<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                        For the Fiscal Year June 30, 2002

                         Commission File Number: 0-29249


                                   ONTV, Inc.
            --------------------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

        Delaware                                         16-1499611
------------------------                    ------------------------------------
(State of Incorporation)                    (IRS Employer Identification Number)

                2444 Innovation Way, Bldg 10, Rochester, NY 14624
            ---------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)


                                 (585) 295-8601
                       -----------------------------------
                           (Issuer's Telephone Number)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

                      Class A Common Stock, par value $.001
                     --------------------------------------
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year:  $3,538,297

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
sold, or the average bid and asked price of such common equity, as of September
25, 2002 is $1,423,252

The number of shares outstanding of each of the issuer's classes of common
equity, as of September 25, 2002 is 23,720,861 shares of Class A and 0 shares of
Class B.

Transitional Small Business Disclosure Format (check one):  Yes [ ]   No [X]


                       DOCUMENTS INCORPORATED BY REFERENCE

None

<PAGE>

                                TABLE OF CONTENTS


ITEM                             PART I

1.   Description of Business
2.   Business Properties
3.   Legal Proceedings
4.   Submission of Matters to a Vote of Security Holders


                                 PART II

5.   Market for the Registrant's Common Equity and Related Stockholder
     Matters
6.   Management's Discussion and Analysis of Financial Condition and Results
     of Operations
7.   Financial Statements
8.   Changes In and Disagreements With Accountants on Accounting and
     Financial Disclosure

                                PART III

9.   Directors, Executive Officers, Promoters and Control Persons; Compliance
       With Section 16(a) of the Exchange Act.
10.  Executive Compensation
11.  Security Ownership of Certain Beneficial Owners and Management
12.  Certain Relationships and Related Transactions
13.  Exhibits and Reports on Form 8 K



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     This Report contains "forward-looking" statements regarding potential
future events and developments affecting the business of the Company. These
forward looking statements involve risks and uncertainties and are usually
accompanied by words such as "believes," "anticipates," "plans," "expects," and
similar expressions. Our actual results could differ materially from those
expressed or implied by such forward-looking statements as a result of certain
factors, including the risk factors described above and elsewhere in this
Report. Such statements relate to, among other things, (i) competition for
customers for products and services; (ii) the uncertainty of developing or
obtaining rights to new products that will be accepted by the market and the
timing of the introduction of new products into the market; (iii) the limited
market life of the Company's products; and (iv) other statements about the
Company or the direct response industry.


THE COMPANY'S ABILITY TO PREDICT RESULTS OR THE EFFECTS OF ANY PENDING EVENTS ON
THE COMPANY'S OPERATING RESULTS IS INHERENTLY SUBJECT TO VARIOUS RISKS AND
UNCERTAINTIES, INCLUDING COMPETITION FOR PRODUCTS, CUSTOMERS, AND MEDIA ACCESS,
THE UNCERTAINTY OF DEVELOPING OR OBTAINING RIGHTS TO NEW PRODUCTS THAT WILL BE
ACCEPTED BY THE MARKET, THE LIMITED MARKET LIFE OF THE COMPANY'S PRODUCTS, AND
THE EFFECTS OF GOVERNMENT REGULATIONS. SEE MANAGEMENT'S DISCUSSION AND ANALYSIS.

                                       2
<PAGE>

                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

ONTV, Inc., formerly known as LA Group, Inc. (the Company) was incorporated in
the state of Delaware on February 29, 1996, in order to create an entity with
which to form a reverse merger with a public, non-reporting, company, Kent Toys,
Inc. Through a series of transactions, Kent merged with the Company on 3/15/96.
Upon completion of this transaction, the Company became public and all Kent
stock was then canceled.

On June 1, 1998, the Company acquired What A Product, Inc., an Arizona
corporation, which was involved in the design, manufacturing, sales and
marketing of products through electronic retailing, primarily through QVC
Television.

On January 6, 1999, the Company formed a wholly owned subsidiary, Seen On TV,
Inc., a New York corporation, for the purpose of selling household, health and
beauty products over the Internet. This subsidiary currently is responsible for
the electronic retailing segment of the Company's business.

On January 14, 2000, the Company purchased the domain name, AsSeenOnTV.com. The
Company, through its subsidiary Seen On TV, Inc., has developed this asset into
a website for e-commerce.

With the approval of shareholders, on March 8, 2000, the Company amended its
Certificate of Incorporation to change its name from LA Group, Inc. to ONTV,
Inc.

The Company presently has one main area of business. The wholly owned
subsidiary, Seen On TV, Inc., markets and sells products, on the Internet, to
the general public.

A prior segment of business, the design and marketing of websites for other
businesses, was previously operated by the Company, for which it derived income
from revenue sharing agreements. In March 2001, the Company agreed to terminate
the agreement with the major customer for this segment when the customer, in a
cost cutting move, made the decision to bring management of the website
in-house. Control of the web operations was transferred back to the customer.

Through the Seen On TV, Inc. subsidiary, the Company operates the websites
"SeenOnTV.Com" and "AsSeenOnTV.com". These are destination websites offering "as
seen on tv" products direct to the consumer via the Internet. Each website
currently derives income from buying at distributor prices and selling products
to wholesale and retail customers. The Company's management has over thirteen
years of experience in the direct response television industry and maintains a
wide range of relationships with many direct response television marketing
companies as well as major manufacturers who provide products to the direct
response industry.

Consumer products, which the Company markets through Seen On TV, Inc., include a
wide variety of categories, i.e.: health, beauty, weight loss, kitchen, sporting
goods, and household appliances, etc. Products sold by Seen On TV, Inc. include,
but are not limited to: Flathose, Perfect pancake, Emerson Switchboard, Sweing
Genie, Vinyl Leather Repair, IGIA Pore Cleanser, IGIA Electro-Sage 8, Pest
Offense, Twist A Braid, Wrap & Snap Curling Systems, AirCore, Cell Phone
Internal Antenna, Rainbow Art, Gator Grip, Space Bag, Versa Wrench, IGIA Wonder
Forms, IGIA Therma-Spa, Marvins Magic, Nads, Tap Light, IGIA Platinum Nail, Epil
Stop & Spray, Steam Buggy, Steam Bullet, Oxiclean, Orangeglow, Shelf Master,
True Motion Lures, Vibratouch Fingertip Massager, ORB, Ginsu Knives, Hygionic
Tooth Brushes, Steamin Iron, IGIA CelluLift, George Foreman Grilling Machine,
FlavorWave Oven, Instagone, Iron Wonder, IGIA Epielle, Pro Trim Paint Roller,
PVA Mop, Quick-n-Brite, Safety Can, Silver Lighting, Sweet Simplicity, Orbitrek,
Ab Slide, Simoniz Car Wash, Flowbee, Thundersticks, and Ab Rocker,

                                       3
<PAGE>

The Company purchases products from a multitude of vendors. The Company carries
inventory and relies, to a large extent, on rapid fulfillment from these and
other vendors. These venders include, but are not limited to: Media Group,
Reliant Interactive Media, On-Tel Products Corp., Orange Glo International,
Inc., Cava, Homedics, Thane, Ronco Inventions, Salco International, Salton, and
Tactica International. The Company has no long-term contracts or arrangements
with any of its vendors that guarantee the availability of merchandise, the
continuation of particular payment terms or the extension of credit limits.
There can be no assurance that the Company's current vendors will continue to
sell merchandise to the Company on current terms or that the Company will be
able to establish new, or extend current, vendor relationships to ensure
acquisition of merchandise in a timely and efficient manner and on acceptable
commercial terms. If the Company were unable to develop and maintain
relationships with vendors that would allow it to obtain sufficient quantities
of merchandise on acceptable commercial terms, its business, prospects,
financial condition and results of operations would be materially affected in an
adverse manner.

ONTV, Inc. competes with a number of other companies that provide electronic
retailing. This competition takes place between the companies that offer
products for sale to end users over the Internet. The competitors try to select
products to sell which will be the most desirable to the customer. Each
competitor attempts to purchase those products at the price which will enable
the competitor to offer the product at the best price to the customer. In
addition, each competitor tries to market the products to the most customers in
order to increase market share. The competitors are trying to attract the
customer that is looking for specific "as seen on tv" products. One way this is
done is by reliance upon the various Internet search engines, in order to
achieve high rankings for those customers to find a competitor's website. The
Company cannot control those search engines, nor are the search engines under
government control. Some of these competitors may have greater financial,
technical, and marketing resources than the Company has. This may allow them to
devote greater resources to the development and promotion of their products and
services. In addition, some of these competitors may offer a broader base of
products and services that may attract consumers to their websites. This could
result in reduced market penetration for the Company's products and services. In
addition, because the barriers to entry are low, new competitors may emerge and
rapidly acquire market share.

