UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
Act of 1934
For the quarterly period ended: March 31, 2003
[ ] Transition Report under Section 13 or 15(d) of the Exchange Act
For the Transition period from _________ to _________
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)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, $0.0001 par value 2,313,912
(Class) (Outstanding as of May 1, 2003)
Transitional Small Business Disclosure format (Check one): Yes [ ] No [X]
MEDIATELEVISION.TV, INC.
FORM 10-QSB
INDEX
Page
----
Part I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheet........................................F-1
Condensed Consolidated Statement of Losses..................................F-2
Condensed Consolidated Statement of Cash Flows..............................F-3
Notes to Financial Statements...............................................F-4
Item 2 Management's Discussion and Analysis or Plan of Operation..........3
Item 3 Controls and Procedures............................................9
Part II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K...................................10
Signatures..................................................................10
Certifications..............................................................11
2
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEDIATELEVISION.TV,INC
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
MARCH 31 SEPTEMBER 30
2003 2002
---------- ----------
ASSETS
Current assets :
Cash and equivalents $ 82 $ 327
Deposits 940 877
Advance to related parties 3,355 2,496
TOTAL CURRENT ASSETS $ 4,377 3,700
Property & Equipment- at cost
Furniture, Equipment & Leasehold Improvements 951 887
Less : Accumulated Depreciation (408) (289)
$ 543 598
Licence Agreement, at cost -- --
---------- ----------
TOTAL ASSETS $ 4,920 $ 4,298
========== ==========
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
Current Liabilities :
Accounts payable 42,210 31,664
Advances from shareholder 22,444 20,925
Total Current Liabilities $ 64,654 52,589
COMMITMENTS AND CONTINGENCIES
DEFICIENCY IN STOCKHOLDERS' EQUITY
Preferred stock, par value $ 0.001 per share;
20,000,000 authorized, none issued and outstanding at
March 31, 2003 and September 30, 2002 -- --
Common stock, par value $ 0.001 per share;
80,000,000 authorized , 2,313,912 and 2,296,632
issued and outstanding at March 31, 2003 and
September 30, 2002, respectively 233 230
Additional paid in capital 82,381 79,097
Deficit accumulated during development stage (142,348) (127,618)
$ (59,734) (48,291)
---------- ----------
$ 4,920 $ 4,298
========== ==========
SEE ACCOMPANYING FOOTNOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.
F-1
MEDIATELEVISION.TV, INC
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF LOSSES
(UNAUDITED)
FOR THE PERIOD
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED FROM OCTOBER 11,
------------------------- ------------------------- 2000 (DATE OF
MARCH 31, MARCH 31, MARCH 31, MARCH 31, INCEPTION) THROUGH
2003 2002 2003 2002 MARCH 31, 2003
----------- ----------- ----------- ----------- -----------
REVENUE :
Internet Service and Design -- 951 -- 951 951
Promotional fees -- -- -- -- --
----------- ----------- ----------- ----------- -----------
TOTAL REVENUE -- 951 -- 951 951
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES :
Selling, general and administrative 8,699 5,247 12,542 11,532 152,747
Research and Development -- -- -- -- --
Depreciation 46 44 91 84 380
----------- ----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 8,745 5,291 12,633 11,616 153,127
----------- ----------- ----------- ----------- -----------
OTHER INCOME
Miscellaneous Income -- -- -- -- 11,274
Foreign currency translation Gain (Loss) (1,879) (3,959) (2,097) (3,914) (495)
----------- ----------- ----------- ----------- -----------
NET LOSS BEFORE TAXES (10,624) (8,299) (14,730) (14,579) (142,348)
----------- ----------- ----------- ----------- -----------
Provision for income taxes -- -- -- -- --
----------- ----------- ----------- ----------- -----------
NET LOSS (10,624) (8,299) (14,730) (14,579) (142,348)
----------- ----------- ----------- ----------- -----------
Loss per common Share (Basic and Diluted) -- (0.04) (0.01) $ (0.01) $ (0.05)
=========== =========== =========== =========== ===========
Weighted average common shares outstanding 2,909,137 2,118,144 2,909,137 2,118,144 2,909,137
=========== =========== =========== =========== ===========
SEE ACCOMPANYING FOOTNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
F-2
MEDIATELEVISION.TV, INC
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE PERIOD
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED FROM OCTOBER 11,
----------------------- ----------------------- 2000 (DATE OF
MARCH 31, MARCH 31, MARCH 31, MARCH 31, INCEPTION) THROUGH
2003 2002 2003 2002 MARCH 31, 2003
---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES :
Net loss from operating activities (10,624) $ (8,299) (14,730) $ (14,579) $(142,348)
Adjustments to reconcile net income to net cash :
Translation Gain or Loss 1,879 3,959 2,097 3,914 495
Common stock issued to founders in exchange for services -- -- -- -- 10,000
Common stock issued in exchange for services -- -- 1,410 -- 22,943
Depreciation 46 44 91 84 380
Write off of licence fees -- -- -- -- 10,000
CHANGE IN :
Prepaid expenses and other assets -- 2 -- -- (877)
Advances to related parties 1,494 (2,314) 376 2,671 (2,120)
Accounts payable 7,427 (623) 7,224 179 41,875
---------- ---------- ---------- ---------- ----------
NET CASH FROM OPERATING ACTIVITIES 222 (7,231) 3,532 (7,731) (59,652)
CASH FLOWS USED IN INVESTING ACTIVITIES :
