions in which:

–

the amounts involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our Company’s total assets at year end for the last two fiscal years; and

–

a director, executive officer or holder of more than 5% of our common stock or any member of his or her immediate family had or will have a direct or indirect material interest.

We currently have two independent members on our board of directors. It is our policy that the disinterested members of our board of directors approve or ratify transactions involving directors, executive officers or principal stockholders or members of their immediate families or entities controlled by any of them in which they have a substantial ownership interest in which the amount involved may exceed the lesser of $120,000 or 1% of the average of our total assets at year end and that are otherwise reportable under SEC disclosure rules. Such transactions include employment of immediate family members of any director or executive officer.

Our Chief Executive Officer had loaned the Company funds in the past to meet short-term working capital needs. These loans totaled $107,000, with related accrued interest of $0 and $2,354 at March 31, 2012 and 2011, respectively. The loan was unsecured and carried an interest rate of 12% per annum. In May 2010, this obligation was formalized through the issuance of a 12% Convertible Promissory Note payable in the principal amount of $107,000, due May 25, 2011. The 12% Convertible Promissory Note was convertible into common shares of the Company at $1.50 per share and carried an interest rate of 12% per annum. The conversion feature of the Promissory Note proved beneficial under the guidance of ASC 470--Debt. Accordingly, a beneficial conversion feature of $107,000 was recognized and was accreted to interest expense over the initial one year term of the note. The accreted note payable to officer balance totaled $0 and $91,219 at March 31, 2012 and 2011, respectively. On May 25, 2011, the Promissory Note was amended to extend the maturity one additional year under the same terms.

On August 18, 2011, our Chief Executive Officer entered into a Subordination Agreement relating to his note. In connection with our Bridge Debenture offering in the amount of $1,800,000, Mr. Rogai agreed to subordinate his position to that of the Bridge Offering investors. On October 28, 2011, the note in the principal amount of $107,000 was converted into Units offered in connection with the Company’s October 28, 2011 financing. As a result, Mr. Rogai received 133,750 common shares and 133,750 warrants exercisable at $1.00 per share. See Note 7.

During the period ending March 31, 2010, we loaned approximately $141,000, including approximately $6,000 in accrued interest, to TV Goods.com, LLC, a company controlled by Tim Harrington, brother of our Chairman and Senior Executive Officer. The loans were made to fund certain projects which were believed to have potential mutual benefit. The loans are unsecured, carried an interest rate of 12% per annum and are payable on demand. These amounts were deemed and reported as an obligation of our Chairman, Kevin Harrington. On November 23, 2010, Kevin Harrington tendered 42,056 shares of our common stock to the Company as payment in full of the loans totaling $151,400, inclusive of related interest of approximately $16,400. The shares were retired. The shares tendered were valued at $3.60 per share, the closing price of our common stock on the settlement date.

During May 2011, the Company entered into a non-binding term sheet with SMS Audio, LLC, an affiliate of Curtis Jackson (aka 50 Cent), a musician and entertainer. Under the non-binding term sheet we agreed to joint marketing efforts to produce and distribute a direct response television infomercial to market wireless over-the-ear headphone products to be offered or sold by SMS Audio that are endorsed by or bear the name of “50 Cent”. At the date of execution of the term sheet, Mr. Jackson was deemed to be an affiliate of the Company. We cannot provide any assurances that we will enter into a binding agreement with SMS Audio. Mr. Jackson is a principal of G-Unit Brands, Inc. During November 2010, G-Unit purchased 375,000 shares of common stock, 375,000 Series A Warrants, 375,000 Series B Warrants and 375,000 Series C Warrants at an aggregate purchase price of $750,000. A majority of the proceeds from the sale of the Units were used for the development of certain “50 Cent” branded products under an infomercial and production agreement dated October 13, 2010, between our company, Sleek Audio, LLC and G-Unit Brands Inc., which was subsequently terminated. Under the terms of the infomercial and production agreement, we contributed $182,100 for product tooling and invested $250,000 for a 5% equity interest in Sleek Audio, LLC. The agreement was subsequently terminated and Sleek Audio retained the product tooling. Accordingly, during our fourth fiscal quarter ended March 31, 2011, we wrote-off our equity investment in Sleek Audio of $250,000 and tooling costs of $182,100.

On March 15, 2012, the Company entered into a distribution and marketing agreement with SMS Audio relating to the promotion and sale of SMS Audio products via major live television shopping networks and their related websites and AsSeenOnTV.com in the U.S. The initial term of the agreement is 12 months. The agreement includes, but is not limited to the product lines of SYNC by 50 Over-Ear Headphones, STREET by 50 Over-Ear Headphones and STREET by 50 In-Ear Headphones. SMS and the Company agree that Curtis Jackson III (aka 50 Cent) may appear for certain television airings for the products as agreed upon by the parties and Mr. Jackson. The agreement does not provide for any minimum purchases or sales commitments by either party and may be terminated by SMS Audio without cause upon 60 days notice. To date we have not sold any products or generated any revenues under the agreement.

Effective March 23, 2011, Michael Cimino resigned from our Board of Directors and his position as Executive Director of TV Goods, Inc. In connection with his resignation, the Company entered into an agreement with Mr. Cimino which provided: (i) all granted but yet unvested options granted to Mr. Cimino would fully vest; (ii) Mr. Cimino would continue to work with the Company on a project-by-project basis and would receive 25,000 common shares which vest August 25, 2011; and (iii) upon commencement of a written consulting agreement to commence no earlier than February 25, 2012, Mr. Cimino would be granted an additional 25,000 common shares and additional compensation for his consulting services of $6,000 per month for a period of one year. The agreement with Mr. Cimino further provided that Mr. Cimino agreed not to sell on a trading market any common shares held by him until the earlier of 30 calendar days after the effective date of the Company’s pending registration statement or seven (7) months from the completion of a then pending funding transaction which closed June 15, 2011. The Company also had agreed to reimburse certain pre-approval travel related expenses, not to exceed $600 per month. Concurrent with Mr. Cimino’s resignation, a dispute arose between Mr. Cimino and the Company as the result of Mr. Cimino’s violation of the terms of his resignation agreement. This violation stemmed from Mr. Cimino failing to provide certain post resignation services agreed to relating to certain open transactions pending and in negotiations during his tenure. Accordingly, the Company believes that it has no obligations to Mr. Cimino under his resignation agreement.

Item 14.

Principal Accounting Fees and Services.

Currently, our Board reviews and approves audit and permissible non-audit services performed by its current independent registered public accounting firm, EisnerAmper LLP as well as the fees charged for such services. In its review of non-audit service and its appointment of EisnerAmper LLP the Company’s independent registered public accounting firm, the Board considered whether the provision of such services is compatible with maintaining independence. All of the services provided and fees charged by EisnerAmper were approved by the Board, acting as our Audit Committee. The following table shows the fees for the year ended March 31, 2011 and March 31, 2012.


	EisnerAmper
	2012		2011
Audit Fees^(*)	$	158,000	$	70,000
Audit Related Fees	$	—	$	—
Tax Fees	$	—	$	—
All Other Fees	$	—	$	—

———————

(*)

Consists of fees billed for the audit of our annual financial statements and review of financial statements included in our Quarterly Reports on Form 10-Q and consents.

PART IV

Item 15.

Exhibits, Financial Statement Schedules.

(a)

Documents filed as part of the report.

(1)

All Financial Statements

(2)

Financial Statements Schedule

(3)

Exhibits


Exhibit Number		Description
2.1		Agreement and Plan of Merger effective May 28, 2010 (1)
3.1		Articles of Incorporation (2)
3.2		Amendment to Articles of Incorporation dated April 18, 2008 (2)
3.3		Amendment to Articles of Incorporation dated August 5, 2010 (increase in authorized common stock) (16)
3.4		Amendment to Articles of Incorporation effective October 28, 2011 (name change and reverse split) (11)
3.5		Bylaws (2)
4.1		Form of Series A, B and C Warrant 2010 (1)
4.2		Form of Placement Agent Warrant 2010 (1)
4.3		Convertible Promissory Note issued to Steven Rogai (1)
4.4		Form of Series A-1, B-1 and C-1 Warrant (14)
4.5		Convertible Debenture dated April 8, 2011(5)
4.5.1		Amendment to Convertible Debenture dated April 8, 2011 (10)
4.6		Form of Convertible Debenture issued August 29, 2011 (10)
4.7		Form of Warrant issued August 29, 2011 (10)
4.8		Form of Warrant issued under Securities Purchase Agreement dated October 28, 2011 (11)
4.9		Form of Placement Agent Warrant issued under Securities Purchase Agreement dated October 28, 2011 (11)
4.10		Form of Common Stock Warrant issued under Securities Purchase Agreement dated October 28, 2011 (11)
10.1.1		Services Agreement with Kevin Harrington (8)
10.1.2		Employment Agreement with Steve Rogai (8)
10.1.3		Employment Agreement with Dennis Healey (8)
10.1.4		Form of Independent Director Agreement (8)
10.1.5		Form of Lock Up Agreement (8)
10.2		Executive Equity Incentive Plan (3)
10.3		Non Executive Equity Incentive Plan (3)
10.5		Form of 2010 Private Placement Subscription Agreement (14)
10.6		Form of October 2010 Private Placement Subscription Agreement (14)
10.6		Infomercial Production and Brand License Agreement (7)
10.8		Securities Purchase Agreement dated April 11, 2011 (5)
10.9		Securities Purchase Agreement dated May 27, 2011 (6)
10.10		Severance, Consulting and Release Agreement dated March 23, 2011 (14)
10.11		Securities Purchase Agreement effective August 29, 2011 (10)


10.12		Notice, Consent, Amendment and Waiver Agreement between the Company and a majority of the Purchasers under the Securities Purchase Agreement dated May 27, 2011, effective August 29, 2011 (10)
10.13		Securities Purchase Agreement dated October 28, 2011 (11)
10.14		Binding Letter Agreement dated May 27, 2011 (12)
10.15		Stratcon Partners, LLC Agreement dated December 6, 2011 (13)
10.16		Purchasing and Marketing Agreement with Presser Direct(14)
21.1		List of subsidiaries of the Company (14)
31.1		Certification Pursuant to Rule 13a-14(a) (Provided herewith)
31.2		Certification Pursuant to Rule 13a-14(a)/15d-14(a) (Provided herewith)
32.1		Certification Pursuant to Section 1350 (Provided herewith)
32.2		Certification Pursuant to Section 1350 (Provided herewith)
101.INS	*	XBRL Instance Document
101.SCH	*	XBRL Taxonomy Extension Schema Document
101.CAL	*	XBRL Taxonomy Calculation Linkbase Document
101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document

———————

* These exhibits are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such exhibits will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we incorporate them by reference

(1)

Incorporated by reference to Form 8-K dated May 28, 2010 filed on June 4, 2010.