On June 2, 2000, the Company formed a subsidiary, Net e-Vantage, Inc. (Net e).
Incorporated in the State of Delaware, Net e-Vantage, Inc., located in San
Diego, California, is a professional services company. Its principal business is
to acquire online and off-line strategic partnerships, Business to Business
(B2B) and Business to Consumer (B2C) product lines and services, major brand
names through direct manufacturer relationships and authorized distributors, as
well as "internet exclusives" for a wide variety of products.

Net e-Vantage, Inc. will also provide the conduit for additional capital sources
and corporate acquisitions for its growth and expansion, as well as that of the
Company. Net e-Vantage, Inc. is in the developmental stage and has not, to date,
generated revenues. On May 16, 2001, Net e-Vantage offered to redeem 3,650,000
of the 4,500,000 shares of Net e stock owned by the company. After the Company
accepted this offer, and the transaction was consummated, the Company, directly
and beneficially, now owns 53% of the outstanding stock of Net e-Vantage, Inc.,
with the balance owned by its management and directors, as well as by outside
investors.

On July 26, 2000, the Company entered into a Joint Venture and Strategic
Alliance Agreement with Coordinated Strategic Alliances (CSA), a major product
developer and supplier to QVC Television. The agreement grants the Company
Internet and interactive digital cable marketing rights for all products
marketed, developed or acquired in the future by CSA. In exchange for these
rights, the Company issued 350,000 restricted shares of Common Stock to CSA.
Additionally, the agreement calls for both companies to expand product
development through the Company's subsidiary, WAPI. WAPI has begun to develop a
unique product and invention submission program designed to present consumer
products for introduction to various CSA distribution lines, including QVC and
Infomercial companies. In addition, the Company will feature the newly developed
products through its websites, including www.AsSeenOnTV.com, www.SeenonTV.com ,
www.AsSeenOnTV.ws and www.SeenOnTV.ws.

                                       4
<PAGE>

On August 4, 2000, the Company entered into a Strategic Alliance/Joint Venture
Agreement with Commerce.TV Corporation, of Braintree, MA. Commerce.TV, an
interactive TV developer, and the Company have aligned to offer a product to
make shopping at home more convenient than has, in the past, been available.
This product is now available, in specific, nationally diverse test markets
throughout the United States, to digital cable and satellite TV subscribers. The
product enables the subscriber to easily and quickly purchase consumer products
that are viewed on a television screen, by using his/her remote control.

The Company has expended no funds on research and development activities.
Although the Company uses the logo "As Seen On TV" for advertising purposes,
neither the Company, nor any other entity, has a trade mark on this term. It is
merely an descriptive term with which customers may identify. However, the
Company's website, AsSeenOnTV.com is exclusive to the Company. It is the belief
of management that the website name represents an advertising tool for the
Company.

From inception to date, the Company has not been involved in any bankruptcy,
receivership, or similar proceeding. Additionally, the Company has not incurred
any environmental expenses.

As of September 2002, the Company employed ten full-time and four part-time
persons in the Rochester, New York office. The Company's employees are not
represented by labor unions. The Company believes relations with its employees
are good.

On December 31, 2001, the employment contract for Curt B. Westrom expired. Mr.
Westrom was retained to consult with ONTV through the month of January 2002, and
he remains a director and shareholder. The position of Treasurer, previously
held by Mr. Westrom is now open. However, Ronald J. Axelrod, the Company's
general counsel and corporate Secretary, is now acting as Treasurer until a new
Treasurer is elected by the Board of Directors.


ITEM 2. BUSINESS PROPERTIES

In May 2002, the Company entered into a five-year lease agreement for office and
warehouse space located at 2444 Innovation Way, Bldg 10, Rochester, New York
14624. During June 2002, the Company relocated its corporate headquarters, along
with its fulfillment and warehouse operations into this facility. Under terms of
the lease, the Company is obligated by a five-year lease with an unrelated
entity, commencing June 1, 2002 with a monthly rent of $6,667 and ending
September 30, 2007. This newly constructed facility is anticipated to provide
ample space for operations and growth during the term of the lease.


ITEM 3. LEGAL PROCEEDINGS

In December 2001, the Company initiated a lawsuit against Airborne Express,
seeking a claim of $2,000,000. This action was to recover losses and damages to
the Company resulting from delivery services that were performed and were
allegedly performed by Airborne as a shipper of products for ONTV's subsidiary,
Seen On TV, Inc. The working relationship between Airborne and ONTV occurred at
various times during the period of April 2001 through September 2001. The basis
of the lawsuit is that the Company claims that Airborne failed to perform to a
standard of service on the delivery of products to the customers of ONTV's
subsidiaries, and further, failed to implement a package tracking system it had
designed for ONTV. Losses to the Company may have occurred due to duplicate
shipments and consulting time expenses, as well as damage to the Company's
reputation. All financial exposure to the Company has been reflected in ONTV's
financial statements, and all customers have been satisfied.

                                       5
<PAGE>

On January 11, 2002, Airborne initiated a countersuit of ONTV, Inc. in the
amount of $20,000. This claim is an attempt by Airborne to recover funds that
Airborne has billed to the Company, and claims as payments due for delivery
services that may have been performed. The Company intends to vigorously
challenge Airborne's claim. The invoice amounts in question have been reflected
on the Company's financial statements.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None


                                     PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER  MATTERS

MARKET INFORMATION

The Common Stock of the Company, trading under the symbol of "ONTV", is quoted
on NASDAQ over the Counter Bulletin Board ("OTCBB"). The following information
is provided, based upon quotations supplied by YAHOO!FINANCE.


 Period       Low Bid       High Bid         Period       Low Bid       High Bid
 ------       -------       --------         ------       -------       --------

1st 2001       .179          .375          1st 2002         .04           .08

2nd 2001       .094          .469          2nd 2002         .05           .09

3rd 2001       .047          .156          3rd 2002         .05           .07

4th 2001        .06           .33          4th 2002         .05           .12


The foregoing price information is based upon inter-dealer prices, without
retail mark-up, mark down or commission, and may not represent actual
transactions.

HOLDERS OF RECORD.

As of September 2002, there were 23,720,861 shares of Common Stock outstanding,
held by 1024 shareholders of record.

DIVIDENDS.

The Company has not declared or paid any cash dividends on our common stock
since inception. We intend to retain any future earnings to finance the
operation and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future.

                                       6
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

The statements contained in this Annual Report on Form 10-KSB which are not
historical facts, including (without limitation) in particular, statements made
in this Item and in "Item 1 - Business", may contain forward-looking statements
that are subject to important factors that could cause actual results to differ
materially from those in the forward-looking statement, including (without
limitation) product demand; the effect of economic conditions; the impact of
competitive services, products and pricing; product supply restraints or
difficulties; industry regulation; the continued availability of capital
resources and financing and other risks set forth or incorporated herein and in
the Company's Securities and Exchange Commission filings. The Company does not
undertake to update any forward-looking statement that may be made from time to
time by or on behalf of the Company.


                              RESULTS OF OPERATIONS

FISCAL YEAR ENDED JUNE 30, 2002 VS. FISCAL YEAR ENDED JUNE 30, 2001

Revenue for the fiscal year ended June 30, 2002 was $3,538,297, an increase of
approximately 102% over fiscal year 2001 revenue of $1,754,385. This improvement
is primarily the result of increases realized in the Seen On TV, Inc.
subsidiary. The sales of the "as seen on tv" products over the Internet has
increased substantially in the past year due to the increased presence of the
Company's domestic website, www.seenontv.com, and the exposure of the domain
name AsSeenOnTV.com, and the resultant increase in sales due to the expanded
product line available from As Seen On TV, Inc.

The cost of goods sold, as a percentage of revenue, was 60% for the current
fiscal year ending June 30, 2002, as compared with 57% for the fiscal year ended
June 30, 2001. The lower cost percentage in the prior period, was the result of
revenue derived from revenue sharing agreements with little direct cost
associated with that revenue. Management believes that the current percentages
are in line with expectations in the future.

Gross profit, as a percentage of revenue, was 40% for the fiscal year ended June
30, 2002, as compared with 43% for the prior fiscal year. The decrease of this
percentage during the current fiscal year operating period is a result of a
change in product mix from the previous fiscal year and is not a result of any
deficiency in operations. Product mix is driven by popularity product promotions
during any operating period.