Capital expenditures, net of disposals 0 (1) -- -- (887)
CASH FLOWS (USED IN) / PROVIDED BY FINANCING ACTIVITIES :
Proceeds from stockholder advances -- -- -- -- 20,950
Proceeds from issuance of common stock -- 7,725 3,287 7,725 39,671
---------- ---------- ---------- ---------- ----------
NET CASH USED IN FINANCING ACTIVITIES -- 7,725 3,287 7,725 60,621
NET CASH USED IN CASH AND CASH EQUIVALENTS 222 494 245 $ (6) 82
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD/ YEAR 304 (494) 347 6 --
---------- ---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD/ YEAR 82 0 82 $ -- 82
---------- ---------- ---------- ---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest
Cash paid during the period for taxes -- -- $ -- $ -- --
Common stock issued in exchange for services -- -- 1,410 -- 22,943
Common stock issued to founders in exchange for services -- -- -- -- 10,000
Common stock issued to founders in exchange
for Licence Agreement -- -- -- -- 10,000
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-3
MEDIATELEVISION.TV, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - SUMMARY OF ACCOUNTING POLICIES
GENERAL
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Accordingly, the results from operations for the three-month period ended March
31, 2003, are not necessarily indicative of the results that may be expected for
the year ended September 30, 2003. The unaudited condensed consolidated
financial statements should be read in conjunction with the consolidated
September 30, 2002 financial statements and footnotes thereto included in the
Company's SEC Form 10-KSB.
BUSINESS AND BASIS OF PRESENTATION
Mediatelevision.tv, Inc (the "Company " ) is in the development stage and its
effort have been principally devoted to seeking profitable business
opportunities. To date Company has incurred expenses, and has sustained losses.
Consequently, its operations are subject to all risks inherent in the
establishment of a new business enterprise. For the period from inception
through March 31 2003, the Company has accumulated losses of $142,348.
RECENT ACCOUNTING PRONOUNCEMENTS
Effective January 1, 2002, the Company adopted SFAS No. 142. Under the new
rules, the Company will no longer amortize goodwill and other intangible assets
with indefinite lives, but such assets will be subject to periodic testing for
impairment. On an annual basis, and when there is reason to suspect that their
values have been diminished or impaired, these assets must be tested for
impairment, and write-downs to be included in results from operations may be
necessary. SFAS No. 142 also requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. Any goodwill
impairment loss recognized as a result of the transitional goodwill impairment
test is recorded as a cumulative effect of a change in accounting principle. The
adoption of SFAS No 142 had no material impact on the Company's condensed
consolidated financial statements.
SFAS No. 143 establishes accounting standards for the recognition and
measurement of an asset retirement obligation and its associated asset
retirement cost. It also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived assets. SFAS No. 143 is
effective in fiscal years beginning after June 15, 2002, with early adoption
permitted. The Company expects that the provisions of SFAS No. 143 will not have
a material impact on its consolidated results of operations and financial
position upon adoption. The Company adopted SFAS No. 143 effective January 1,
2003. The adoption of SFAS No. 143 had no material impact on Company's condensed
consolidated financial statements.
F-4
SFAS No. 144 establishes a single accounting model for the impairment or
disposal of long-lived assets, including discontinued operations. SFAS No. 144
superseded Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
(SFAS No. 121), and APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions". The Company adopted
SFAS No. 144 effective January 1, 2002. The adoption of SFAS No. 144 had no
material impact on Company's condensed consolidated financial statements
In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This Statement rescinds FASB Statement No. 4, "Reporting Gains and
Losses from Extinguishment of Debt", and an amendment of that Statement, FASB
Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements" and FASB Statement No. 44, "Accounting for Intangible Assets of
Motor Carriers". This Statement amends FASB Statement No. 13, "Accounting for
Leases", to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that a similar to sale-leaseback
transactions. The Company does not expect the adoption to have a material impact
to the Company's financial position or results of operations.
In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." The Company
adopted SFAS No. 146 effective January 1, 2003. The adoption of SFAS No. 146 had
no material impact on Company's condensed consolidated financial statements.
In October 2002, the FASB issued Statement No. 147, "Acquisitions of Certain
Financial Institutions-an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9", which removes acquisitions of financial institutions from
the scope of both Statement 72 and Interpretation 9 and requires that those
transactions be accounted for in accordance with Statements No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets. In addition,
this Statement amends SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, to include in its scope long-term customer relationship
intangible assets of financial institutions such as depositor- and
borrower-relationship intangible assets and credit cardholder intangible assets.
