UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(D) of The Securities Act of 1934
For the quarterly period ended: June 30, 2002
Commission file number: 333-81520
MEDIATELEVISION.TV, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 98-0361568
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
1904 West 16th Avenue, Suite 1
Vancouver, BC V6J 2M4
(Address of principal executive offices)
(604) 605-0507
(Issuer's telephone number)
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 and 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.
Yes X No
-------------- --------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $0.0001 par value 2,296,632
(Class) (Outstanding as of August 6, 2002)
MEDIATELEVISION.TV, INC.
FORM 10-QSB
INDEX
Page
----
Part I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheet
June 30, 2002 and September 31, 2001 ...............................3
CondensedConsolidated Statement of Losses
For the Three and Nine Months ended
June 30, 2002 and 2001 and for the period
October 11, 2000 (Date of Inception) through
June 30, 2002........................................................4
Condensed Consolidated Statement of Deficiency
In Stockholder's Equity for the period
October 11, 2000 (Date of Inception) through
June 30, 2002........................................................5
CondensedConsolidated Statement of Cash Flows
For the Nine months ended June 30, 2002 and
2001 and for the period October 11, 2000
(Date of Inception) through June 30, 2002............................6
Notes to Financial Statements.................................................7
Item 2 Management's Discussion and Analysis or Plan of Operation............8
Part II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K.....................................15
Signatures....................................................................16
2
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 2002 September 30,
(Unaudited) 2001
---------- ----------
ASSETS
Current assets:
Cash and equivalents $ 164 $ 6
Deposits 912 877
Advance to related parties 2,784 11,078
---------- ----------
Total current assets 3,860 11,961
Property & Equipment - at cost
Furniture, Equipment, & Leasehold Improvements 921 887
Less: Accumulated Depreciation 255 116
---------- ----------
666 771
License Agreement, at cost 10,000 10,000
Total Assets $ 14,526 $ 22,732
========== ==========
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 27,289 $ 407
Due to shareholder 19,283 16,204
---------- ----------
46,572 16,611
(Deficiency in) Stockholders' equity:
Preferred stock, par value $.001 per share;
20,000,000 authorized, none issued and outstanding at
June 30, 2002 and September 31, 2001 -- --
Common stock, par value $.001 per share;
80,000,000 authorized, 2,296,632 and 2,249,632 issued
and outstanding at June 30, 2002 and September 30, 2001,
respectively 230 225
Additional paid-in-capital 79,097 69,700
Deficit accumulated during development stage (111,373) (63,804)
---------- ----------
(32,046) 6,121
---------- ----------
$ 14,526 $ 22,732
========== ==========
See accompanying footnotes to the unaudited condensed consolidated financial statements
3
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF LOSSES
(UNAUDITED)
For the Period from
October 11, 2000 (date
of inception) through
Three Months Ended June 30, Nine Months Ended June 30, June 30, 2002
2002 2001 2002 2001
Revenue:
Internet Service and Design $ 7 $ 2,614 $ 958 $ 2,614 $ 8,044
Party/ Ticket Revenue 349 2,886 349 2,886 3,227
------------ ------------ ------------ ------------ ------------
Total Revenue 356 5,500 1,307 5,500 11,271
Operating expenses:
Selling, general and administrative 35,782 28,907 47,314 51,847 120,236
Depreciation 49 70 133 70 249
------------ ------------ ------------ ------------ ------------
Operating expense 35,831 28,978 47,447 51,918 120,485
Other Income
Translation Gain or Loss 2,485 (3,918) (1,429) (4,254) (2,159)
------------ ------------ ------------ ------------ ------------
2,485 (3,918) (1,429) (4,254) (2,159)
Net loss before taxes (32,990) (27,396) (47,569) (50,672) (111,373)
Provision for income taxes -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net loss $ (32,990) $ (27,396) $ (47,569) $ (50,672) $ (111,373)
============ ============ ============ ============ ============
Loss per Common Share (Basic and
Diluted) $ (0.01) $ (0.01) $ (0.02) $ (0.03) $ (0.05)
============ ============ ============ ============ ============
Weighted Average Common Share
Outstanding 2,294,539 2,039,560 2,273,928 1,932,601 2,143,275
See accompanying footnotes to the unaudited condensed consolidated financial statements
4
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
FOR THE PERIOD OCTOBER 11, 2000 (DATE OF INCEPTION) THROUGH JUNE 30, 2002