Operating expenses, as a percentage of revenue, approximated 35% for the fiscal
year ended June 30, 2002, as compared with 43% for the prior year. The
improvement of this percentage during the current operating period results is
primarily the result of realized economies of scale generated from the
absorption of expenses against increased revenues. Management believes that
although additional staff and operating expenses may be necessary to support
growth, the operating expense ratio should remain fairly constant in future
reporting periods as the Company continues to experience anticipated increased
revenues.

Net income(loss) for the fiscal year ended June 30, 2002 was $(212,592), or
$(.01) per share, as compared to $417,562 or $.02 per share for the fiscal year
ended June 30, 2001. The current fiscal year had a loss resulting from the
decision to take a one-time write off of the Net e-Vantage, Inc. indebtedness
owed to the Company. Net e-Vantage, Inc. was previously a majority owned
subsidiary of the Company. Without respect to this one time write off of
$(313,500) after tax income from operations would have been $100,908.

                                       7
<PAGE>

                               IMPACT OF INFLATION

Management believes inflation has not had a material effect on the Company's
operations or on its financial condition. The Company believes that it will be
able to offset any future effects of inflation. The Company does not purchase,
by contract, any product for resale. The Company sells products on an individual
basis. Management therefore believes that any increase in costs to the Company
can be immediately passed on to the customer. Although inflation could have an
impact on the volume of sales, the Company could combat this by adjusting
product mix, or by the change of product offered for sale.


                         LIQUIDITY AND CAPITAL RESOURCES

At the end of fiscal year 2002, working capital was $(27,428), a decrease of
$(194,680) over the prior fiscal year. The decrease in working capital was
primarily due to a decrease in the note receivable from Net e-Vantage as more
fully described in the preceding paragraphs. Cash flow from operating activities
increased to $311,281 for the current fiscal year, from $266,741 in the year
ending June 30, 2001. This increase resulted from the previously described
increase in revenues and an increase in non cash expenses primarily
amortization.

On January 14, 2000, the Company purchased, at a total cost of $5,000,000, the
domain name, AsSeenOnTV.com. Consideration for the acquisition included a cash
payment of $25,000 and a non-interest-bearing promissory note of $4,975,000. On
October 13, 2000, the purchase contract was renegotiated, with the purchase
price decreased to $2,800,000, and the resultant note payable decreased to a
balance of $2,455,000. The entire note balance had been classified as a current
liability in prior reporting periods, however with the restructure of the note
agreement, only $60,000 is now a current liability due within the current
operating cycle, with the balance being reflected as a long term liability. The
renegotiated note payable requires monthly payments of a minimum of $5,000, or
5% of monthly gross sales, until October 2005, at which time, the Company will
have 45 days to pay the remaining balance in full. The domain name is the only
collateral for the renegotiated note. Should the Company default on the
renegotiated note, the domain name would revert back to the seller, and the
Company would forfeit all stock and cash paid to date.

On May 16, 2001, Net e-Vantage, Inc.(Net e) offered to redeem 3,650,000 of the
4,500,000 shares of Net e stock which was owned by the Company, for total
purchase price of $365,000. Upon acceptance of the offer, the Company was issued
a promissory note for the full purchase price, with the entire principle
balance, plus interest at the rate of 8%, due on May 16, 2002. The Company
retains an equity position of approximately 19% of the Net e outstanding stock.
During fiscal year-end 2002, the Company has written off the balance of this
note. This decision is a reflection of the likelihood of non-payment by Net
e-Vantage, Inc.

Traditionally, in the electronic retailing business, retailers may expect to see
an significant increase in sales during the last several weeks of a calendar
year, caused by holiday shopping. The Company notes that in the fiscal year
ended June 30, 2002, sales orders received during the holiday period comprised
20% of the orders received over the entire fiscal year.

Management believes that income generated from operations may be sufficient to
finance the potential growth of the sales of the business. Working capital
requirements, primarily related to increased inventory needs, may increase as a
result of the alliances entered into by the Company. The Company may seek
financing with a traditional lender in order to fund this growth. Such financing
may include secured lines of credit, or debenture bonds. There can be no
assurance that financing will be available in amounts or on terms acceptable to
the Company, if at all.

                                       8
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

The financial statements of the Company are set forth on page F-1 of this
report.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

There have been no changes in or disagreements with the Company's accountants on
any accounting or financial disclosure matters during fiscal years 2002, 2001,
or 2000.

In the absence of an audit committee, the entire Board of Directors of the
Company performs the equivalent functions of that committee. Management is
taking steps to involve outside individuals and appoint a formal audit
committee.



                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT


EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth the name, age at September 2002, and position of
each executive officer.


NAME                      AGE           POSITION WITH THE COMPANY
----                      ---           -------------------------

Daniel M. Fasano          40             Chairman, Chief Executive Officer, and
                                         President

Ronald J. Axelrod         56             Treasurer

Ronald J. Axelrod         56             Secretary

Frank T. Costanzo         54             Director

Our executive officers are appointed by the Board of Directors and serve until
their successors are duly elected and qualified. There are no family
relationships among any of our executive officers or Directors.

BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS

DANIEL M. FASANO, of Rochester, New York, has served as CEO and Director of the
Company since February 1996. Since February 2001, upon the resignation of the
previous office holder, Mr. Fasano has also served as President. He has over
thirteen years experience in the Direct Response Industry. Mr. Fasano was the
first to successfully market, in a retail setting, products traditionally sold
exclusively on television. During this period, Mr. Fasano was an officer in a
Direct Response cosmetics and skin care company involved in the production of
infomercials. Mr. Fasano attended Rochester Institute of Technology.

                                       9
<PAGE>

FRANK T. COSTANZO, of Phoenix, Arizona, was elected a Director of the Company in
November 2000. In addition he served as President from January 2000 until
February 2001. Upon his resignation from his officer position, Mr. Costanzo was
appointed CEO of Net e-Vantage, Inc., a San Diego company, in which ONTV, Inc.
currently owns a minority interest. He has been a founder, officer, and/or
director in several public and private companies, including Ronco Holding, LLC.
In addition, he has been a business consultant with FTC & Associate, Inc.,
during the past six years. In this capacity, he has served as President of FTC &
Associate, Inc., President of What-a Product, Inc. and Chief Operating Officer
of Ronco Inventions, Inc. In addition, Mr. Costanzo has been an adviser to
Coordinated Strategic Alliances, Inc., a major supplier of product to QVC
Television. Mr. Costanzo also has served as an officer of Featherfew, Inc., an
Arizona based publishing company. Mr. Costanzo has taught at the University of
Phoenix and remains an adjunct faculty member. He received a MA Degree from Kane
College of New Jersey, and holds a BA Degree from St. Bonaventure University.

RONALD J. AXELROD, of Pittsford, New York, was appointed Secretary of the
Company in January 2000. Mr. Axelrod has been a full time practicing attorney,
in Rochester, NY, for more than 30 years. He was co-founder of The Maxim Group,
Inc., now known as Floor Covering America, and traded on the New York Stock
Exchange. Mr. Axelrod has a BS Degree in Finance from SUNY at Buffalo and a JD
Degree from its Law School.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and 10% holders of our outstanding common stock to
file with the SEC reports of their ownership and changes in ownership of our
common stock held by such persons. The Company is seeking to determine, however,
whether each of its officers, directors and 10% holders filed a Form 3 when the
Company registered under Section 12 of the Securities Exchange Act in May 2000.

ITEM 10. EXECUTIVE COMPENSATION

The following table provides certain summary information for fiscal 2002
concerning compensation paid or accrued by us to Mr. Fasano for services
rendered in all capacities to the Company. No other executive officer of the
Company was paid an annual salary and bonus in excess of $100,000 during such
period.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                                                            Other Annual
                                  Year         Salary ($)                  Compensation ($)
Name and Principal Position      Ending          (1)           Bonus            (2)
---------------------------      ------                        -----
<S>                              <C>           <C>                <C>           <C>
Daniel M. Fasano                 6/30/02       137,500           -0-            12,000
CEO                              6/30/01       125,000           -0-            12,000
                                 6/30/00        41,677           -0-             6,000
</TABLE>

(1)      In accordance with the rules of the Securities and Exchange Commission,
         the compensation set forth in the table does not include benefits,
         securities or property that do not exceed the lesser of $50,000 or 10%
         of the person's salary and bonus shown in the table.

(2)      These amounts are payments for business use of Mr. Fasano's personal
         vehicle.