(2)

Incorporated by reference to Registration Statement on Form S-1 Registration Statement filed April 24, 2008 (333-150419).

(3)

Incorporated by reference to Schedule 14C Definitive Information Statement filed on July 8, 2010.

(4)

Incorporated by reference to Form 10-Q Quarterly Report for the period ended December 31, 2010.

(5)

Incorporated by reference to Form 8-K dated April 11, 2011 filed on April 15, 2011.

(6)

Incorporated by reference to Form 8-K dated May 27, 2011 filed on June 8, 2011.

(7)

Incorporated by reference to Form 10-K Annual Report for the year ended March 31, 2011.

(8)

Incorporated by reference to Form 8-K dated October 28, 2011 filed on November 3, 2011.

(9)

Incorporated by reference to the Company’s Definitive Information Statement filed on September 19, 2011.

(10)

Incorporated by reference to Form 8-K dated August 29, 2011 filed on August 31, 2011.

(11)

Incorporated by reference to Form 8-K dated November 18, 2011 as filed on November 21, 2011.

(12)

Incorporated by reference to Form 8-K dated May 27, 2011 filed on June 3, 2011.

(13)

Incorporated by reference to Form 8-K dated December 6, 2011 filed on December 12, 2011.

(14)

Incorporated by reference to Form S-1 Registration Statement (333-170778).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: June 29, 2012


	As Seem On TV, Inc.

	By:	/s/ Steve Rogai
		Steve Rogai
		Chief Executive Officer (Principal Executive Officer)

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.


Signature	Title	Date

/s/Steve Rogai	Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Director	June 29, 2012
Steve Rogai		June 29, 2012

/s/Dennis W. Healey	Principal Financial Officer and Principal Accounting Officer	June 29, 2012
Dennis W. Healey

/s/Kevin Harrington	Senior Executive Officer and Chairman of the Board of Directors	June 29, 2012
Kevin Harrington

/s/Adrian Swaim	Controller	June 29, 2012
Adrian Swaim

/s/Greg Adams	Director	June 29, 2012
Greg Adams

/s/Randolph Pohlman	Director	June 29, 2012
Randolph Pohlman

INDEX TO FINANCIAL STATEMENTS

AS SEEN ON TV, INC. AND SUBSIDAIRIES
CONSOLIDATED FINANCIAL STATEMENTS


	Page

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets	F-3

Consolidated Statements of Operations	F-4

Consolidated Statements of Stockholders’ Equity/(Deficiency)	F-5

Consolidated Statements of Cash Flows	F-6

Notes to Consolidated Financial Statements	F-7-26

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

As Seen On TV, Inc.

We have audited the accompanying consolidated balance sheets of As Seen On TV, Inc. and Subsidiaries (the “Company”) as of March 31, 2012 and 2011, and the related consolidated statements of operations, stockholders’ equity (deficiency), and cash flows for each of the years in the two-year period ended March 31, 2012. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of As Seen On TV, Inc. and Subsidiaries as of March 31, 2012 and 2011 and the consolidated results of their operations and their cash flows for each of the years in the two-year period ended March 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

/s/ EisnerAmper LLP

Edison, New Jersey

June 29, 2012

F-2

AS SEEN ON TV, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	March 31,
	2012			2011

ASSETS
Current Assets:
Cash and cash equivalents	$	4,683,186		$	35,502
Accounts receivable, net		2,055,162			82,238
Advances on inventory purchases		304,702			—
Inventories		1,561,314			1,107
Deferred offering costs		—			63,500
Prepaid expenses and other current assets		262,163			46,370
Total current assets		8,866,527			228,717

Investments, at cost		—			150,000
Certificate of deposit – non current		50,000			—
Property, plant and equipment, net		140,000			92,732
Deposit on asset acquisition		729,450			—

Total Assets	$	9,785,977		$	471,449
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable	$	433,591		$	332,833
Notes payable officer		—			91,219
Deferred revenue		33,750			88,652
Accrued interest related parties		—			2,354
Accrued registration rights penalty		156,000			156,000
Accrued expenses and other current liabilities		601,695			108,326
Notes payable – current portion		28,737			9,714
Warrant liability		25,797,615			4,117,988
Total current liabilities		27,051,388			4,907,086

Commitments and contingencies

Stockholders' equity (deficiency):
Preferred stock, $.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2012 and 2011, respectively.		—			—
Common stock, $.0001 par value; 750,000,000 and 400,000,000 shares authorized at March 31, 2012 and 2011, respectively, and; 31,970,784 and 10,886,374 issued and outstanding at March 31, 2012 and 2011, respectively.		3,197			1,089
Additional paid-in capital		—			3,460,597
Accumulated deficit		(17,268,608	)		(7,897,323	)
Total stockholders' equity (deficiency)		(17,265,411	)		(4,435,637	)

Total liabilities and stockholders' equity (deficiency)	$	9,785,977		$	471,449

See accompanying notes to consolidated financial statements

F-3

AS SEEN ON TV, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended March 31,
	2012			2011

Revenues	$	8,165,470		$	1,354,238
Cost of revenues		6,270,508			1,838,367

Gross profit (loss)		1,894,962			(484,129	)

Operating expenses:
Selling and marketing expenses		3,517,765			—
General and administrative expenses		4,970,616			4,271,965

Loss from operations		(6,593,419	)		(4,756,094	)


Other (income) expense:
Warrant revaluation		(5,452,436	)		1,935,256
Loss of extinguishment of debt		2,950,513			—
Revaluation of derivative liability		(209,351	)		—
Registration rights penalty		—			156,000
Interest income - related party		—			(10,440	)
Other income		(10,076	)		(25,407	)
Interest expense		4,181,642			63,212
Interest expense - related party		23,271			104,783
		1,483,563			2,223,404

Loss before income taxes		(8,076,982	)		(6,979,498	)

Provision for income taxes		—			—

Net loss	$	(8,076,982	)	$	(6,979,498	)

Loss per common share – basic and diluted	$	(0.40	)	$	(0.70	)

Weighted-average number of common shares outstanding – basic and diluted		20,240,435			9,923,596

See accompanying notes to consolidated financial statements

F-4

AS SEEN ON TV, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIENCY)

YEARS ENDED MARCH 31, 2012 AND 2011


	Common Shares, $.0001 Par Value Per Share					Additional Paid-In Capital			Accumulated Deficit			Total
	Shares Issued		Amount			Additional Paid-In Capital			Accumulated Deficit			Total

Balance April 1, 2010	7,909,375			791			308,584			(917,825	)		(608,450	)

Reverse recapitalization transaction	143,375			14			(320,014	)		—			(320,000	)

Warrants issued in Units offering	—			—			(2,182,732	)		—			(2,182,732	)

Common stock issued towards settlement of notes payable	515,367			52			687,448			—			687,500

Common shares issued for services	122,813			12			365,488			—			365,500

Common stock issued in Private Placements, net of offering costs of $389,437	2,237,500			224			4,085,339			—			4,085,563

Share based compensation	—			—			560,880			—			560,880

Beneficial conversion feature on related party loan	—			—			107,000			—			107,000

Retirement of common shares	(42,056	)		(4	)		(151,396	)		—			(151,400	)

Net loss	—			—			—			(6,979,498	)		(6,979,498	)

Balance March 31, 2011	10,886,374			1,089			3,460,597			(7,897,323	)		(4,435,637	)

Common shares issued for services	16,849			2			183,998			—			184,000

Warrants issued for services	—			—			132,707			—			132,707

Common stock issued in Private Placement, net of offering costs of $255,900	292,500			29			914,071			—			914,100

Common shares issued in Unit offering, net of Offering costs of $1,605,747	15,625,945			1,563			10,892,690			—			10,894,253

Placement Agent consideration For Unit offering	100,000			10			(10	)		—			—

Common shares issued on conversion of notes payable in Unit offering	4,041,563			404			4,980,359			—			4,980,763

Warrants issued in Unit offering	—			—			(26,353,122	)		(1,294,303	)		(27,647,425	)

Common shares issued on conversion of related party note payable	133,750			13			106,987			—			107,000

Share-based compensation	—			—			356,702			—			356,702

Cashless exercise of Placement Agent warrants	331,303			33			3,594,402			—			3,594,435

Shares issued under repricing agreement	292,500			29			(29	)		—			—

Warrants issued on deposit of Asset acquisition	—			—			162,192			—			162,192

Common shares issued on deposit of assets acquisition	250,000			25			499,975			—			500,000

Warrants issued with convertible note	—			—			811,447			—			811,447

Beneficial conversion feature on note payable	—			—			243,711			—			243,711

Settlement of derivative liability	—			—			13,323			—			13,323

Net loss	—			—			—			(8,076,982	)		(8,076,982	)

Balance March 31, 2012	31,970,784		$	3,197		$	—		$	(17,268,608	)	$	(17,265,411	)

See accompanying notes to consolidated financial statements

F-5

AS SEEN ON TV, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED MARCH 31, 2012 AND 2011