(UNAUDITED)
Deficit
accumulated
Common Stock during
------------------------- Development
Common shares Amount Subscriptions APIC Stage Total
------------- ---------- ------------- ---- ----- -----
Common stock issued in October 2000 to founders in
exchange for services rendered at $.01 per share 1,000,000 $ 100 $ -- $ 9,900 $ -- $ 10,000
Common stock issued in October 2000 to founders in
exchange for License and Distribution agreement at
$.01 per share 1,000,000 100 -- 9,900 -- 10,000
Common Stock subscribed March 2001, at $ 0.20 per
share -- -- 3,833 -- -- 3,833
Common Stock subscribed April 2001, at $ 0.20 per
share -- -- 6,720 -- -- 6,720
Common Stock issued in exchange for services
rendered in April 2001 18,000 2 -- 3,598 -- 3,600
Common Stock subscribed May 2001, at $ 0.20 per share -- -- 12,080 -- -- 12,080
Common Stock issued in exchange for services
rendered in May 2001 67,000 7 -- 13,393 -- 13,400
Common Stock subscribed June 2001, at $ 0.20 per
share -- -- 1,200 -- -- 1,200
Common Stock subscribed July 2001, at $ 0.20 per
share -- -- 1,026 -- -- 1,026
Common Stock issued in exchange for services
rendered in July 2001 8,000 1 -- 1,599 -- 1,600
Common Stock subscribed August 2001, at $ 0.20 per
share -- -- 1,000 -- -- 1,000
Common Stock issued in exchange for services
rendered in August 2001 14,666 1 -- 2,932 -- 2,933
Common Stock subscribed September 2001, at $ 0.20
per share -- -- 2,533 -- -- 2,533
Conversion of Common Stock Subscriptions into Common
Stock, September 10, 2001 141,966 14 (28,392) 28,378 -- --
Net Loss -- -- -- -- (63,804) (63,804)
---------- ---------- ---------- ---------- ---------- ----------
Balance at September 30, 2001 2,249,632 $ 225 $ -- $ 69,700 $ (63,804) $ 6,121
========== ========== ========== ========== ========== ==========
Common stock issued for cash , January 2002, at $.20
per share 37,500 3 -- 7,722 -- 7,725
Common stock issued for services rendered in April
2002 8,167 1 -- 1,409 -- 1,410
Common stock issued for cash, May 2002, at $0.20 per
share 1,333 1 -- 266 -- 267
Net loss -- -- -- -- (47,569) (47,569)
---------- ---------- ---------- ---------- ---------- ----------
Balance at June 30, 2002 2,296,632 $ 230 $ -- $ 79,097 $(111,373) $ (32,046)
========== ========== ========== ========== ========== ==========
See accompanying footnotes to the unaudited condensed consolidated financial statements
5
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the Period from
October 11, 2000 (date
of inception) through
Nine Months Ended June 30, June 30, 2002
2002 2001
Cash flows from operating activities:
Net loss from operating activities $ (47,569) $ (50,672) $(111,373)
Adjustments to reconcile net income to net cash:
Translation Gain or Loss 1,429 -- 1,429
Common stock issued to founders in exchange for services -- 10,000 10,000
Common stock issued in exchange for services rendered 1,410 17,000 22,943
Depreciation 133 70 249
Change in:
Prepaid expenses and other assets -- (914) (877)
Advances to related parties 8,523 (9,679) (2,555)
Accounts Payable 23,917 -- 24,324
---------- ---------- ----------
Net cash from operating activities (12,157) (34,195) (55,860)
Cash flows used in investing activities:
Capital expenditures, net of disposals -- (924) (887)
---------- ---------- ----------
Net cash used in investing activities -- (924) (887)
Cash flows (used in)/provided by financing activities:
Proceeds from stockholder loans 4,323 14,872 20,527
Proceeds from issuance of common stock 7,992 23,900 36,384
---------- ---------- ----------
Net cash used in financing activities 12,315 38,772 56,911
Net increase in cash and cash equivalents 158 3,653 164
Cash and cash equivalents at October 1, 6 -- --
---------- ---------- ----------
Cash and cash equivalents at June 30, $ 164 $ 3,653 $ 164
========== ========== ==========
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest $ -- $ -- $ --
Income taxes paid -- -- --
Common stock issued for services 1,410 -- 21,333
Common stock issued to founders -- 10,000 10,000
See accompanying footnotes to the unaudited condensed consolidated financial statements
6
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
NOTE A - SUMMARY OF ACCOUNTING POLICIES
- ---------------------------------------
GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB, and therefore, do not
include all the information necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
results from developmental stage operations for the nine-month period ended June
30, 2002 are not necessarily indicative of the results that may be expected for
the year ended September 30, 2002. The unaudited consolidated financial
statements should be read in conjunction with the consolidated September 30,
2001 financial statements and footnotes thereto included in the Company's SEC
Form SB-2.