                                       10
<PAGE>

                              Employment Agreement

On January 1, 2000, Daniel M. Fasano entered into a new five-year employment
agreement with the Company, expiring December 31, 2005. This agreement carried
an annual base salary of $125,000 for the first year, to be increased by $12,500
per year for each of the remaining four years of the agreement. Mr. Fasano
agreed to defer the first annual increase due January 1, 2001 to January 1,
2002. The agreement also provides for incentive compensation based upon certain
increases to the Company's revenues, a Stock Option Plan which will allow Mr.
Fasano to purchase stock based on the trading price of the stock reaching
specific targets, and a provision for the payment of termination benefits should
the Company undergo a sale or transfer of ownership. Under this agreement, Mr.
Fasano is subject to a non-compete, nondisclosure, and assignment of invention
provisions.

STOCK OPTIONS GRANTED IN FISCAL 2001

None


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of September 25, 2002 by (i) each
person who is known by the Company based on the records of the Company's
transfer agent and relevant documents filed with the SEC to own beneficially
more than 5% of the outstanding shares of the Company's Common Stock, (ii) each
member of the Board, (iii) the executive officers of the Company, and (iv) all
members of the Board and executive officers of the Company as a group. Unless
otherwise specified, the address of each named individual is the address of the
Company.

<TABLE>
<CAPTION>

NAME OF BENEFICIAL OWNER AND TITLE OF BENEFICIAL       AMOUNT AND NATURE OF         PERCENT OF COMMON
OWNERSHIP                                             BENEFICIAL OWNERSHIP (1)      STOCK OUTSTANDING
------------------------------------------------      ------------------------      -----------------
<S>                                                                <C>                         <C>
Daniel M. Fasano - Chairman, CEO                                   3,879,166                   16.4%

Daniel J. Fasano - None                                            3,000,000                   12.6%
  13 Fox Tail Lane
  Rochester, NY 14624

Conrad Promotions, LLC                                             2,500,000                   10.6%
  15034 North 40th Place
  Phoenix, AZ 85032

Emanuel Tarboti - None                                             1,500,000 (3)                6.3%
  P.O. Box 1767
  Rancho Santa Fe, CA 92067

Frank T. Costanzo - Director                                       2,703,834                   11.4%

Curt B. Westrom - Director                                         1,000,000 (2)                4.2%

Ronald J. Axelrod - Secretary, Treasurer                             360,000                    1.5%

All Directors and Executive Officers
  as a group (4 Individuals)                                       7,943,000                   33.5%

</TABLE>

                                       11
<PAGE>

(1)      Except as indicated in the footnotes to this table, the persons named
         in the table have sole voting and investment power with respect to all
         shares of Common Stock shown as beneficially owned by them, subject to
         community property laws where applicable.

(2)      Excludes 10,000 shares owned by Mr. Westrom's son, as to which shares
         Mr. Westrom disclaims beneficial ownership.

(3)      Voting and other consensual rights pertaining to Mr. Torbati's shares
         remain are to be exercised by the Company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8 K

         (a) EXHIBITS:

         EXHIBIT
         NUMBER                DESCRIPTION OF EXHIBIT
         ------                ----------------------

         3 (i)             Articles of Incorporation (1)
         3 (ii)            By-laws (1)
         4                 Form of Certificate evidencing Common Stock (1)
        10.1               Employment Contract of Daniel M. Fasano (1)
        10.2               Employment Contract of Curt B. Westrom (1)
        11                 Computation of per share earnings (2)
        21                 Subsidiaries of the small business issuer (1)
        99                 Analysis of Intangible Assets (1)
                           Origin of Goodwill (1)

(1)      Incorporated by reference to Exhibits filed as part of Registrant's
         Form 10-SB under SEC file Number 000-29249.

(2)      See Financial Statements.

         (b) REPORTS ON FORM 8-K

             No reports on Form 8-K have been filed by the registrant.

                                       12
<PAGE>

                                   SIGNATURES


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



September 27, 2002                            ONTV, Inc.




                                              By:  /s/ Daniel M. Fasano
                                                   --------------------
                                              Daniel M. Fasano
                                              Chairman of the Board of Directors


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.




/s/ Daniel M. Fasano           Chief Executive Officer        September 27, 2002
--------------------           And Chairman of the
Daniel M. Fasano               Board of Directors


                                       13

<PAGE>









                            ONTV, INC. & SUBSIDIARIES
                            (A DELAWARE CORPORATION)
                               ROCHESTER, NEW YORK

                     --------------------------------------
                                FINANCIAL REPORTS
                                       AT
                                  JUNE 30, 2002
                     --------------------------------------


<PAGE>





ONTV, INC. & SUBSIDIARIES


(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


TABLE OF CONTENTS
--------------------------------------------------------------------------------


Independent Auditors' Report                                                  1

Consolidated Balance Sheets at June 30, 2002 and 2001                         2

Consolidated Statements of Changes in Stockholders' Equity for the Years
  Ended June 30, 2002, 2001 and 2000                                          3

Consolidated Statements of Operations for the Years Ended June 30, 2002,
  2001 and 2000                                                               4

Consolidated Statements of Cash Flows for the Years Ended June 30, 2002,
  2001 and 2000                                                              5-6

Notes to Consolidated Financial Statements                                  7-18

<PAGE>



                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors
  and Stockholders
ONTV, Inc. & Subsidiaries
(A Delaware Corporation)
Rochester, New York


         We have audited the accompanying consolidated balance sheets of ONTV,
Inc. & Subsidiaries (A Delaware Corporation) as of June 30, 2002 and 2001, and
the related consolidated statements of changes in stockholders' equity,
operations, and cash flows for each of the three years in the period ended June
30, 2002. These 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit 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 presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ONTV, Inc. &
Subsidiaries as of June 30, 2002 and 2001, and the results of its operations and
its cash flows for each of the three years in the period ended June 30, 2002, in
conformity with accounting principles generally accepted in the United States of
America.




/s/ Rotenberg & Co., LLP


Rotenberg & Co., LLP
Rochester, New York
  July 31, 2002

                                      F-1
<PAGE>
<TABLE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


CONSOLIDATED BALANCE SHEETS
<CAPTION>
---------------------------------------------------------------------------------------------------------------

June 30,                                                                            2002              2001
---------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>               <C>
ASSETS

CURRENT ASSETS
Cash and Cash Equivalents                                                        $    96,914       $     1,253
Note Receivable - Related Party                                                           --           368,600
Inventory                                                                            177,414            81,946

Prepaid Expenses and Security Deposits                                                 6,667             2,500
---------------------------------------------------------------------------------------------------------------

TOTAL CURRENT ASSETS                                                                 280,995           454,299

PROPERTY AND EQUIPMENT - NET OF ACCUMULATED DEPRECIATION                              65,182            30,465

OTHER ASSETS
Accounts Receivable - Related Party                                                   37,850            37,310
Due from Officer                                                                      79,101            60,531
Intangible Assets - Net of Accumulated Amortization                                2,877,085         3,011,597
Investments in Affiliates                                                            105,308           133,524
---------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                     $ 3,445,521       $ 3,727,726
===============================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts Payable                                                                 $    96,650       $   112,613
Accrued Expenses and Accrued Taxes                                                   151,773           105,298
Notes Payable - Due Within One Year                                                   60,000            69,136
---------------------------------------------------------------------------------------------------------------

TOTAL CURRENT LIABILITIES                                                            308,423           287,047

OTHER LIABLITIES
Notes Payable - Due After One Year                                                 2,277,397         2,362,764
---------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES                                                                  2,585,820         2,649,811
---------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
Common Stock:  $.001 Par; 100,000,000 Shares Authorized,
                            23,720,861 Shares Issued and Outstanding                  23,721            23,721
Additional Paid-In Capital                                                         1,052,099         1,052,099
Retained Earnings (Deficit)                                                         (196,910)           15,682
---------------------------------------------------------------------------------------------------------------
                                                                                     878,910         1,091,502

Less: Stock Held in Trust                                                              1,500             1,500
          Treasury Stock - 127,500 and 57,500 Shares, Respectively, at Cost           17,709            12,087
---------------------------------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' EQUITY                                                           859,701         1,077,915
---------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $ 3,445,521       $ 3,727,726
===============================================================================================================

                   The accompanying notes are an integral part of this financial statement.
</TABLE>
                                                     F-2
<PAGE>
<TABLE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
----------------------------------------------------------------------------------------------------------------

                                                                 Additional        Retained
                                 Number           Common          Paid-In          Earnings        Stockholders'
                               of Shares           Stock          Capital          (Deficit)          Equity
----------------------------------------------------------------------------------------------------------------
<S>                           <C>             <C>              <C>              <C>               <C>
BALANCE - JUNE 30, 1999       15,277,938      $    15,278      $   465,630      $  (440,531)      $    40,377