	Year Ended March 31,
	2012			2011
Cash flows from operating activities:
Net loss	$	(8,076,982	)	$	(6,979,498	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		48,572			22,908
Amortization of discount on convertible debt		1,993,650			—
Amortization of deferred financing costs		2,149,491			—
Warrants issued for services		132,707			—
Share-based compensation		356,702			560,880
Interest accretion in related party note payable		15,781			91,219
Shares issued for consulting services		184,000			365,500
Change in fair value of warrants		(5,452,436	)		1,935,256
Accrued interest income – related party		—			(10,440	)
Accrued registration penalty		—			156,000
Change in derivative liability		(209,351	)		—
Loss on extinguishment of debt		2,950,513			—
Accrued interest-related party		(2,354	)		33
Impairment of investments		150,000			522,100
Inventory write-down		347,720			—
Changes in operating assets and liabilities:
Accounts receivable		(1,972,924	)		(72,003	)
Advances on inventory purchases		(304,702	)		—
Inventories		(1,907,927	)		45,081
Prepaid expenses and other current assets		(115,693	)		18,800
Accounts payable		100,754			266,392
Deferred revenue		(54,902	)		(2,202	)
Accrued expenses and other current liabilities		493,369			47,276
Net cash used in operating activities		(9,174,012	)		(3,032,698	)

Cash flows from investing activities:
Investments		—			(582,100	)
Deposit on asset acquisition		(67,254	)		—
Certificate of deposit – non current		(50,000	)		—
Reverse recapitalization transaction		—			(320,000	)
Additions to property, plant and equipment		(95,840	)		(85,955	)
Net cash used in investing activities		(213,094	)		(988,055	)

Cash flows from financing activities:
Proceeds from issuance of convertible debt		2,550,000			—
Costs associated with convertible debt		(342,586	)		—
Deferred offering costs		—			(63,500	)
Proceeds of notes payable		89,514			27,293
Repayment of notes payable		(70,491	)		(67,579	)
Repayment of loans from related parties		—			(513	)
Proceeds from private placements of common stock		13,670,000			4,475,000
Costs associated with private placement of common stock		(1,861,647	)		(389,437	)
Net cash provided by financing activities		14,034,790			3,981,264

Net increase (decrease) in cash and cash equivalents		4,647,684			(39,489	)
Cash and cash equivalents - beginning of period		35,502			74,991
Cash and cash equivalents - end of period	$	4,683,186		$	35,502

Supplemental disclosures of cash flow information
Interest paid in cash	$	9,361		$	96,841
Taxes paid in cash	$	—		$	—
Non Cash Investing and Financing Activities
Common shares issued towards settlement of notes payable	$	107,000		$	687,500
Common shares issued in payment of related party receivables	$	—		$	151,400
Shares issued on acquisition deposit	$	500,000		$	—
Warrants issued with debt	$	811,447		$
Cashless exercise of placement agent warrants	$	3,594,435		$	—
Deferred offering costs	$	63,500		$	—
Beneficial conversion feature on note payable	$	243,711		$	—
Settlement of derivative liabilities	$	13,323		$	—
Warrant liabilities	$	29,067,319		$	2,182,732
Common Shares issued in conversion of notes payable	$	4,980,763		$	—

See accompanying notes to consolidated financial statements

F-6

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Description of Our Business

As Seen On TV, Inc., a Florida corporation (the “Company” or “ASTV”), was organized in November 2006. ASTV and its operating subsidiaries (collectively referred to as the “Company”) market and distribute products and services through direct response channels. Our operations are conducted principally through our wholly-owned subsidiary, TV Goods, Inc., a Florida corporation organized in October 2009 (“TVG”).

Our primary channels of distribution are through television via infomercials (28.5 minute shows), short form spots (30 seconds to 5 minutes) and via shopping channels such as QVC and HSN. Our business model is to initially test the potential commercial viability of a product or service with a limited media campaign to determine if a full-scale marketing campaign would be justified. If preliminary marketing results appear to justify an expanded campaign, we will develop and launch an expanded program. Secondary channels of distribution include the Internet, retail, catalog, radio and print media.

Our executive offices are located in Clearwater, Florida.

Due to the similar nature of the underlying business and the overlap of our operations, we view and manage these operations as one business; accordingly, we do not report as segments.

Note 2.

Basis of Presentation

Effective October 27, 2011, the Company changed its name from H & H Imports, Inc. (“H&H”) to As Seen On TV, Inc.

On May 28, 2010, H&H completed an Agreement and Plan of Merger (the “Merger Agreement”) with TV Goods Holding Corporation, a Florida corporation (“TV Goods”) and the Company’s wholly owned subsidiary, TV Goods Acquisition, Inc. (“Acquisition Sub”), pursuant to which TV Goods merged with Acquisition Sub and continues its business as a wholly owned subsidiary of the Company. TVG is a wholly owned subsidiary of TV Goods (TV Goods and TVG sometimes collectively referred to in this report as “TV Goods”). Under the terms of the Merger Agreement, the TV Goods shareholders received shares of H&H common stock such that the TV Goods shareholders received approximately 98% of the total shares of H&H issued and outstanding following the merger. Due to the nominal assets and limited operations of H&H prior to the merger, the transaction was accorded reverse recapitalization accounting treatment under the provision of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 805 whereby TV Goods became the accounting acquirer (legal acquiree) and H&H was treated as the accounting acquiree (legal acquirer). The historical financial records of the Company are those of the accounting acquirer adjusted to reflect the legal capital of the accounting acquiree. In connection with the recapitalization transaction, TV Goods paid $320,000 consideration in cash to the legal acquirer.As the transaction was treated as a recapitalization, no intangibles, including goodwill, were recognized. Concurrent with the effective date of the reverse recapitalization transaction, the Company adopted the fiscal year end of the accounting acquirer, March 31.

The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All inter-company account balances and transactions have been eliminated in consolidation and certain prior period amounts have been reclassified to conform with the current period presentation.

Note 3.

Liquidity

Since inception until our third fiscal quarter ending December 31, 2011, we have had limited sales and have financed our operations primarily through the issuance of shares of our common stock and the issuance of convertible notes.

At March 31, 2012, we had a cash balance of approximately $4.7 million, a working capital deficit of approximately $18.2 million and an accumulated deficit of approximately $17.3 million. As we have experienced losses from operations since our inception in October 2009, we have relied on a series of private placements and convertible debentures to fund our operations. The Company cannot predict how long it will continue to incur further losses or whether it will ever become profitable which is dependent upon the frequency and success of new and existing products. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Management believes the Company has sufficient cash resources to sustain operations through at least June 2013. The Company plans to increase revenues in order to reduce, or eliminate, its operating losses. In the event the Company incurs further losses, the Company may seek additional capital from external sources in order to enable it to continue to meet its financial obligations until it achieves profitability. There can be no assurances that the Company will be able to raise additional capital on favorable terms, or at all.

F-7

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4.

Summary of Significant Accounting Policies

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reported periods. Our management believes the estimates utilized in preparing our consolidated financial statements are reasonable. Actual results could differ from these estimates.

Significant estimates for the periods reported include the allowance for doubtful accounts which is based on an evaluation of our outstanding accounts receivable including the age of amounts due, the financial condition of our specific customers, knowledge of our industry segment and historical bad debt experience. This evaluation methodology has proved to provide a reasonable estimate of bad debt expense in the past and we intend to continue to employ this approach in our analysis of collectability.

In the direct response industry, purchased items are generally returnable for a certain period after purchase. We attempt to estimate returns and provide an allowance for sales returns where applicable. Our estimates are based on historical experience and knowledge of the products sold. The allowance for estimated sales returns totaled $275,000 and $4,757 at March 31, 2012 and 2011, respectively.

We also rely on assumptions such as volatility, forfeiture rate, and expected dividend yield when deriving the fair value of share-based compensation and warrants. Assumptions and estimates employed in these areas are material to our reported financial conditions and results of operations. Actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents are recorded in the balance sheets at cost, which approximates fair value. All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents.

Revenue Recognition

We recognize revenue from product sales in accordance with FASB ASC 605 —Revenue Recognition. Following agreements or orders from customers, we ship product to our customers often through a third party facilitator. Revenue from product sales is only recognized when substantially all the risks and rewards of ownership have transferred to our customers, the selling price is fixed and collection is reasonably assured. Typically, these criteria are met when our customer’s order is received and we receive acknowledgment of receipt by a third party shipper and collection is reasonably assured.

We also have offered our customers on a limited basis, services consisting of planning, shooting and editing infomercials to aid in the Direct Response marketing of their product or service. In these instances, revenue is recognized when the contracted services have been provided and accepted by the customer. Deposits, if any, on these services are recorded as deferred revenue until earned. Production costs associated with a given project are deferred until the related revenues are earned and recognized. As of March 31, 2012 and 2011, we had recognized deferred revenue of $33,750 and $88,652, respectively.

Investments

We carried our investment at March 31, 2011, at our direct cash cost. The amounts paid were determined by contract provision on the contract commitment date. Due to our percentage ownership of 10% and lack of significant influence, the investments made by the Company was not accounted for under the consolidation or equity methods of accounting. This investment was accounted for under the cost method as provided under ASC 325-Investments-Other. Under this method, the Company’s share of the earnings or losses of each investee company are not included in our Consolidated Statement of Operations. However, impairment charges, if any, are recognized in the Consolidated Statement of Operations. During our fiscal year ended March 31, 2012 we recognized an impairment loss of $150,000 related to our investment in the Military Shopping Channel, LLC. If circumstances suggest that the value of the investee company has subsequently recovered, such recovery is not recorded.

F-8

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Receivables

Accounts receivable consists of amounts due from the sale of our direct response and home shopping related products. Accounts receivables, net of allowances, totaled $2,055,162 and $82,238 at March 31, 2012 and 2011, respectively. Our allowance for doubtful accounts at March 31, 2012 and 2011, totaled $75,000 and $25,000, respectively. The allowances are estimated based on historical customer experience and industry knowledge.