BUSINESS AND BASIS OF PRESENTATION
Mediatelevision.tv, Inc (the "Company") was formed on October 11, 2000 under the
laws of the State of Delaware. The Company is a development stage enterprise, as
defined by Statement of Financial Accounting Standards No. 7 ("SFAS. 7") and is
in the business of producing, acquiring and syndicating episodic series designed
especially for the Internet. From its inception through the date of these
financial statements, the Company has incurred significant operating expenses
and accumulated losses of $ 111,373. Consequently, its operations are subject to
all risks inherent in the establishment of a new business enterprise.
The consolidated financial statements include the accounts of the Company, and
its wholly-owned subsidiary, Mediatelevision.tv Distribution, Ltd. Significant
intercompany transactions have been eliminated in consolidation.
7
Forward Looking Statements
This Form 10-QSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All statements
included herein that address activities, events or developments that the Company
expects, believes, estimates, plans, intends, projects or anticipates will or
may occur in the future, are forward-looking statements. Actual events may
differ materially from those anticipated in the forward-looking statements.
Important risks that may cause such a difference include: general domestic and
international economic business conditions, increased competition in the
Company's markets and products. Other factors may include, availability and
terms of capital, and/or increases in operating and supply costs. Market
acceptance of existing and new products, rapid technological changes,
availability of qualified personnel also could be factors. Changes in the
Company's business strategies and development plans and changes in government
regulation could adversely affect the Company. Although the Company believes
that the assumptions underlying the forward-looking statements contained herein
are reasonable, any of the assumptions could be inaccurate. There can be no
assurance that the forward-looking statements included in this filing will prove
to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company that the objectives
and expectations of the Company would be achieved.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion should be read in conjunction with the Company's
Condensed Financial Statements and Notes thereto, included elsewhere within this
report. The discussions of results, causes and trends should not be construed to
imply any conclusion that these results or trends will necessarily continue in
the future.
Overview
- --------
Mediatelevision.tv, Inc, is a development stage company whose efforts have been
principally devoted to the business of producing, acquiring, and syndicating
episodic series designed especially for the Internet.
The Company anticipates that its business will incur significant operating
losses in the future. At this time, the Company believes that its success
depends on its ability to build a selection of quality content available for
distribution on the Internet.
As of June 30, 2002, the Company had a cash balance of $ 164. The Company's
existence is dependent upon management's ability to develop profitable
operations and resolve it's liquidity problems. Management anticipates the
Company will attain profitable status and improve its liquidity through the
continued developing of its products, establishing a profitable market for the
Company's products and additional equity investment in the Company.
In order to improve the Company's liquidity, the Company is actively pursuing
additional equity financing through discussion with investment bankers and
private investors. There can be no assurance the Company will be successful in
its effort to secure additional equity financing.
If operations and cash flow continue to improve through these efforts,
management believes that the Company can continue to operate. However, no
assurance can be given that management's actions will result in profitable
operations or the resolution of its liquidity problems.
If the Company is able to raise sufficient funds, it intends to spend $10,000
over the course of the next year in the development of its contacts for a
distribution and licensing network in North America, and in the release and
marketing of a FashionFreakz DVD. If the Company is able raise additional
financing , it expects to expand operations with the purchase of $3,000 worth of
major equipment. The Company's business plan provides for an increase of four
part time contractors in the next 12 months.
THREE MONTHS ENDED JUNE 30, 2002
Results Of Operations
- ---------------------
During the quarterly period covered by this Report, the Company received minimal
revenues from operations and incurred expenses of $ 35,831 as compared to
$28,978 for the same period last year. An increase in expenses of $6,853, or
24%, the increase is due to an increase in prospects of new programming. The
expenses stem from general, administrative and development expenses relating to
the development of the Company's websites and administrative fees.
8
The Company intends to continue negotiating with a large media company for
licensing of episodes of Fashionfreakz.com. The Company has also been
negotiating with several content producers regarding acquiring their content for
distribution by the Company. These alliances may involve significant amounts of
intangible assets, or non-cash charges that may affect operating results over
the next several fiscal periods.