Common Stock Issued            1,500,000            1,500               --               --             1,500


Net Income                            --               --               --           38,651            38,651
----------------------------------------------------------------------------------------------------------------

BALANCE - JUNE 30, 2000       16,777,938           16,778          465,630         (401,880)           80,528


Common Stock Issued            6,942,923            6,943          586,469               --           593,412


Net Income                            --               --               --          417,562           417,562
----------------------------------------------------------------------------------------------------------------


BALANCE - JUNE 30, 2001       23,720,861           23,721        1,052,099           15,682         1,091,502


Net Loss                              --               --               --         (212,592)         (212,592)
----------------------------------------------------------------------------------------------------------------

BALANCE - JUNE 30, 2002       23,720,861      $    23,721      $ 1,052,099      $  (196,910)      $   878,910
================================================================================================================

                   The accompanying notes are an integral part of this financial statement.
</TABLE>
                                                     F-3
<PAGE>
<TABLE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
----------------------------------------------------------------------------------------------------------------------

Years Ended June 30,                                                    2002                2001               2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                <C>                <C>
REVENUES, NET OF RETURNS                                           $  3,538,297       $  1,754,385       $    541,955

Cost of Goods Sold                                                    2,138,267          1,003,332            145,249
----------------------------------------------------------------------------------------------------------------------

GROSS PROFIT                                                          1,400,030            751,053            396,706
----------------------------------------------------------------------------------------------------------------------

EXPENSES
Advertising                                                             237,564             45,581                890
Amortization                                                            182,794             27,130             21,282
Depreciation                                                              8,386              9,303              1,000
Interest                                                                    343                200              1,292
Legal and Accounting                                                     50,206             39,234             71,334
Payroll and Payroll Taxes                                               304,992            363,918            133,523

Shipping Supplies                                                        49,845             23,641              5,266
Other Expenses                                                          414,382            252,324            113,998
----------------------------------------------------------------------------------------------------------------------

TOTAL EXPENSES                                                        1,248,512            761,331            348,585
----------------------------------------------------------------------------------------------------------------------

OPERATING INCOME (LOSS) BEFORE OTHER INCOME
  AND (EXPENSES) AND PROVISION FOR TAXES                                151,518            (10,278)            48,121

OTHER INCOME AND (EXPENSES)
Other Income                                                             37,706             67,023                 --

Equity in Income (Loss) of Unconsolidated Investments                    (1,387)            (5,545)             5,030
Loss from Impairment of Investment in Affiliate (Note F)                (31,829)                --                 --
----------------------------------------------------------------------------------------------------------------------

INCOME BEFORE PROVISION FOR INCOME TAXES                                156,008             51,200             53,151

Provision for Income Taxes                                               55,100              8,189                325
----------------------------------------------------------------------------------------------------------------------

INCOME FROM CONTINUING OPERATIONS                                       100,908             43,011             52,826
----------------------------------------------------------------------------------------------------------------------

DISCONTINUED OPERATIONS (NOTE K)
Income (Loss) from Operations of
  Significant Disposition of Subsidiary                                      --              9,551            (14,175)
Gain from Significant Disposition of Subsidiary, Net of Taxes                --            365,000                 --
Loss from Impairment of Note Receivable from Significant
  Disposition of Subsidiary, Net of Tax Benefit of $55,100             (313,500)                --                 --
----------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM DISCONTINUED OPERATIONS                             (313,500)           374,551            (14,175)
----------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                                  $   (212,592)      $    417,562       $     38,651
======================================================================================================================
EARNINGS PER SHARE
======================================================================================================================

Weighted Average Number of Common Shares Outstanding                 23,720,861         19,372,416         15,339,413

Income from Continuing Operations
     per Common Share - Basic and Diluted                          $       0.00       $       0.00       $       0.00

Net Income (Loss) Per Common Share - Basic and Diluted             $      (0.01)      $       0.02       $       0.00
======================================================================================================================

                   The accompanying notes are an integral part of this financial statement.
</TABLE>

                                                     F-4
<PAGE>
<TABLE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
-------------------------------------------------------------------------------------------------------

Years Ended June 30,                                            2002            2001           2000
-------------------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES

NET INCOME (LOSS)                                            $(212,592)      $ 417,562       $  38,651

ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
  TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
Bad Debts                                                        3,373          17,234              --
Amortization                                                   182,794          27,130          21,282
Depreciation                                                     8,386           9,303           1,000
Payment of Officers' Salaries via Common Stock                      --         152,499              --
Loss from Impairment of Note Receivable - Related Party        368,600              --              --
Gain from Significant Disposition of Subsidiary                     --        (365,000)             --
Income from Operations of Disposed Subsidiary                       --          (9,551)             --
Accounts Payable Paid via Issuance of Common Stock                  --          24,375              --
Equity in (Income) Loss of Unconsolidated Investments            1,387           5,545          (5,030)
Loss from Impairment of Unconsolidated Investment               31,829              --              --
Increase (Decrease) in Value of Minority Interest                   --            (700)            700

CHANGES IN ASSETS AND LIABILITIES:
Accounts Receivable                                             (3,373)         10,695          (3,727)
Inventory                                                      (95,468)        (43,399)        (34,546)
Prepaid Expenses and Security Deposits                          (4,167)         12,511         (14,411)
Accounts Payable                                               (15,963)         12,001          34,195
Accrued Expenses and Accrued Taxes                              46,475          (3,464)         70,138
-------------------------------------------------------------------------------------------------------

NET CASH FLOWS FROM OPERATING ACTIVITIES                       311,281         266,741         108,252
-------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Investments in Affiliates                                       (5,000)        (69,752)        (15,060)
Acquisition of Property and Equipment                          (43,103)        (10,304)        (24,470)
Acquisition of Intangible Assets                               (48,282)        (69,188)        (27,571)
-------------------------------------------------------------------------------------------------------

NET CASH FLOWS FROM INVESTING ACTIVITIES                       (96,385)       (149,244)        (67,101)
-------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Borrowings                                            --              --         250,000
Cash Repayment to Former Subsidiary                                 --        (200,000)             --
Repayment of Debt                                              (94,503)        (93,100)        (25,000)
Accounts Receivable - Related Party                               (540)        (31,000)         (2,960)
Accrued Interest on Note Receivable - Related Party                 --          (3,600)             --
Advances to Officer                                            (18,570)        (20,354)        (35,843)
Purchase of Treasury Stock                                      (5,622)        (12,087)             --
-------------------------------------------------------------------------------------------------------

NET CASH FLOWS FROM FINANCING ACTIVITIES                      (119,235)       (360,141)        186,197
-------------------------------------------------------------------------------------------------------

Net Increase (Decrease) in Cash and Cash Equivalents            95,661        (242,644)        227,348

Cash and Cash Equivalents - Beginning of Year                    1,253         243,897          16,549
-------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS - END OF YEAR                      $  96,914       $   1,253       $ 243,897
=======================================================================================================

              The accompanying notes are an integral part of this financial statement.
</TABLE>
                                                F-5
<PAGE>
<TABLE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<CAPTION>
------------------------------------------------------------------------------------------------------------------

Years Ended June 30,                                                      2002           2001           2000
------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES
==================================================================================================================
<S>                                                                   <C>             <C>             <C>
Interest Paid                                                         $      343      $    1,292      $    1,292
Income Taxes Paid                                                     $    9,155      $    9,077      $       --
==================================================================================================================

NON-CASH INVESTING AND FINANCING ACTIVITIES
==================================================================================================================

Loss from Impairment of Note Receivable from
  Significant Disposition of Subsidiary                               $  368,600      $       --      $       --
Loss from Impairment of Investment of Affiliate                       $   31,829      $       --      $       --
Reduction of Domain Name and Note Payable                             $       --      $2,500,000      $       --
Note Receivable from Significant Disposition of Subsidiary            $       --      $  365,000      $       --
Issuance of Common Stock to
  Adjust Purchase Price of Domain Name                                $       --      $  300,000      $       --
Issuance of Common Stock in Settlement of Lawsuit                     $       --      $   24,375      $       --
Issuance of Common Stock in Exchange for Marketing Rights             $       --      $   96,500      $       --
Issuance of Common Stock in Exchange for Investment in Affiliate      $       --      $   20,021      $       --
Issuance of Common Stock in Exchange for Officers' Salaries           $       --      $  152,499      $       --
Issuance of Common Stock in Exchange for Services                     $       --      $       17      $       --
==================================================================================================================

                   The accompanying notes are an integral part of this financial statement.
</TABLE>
                                                F-6
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE A -   NATURE OF OPERATIONS
           ONTV, Inc. (the "Company") was formed on February 29, 1996 under the
           laws of the State of Delaware. The Company has since merged with
           other companies as well as acquired the stock of other companies. The
           Company is authorized to issue 20,000,000 shares of common stock
           $.001 par value. The Company is also authorized to issue 5,000,000
           shares of preferred stock. There were no preferred shares issued or
           outstanding at June 30, 2002. On March 13, 2000, the shareholders
           voted to increase the authorized number of common shares from
           20,000,000 to 100,000,000. The new structure of common stock consists
           of 80,000,000 shares of Class A common stock and 20,000,000 shares of
           Class B common stock. The Company is primarily engaged in retail
           sales of general merchandise and consumer goods.