Inventories and Advances on Inventory Purchases

Inventories are stated at the lower of cost or market. Cost is determined using a first-in, first-out, or FIFO, method. We review our inventory for excess or obsolete inventory and write-down obsolete or otherwise unmarketable inventory to its estimated net realizable value. Inventories totaled $1,561,314 and $1,107 at March 31, 2012 and 2011, respectively. As we do not internally manufacture any of our products, we do not maintain raw materials or work-in-process inventories. In addition, the Company had made advanced deposits against inventory orders placed totaling $304,702 and $0 at March 31, 2012 and 2011, respectively.

At March 31, 2012, the Company had a balance of $304,702 in deposits on inventory purchases. This balance represents payments made to our product suppliers in advance of delivery to the Company. It is common industry practice to require a substantial deposit against products ordered before commencement of manufacturing, particularly with off-shore suppliers. Additional advance payments may also be required upon achievement of certain agreed upon manufacturing or shipment benchmarks. Upon delivery and receipt by the Company of the items ordered, and the Company taking title to the goods, the balances are transferred to inventory.

Property, Plant and Equipment, net

We record property, plant and equipment and leasehold improvements at historical cost. Expenditures for maintenance and repairs are recorded to expense; additions and improvements are capitalized. We provide for depreciation using the straight-line method at rates that approximate the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvement or the remaining term of the lease.

Property, plant and equipment, net consists of the following:


		March 31,
Property, plant and equipment	Estimated Useful Lives	2012			2011
Computers and software	3 Years	$	64,724		$	52,432
Office equipment and furniture	5-7 Years		85,345			19,681
Leasehold improvements	1-3 Years		62,610			44,726
			212,679			116,839
Less: accumulated depreciation and amortization			(72,679	)		(24,107	)
		$	140,000		$	92,732

Depreciation and amortization expense totaled $48,572 and $22,908 for the years ended March 31, 2012 and 2011, respectively.

Earnings (Loss) Per Share

Basic earnings per share is based on the weighted effect of all common shares issued and outstanding and is calculated by dividing net income (loss) available to common stockholders by the weighted average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of common shares used in the basic earnings per share calculation plus the number of common shares, if any, that would be issued assuming conversion of all potentially dilutive securities outstanding. For the years ended March 31, 2012 and 2011, no potentially issuable shares were reflected in a diluted calculation as the inclusion of potentially issuable shares would be anti-dilutive.

F-9

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following securities were not included in the computation of diluted net earnings per share as their effect would be anti-dilutive:


	March 31,
	2012	2011

Stock options	1,025,000	800,000
Warrants	40,859,253	6,712,500
Related party convertible note	—	71,333
	41,884,253	7,583,833

Share-Based Payments

Impairment of Long-Lived Assets

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from future undiscounted cash flows. Impairment losses are recorded for the excess, if any, of the carrying value over the fair value of the long-lived assets. No indicators of impairment existed at March 31, 2012, except for the $150,000 impairment of our investment in the Military Shopping Channel. SeeInvestments section in this footnote.

Income Taxes

We account for income taxes in accordance with FASB ASC 740— Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of FASB ASC 740 —Income Taxes.

FASB ASC 740 also requires that we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

Concentration of Credit Risk

Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash, cash equivalents and trade accounts receivable. Cash and cash equivalents are held with financial institutions in the United States and from time to time we may have balances that exceed the amount of insurance provided by the Federal Deposit Insurance Corporation on such deposits. Concentration of credit risk with respect to our trade accounts receivable to our customers is limited to $2,055,162 at March 31, 2012. Credit is extended to our customers, based on an evaluation of a customer’s financial condition and collateral is not required. To date, we have not experienced any material credit losses.

F-10

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Marketing and Advertising Costs

Marketing, advertising and promotional costs are expensed when incurred and totaled $169,741 and $114,786 for years ended March 31, 2012 and 2011, respectively.

Fair Value Measurements

FASB ASC 820 —Fair Value Measurements and Disclosures,defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to us on March 31, 2012 and 2011, respectively. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.

FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models consider various assumptions, including volatility factors, current market prices and contractual prices for the underlying financial instruments. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 — Unobservable inputs for the asset or liability.Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents, accounts receivable, accounts payable, notes payable and accrued expenses approximate their fair value based on the short-term maturity of these instruments. Determination of fair value of related party payables is not practicable due to their related party nature.

The Company recognizes all derivative financial instruments as assets or liabilities in the financial statements and measures them at fair value with changes in fair value reflected as current period income or loss unless the derivatives qualify as hedges. As a result, certain warrants issued in connection with various offerings were accounted for as derivatives. Additionally, the Company determined that the conversion feature on the convertible debentures issued in August 2011 and May 2011 qualifies for derivative accounting. See Note 8,Warrant Liabilitiesand Note 11, Notes Payable, for additional discussion.

Debt Issuance Costs

The Company capitalizes debt issuance costs and amortizes these costs to interest expense over the term of the related debt.

New Accounting Standards

In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04,Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. ASU No. 2011-04 clarifies some existing concepts, eliminates wording differences between U.S. GAAP and International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some principles to achieve convergence between U.S. GAAP and IFRS. ASU No. 2011-04 results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU No. 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The provisions of ASU No. 2011-04 became effective for us on April 1, 2012 and are to be applied prospectively. We do not expect the adoption of the provisions of ASU No. 2011-04 to have a material effect on our consolidated financial position, results of operations or cash flows and we do not expect to materially modify or expand our financial statement footnote disclosures.

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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In June 2011, the FASB issued ASU No. 2011-05,Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU No. 2011-05 requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. ASU No. 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of stockholders’ equity. The presentation requirements became effective for us on April 1, 2012. As ASU No. 2011-05 applies to financial statement presentation matters, the adoption of ASU No. 2011-05 will not affect our consolidated financial statements.

Note 5.

Major Customers

There were no major customers for the year ended March 31, 2011.

Note 6.

Prepaid expenses and other current assets

Components of prepaid expenses and other current assets consist of the following:


	March 31,
	2012		2011

Prepaid production costs	$	93,100	$	—
Prepaid shipping and freight		14,225		—
Prepaid license fees		37,549		—
Prepaid insurance		45,385		—
Prepaid investor relations fees		45,000		—
Prepaid expenses – other		26,904		28,065
Deposits		—		12,420
Project deposits		—		5,885
	$	262,163	$	46,370

Note 7.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:


	March 31,
	2012		2011

Accrued compensation	$	63,115	$	—
Accrued warranty		90,000		—
Accrued sales returns		275,000		—
Accrued professional fees		164,999		45,200
Accrued rents		—		53,613
Accrued other		8,581		9,513
	$	601,695	$	108,326

Note 8.

Private Placements

On June 15, 2011 the Company and approximately twenty accredited investors entered into a securities purchase agreement and completed a closing of a private offering of 292,500 shares of the Company’s common stock and three series of warrants to purchase up to 585,000 shares of common stock, in the aggregate, for aggregate gross proceeds of $1,170,000. The Company sold the shares at an initial purchase price of $4.00 per share, which may be adjusted downward, but not to less than $2.00 per share, under certain circumstances. In addition to the shares, the Company issued: (i) Series A Common Stock purchase warrants to purchase up to 292,500 shares of common stock at an exercise price of $3.00 per share; (ii) Series B Common Stock purchase warrants to purchase up to 146,250 shares of common stock at an exercise price of $5.00 per share and (iii) Series C Common Stock purchase warrants to purchase up to 146,250 shares of common stock at an exercise price of $10.00 per share.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In August 2011, a majority of the investors in the June 15, 2011 private offering, entered into a Notice, Consent, Amendment and Waiver Agreement (“Amendment Agreement”) with the Company in connection with the Bridge Debenture (defined below) offering. Under the terms of the Amendment Agreement, all the investors (i) waived any right to participate in the Bridge Debenture offering or related offerings, (ii) waived a provision prohibiting certain subsequent equity sales and (iii) amendment to per share price protection. In exchange, the Company lowered the sale price of the June 15, 2011 private offering from $4.00 per share to $2.00 per share and according issued an additional 292,500 common shares under that agreement to the investors.

The Company engaged a registered broker dealer in connection with the offering and the broker dealer received a selling commission in cash of 10 percent of the aggregate funds raised, with an additional two percent in non-accountable cash expense allowance. In addition, the Company issued to the broker dealer common stock purchase warrants equal to 10 percent of (i) the number of shares and (ii) the number of shares of common stock issuable upon exercise of the warrants, with an exercise price of $3.00 per share.

On August 29, 2011, the Company raised aggregate gross proceeds of $1,800,000 under a private placement of 12% Senior Convertible Debentures (the “Bridge Debentures”) with six accredited investors. Investors purchased Debentures, in the aggregate principal amount of $1,800,000. The Bridge Debentures carried an interest at a rate of 12% per annum and were payable quarterly. Principal and accrued interest on the Bridge Debentures would automatically convert into equity securities identical to those sold to investors in the Company’s next offering of at least $4 million of gross proceeds of equity or equity linked securities (excluding the principal amount under the Bridge Debentures) that is consummated during the term of the Bridge Debentures (a “Qualified Financing”) at a conversion price equal to 80% of the price paid by investors in the Qualified Financing (the “Conversion Price”). Furthermore, the Bridge Debentures could have been converted at any time at the option of the each Investor into shares of the Company's common stock, $0.0001 par value per share at an initial conversion price of $2.00 per share, subject to adjustment. The Debenture was due and payable on March 1, 2012 (the “Maturity Date”). In the event a Qualified Financing was not consummated on or before the Maturity Date, the entire principal amount of the Bridge Debenture, along with all accrued interest thereon, would, at the option of the holder, be convertible into the Company’s common stock at a conversion price equal to $2.00 per share. The Company determined that the conversion option in the debentures was beneficial at issuance. As such, the Company recorded a discount from the beneficial conversion option of approximately $244,000 which was accreted to interest expense throughout the term of the Bridge Debentures.