The Company has been negotiating with companies to build marketing alliances.
These alliances may involve significant amounts of intangible assets, or
non-cash charges that may affect operating results over the next several fiscal
periods.
NINE MONTHS ENDED JUNE 30, 2002
Results Of Operations
- ---------------------
During the nine months ended June 30, 2002, the Company received minimal
revenues from operations and incurred expenses of $ 47,447 as compared to
$51,918 for the same period last year, a decrease of $4,471. The expenses stem
from general, administrative and development expenses relating to the
development of the Company's websites and administrative fees.
Liquidity
- ---------
At June 30, 2002, the Company had total current assets of $ 3,860 and total
liabilities of $ 46,572. As of June 30, 2002, the Company had an accumulated
deficit of approximately
$ 42,712, as compared to $4,650 at September 30, 2001. The Company intends to
continue to make financial investments in marketing, content, technology and
website development. The Company expects to have revenues from digital
production services within the next quarter. The Company expects to incur
substantial losses over the next year.
The Company's independent certified public accountants have stated in their
report included in the Company's Form SB-2/A, filed July 10, 2002, that the
Company has incurred operating losses since inception, and that the Company is
dependent upon managements ability to develop profitable operations. These
factors among others may raise substantial doubt about the Company's ability to
continue as a going concern.
Discussion and Analysis of Financial Condition
- ----------------------------------------------
OPERATIONS AND RESULTS FOR THREE MONTHS ENDED JUNE 30, 2002. Activity during the
past quarter has been confined to testing the viability of the Company's
business model, the identification of markets, development of products, and
acquisition of complementary businesses.
9
FUTURE PROSPECTS: The Company is unable to predict when it may launch intended
operations, or failing to do so, when and if it may elect to participate in a
business acquisition opportunity. The reason for this uncertainty arises from
its limited resources, and competitive disadvantage to other public or
semi-public issuers.
REVERSE ACQUISITION CANDIDATE: The Company is not currently searching for a
profitable business opportunity. This contingency is disclosed for the
possibility that the Company's intended business might fail. The Company is not
presently a reverse acquisition candidate. Should the Company's business fail,
management does not believe the Company would be able to effectively, under
current laws and regulations, attract capital, and would be required to seek
such an acquisition to achieve profitability for shareholders.
Factors That May Affect Future Results and Market Price of Stock.
- -----------------------------------------------------------------
The business of the Company involves a number of risks and uncertainties that
could cause actual results to differ materially from results projected in any
forward-looking statement, or statements, made in this report. These risks and
uncertainties include, but are not necessarily limited to the risks set forth
below. The Company's securities are speculative and investment in the Company's
securities involves a high degree of risk and the possibility that the investor
will suffer the loss of the entire amount invested.
NO OPERATING HISTORY; POTENTIAL OF INCREASED EXPENSES.
The Company was organized in 2000, and has no operating history upon which an
evaluation of its business and prospects can be based.
There can be no assurance that the Company will be profitable on a quarterly or
annual basis. In addition, as the Company expands its business network and
marketing operations it will likely need to increase its operating expenses,
broaden its customer support capabilities, and increase its administrative
resources.
POSSIBLE NEED FOR ADDITIONAL FINANCING.
It is possible that revenues from the Company's operations may not be sufficient
to finance its initial operating cost to reach breakeven. If this were to occur,
the Company would need to raise or find additional capital. While the Company
expects to be able to meet its financial obligations for approximately the next
twelve months, there is no assurance that, after such period, the Company will
be operating profitably. If they are not, there can be no assurance that any
required capital will be obtained on terms favorable to the Company. Failure to
obtain adequate additional capital on favorable terms could result in
significant delays in the expansion of new services and market share and could
even result in the substantial curtailment of existing operations and services
to clients.
10
UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL FLUCTUATIONS IN QUARTERLY
RESULTS.
As a result of the Company's lack of operating history and the emerging nature
of the market in which it competes, the Company is unable to forecast its
revenues accurately. The Company's current and future expense levels are based
largely on its investment/operating plans and estimates of future revenue and
are to a large extent based on the Company's own estimates. Sales and operating
results generally depend on the volume of, timing of, and ability to obtain
customers, orders for services received, and revenues therefrom generated. These
are, by their nature, difficult at best to forecast.The Company may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall or delay. Accordingly, any significant shortfall or delay in revenue
in relation to the Company's planned expenditures would have an immediate
adverse affect on the Company's business, financial condition, and results of
operations. Further, in response to changes in the competitive environment, the
Company may from time to time make certain pricing, service, or marketing
decisions that could have a material adverse effect on the Company's business,
financial condition, operating results, and cash flows.