           PRINCIPLES OF CONSOLIDATION
           The consolidated financial statements include the accounts of ONTV,
           Inc. and its wholly owned subsidiaries. All significant intercompany
           balances and transactions have been eliminated in consolidation.

           SEGMENT DATA, GEOGRAPHIC INFORMATION AND SIGNIFICANT CUSTOMERS
           The corporation operated in two industry segments and generates
           revenue from customers throughout the United States. During the year
           ended June 30, 2002, the Company ceased the activities of its website
           hosting and development segment.

NOTE B -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
           METHOD OF ACCOUNTING
           The Company maintains its books and prepares its financial statements
           on the accrual basis of accounting.

           REVENUE RECOGNITION
           Revenue from product sales are recognized when both the goods are
           shipped and the customer's right of return has expired.

           USE OF 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 amounts of assets and liabilities and disclosure of
           contingent assets and liabilities at the date of the financial
           statements and the reported amounts of revenues and expenses during
           the reporting period. Actual results can differ from those estimates.

                                                                   - continued -

                                      F-7
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE B -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

           CONCENTRATIONS OF CREDIT RISK
           Financial instruments, which potentially expose the Company to
           significant concentrations of credit risk, consist principally of
           bank deposits, which may at times exceed federally insured limits.
           The Company had no cash balances that exceeded insured limits at June
           30, 2002 or 2001. Cash is placed primarily in high quality short term
           interest bearing financial instruments. There were no significant
           customers for the fiscal years ending June 30, 2002 and 2001. The
           company periodically monitors the credit worthiness of its customers
           to which it grants credit terms in the ordinary course of business.
           The Company does not foresee a credit risk with these receivables and
           accordingly no allowance for doubtful accounts has been recorded.

           CASH AND CASH EQUIVALENTS
           Cash and cash equivalents include time deposits, certificates of
           deposit, and all highly liquid debt instruments with original
           maturities of three months or less. The Company maintains cash and
           cash equivalents at financial institutions, which periodically may
           exceed federally insured amounts.

           INVESTMENTS IN AFFILIATES
           The Company has a 20% investment in two non-majority owned companies.
           The investment is accounted for under the equity method. Under the
           equity method the Company records its pro rata share of income or
           loss of the investee as part of the investors net income with a
           corresponding adjustment to the carrying value of the investment.
           Dividends received from the investee are also recorded as an
           adjustment to the carrying value of the investment.

           The Company had an equity investment of 23% in a non-majority owned
           affiliate. The investment was accounted for under the equity method.
           Under the equity method the Company records its prorata share of
           income or loss of the investee as part of the investors net income
           with a corresponding adjustment to the carrying value of the
           investment. Dividends received from the investee are also recorded as
           an adjustment to the carrying value of the investments. A principal
           stockholder in ONTV, Inc. also held a material interest in the
           affiliate. On June 30, 2002, the carrying value of this equity
           investment was reduced to $-0- by impairment, due to inactivity and
           no expected future benefit from the affiliate.

           DUE FROM OFFICER
           Due from officer consists of short-term advances due on demand. The
           amount due from officer bears no interest and contains no formal
           repayment terms.

           INVENTORY
           Inventory consists of merchandise held for resale and is stated at
           the lower of cost or market using the first-in, first-out method.

                                                                   - continued -

                                      F-8
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE B -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

           PROPERTY, EQUIPMENT AND DEPRECIATION
           Property and equipment are stated at cost, less accumulated
           depreciation computed using the straight line method over the
           estimated useful lives as follows:

                           Leasehold Improvements                 5 Years
                           Computer Equipment                     7 Years
                           Office Furniture and Equipment         7 Years
                           Warehouse Equipment                    7 Years

           Maintenance and repairs are charged to expense. The cost of the
           assets retired or otherwise disposed of and the related accumulated
           depreciation are removed from the accounts.

           TRADEMARKS
           Trademarks are carried at cost and are amortized using the
           straight-line method over the estimated useful lives of 10 years from
           the date the Company acquired the trademark.

           GOODWILL
           Goodwill results from the excess of the fair market value of assets
           acquired over the purchase price. Goodwill is carried at cost and is
           amortized using the straight-line method over 5 years. The Company's
           policy is to periodically review the value assigned to goodwill to
           determine if it has been permanently impaired by adverse conditions,
           which might affect the Company. Such reviews include an analysis of
           current results and take into consideration the discounted value of
           projected operating cash flow (earnings before interest, taxes and
           depreciation and amortization).

           WEBSITE DEVELOPMENT
           The Company has made expenditures in designing and developing a
           website. The company is amortizing the cost of the website
           developments as a charge to operations using the straight line method
           over 5 - 10 years.

           DOMAIN NAME
           The Company acquired the exclusive rights to the domain name "As Seen
           on TV" during the fiscal year end 2000. The Company continued to
           develop the domain name during the fiscal year end 2001. The domain
           name became operational during the first quarter of the fiscal year
           end 2002, and accordingly, amortization was charged to operations on
           the straight-line method over 15 years.

           MARKETING RIGHTS
           The Company has entered into an alliance and marketing agreement with
           Coastal Sales Associates ("CSA") (an unrelated party) which grants
           the Company exclusive marketing rights via the Internet and digital
           cable television to products owned by CSA. The Company will amortize
           the cost of this agreement as a charge to operations when marketing
           of CSA products commences. The Company will begin to amortize the
           rights in July 2002, ratably over 5 years.

                                                                   - continued -

                                      F-9
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE B -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

           ADVERTISING EXPENSES
           Advertising expenses are charged against operations during the period
           incurred, except for direct-response advertising costs, which are
           capitalized and amortized over periods not exceeding one year.
           Advertising expenses charged against operations were $237,564,
           $45,581 and $890 for the years ended June 30, 2002, 2001, and 2000,
           respectively. The Company did not incur any direct-response
           advertising costs during the years ended June 30, 2002, 2001, and
           2000.

           RECLASSIFICATIONS
           Certain amounts in the prior year financial statements have been
           reclassified to conform with the current year presentation.

           NET INCOME (LOSS) PER COMMON SHARE
           Net income (loss) per common share is computed in accordance with
           SFAS No. 128, "Earnings Per Share." Basic Earnings Per Share is
           calculated by dividing income (loss) available to common stockholders
           by the weighted average number of common shares outstanding for each
           period. Diluted Earnings per share is the same as Basic Earnings Per
           Share since no common stock equivalents were outstanding for the
           years ended June 30, 2002, 2001, or 2000.

           INCOME TAXES
           The Company accounts for income taxes in accordance with SFAS No.
           109, "Accounting for Income Taxes," using the asset and liability
           approach, which requires recognition of deferred tax liabilities and
           assets for the expected future tax consequences of temporary
           differences between the carrying amounts and the tax basis of such
           assets and liabilities. This method utilizes enacted statutory tax
           rates in effect for the year in which the temporary differences are
           expected to reverse and gives immediate effect to changes in income
           tax rates upon enactment. Deferred tax assets are recognized, net of
           any valuation allowance, for temporary differences and net operating
           loss and tax credit carry forwards. Deferred income tax expense
           represents the change in net deferred assets and liability balances.
           There were no deferred tax assets or liabilities at June 30, 2002 and
           2001.

           PROVISION FOR INCOME TAXES
           Deferred income taxes result from temporary differences between the
           basis of assets and liabilities recognized for differences between
           the financial statement and tax basis thereon, and for the expected
           future tax benefits to be derived from net operating losses and tax
           credit carry forwards. A valuation allowance is recorded to reflect
           the likelihood of realization of deferred tax assets.