Each investor also received a Bridge Warrant exercisable for a period of three years from the Closing Date to purchase a number of shares of the Company’s common stock equal to the quotient obtained by dividing the principal amount of the Debenture by the Conversion Price at an exercise price equal to $2.00, subject to adjustment. If a Qualified Financing did not occur on or before the Maturity Date, then each Warrant would have been exercisable for that number of shares of common stock equal to the principal amount of the Debenture purchased divided by $0.90. Under the terms of the Bridge Warrant, the investor received cashless exercise rights in the event the underlying shares of common stock are not registered at the time of exercise. The Bridge Debentures and Bridge Warrants also provided for full-ratchet anti-dilution protection in the event that any shares of common stock, or securities convertible into common stock, are issued at less than the Exercise Price of the Warrants, except in connection with the following issuances of the Company's common stock, or securities convertible into common stock: (i) shares issuable under currently outstanding securities, including those authorized under stock plans, (ii) securities issuable upon the exchange or exercise of the Bridge Debenture or Bridge Warrants, (iii) securities issued pursuant to acquisitions or strategic transactions, or (iv) securities issued to the Placement Agent. See Note 8 for additional information about the Bridge Warrants.

On October 28, 2011 (the “Closing Date”) the Company, entered into and consummated a Securities Purchase Agreement with certain accredited investors for the private sale (the “Offering”) of 243.1 units (“Unit”) at $50,000 per Unit. Each Unit consisting of (i) 62,500 shares of common stock, and (ii) warrants to purchase 62,500 shares of common stock at an initial exercise price of $1.00 per share (the “Warrants”). Accordingly, for each $0.80 invested, investors received one share of common stock and one Warrant. The Company received gross proceeds of $12,155,000 (net proceeds of approximately $10,610,653 after commissions and offering related expenses) and issued an aggregate of 15,194,695 shares of common stock and 15,193,750 Warrants to the investors pursuant to the Securities Purchase Agreement.

On November 18, 2011, the Company sold an additional 6.9 Units under the Securities Purchase Agreement, receiving an additional $345,000 in gross proceeds (net proceeds of $283,600 after commissions and offering related expenses), issuing an additional aggregate of 431,250 shares of Common Stock and 431,250 Warrants to investors.

The October 28, 2011 and November 18, 2011 closings brought the total raised under the Securities Purchase Agreement to $12,500,000.

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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Warrants are exercisable at any time within five years from the Closing Date at an exercise price of $1.00 per share with cashless exercise in the event a registration statement covering the resale of the shares underlying the Warrants is not in effect within six months of the completion of the Offering. The Warrants also provide for full-ratchet anti-dilution protection in the event that any shares of common stock, or securities convertible into common stock, are issued at less than the exercise price of the Warrants during any period in which the Warrants are outstanding, subject to certain exceptions as set forth in the Warrants.

If during a period of two years from the completion of the Offering, the Company issues additional shares of common stock or other equity or equity-linked securities at a purchase, exercise or conversion price less than $0.80 (subject to certain exceptions and such price is subject to adjustment for splits, recapitalizations, reorganizations), then the Company shall issue additional shares of common stock to the investors so that the effective purchase price per share paid for the common stock included in the Units shall be the same per share purchase, exercise or conversion price of the additional shares.

The Company has provided the investors with “piggyback” registration rights with respect to the resale of the common stock and the shares of common stock issuable upon exercise of the Warrants.

The Company engaged a registered broker dealer to serve as placement agent (the “Placement Agent”) who received (a) selling commissions aggregating 10% of the gross proceeds of the Offering, (b) a non-accountable expense allowance of 2% of the gross proceeds of the Offering to defray offering expenses, (c) five-year warrants to purchase such number of shares of common stock as is equal to 10% of the shares of common stock (i) included as part of the Units sold in this Offering at an exercise price equal to $0.80 per share, and (ii) issuable upon exercise of the Warrants sold in this Offering at an exercise price equal to $1.00 per share, and (d) 100,000 restricted shares of common stock.

The closing of the Offering triggered the automatic conversion of all principal and accrued interest on the Bridge Debentures into Units in the Offering at a conversion price equal to 80% of the price paid by investors in the Offering, or $0.64 per share of common stock and Warrant (the “Debenture Conversion Price”). The holders of the Bridge Debentures received an aggregate of 2,869,688 shares of common stock and Warrants to purchase 2,869,688 shares of common stock. Each investor in the Bridge Offering also received a Bridge Warrant exercisable for a period of three years from the closing date of the Bridge Offering to purchase a number of shares of the Company’s common stock equal to the quotient obtained by dividing the principal amount of the Bridge Debenture by the Debenture Conversion Price of $0.64 per share. Accordingly, at the closing of the Offering and based on the full ratchet anti-dilution provisions of the Bridge Warrants, investors in the Bridge Offering received Bridge Warrants to purchase an aggregate of 8,789,063 shares of common stock. The Bridge Warrants continue to provide for full-ratchet anti-dilution protection if the Company issues at any time prior to August 30, 2012, any shares of common stock, or securities convertible into common stock, at a price less than the Bridge Warrant Exercise Price, subject to certain exceptions.

Further, in connection with the Offering, Octagon, the holder of the Company’s debenture in the principal amount of $750,000 issued on April 8, 2011, agreed to amend the Debenture to provide for automatic conversion into the Units in the Offering at the Debenture Conversion Price. Accordingly, the holder of the Debenture received 1,171,875 shares of common stock and warrants to purchase 1,171,875 shares of common stock exercisable at $1.00 per share.

The Placement Agent also served as exclusive placement agent for the Bridge Offering. Accordingly, pursuant to the terms of the Bridge Offering, at the Closing of the Offering the Placement Agent and its assignees received warrants with full ratchet and anti-dilution protection to purchase an aggregate of 1,164,375 shares of common stock exercisable at $0.64 per share, each warrant exercisable on or before August 29, 2014.

In connection with the Offering, Steve Rogai, the Company’s President and Chief Executive Officer, agreed to convert a 12% convertible promissory note payable to him by the Company in the principal amount of $107,000 (the “Rogai Note”), together with accrued interest thereon, into Units in this Offering at a conversion price of $0.80 per Share and Warrant. As such, Mr. Rogai was issued 133,750 shares of common stock and 133,750 Warrants in satisfaction of the Rogai Note. Also, the Company’s executive officers each executed a lock up agreement (the “Lock Up Agreement”) which provides that each officer shall not sell, assign, transfer or otherwise dispose of their shares of common stock or other securities of the Company for a period ending 270 days after the completion of the Offering. Following this initial lock-up period, each officer has agreed to an additional six-month lock-up period for their shares during which they each may not sell more than 5,000 shares of common stock per month.

From April 2010 through July 2010, we sold Units containing common stock and warrants raising gross proceeds of $2,600,000 (net proceeds of $2,267,813 after offering related costs of $332,187), to 64 accredited investors (the “2010 Private Placement”). We secured $2,495,000 prior to June 30, 2010 and $105,000 in July 2010. The selling price was $2.00 per Unit; each Unit consists of: (1) one share (pre 1:20 reverse split) of common stock, par value $0.0001 per share; (2) one

F-14

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Series A Warrant to purchase one share of common stock exercisable at $3.00 per share; (3) one Series B Warrant to purchase one share of common stock exercisable at $5.00 per share; and (4) one Series C Warrant to purchase one share of common stock exercisable at $10.00 per share. In connection with the 2010 Private Placement we issued 1,300,000 shares of common stock and warrants exercisable to purchase 3,900,000 shares of common stock. The warrants expire three years from the date of issuance and are redeemable by the Company at $0.20 per share, subject to certain conditions. Other than the exercise price and call provisions of each series of warrant, all other terms and conditions of the warrants are the same.

Under the terms of the 2010 Private Placement the Company provided that it would use its best reasonable effort to cause a registration statement to become effective within 180 days of the termination date of the offering. We have failed to comply with the registration rights provision and are obligated to make pro rata payments to the subscribers under the 2010 Private Placement in an amount equal to 1% per month of the aggregate amount invested by the subscribers up to a maximum of 6% of the aggregate amount invested by the subscribers. The maximum amount of penalty to which the Company may be subject is $156,000 which has been recognized in full in fiscal 2011.

In connection with the 2010 Private Placement, we paid certain fees and commissions to Forge Financial Group, Inc., a broker-dealer and a member of FINRA, as placement agent, of approximately $280,000. In addition, the Company granted Forge Financial Group, Inc. and its assignees a placement agent warrant to purchase up to a maximum amount of $260,000 worth of Units, (the “Placement Agent Option”). The underlying Series A, Series B and Series C warrants are substantially the same as the warrants issued under the 2010 Private Placement, but contain cashless exercise and anti-dilution provisions. See Note 8. Warrant Liability.

Warrants issued to Forge Financial Group, Inc. as placement agent to our April 2010 through July 2010 Unit offering contained an exercise price reset provision (or “down-round” provision). The Company accounted for these warrants as a liability equal to their fair value on each reporting date.

Note 9.

Warrant Liabilities

Warrants issued to the placement agent in connection with the 2010 Private Placement contained provisions that protect holders from a decline in the issue price of its common stock (or “down-round” provisions) or that contain net settlement provisions. The Company accounted for these warrants as liabilities instead of equity. Down-round provisions reduce the exercise or conversion price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise or conversion price of those instruments or issues new warrants or convertible instruments that have a lower exercise or conversion price. Net settlement provisions allow the holder of the warrant to surrender shares underlying the warrant equal to the exercise price as payment of its exercise price, instead of physically exercising the warrant by paying cash. The Company evaluated whether warrants to acquire its common stock contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective warrant agreements based on a variable that is not an input to the fair value of a “fixed-for-fixed” option.

The warrants issued to the placement agent, in conjunction with the 2010 Private Placement, contained a down-round provision. The triggering event of the down-round provision was not based on an input to the fair value of “fixed-for-fixed” option and therefore was not considered indexed to the Company’s stock. Since the warrant contained a net settlement provision, and it was not indexed to the Company’s stock, it is accounted for as a liability.