DEVELOPING MARKET; ACCEPTANCE OF THE INTERNET AS A MEDIUM FOR COMMERCE JUST NOW
BEING PROVEN.
The Company's long-term viability is substantially dependent upon the continued
widespread acceptance and use of the Internet as a medium for business commerce,
in terms of the sales of both products and services to businesses and
individuals. The use of the Internet as a means of business sales and commerce
has only recently reached a point where many companies are making reasonable
profits from their endeavors therein, and there can be no assurance that this
trend will continue.The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic.
There can be no assurance that the Internet infrastructure will continue to be
able to support the demands placed on it by this continued growth. In addition,
delays in the development or adoption of new standards and protocols to handle
increased levels of Internet activity or increased governmental regulation could
slow or stop the growth of the Internet as a viable medium for business
commerce. Moreover, critical issues concerning the commercial use of the
Internet (including security, reliability, accessibility and quality of service)
remain unresolved and may adversely affect the growth of Internet use or the
attractiveness of its use for business commerce.The failure of the necessary
infrastructure to further develop in a timely manner, or the failure of the
Internet to continue to develop rapidly as a valid medium for business would
have a material adverse effect on the Company's business, financial condition,
operating results, and cash flows.
11
UNPROVEN ACCEPTANCE OF THE COMPANY'S SERVICES AND/OR PRODUCTS.
The Company is still in its development stage. As a result, it does not know
with any certainty whether its services and/or products will be accepted within
the business marketplace. If the Company's services and/or products prove to be
unsuccessful within the marketplace, or if the Company fails to attain market
acceptance, it could materially adversely affect the Company's financial
condition, operating results, and cash flows.
DEPENDENCE ON KEY PERSONNEL.
The Company's performance and operating results are substantially dependent on
the continued service and performance of its officer and directors. The Company
intends to hire additional technical, sales, and other personnel as they move
forward with their business model. Competition for such personnel is intense,
and there can be no assurance that the Company can retain its key technical
employees, or that it will be able to attract or retain highly qualified
technical and managerial personnel in the future. The loss of the services of
any of the Company's key employees or the inability to attract and retain the
necessary technical, sales, and other personnel could have a material adverse
effect upon the Company's business, financial condition, operating results, and
cash flows. The Company does not currently maintain "key man" insurance for any
of its key employees.
LIABILITY FOR INFORMATION DISPLAYED ON THE COMPANY'S INTERNET WEB SITES.
The Company may be subjected to claims for defamation, negligence, copyright, or
trademark infringement and various other claims relating to the nature and
content of materials it publishes on its Internet Web site, or those set up for
its clients. These types of claims have been brought, sometimes successfully,
against online businesses in the past. The Company could also face claims based
on the content that is accessible from its own, or its clients' Internet Web
sites through links to other Web sites.
DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET.
The success of the Company's business depends, in part, on
continued acceptance and growth in the use of the Internet for business commerce
and would suffer if Internet usage does not continue to grow. Internet usage may
be inhibited for a number of reasons, such as:
o Inadequate network infrastructure.
o Security concerns.
o Inconsistent quality of service.
o Lack of available cost-effective, high-speed service.
o The adoption of new standards or protocols for the Internet.
o Changes or increases in government regulation.
Online companies have experienced interruptions in their services as a result of
outages and other delays occurring due to problems with the Internet network
infrastructure, disruptions in Internet access provided by third-party providers
or failure of third party providers to handle higher volumes of user traffic. If
Internet usage grows, the Internet infrastructure or third-party service
providers may be unable to support the increased demands which may result in a
decline of performance, reliability or ability to access the Internet. If
outages or delays frequently occur in the future, Internet usage, as well as
usage of the Company's Internet Web-sites, could grow more slowly or
decline.
12
RELIANCE ON OTHER THIRD PARTIES.