                                                                   - continued -

                                      F-10
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE C -   BUSINESS SEGMENTS
           The Company operated in two principal business segments. Through its
           wholly owned subsidiary Seen on TV, Inc., the Company delivers
           products directly to the consumer via its Internet website. (Segment
           I) The Company also operated in website hosting and development.
           (Segment II)

           On July 1, 2001, the Company decided to cease its involvement with
           the segment devoted to website hosting and development. The Company's
           exit from that segment resulted in no gain or loss. Assets previously
           used in the segment have been reallocated to the remaining business
           or employed for general corporate purposes. The Company had no
           revenue from the segment and incurred no significant expenses as a
           result of its decision to cease the segment's activity.

           For year ended June 30, 2002, no segment activity is presented as
           Seen on TV, Inc. represents the Company's only segment and source of
           revenue.

           Information on the Company's previous business segments was as
           follows:

--------------------------------------------------------------------------------
                                                       Years Ended June 30,
                                                      2001            2000
--------------------------------------------------------------------------------

SEGMENT I
Sales                                           $ 1,515,104         $   268,341
Cost of Sales                                      (746,676)           (122,290)
--------------------------------------------------------------------------------
Gross Profit                                        768,428             146,051
Expenses                                           (455,869)            (96,498)
--------------------------------------------------------------------------------

Net Income                                      $   312,559         $    49,553
--------------------------------------------------------------------------------

Total Assets                                    $   466,995         $    93,669
================================================================================

SEGMENT II
Sales                                           $   239,281         $   298,818
Cost of Sales                                            --                  --
--------------------------------------------------------------------------------
Gross Profit                                        239,281             298,818
Interest Revenue                                      3,600                  --
Other Revenue                                       432,974                  --
Expenses                                           (582,368)           (289,130)
--------------------------------------------------------------------------------

Net Income (Loss)                               $    93,487         $     9,688
--------------------------------------------------------------------------------

Total Assets                                    $ 3,555,133         $ 5,485,837
================================================================================

                                                                   - continued -

                                      F-11
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE C -   BUSINESS SEGMENTS - CONTINUED

           RECONCILIATION OF SEGMENT INFORMATION TO CONSOLIDATED AMOUNTS
           Information for the company's reportable segments relates to the
           company's consolidated totals as follows:

--------------------------------------------------------------------------------
                                                      Years Ended June 30,
                                                      2001            2000
--------------------------------------------------------------------------------

REVENUES
Total Revenues for Reportable Segments            $ 2,190,959       $   567,159
Other Revenues                                         20,000             4,796
Elimination of Intercompany Revenues                  (15,000)          (30,000)
--------------------------------------------------------------------------------

Total Consolidated Revenues                       $ 2,195,959       $   541,955
================================================================================
PROFIT OR LOSS
Total Profit or Loss for Reportable Segments      $   406,046       $    59,241
Other Profit or Loss                                   11,516           (20,590)
--------------------------------------------------------------------------------

Total Consolidated Net Income                     $   417,562       $    38,651
================================================================================
ASSETS
Total Assets for Reportable Segments              $ 6,222,128       $ 5,579,506
Reduction of Domain Name Cost
   Due to Renegotiation of Price                   (2,200,000)               --
Elimination of Intersegment Receivables              (368,461)         (144,552)
Assets Not Attributable to Segments                    74,059            79,148
--------------------------------------------------------------------------------
Total Consolidated Assets                         $ 3,727,726       $ 5,514,102
================================================================================

                                                                   - continued -

                                      F-12
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE D -   PROPERTY AND EQUIPMENT
           Property and equipment are recorded at cost and consisted of the
           following:

           --------------------------------------------------------------------
           June 30,                                         2002         2001
           --------------------------------------------------------------------

           Warehouse Equipment                          $ 12,446      $ 8,196
           Office Furniture and Equipment                 40,654       15,745
           Computer Equipment                             12,003       11,013
           Leasehold Improvements                         12,955        5,957
           --------------------------------------------------------------------
                                                        $ 78,058     $ 40,911
           Less:  Accumulated Depreciation                12,876       10,446
           --------------------------------------------------------------------

           Net Property and Equipment                   $ 65,182     $ 30,465
           =====================================================================

           Depreciation expense for the years ended June 30, 2002 and 2001 was
           $8,386 and $9,303, respectively.

NOTE E -   INTANGIBLE ASSETS
           Intangible assets consisted of the following:

           --------------------------------------------------------------------
           June 30,                                        2002          2001
           --------------------------------------------------------------------

           Website Development and Domain Name      $ 2,943,634   $ 2,895,352
           Marketing Rights                              97,906        97,906
           Goodwill                                      95,145        95,145
           Trademarks                                    15,382        15,382
           Other                                          3,575         3,575
           --------------------------------------------------------------------
                                                    $ 3,155,642   $ 3,107,360
           Less:  Accumulated Amortization              278,557        95,763
           --------------------------------------------------------------------

           Net Intangible Assets                    $ 2,877,085   $ 3,011,597
           =====================================================================

           Amortization expense for the years ended June 30, 2002 and 2001 was
           $182,794 and $27,130, respectively.

                                                                   - continued -

                                      F-13
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE F -   INVESTMENTS IN AFFILIATES - AT EQUITY
           Investments in affiliates, in which the company owns between 20% and
           50% ownership consists of the following at June 30:
<TABLE>
<CAPTION>
           ------------------------------------------------------------------------------------
                                                  Tirk
                                               Enterprises,    Ronco Holding    What-A-Limited,
           2001                                    Inc.         Group, Inc.         Inc.
           ------------------------------------------------------------------------------------

           <S>                                    <C>              <C>             <C>
           Balance, Beginning of Year             $53,096          $    --         $    --
           Additional Investments                  15,000           32,825          38,148
           Loss From Investee                      (4,549)            (996)             --
           ------------------------------------------------------------------------------------

           Investment in Affiliates               $63,547          $31,829         $38,148
           ====================================================================================

                                                   TIRK
                                               ENTERPRISES,    RONCO HOLDING    WHAT-A-LIMITED,
           2002                                    INC.         GROUP, INC.         INC.
           ------------------------------------------------------------------------------------

           Balance, Beginning of Year             $63,547          $31,829         $38,148
           Additional Investments                   5,000               --              --
           Loss From Investee                      (1,387)              --              --
           Loss From Impairment                        --          (31,829)             --
           ------------------------------------------------------------------------------------

           Investment in Affiliates               $67,160          $    --         $38,148
           ====================================================================================
</TABLE>

           The carrying amount of the investment approximates the ownership
           percentage in the net assets for the periods presented.

           On June 30, 2002, the equity investment in Ronco Holding Group, Inc.
           was deemed to be impaired, due to inactivity and no expected future
           benefit from the affiliate. Accordingly, the Company's carrying value
           of this equity investment has been reduced to $-0-.

NOTE G -   NOTES PAYABLE
           In January 2000, the Company entered into an agreement with an
           unrelated entity to acquire the domain name "As Seen on TV.com" for
           $5,000,000. The consideration included cash of $25,000 and a
           non-interest bearing promissory note of $4,975,000. The note was
           collateralized by 2,100,000 shares of ONTV, Inc. common stock, which
           are held in escrow, and the domain name. The terms of the note
           required a payment of $150,000 due on July 18, 2000 with the balance
           of the note due on April 18, 2001. The debt is non-recourse and
           should the company default on the note terms, the domain name would
           revert back to the seller, and the company would forfeit the stock
           given as collateral.

                                                                   - continued -

                                      F-14
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE G -   NOTES PAYABLE - CONTINUED
           In October 2001, the Company renegotiated the purchase price of the
           domain name "As Seen on TV.com". The purchase price was adjusted from
           $5,000,000 down to $2,800,000 in exchange for 2,500,000 shares of
           ONTV, Inc. common stock. The renegotiated note payable requires
           monthly payments of a minimum of $5,000 or 5% of monthly gross sales
           until October 2005, at which time, the Company will have 45 days to
           pay the remaining balance in full. The domain name is the only
           collateral on the renegotiated note. Should the Company default on
           the renegotiated note, the domain name would revert back to the
           seller, and the Company would forfeit all stock and cash paid to
           date. The balance of the note at June 30, 2002 was $2,337,397.

           In June 2000, ONTV, Inc. entered into a loan agreement with an
           unrelated entity in the amount of $250,000. This note is for working
           capital and is secured by a promissory note and 1,500,000 shares of
           common stock. These shares are issued and are being held in trust by
           the Company at June 30, 2002 and 2001. All rights associated with
           these shares remain with ONTV, Inc. The note was due in full on May
           16, 2002 together with accrued interest. The note was in default at
           June 30, 2002. The Company and lender are currently renegotiating new
           payment terms.