The assumptions used in connection with the 2010 Private Placement with the valuation as of June 22, 2011 were as follows:


Number of shares underlying the warrants	520,000
Exercise price	$2.00 - $10.00
Volatility	158	%
Risk-free interest rate	.68	%
Expected dividend yield	0.00	%
Expected warrant life (years)	1.83 – 2.08

The Company recognized these warrants as a liability equal to their fair value on each reporting date. On June 22, 2011, the warrant holders converted their warrants on a cashless basis into 331,303 common shares at an agreed upon stock price of $16.40 per share. As a result of the warrant conversion we re-measured the fair value of these warrants as of June 22, 2011, and recorded other income associated with the re-measurement of $523,553.

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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

accounted for these warrants as liabilities instead of equity. In addition, we considered the dilution and repricing provisions triggered by the Company’s October 2011 follow-on offering which impacted the accounting recognition of this financing.

The Company recognized an initial warrant liability for the warrants issued in connection with our $1,800,000 12% convertible debenture of $1,556,289 which was recorded as a debt discount. The initial warrant liability recognized on the related placement agent warrants totaled $1,522,784 which was recorded as debt issuance costs. Due to an increase in the market value of our common stock from the initial issuance date, August 29, 2011 through March 31, 2012, we recognized $4,401,752 in warrant revaluation expense.

We recognized an initial warrant liability valuation on the series of warrants issued in connection with of $12,500,000 Unit Offering of $27,647,424. On October 28, 2011, at the initial closing of $12,155,000 of the Unit Offering, the closing price of our common stock as reported on OTC Markets was $1.25. On November 17, 2011, at the final closing of $345,000 of the Unit Offering, the closing price of our common stock as reported on OTC Markets was $0.90. On March 31, 2012, the closing price of our common stock as reported on OTC Markets was $0.82. Due to the overall decline in the market value of our common stock from the initial valuations on October 28, 2011 and November 17, 2011, through March 31, 2012, we recognized $9,330,634 in warrant revaluation income.

Accordingly, warrant revaluation income for the year ending March 31, 2012 related to our 2010 Private Placement, $1,800,000 12% convertible debenture, and $12,500,000 Unit Offering totaled $5,452,436.

The assumptions used in connection with the valuation of warrants issued in connection with our 12% convertible debenture financing on the date of grant were as follows:


Number of shares underlying the warrants	9,953,438
Exercise price	$0.64
Volatility	190	%
Risk-free interest rate	.35	%
Expected dividend yield	0.00	%
Expected warrant life (years)	3.00

The assumption used in connection with the valuation of warrants issued in connection with our $12,500,000 Unit Offering on the date of grant were as follows:


Number of shares underlying the warrants	22,925,313
Exercise price	$0.64 - $1.00
Volatility	190	%
Risk-free interest rate	1.13	%
Expected dividend yield	0.00	%
Expected warrant life (years)	5.00

The assumptions used in connection with the remeasurement at March 31, 2012 of the warrants issued with our 12% convertible debenture financing and $12,500,000 were as follows:


Number of shares underlying the warrants	32,878,751
Exercise price	$.064 - $1.00
Volatility	211	%
Risk-free interest rate	1.04	%
Expected dividend yield	2.50-4.58	%
Expected warrant life (years)	2.5 - 4.58

Recurring Level 3 Activity and Reconciliation

The tables below provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3). The table reflects gains and losses for the year ended March 31, 2012 for all financial liabilities categorized as Level 3 as of March 31, 2012.

F-16

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):


Warrant liability 2010 Private Placement:
Balance as of April 1, 2011	$	4,117,988
Decrease in fair value of warrants as of conversion date		(523,553	)
Conversion to common stock		(3,594,435	)
Balance as of December 31, 2011	$	—

Warrant liability 12% convertible debenture:
Balance as of April 1, 2011	$	—
Initial measurement of investor warrants		1,556,289
Initial measurement of placement agent warrants		1,522,784
Increase in fair value warrants included in earnings		4,401,752
Balance as of March 31, 2012	$	7,480,825

Warrant liability $12,500,000 Unit Offering related:
Balance as of April 1, 2011	$	—
Initial measurement of warrants:
Unit Offering investors		18,812,123
Unit Offering placement agent		3,768,606
12% convertible debenture conversion		3,482,334
Octagon convertible debenture conversion		1,422,057
Related party note conversion		162,304
Total initial measurements		27,647,424
Decrease in fair value included in earnings		(9,330,634	)
Balance at March 31, 2012	$	18,316,790

Summary of warrant liability:
Balance as of April 1, 2011	$	4,117,988
Conversion to common stock		(3,594,435	)
Initial measurements 12% convertible debentures – investor warrants		1,556,289
Initial measurements 12% convertible debentures – placement agent		1,522,784
Initial measurements of $12,500,000 Unit Offering		27,647,424
Decrease in fair value at conversion date		(523,553	)
Decrease in fair value of warrants included in earnings		(4,928,882)
Balance as of March 31, 2012	$	25,797,615

Note 10.

Income Taxes

At March 31, 2012 and 2011, we had gross deferred tax assets in excess of deferred tax liabilities of $4.25 million and $ 1.54 million, respectively. We determined that it is not “more likely than not” that such assets will be realized, and as such have applied a valuation allowance of $4.25 million and $1.54 million as of March 31, 2012 and 2011, respectively. We evaluate our ability to realize our deferred tax assets each period and adjust the amount of our valuation allowance, if necessary. We operate within multiple taxing jurisdictions and are subject to audit in those jurisdictions. Because of the complex issues involved, any claims can require an extended period to resolve.

FASB ASC 740 –Income Taxes requires that a valuation allowance be established when it is more likely than not all or a portion of a deferred tax asset will not be realized. A review of all available positive and negative evidence needs to be considered, including our current and past performance, the market environment in which we operate, the utilization of past tax credits and length of carry-back and carry-forward periods. Forming a conclusion that a valuation allowance is not needed is difficult when there is negative objective evidence such as cumulative losses in recent years. Cumulative losses weigh heavily in the overall assessment. We have applied a 100% valuation allowance against our net deferred tax assets as of March 31, 2012 and 2011.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation between the amount of income tax benefit determined by applying the applicable US statutory income tax rate to pre-tax loss is as follows:


	Year Ended March 31,
	2012			2011
Federal Statutory	$	(2,827,000	)	$	(2,440,000	)
State Tax, Net of Federal		(289,000	)		( 250,000	)
Change in Fair Value of Warrants		(2,103,000	)		750,000
Stock Based Compensation		138,000			220,000
Non-Deductible Debt Discount		1,301,000			40,000
Loss on Extinguishment of Debt		1,138,000			—
Revaluation of Derivative Liability		(81,000	)		—
Reserves and Depreciation		—			20,000
Meals & Entertainment and Other		12,000			290,000
Change in Tax Valuation Allowance on Deferred Tax Assets		2,711,000			1,370,000
	$	—		$	—

The valuation allowance increased by approximately $2.71 million for the year ended March 31, 2012 and increased by approximately $1.37 million for the year ended March 31, 2011.

The primary components of net deferred tax assets are as follows:


	At March 31,
	2012			2011
Net Operating Losses	$	4,107,000		$	1,530,000
Reserves		170,000			22,000
Depreciation		(27,000	)		(13,000	)
Valuation Allowance		(4,250,000	)		(1,539,000	)
Net Deferred Tax Assets	$	—		$	—

At March 31, 2012, we had net operating loss carry forwards of approximately $10.6 million for U.S. federal income tax purposes. The U.S. operating losses expire as follows:


Year of Expiration	Year Generated	U.S. Losses

March 31, 2030	March 31, 2010	$	(475,000	)
March 31, 2031	March 31, 2011		(4,368,000	)
March 31, 2032	March 31, 2012		(5,803,000	)
		$	(10,646,000	)

If there is an ownership change, as defined under Internal Revenue Code section 382, the use of net operating loss and credit carry-forwards may be subject to limitation on use. On October 28, 2011, the Company underwent an ownership change, as defined in Internal Revenue Code Section 382, which, in general, limits the use of prior year net operating tax losses in future years to approximately $1.5 million per year.

Uncertain Tax Positions

We have no unrecognized income tax benefits as of March 31, 2012 and March 31, 2011. There have been no material changes in unrecognized tax benefits through March 31, 2012. The fiscal years March 31, 2012, 2011 and 2010 are considered open tax years in U.S. federal and state tax jurisdictions. We currently do not have any audit investigations in any jurisdiction.

Note 11.

Related Party Transactions

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt. Accordingly, a beneficial conversion feature of $107,000 was recognized and was accreted to interest expense over the initial one year term of the note. The accreted note payable to officer balance totaled $0 and $91,219 at March 31, 2012 and 2011, respectively. On May 25, 2011, the Promissory Note was amended to extend the maturity one additional year under the same terms.

Note 12.

Notes Payable

On April 11, 2011, the Company and Octagon Capital Partners (“Octagon”), an accredited investor, entered into a securities purchase agreement in which Octagon purchased from the Company a convertible debenture, in the principal amount of $750,000. The debenture carried an interest rate of 0% per annum and was convertible into shares of the Company's common stock at any time commencing on the date of the debenture at a conversion price of $4.00 per share, subject to adjustment. The debenture was due and payable on December 1, 2011. In connection therewith, the Company also issued the following warrants to Octagon: 187,500 Series A Common Stock Purchase Warrants exercisable at $3.00 per share, 93,750 Series B Common Stock Purchase Warrants exercisable at $5.00 per share and 93,750 Series C Common Stock Purchase Warrants exercisable at $10.00 per share. Total commissions and fees payable to the placement agent in connection with this transaction was $90,000 in cash, 42,187 Series A Common Stock Purchase Warrants exercisable at $3.00 per share and 14,062 Series B Common Stock Purchase Warrants exercisable at $5.00 per share. Warrants issued to the placement agent in this transaction had a fair value at issuance of $284,121 which was recorded as a debt issuance cost and was being accreted to interest expense over the term of the debenture. Upon issuance of the debenture, the Company accounted for the transaction under the guidance of ASC 470-Debt and ASC 815-Derivatives and Hedging. As the ultimate conversion rates could change due to a ”down-round” provision, the Company bifurcated the conversion option and recorded a derivative liability which was adjusted to market each reporting period. The derivative liability was initially valued at $222,674 on the date of the transaction and was recorded as a debt discount with a credit to a derivative liability. The change in fair value of the derivative liability recognized totaled approximately $209,000 for the year ended March 31, 2012. The derivative liability was re-measured at a fair value of $13,323 on August 28, 2011, the effective date of the Company’s closing of its $1,800,000 convertible debenture transaction. As the conversion price of the debentures became fixed, the fair value of the derivative liability was reclassified to equity as it no longer met bifurcation criteria on August 28, 2011. The relative fair value of the detachable warrants, initially recorded at $527,326, was recorded as a debt discount and was initially being accreted to interest expense under the effective interest rate method over the term of the debenture, due December 1, 2011.