The Company's and its clients' operations may depend, to a significant degree,
on a number of other third parties, including but not limited to ISPs. The
Company has no effective control over these third parties and no long-term
contractual relationships with any of them. From time to time, the Company
and/or its clients could experience temporary interruptions in their Internet
Web-site connections and related communications access. Continuous or prolonged
interruptions in the Internet Web-site connections or communications access
would have a material adverse effect on the Company's business, financial
condition and results of operations. Most agreements with ISPs place certain
limits on a company's ability to obtain damages from the service providers for
failure to maintain the company's connection to the Internet.
COMPETITION.
The business of online entertainment is very competitive and the Company
believes such competition will continue to grow and intensify. In addition to
competition on the Internet, the Company faces competition from new forms of
digital entertainment distribution such as DVDs. The Company also competes with
other forms of leisure for consumer spending, such as sports.
The Company will be competing with more established on-line entertainment
distribution companies. These competitors may include major music labels, movie
studios, major technology companies, as well as established on-line companies.
Many of these competitors have substantially greater access to capital, greater
financial, technical, marketing, sales and distribution resources, and more
experience in distribution of on-line entertainment and in the production of
entertainment. Some of the Company's competitors for content distribution are:
Screaming Media Inc., which is in the business of content aggregation and
distribution, iSyndicate, a provider of syndication solutions and content, and
Atom Films Inc., which is in the business of distributing short films.
RISKS OF POTENTIAL GOVERNMENT REGULATION AND OTHER LEGAL UNCERTAINTIES RELATING
TO THE INTERNET.
The Company is not currently subject to direct federal, state, or local
regulation in the United States and Canada other than regulations applicable to
businesses generally or directly applicable to electronic commerce. However,
because the Internet is becoming increasingly popular, it is possible that a
number of laws and regulations may be adopted with respect to the Internet.
These laws may cover issues such as user privacy, freedom of expression,
pricing, content, and quality of products and services, taxation, advertising,
intellectual property rights and information security. Furthermore, the growth
of electronic commerce may prompt calls for more stringent consumer protection
laws. The adoption of such consumer protection laws could create uncertainty in
Internet usage and reduce the demand for all products and services.
13
In addition, the Company is not certain how its business may be affected by the
application of existing laws governing issues such as property ownership,
copyrights, encryption, and other intellectual property issues, taxation, libel,
obscenity, and export or import matters. It is possible that future applications
of these laws to the Company's business could reduce demand for its products and
services or increase the cost of doing business as a result of litigation costs
or increased service delivery costs.
Because the Company's services will likely be available over the Internet in
multiple states, and possibly foreign countries, other jurisdictions may claim
that the Company is required to qualify to do business and pay taxes in each
state or foreign country. The Company's failure to qualify in other
jurisdictions when it is required to do so could subject the Company to
penalties and could restrict the Company's ability to enforce contracts in those
jurisdictions. The application of laws or regulations from jurisdictions whose
laws do not currently apply to the Company's business may have a material
adverse affect on its business, results of operations and financial condition.
INTELLECTUAL PROPERTY RIGHTS.
As part of its confidentiality procedures, the Company expects to enter into
nondisclosure and confidentiality agreements with its key employees, and any
consultants and/or business partners and will limit access to and distribution
of its technology, documentation, and other proprietary information.
Despite the Company's efforts to protect any intellectual property rights it may
have, unauthorized third parties, including competitors, may from time to time
copy or reverse-engineer certain portions of the Company's technology and use
such information to create competitive services and/or products.
It is possible that the scope, validity, and/or enforceability of the Company's
intellectual property rights could be challenged by other parties, including
competitors. The results of such challenges before administrative bodies or
courts depend on many factors which cannot be accurately assessed at this time.
Unfavorable decisions by such administrative bodies or courts could have a
negative impact on the Company's intellectual property rights. Any such
challenges, whether with or without merit, could be time consuming, result in
costly litigation and diversion of resources, and cause service or product
delays. If such events should occur, the Company's business, operating results
and financial condition could be materially adversely affected.
14
PART II: OTHER INFORMATION
- -------- -----------------
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
a. NONE
b. NONE
c. NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Articles of Incorporation of the Registrant*
3.2 By-laws of the Registrant*
99.1 Certification of CEO and CFO
----------------
* Previously filed as an exhibit to the Company's Form SB-2
dated January 29, 2002
(b) Reports on Form 8-K filed during the three months ended June 30, 2002.
No Current Reports on Form 8-K were filed during the three months ended
June 30, 2002
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 13, 2002 Mediatelevision.tv, Inc.
/s/ Penny Green
-----------------------------------
Penny Green
President
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