           Concurrent with the sale of the Company's equity interest in its
           subsidiary Net e-Vantage, Inc. on May 16, 2001, this note became the
           obligation of Net e-Vantage, Inc. ONTV, Inc. continues to guarantee
           the note and maintains the 1,500,000 shares of ONTV, Inc. common
           stock as collateral in trust, approximately worth $105,000 on June
           30, 2002.

NOTE H -   LEASES
           During June 2002, the Company relocated its operations. Under the
           previous lease, the Company was obligated by a two-year lease
           beginning June 2000 with an unrelated entity. The lease required
           monthly payments of $2,279 per month for the first year, increasing
           to $2,347 per month for the second year.

           Under the current lease, the Company is obligated by a five-year
           lease with an unrelated entity, commencing June 1, 2002 with a
           monthly rent of $6,667. Future minimum lease payments for the five
           years succeeding June 30, 2002 are as follows:
<TABLE>
<CAPTION>
                       2003            2004            2005            2006            2007        Thereafter         Total
           -------------------------------------------------------------------------------------------------------------------
                     <S>             <C>             <C>             <C>             <C>              <C>            <C>
                     $80,000         $80,000         $80,000         $80,000         $80,000          $20,000        $420,000
           -------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE I -   LINE OF CREDIT
           The Company has a line of credit with Key Bank, NA for $10,000 with
           interest at the prime rate plus three percent. The balance was $-0-
           and $9,136 at June 30, 2002 and 2001, respectively.

NOTE J -   RELATED PARTY TRANSACTIONS
           Related party transactions consisted of transactions with Web
           Marketing FX and ONTV, Inc. & Subsidiaries. The owner of Web
           Marketing FX is also a principal shareholder of ONTV, Inc. The net
           receivable balance was $37,850 and $37,310 at June 30, 2002 and 2001,
           respectively. Web Marketing FX provided online access services to the
           Companies in the amount of $82,000 and $27,000 for the years ended
           June 30, 2002 and 2001, respectively.

                                                                   - continued -

                                      F-15
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE K -   DISCONTINUED OPERATIONS
           On May 16, 2001, the Company elected to sell approximately 80% of
           their 57% equity interest in their majority-owned subsidiary Net
           e-Vantage, Inc. (Net e) to Net e, in exchange for a promissory note
           of $365,000. The Company no longer accounts for Net e as a majority -
           owned subsidiary in its consolidated financial statements. The sale
           resulted in a gain of $365,000.

           The terms of the note receivable required full payment of the note,
           plus accrued interest of 8%, on May 16, 2002. The note is
           collateralized by the 3,650,000 shares sold. In the event of default,
           the note becomes payable immediately, with the interest rate
           increasing to 10%, retroactively to May 16, 2001. The balance of the
           note receivable together with interest at June 30, 2001 was $368,600.

           As of June 30, 2002, no payments had been received, Net e was
           insolvent, and the note was deemed uncollectible. Accordingly, the
           note receivable balance was reduced to $-0-, with a corresponding
           loss, net of a tax benefit of $55,100, recorded under Discontinued
           Operations on the Statements of Operations.

NOTE L -   CONTINGENCIES
           The Company has been named a defendant in a lawsuit. While the
           Company may prevail, it is possible that the Company may be liable
           for the amount of the claim. The Company believes that in the event
           the outcome is unfavorable, the amount can be settled for
           approximately $16,500. Accordingly, this amount has been recorded in
           the accompanying financial statements.

           The Company had been named a defendant in a suit brought by a vendor
           against the predecessor company for services rendered. The suit
           requested indemnification for the debt in the amount of $24,375. The
           loss had been recorded for in the accompanying financial statement,
           however, pursuant to a consent judgment order, the Company issued
           204,862 shares of its stock in Settlement of Judgment, in October
           2000.

NOTE M -   RECENTLY ISSUED ACCOUNTING STANDARDS
           In June 2001, the Financial Accounting Standards Board issued FASB
           Statements No. 141, Business Combinations (SFAS 141) and No. 142,
           Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires
           the use of the purchase method of accounting and prohibits the use of
           the pooling-of-interests method of accounting for business
           combinations initiated after June 30, 2001. SFAS 141 also requires
           that the Company recognize acquired intangible assets apart from
           goodwill if they meet certain criteria. SFAS 141 applies to all
           business combinations after June 30, 2001 and for purchase business
           combinations completed on or after July 1, 2001. It also requires,
           upon adoption of SFAS 142, that the Company reclassify the carrying
           amounts of intangible assets and goodwill based on the criteria in
           SFAS 141.

                                                                   - continued -

                                      F-16
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE M -   RECENTLY ISSUED ACCOUNTING STANDARDS - CONTINUED
           SFAS 142 requires, among other things, that companies no longer
           amortize goodwill, but instead test goodwill for impairment at least
           annually. In addition, SFAS 142 requires that the Company identify
           reporting units for the purposes of assessing potential future
           impairment of goodwill, reassess the useful lives of other existing
           recognized intangible assets, and cease amortization of intangibles
           with an indefinite useful life. An intangible asset with an
           indefinite useful life should be tested for impairment in accordance
           with SFAS 142. SFAS 142 is required to be applied in fiscal years
           beginning after December 15, 2001 to all goodwill and other
           intangible assets recognized at that date, regardless of when those
           assets were initially recognized. It also requires the Company to
           complete a transitional goodwill impairment test by six months from
           the date of adoption. The Company is also required to reassess the
           useful lives of other intangible assets within the first interim
           quarter after adoption of SFAS 142.

           In August 2001, the Financial Accounting Standards Board issued FASB
           Statement No. 144, Accounting for the Impairment or Disposal of
           Long-Lived Assets (SFAS 144). SFAS 144 supercedes FASB Statement No.
           121, Accounting for the Impairment of Long-Lived Assets and for
           Long-Lived Assets to Be Disposed Of. SFAS 144 also amends the
           accounting and reporting provisions for the disposal of a segment of
           business in Accounting Principles Board 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 (Opinion 30). SFAS 144 is required
           to be applied in fiscal years beginning after December 15, 2001.

           In April 2002, the Financial Accounting Standards Board issued FASB
           Statement No. 145, Rescission of FASB Statements No. 4, 44, and 64,
           Amendment of FASB Statement No. 13, and Technical Corrections (SFAS
           145). SFAS 145 requires that gains and losses from extinguishment of
           debt be classified as extraordinary items only if they meet the
           criteria in Opinion 30. Applying the provisions of Opinion 30 will
           distinguish transactions that are part of an entity's recurring
           operations from those that are unusual and infrequent and therefore
           meet the criteria for classification as an extraordinary item. SFAS
           145 also requires that modifications to a capital lease that make it
           an operating lease be accounted for, as applicable, in accordance
           with FASB Statement No. 98, Accounting for Leases, or FASB Statement
           No. 28, Accounting for Sales with Leasebacks. SFAS 145 is required to
           be applied in fiscal years beginning after May 15, 2002 and to
           provisions relating to modifications of a capital lease that make it
           an operating lease as of May 15, 2002. Upon adoption of SFAS 145,
           gains and losses on debt extinguishment that have been shown on the
           income statement as extraordinary items in prior periods should be
           reclassified, unless they meet the criteria for extraordinary status
           per Opinion 30.

           The Company is assessing, but has not yet determined how the adoption
           of SFAS 141, SFAS 142, and SFAS 144, as of July 1, 2002, will affect
           its future financial position and results of its operations.

           The Company is assessing, but does not expect the adoption of SFAS
           145, as of July 1, 2002, to have a material effect on its future
           financial position and results of operations.

                                                                   - continued -

                                      F-17
<PAGE>

ONTV, INC. & SUBSIDIARIES
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE M -   RECENTLY ISSUED ACCOUNTING STANDARDS - CONTINUED
           In June 2002, the Financial Accounting Standards Board issued FASB
           Statement No. 146, Accounting for Costs Associated with Exit or
           Disposal Activities (SFAS 146). SFAS 146 addresses financial
           accounting and reporting for costs associated with exit or disposal
           activities and nullifies Emerging Issues Task Force 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). SFAS 146 requires companies to recognize costs
           associated with exit or disposal activities when they incurred rather
           than at the date of a commitment to an exit or disposal plan. Costs
           covered by SFAS 146 include lease termination costs and certain
           employee severance costs that are associated with a restructuring,
           discontinued operation, plant closing, or other exit or disposal
           activity. SFAS 146 applies to all exit or disposal activities
           initiated after December 31, 2002.

           The Company is assessing, but does not expect the adoption of SFAS
           146, as of January 1, 2003, to have a material effect on its future
           financial position and results of operations.


                                      F-18