On August 17, 2011, Octagon entered into an Amendment to its convertible debenture modifying the conversion option. The Amendment was entered into in connection with the Company’s Bridge Debenture transaction concluded on August 28, 2011. The Amendment transaction was treated as an extinguishment of debt related to the original Octagon note, effective on August 28, 2011, the closing date of the 12% convertible debenture transaction. Accordingly, the carrying value of the Octagon debenture on August 28, 2011 of $193,650, including the unaccredited balances in the related note discount and debt issuance cost of $277,524 were written-off with a loss on extinguishment of debt being recognized of $2,950,513 and a fair value of the modified note obligation being recognized of $3,144,163. The fair value of the modified note was determined by fair valuing 1,171,875 common shares and 1,171,875 related investor warrants as of August 29, 2011, the modification date.

On October 28, 2011, the Company converted the Octagon convertible debentures into Units of the Company’s Unit Offering. See Note 7.

Fair Value Measurement Using Significant Unobservable Inputs (Level 3) – See note 8 for assumptions used:


Derivative liability:
Balance April 1, 2011	$	—
Initial valuation		222,674
Revaluation of derivative		(209,351	)
Reclassification to equity		(13,323	)
Balance at December 31, 2011	$	—

Commencing in November 2009 through March 2010, the Company issued a series of 12% Senior Working Capital Notes and Revenue Participation Agreements totaling $687,500 in gross proceeds with net proceeds of $581,750 after related costs of $105,750.

F-19

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the issuance of the Senior Working Capital Notes, the Company recognized deferred financing costs of $105,750 and a discount on the notes attributable to the fair value of the common shares issued of $309,375. These costs were initially being accreted over the life of the notes. Subsequent to issuance, and at March 31, 2010, the notes were in default for failure to pay the required interest. As a result of the default, the notes became immediately callable by the note holders. Accordingly, the unaccreted balances remaining attributable to financing costs and Note discount were charged to interest expense.

Due to the default status of the notes for failure to make timely interest payments, during the first fiscal quarter of fiscal 2011, the Company entered into a series of Amendment and Exchange Agreements, modifying the terms and conditions of their 12% Senior Working Capital Notes and Revenue Participation Agreements, which totaled $687,500.

In May 2010, concurrent with the completion of the Merger Agreement, the Amended and Restated Senior Working Capital Notes totaling $687,500 were converted, at the contractual agreed upon rate of $1.334 per share, resulting in the issuance of 515,360 common shares. Also, as provided in the amended note agreements, upon conversion, the note holders were paid interest through December 31 2010, the maturity date. Actual interest earned prior to conversion plus the additional interest through the maturity date totaled $84,379. The entire interest payment was paid in cash and charged to interest expense in May 2010.

In March 2010, the Company borrowed $50,000 under a note agreement. The note was due on or before the earlier of (a) the initial closing of the Company’s then pending 2010 Private Placement or (b) August 30, 2010, the maturity date. The note provided that in the event there was no closing of the 2010 Private Placement prior to the maturity date, the note holder will forgive $25,000 and the related accrued interest. The note carried an interest rate of 12% per annum and could be prepaid at any time; however, in the event of a prepayment, the company was obligated to pay interest through the maturity date. The lender in this transaction was an officer of the placement agent in the Company’s 2010 Private Placement. In May 2010, upon completion of the 2010 Private Placement, the note and related accrued interest were paid-in full.

At March 31, 2012 and 2011, the Company had notes payable of $28,737 and $9,714, respectively, reflecting amounts due on insurance related note financings payable under terms of less than one year.

Note 13.

Commitments

Leases

On January 20, 2010, the Company entered into a 38-month lease agreement for our 10,500 square foot headquarters facility in Clearwater, Florida. Terms of the lease provide for base rent payments of $6,000 per month for the first six months; a base rent of $7,500 per month for the next 18 months and $16,182 per month from January 2012 through February 2013. The increase in minimum rental payments over the lease term is not dependent upon future events or contingent occurrences. In accordance with the provisions of ASC 840 -Leases,the Company recognized lease expenses on a straight-line basis, which total $10,462 per month over the lease term.

On February 1, 2012, the Company entered into a new 36-month lease agreement on our existing headquarters facility. Terms of the lease provide for a base rent payments of $7,875 per month for the first twelve months, increasing 3% per year thereafter. The lease contains no provisions for a change in the base rent based on future events or contingent occurrences. In accordance with the provisions ASC 840-Leases, the Company is recognizing lease expenses on a straight-line basis, which total $8,114 per month over the lease term. In connection with the entering into the new leases, the Company recognized income of approximately $71,000 attributable to the recovery of the deferred rent obligation under the previous lease and wrote-off to lease expense $12,420 in security deposits attributable to the prior lease.

The following is a schedule by year of future minimum rental payments required under our lease agreement on March 31, 2012:


	Operating Leases
Year 1	$	94,973
Year 2		97,822
Year 3		83,546
Year 4		—
Year 5		—
	$	276,341

Base rent expense recognized by the Company, all attributable to its headquarters facility, totaled $47,515 and $125,544 for the years ended March 31, 2012 and 2011, respectively.

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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14.

Stockholders’ Equity

Preferred Stock

We are authorized to issue up to 10,000,000 shares of preferred stock, $.0001 par value per share. Our board of directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of preferred stock in series, and by filing a certificate pursuant to the applicable law of the state of Florida, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. No shares of preferred stock have been issued or were outstanding at March 31, 2012 and 2011, respectively.

Common Stock

At March 31, 2012 and 2011 we were authorized to issue up to 750,000,000 shares and 400,000,000 shares of common stock, $.0001 par value per share, respectively.

At March 31, 2012 and 2011, the Company had 31,970,784 and 10,886,374 shares outstanding, respectively. Holders are entitled to one vote for each share of common stock (or its equivalent).

Effective June 15, 2011, based on a majority shareholder vote, our articles of incorporation were amended to increase our authorized common stock from 400,000,000 to 750,000,000 shares.

All share and per share information contained in this report gives retroactive effect to a 1 for 20 (1:20) reverse stock split of our outstanding effective October 27, 2011 and a 30 for 1 (30:1) forward stock split of our outstanding common stock effective March 17, 2010 and the reverse recapitalization transaction completed in May 2010.

Share Issuances

Common Stock and Warrants

On April 1, 2011, the Company issued 5,000 shares under a financial consulting and management agreement with a fair value of $75,000. The fair value of the common shares was derived from the closing price of our common stock on the contract commitment date.

On April 18, 2011, the Company issued 6,849 shares under a one year infomercial monitoring agreement. The transaction had fair value of $100,000 on the commitment date based on the closing price of our common stock. The fair value of the stock granted was recorded as a prepaid expense and is being amortized over the term of the agreement.

On June 15, 2011, the Company issued a total of 292,500 common shares and (i) 380,250 Series A warrants exercisable at $3.00 per share, (ii) 146,250 Series B warrants exercisable at $5.00 per share and (iii) 146,250 Series C warrants exercisable at $10.00 per share. These securities, as further described in Note 7 – Private Placements, were issued in connection with a private placement completed in June 2011 with gross proceeds of $1,170,000.

F-21

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On June 1, 2011, the Company issued 75,000 warrants to a consulting firm representing the Company in Canada. The warrants vest over fourteen months, are exercisable for a period of three years from grant date and exercisable at $3.15 per share. The Company valued these warrants using the Black-Scholes model. The initial grant date fair value was $205,962 which is being recorded as consulting expenses in general and administrative expenses, over the vesting period with unvested components being marked-to-market every reporting period throughout the vesting term. The assumptions used in the valuation on June 1, 2011 were as follows:


Number of shares underlying the warrants	75,000
Exercise price	$3.15
Volatility	175	%
Risk-free interest rate	.74	%
Expected dividend yield	0.00	%
Expected warrant life (years)	3.00

The assumptions in the re-measurement of the unvested warrants at March 31, 2012 were as follows:


Number of shares underlying the warrants	37,500
Exercise price	$3.15
Volatility	211	%
Risk-free interest rate	.33	%
Expected dividend yield	0.00	%
Expected warrant life (years)	2.17

The Company recognized consulting expense under this agreement of $73,873 for the year ended March 31, 2012.