The requirements relating to acquisitions of financial institutions are
effective for acquisitions for which the date of acquisition is on or after
October 1, 2002. The provisions related to accounting for the impairment or
disposal of certain long-term customer-relationship intangible assets are
effective on October 1, 2002. The adoption of this Statement did not have a
material impact to the Company's financial position or results of operations as
the Company has not engaged in either of these activities.
In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", which amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The transition guidance and annual disclosure provisions of Statement
148 are effective for fiscal years ending after December 15, 2002, with earlier
application permitted in certain circumstances. The interim disclosure
provisions are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002. The adoption of this
Statement did not have a material impact to the Company's financial position or
results of operations as the Company has not engaged in either of these
activities.
F-5
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." Interpretation 46 changes the criteria by which one
company includes another entity in its consolidated financial statements.
Previously, the criteria were based on control through voting interest.
Interpretation 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation requirements
apply to older entities in the first fiscal year or interim period beginning
after June 15, 2003. Certain of the disclosure requirements apply in all
financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The adoption of this Statement did not
have a material impact to the Company's financial position or results of
operations as the Company has not engaged in either of these activities.
F-6
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 March 31, 2003, the Company had a cash balance of $82. 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.
SIX MONTHS ENDED MARCH 31, 2003
Results Of Operations
- ---------------------
During the quarterly period covered by this Report, the Company received minimal
revenues from operations and incurred expenses of $8,745 as compared to $5,291
for the same period last year. The expenses stem from general, administrative
and development expenses relating to the development of the Company's websites
and administrative fees.
3
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.
Liquidity
- ---------
As of March 31, 2003, we had a working capital deficit of $59,734. As a result
of our operating losses from our inception through March 31, 2003, we generated
a cash flow deficit of $59,652 from operating activities. We met our cash
requirements during this period through the private placement of $39,671 and
$20,950 of advances from stockholders (net of repayments).
While we have raised capital to meet our working capital and financing needs in
the past, additional financing is required in order to meet our current and
projected cash flow deficits from operations and development. We are seeking
financing in the form of equity in order to provide the necessary working
capital. We currently have no commitments for financing. There is no guarantee
that we will be successful in raising the funds required.
By adjusting its operations and development to the level of capitalization,
management believes it has sufficient capital resouces to meet, projected cash
flow deficits through the next twelve months. However, if thereafter, we are not
successful in generating sufficient liquidity from operations or in raising
sufficient capital resources, on terms acceptable to us, this could have a
material adverse effect on our business, results of operations, liquidity and
financial condition.
The Company's independent certified public accountants have stated in their
report included in the Company's Form 10KSB, filed January 14, 2003, 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 SIX MONTHS ENDED MARCH 31, 2003. 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.
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.
4
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.
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
5
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.
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
6
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.
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.
7
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.
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.
8
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.
ITEM 3. CONTROLS AND PROCEDURES
The Company's management including the Chief Executive Officer, President and
Chief Financial Officer, have evaluated, within 90 days prior to the filing of
this quarterly report, the effectiveness of the design, maintenance, and
operation of the Company's disclosure controls and procedures. Management
determined that the Company's disclosure controls and procedures were effective
in ensuring that information required to be disclosed by the Company in the
reports that it files under the Exchange Act is accurate and is recorded,
processed, summarized and reported within the time periods specified in the
Commission's rules and forms.
Disclosure controls and procedures, no matter how well designed and implemented,
can provide only reasonable assurance of achieving an entity's disclosure
objectives. The likelihood of achieving such objectives is affected by
limitations inherent in disclosure controls and procedures. These include the
fact that human judgment in decision-making can be faulty and that breakdowns in
internal control can occur because of human failures such as simple errors or
mistakes or intentional circumvention of the established process.
There have been no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to the date of the
evaluation thereof, including any corrective actions with regard to significant
deficiencies and material weaknesses.
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ITEM 3. CONTROLS AND PROCEDURES
The registrant's Principal executive officers and principal financial officer,
based on their evaluation of the registrant's disclosure controls and procedures
(as defined in Rules 13a-14 ( c ) of the Securities Exchange Act of 1934 ) as of
March 31, 2003 have concluded that the registrants' disclosure controls and
procedures are adequate and effective to ensure that material information
relating to the registrants and their consolidated subsidiaries is recorded,
processed , summarized and reported within the time periods specified by the
SEC' s rules and forms, particularly during the period in which this quarterly
report has been prepared.
The registrants' principal executive officers and principal financial officer
have concluded that there were no significant changes in the registrants'
internal controls or in other factors that could significantly affect these
controls subsequent to February 28, 2003 the date of their most recent
evaluation of such controls, and that there was no significant deficiencies or
material weaknesses in the registrant's internal controls.
PART II: 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
99.2 Certification of 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 March 31, 2003.
No Current Reports on Form 8-K were filed during the three months ended
March 31, 2003
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: May 14, 2003 Mediatelevision.tv, Inc.
/s/ Penny Green
-------------------------------
Penny Green
President
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CERTIFICATIONS
I, Penny Green, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
Mediatelevision.tv, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
(a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
date"); and
(c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
registrant's board of directors:
(a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls, and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date : May 14, 2003
/s/ Penny Green
- ---------------------
Penny Green
President
11