On May 27, 2011, the Company issued 250,000 shares of its common stock and 50,000 Common Stock purchase warrants to the sole member of Seen On TV, LLC pursuant to an acquisition agreement with Seen on TV, LLC to acquire certain assets from Seen On TV, LLC, including but not limited to the “AsSeenOnTV.com” domain name. The shares had a fair value of $500,000 at the contract date. The fair value was derived from the closing price of our common stock on the contract commitment date. The Company also paid cash consideration to Seen On TV, LLC as part of this agreement during the year ended March 31, 2012 of $60,254 with an additional $7,000 paid for certain rights in the United Kingdom. As the acquisition agreement had not been completed as of March 31, 2012, the Company recorded the fair value of the shares issued and the cash consideration paid as a deposit on the acquisition. This transaction was completed on June 28, 2012. See Note 16.Subsequent Events. This transaction provides the Company with exclusive use of the domain name “AsSeenOnTV.com” only. The term or phrase “As Seen On TV” is not subject to trademark protection and has been, and will continue to be, used by others including on-line and retail outlet applications with no connection with, or benefit to, the Company. The common stock purchase warrants issued in this transaction had a fair value of $162,192 under the following assumptions:


Number of shares underlying the warrants	50,000
Exercise price	$7.00
Volatility	190	%
Risk-free interest rate	1.65	%
Expected dividend yield	0.00	%
Expected warrant life (years)	5

On June 22, 2011 the Company issued an aggregate of 331,303 shares of common stock to affiliates of Forge Financial Group, Inc., pursuant to the cashless exercise of warrants held by six affiliates of Forge Financial Group. The warrants were issued in connection with the placement agent agreement related to the Company’s completed 2010 Private Placement Offering. The Company did not receive any proceeds in connection with the exercise of the warrants nor pay any commissions or fees in connection with the issuances.

On July 7, 2011, under a consulting agreement related to the Company’s investor relations activities, the Company issued 5,000 shares with a fair value of $9,000 on the contract date. The fair value of the common stock issued was derived from the closing price of our common stock on the contract commitment date.

F-22

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On August 17, 2011, under the Amendment Agreement entered into in connection with the Company’s Bridge Debenture financing, the Company issued 292,500 shares to its investors in the June 15, 2011 private placement.

On October 28, 2011 the Company, entered into and consummated a Securities Purchase Agreement with certain accredited investors for the private sale of 243.1 units (each, a “Unit”) at $50,000 per Unit. Each Unit consists of (i) 62,500 shares of common stock, and (ii) warrants to purchase 62,500 shares of common stock at an initial exercise price of $1.00 per share (the “Warrants”). Accordingly, for each $0.80 invested, investors received one share of common stock and one Warrant. The Company received gross proceeds of $12,155,000 (net proceeds of approximately $10,591,000 after commissions and offering related expenses) and issued an aggregate of 15,194,695 shares of common stock and 15,193,750 Warrants to the investors pursuant to the Securities Purchase Agreement.

The October 28, 2011 and November 18, 2011 closings brought the total raised under the Securities Purchase Agreement to $12,500,000.

A summary of the common shares and warrants issued in connection with the Company’s $12,500,000 Unit Offering including the conversion of existing debt into the Unit Offering is as follows:


			Warrants exercisable at
	Common Shares		$0.64		$0.80		$1.00

Unit Offering investors		15,625,945						15,625,000
Unit Offering placement agent		100,000		1,164,375		1,562,500		1,562,500
12% convertible debenture conversion		2,869,688		8,789,063		—		2,869,688
Octagon convertible debenture conversion		1,171,875		—		—		1,171,875
Related party note conversion		133,750		—		—		133,750
		19,901,258		9,953,438		1,562,500		21,362,813

Effective December 6, 2011 the Company entered into an independent contractor agreement with Stratcon Partners, LLC pursuant to which Stratcon has agreed to provide the Company consulting and advisory services, including, but not limited to business marketing, management, budgeting, financial analysis, and investor and press relations. Under the agreement, Stratcon is also required to establish and maintain executive facilities and a business presence in New York City for the Company. The agreement is for an initial term of two years and may be terminated by either party upon written notice. In consideration of providing the services, Stratcon shall receive $12,500 per month. In addition, the Company has agreed to issue Stratcon an aggregate of 500,000 shares of restricted common stock, such shares vesting over a period of two years in four equal traunches. The closing price of the Company’s common stock as reported on the OTC Markets on the Effective Date was $1.00. The Company has agreed to provide Stratcon rent reimbursement up to $2,500 per month for the New York office. The Company recorded $80,000 of consulting expense attributable to vesting of the common shares which is included in accrued expenses at March 31, 2012.

Effective December 6, 2011 the Company agreed to issue 25,000 shares of common stock to Mediterranean Securities Group, LLC in consideration of consulting services. As the agreement did not contain any vesting or forfeiture provisions, the entire fair value of $25,000, based on our stock price on the commitment date, was charged to consulting expenses and included in accrued expenses.

Equity Compensation Plans

In May 2010, the Company adopted its 2010 Executive Equity Incentive Plan and 2010 Non Executive Equity Incentive Plan (collectively, the “Plans”) and granted 600,000 options and 450,000 options, respectively, under TV Goods stock option plans. These options were exchanged for Company options under the Merger Agreement.

In May 2010, our Board of Directors granted 600,000 options under the Executive Equity Incentive Plan, exercisable at $1.50 per share to two officers and directors of the Company. The shares vested over eighteen months from grant and are exercisable for five (5) years from grant date (May 26, 2010). In September 2011, October 2011, December 2011 and March 2012, our Board of Directors granted an additional 225,000 options to an officer and two directors under the Executive Equity Incentive Plan. The options vest over eighteen months (150,000 options) and two years (50,000 options) and are

F-23

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

exercisable for five years from date of grant. At March 31, 2012, there were 350,000 options available for issuance under the Executive Equity Incentive Plan.

In May 2010, our Board also granted options to purchase an aggregate of 450,000 shares of our common stock with an exercise price of $1.50 per share under the Non Executive Equity Incentive Plan. The options granted vest over eighteen months from the date of the grant (May 26, 2010) and are exercisable for five (5) years from their grant date. On July 15, 2010, the Company issued an additional 50,000 shares under the Non Executive Incentive Plan under terms similar to the May 2010 grant. During the quarter ending December 31, 2010, 400,000 shares were forfeited due to termination of employment. In December 2010, an additional 100,000 options were granted under this plan. On September 26, 2011 and March 31, 2012, our Board granted an additional 300,000 and 75,000 options, respectively, under the Non Executive Plan to nine employees and one consultant. The options vest over eighteen months and are exercisable for five years from date of grant. At March 31, 2012, there were 325,000 shares available for future issuance under the Non Executive Equity Incentive Pan.

The fair value of each option is estimated on the date of grant using the Black Scholes options pricing model using the assumptions established at that time. The following table includes the weighted average assumptions used for options issued in the fiscal years ending March 31, 2012 and 2011, respectively.


	2012		2011
Dividend Yield	0.00	%	0.00	%
Expected volatility	194	%	79	%
Risk-free interest rate	0.56	%	2.07	%
Expected life (years)	3		5
Forfeiture rate	10	%	10	%

Information related to options granted under both our option plans at March 31, 2012 and 2011, respectively, and activity for the years then ended is as follows:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at April 1, 2010		—		$	—		—	$	—
Granted		1,200,000			1.58		—		—
Exercised		—			—		—		—
Forfeited		(400,000	)		1.50		—		—
Expired		—			—		—		—

Outstanding at April 1, 2011		800,000		$	1.58		—	$	—
Granted		600,000			1.01		—		—
Exercised		—			—		—		—
Forfeited		(375,000	)		1.06		—		—
Expired		—			—		—		—

Outstanding at March 31, 2012		1,025,000		$	1.31		3.89	$	—
Exercisable at March 31, 2012		700,000		$	1.41		3.55	$	—

The weighted average grant date fair value of unvested options at March 31, 2012 totaled $284,719 and will be expensed over a weighted average period of 4.50 years.

As of March 31, 2011, there were 100,000 options and 300,000 options available for further issuance through the 2010 Executive Equity Incentive Plan and the 2010 Non Executive Equity Incentive Plan, respectively.

No tax benefits are attributable to our share based compensation expense recorded in the accompanying financial statements because we are in a net operating loss position and a full valuation allowance is maintained for all net deferred tax assets. For stock options, the amount of the tax deductions is generally the excess of the fair market value of our shares of common stock over the exercise price of the stock options at the date of exercise.

F-24

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the event of any stock split of our outstanding common stock, the Board of Directors in its discretion may elect to maintain the stated amount of shares reserved under the Plans without giving effect to such stock split. Subject to the limitation on the aggregate number of shares issuable under the Plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. Plan options may either be (i) ISOs, (ii) NSOs (iii) awards of our common stock or (iv) rights to make direct purchases of our common stock which may be subject to certain restrictions. Any option granted under the Plans must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The Plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The term of each plan option and the manner in which it may be exercised is determined by the Board of Directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant.

Note 15.

Litigation

Note 16.

Subsequent Events

Restricted Shares

During June 2012 the Company issued 125,000 vested and restricted shares of common stock to Stratcon Partners, LLC pursuant to the terms of an independent contractor agreement effective December 6, 2011 pursuant to which Stratcon has agreed to provide the Company with consulting and advisory services, including, but not limited to business marketing, management, budgeting, financial analysis, and investor and press relations. In addition, during June 2012 the Company issued 25,000 shares of restricted common stock to Mediterranean Securities Group, LLC in consideration of financial consulting services.

Asset Purchase

On June 28, 2012, the Company finalized the asset purchase agreement with Seen on TV, LLC agreeing (i) to pay an additional $1,560,000 in cash, (ii) issue an additional 250,000 shares of restricted stock, (iii) issue 250,000 common stock purchase warrants, exercisable at $0.64 per share for the three years of issuance, (iv) modifying the exercise price of the 50,000 common stock purchase warrants issued in May 2011 from $7.00 per share to $1.00 per share and extending their term, and (v) making five annual payments of $10,000 per year to a charitable organization designated by Seen on TV. The Company agreed that so long as the seller owns at least 250,000 common shares received under the purchase agreement, if

F-25

AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

we were to issue additional shares of common stock, the seller will be entitled to receive additional shares sufficient to maintain their proportional ownership in the Company.

This transaction did not meet the criteria of a business combination within the guidelines of ASC 805—BusinessCombinations, and therefore will be accounted for as an asset purchase. The transaction contained no contingent consideration and no liabilities were assumed contingent or otherwise. Accordingly, the assets acquired, all identifiable intangible assets, will be recognized based on our cost, including transactions costs, of the asset acquired.

F-26

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

As Seen On TV (ASTVF) Inactive 10-K2012 FY Annual report

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