<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, 2001

                         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)

               75 Bermar Park, Suite 5, Rochester, New York 14624
            ---------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)


                                 (716) 426-2307
                       -----------------------------------
                           (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:  $1,754,385

<PAGE>

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, 2001 is $1,541,856.


The number of shares outstanding of each of the issuer's classes of common
equity, as of September 25, 2001 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






                                       2
<PAGE>


                                TABLE OF CONTENTS


ITEM                                 PART I

1.   Description of Business
2.   Description of 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.


                                       3
<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: Ronco ShowTime Rotisserie & BBQ, Popeil Pastamaker,
Ronco Food Dehydrator, , IGIA Wonder Forms, , IGIA Therma-Spa, Marvins Magic,
Nads, Tap Light, , IGIA Platinum Nail, Epil Stop, Steam Buggy, Oxiclean,
Orangeglow, Shelf Master, True Motion Lures, Vibatouch Fingertip Massager, QRB,
Ginsu Knives, Hygionic Tooth Brushes, Steamin Iron, IGIA CelluLift, 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, Ab Rocker, Silver Bomber Electric Scooter.

                                       4
<PAGE>

The Company purchases products from a multitude of vendors. The Company carries
minimal 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 31, 2000, the Company entered into an Acquisition Agreement with
What-a-Product, Ltd., a product development and manufacturing company, organized
in the Province of Alberta, Canada. For total consideration of $15,000 in cash
and $20,000 in restricted shares of Common Stock of the Company, ONTV, Inc.
acquired 85% of the issued and outstanding shares of capital stock of
What-a-Product, Ltd. As a result of this stock purchase, the Company now owns
100% of the issued and outstanding shares of What-a-Product, Ltd's. Common
stock. The Company's controlling interest now permits it to use certain
manufacturing equipment and inventory, primarily related to the What-a Saw
product which it will now have the full capability to produce. This acquisition
continues the implementation of the Company's business strategy, which includes
the expansion of What-a-Product, Inc. (WAPI) into a product development and
manufacturing company. In furtherance of this strategy, the Company is seeking
inventions and new products to market under its What-a-Product brand name for
direct response and traditional retail distribution.

                                       5
<PAGE>

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

On August 4, 2000, the Company entered into 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.
Management feels this will be an area of growth for the Company in the future.

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 17, 2001, the Company employed four full time and three part
time persons in the Rochester, NY office. The Company's employees are not
represented by labor unions. The Company believes relations with its employees
are good.


ITEM 2. BUSINESS PROPERTIES

On March 31, 2000, the Company entered into a two year lease agreement for
office and warehouse space located at 75 Bermar Park, Suite 5, Rochester, New
York 14624. On June 1, 2000, the Company moved its corporate headquarters, along
with its fulfillment and warehouse operations into this facility. Under terms of
the lease, monthly payments of $2,279 were made for the first year, and $2,347
per month will be paid for the second year. In addition, the Company pays a
pro-rata share, along with other occupants of the building, of real estate
taxes, of which the Company estimates its share to approximate $5,000 per year.
This newly constructed facility is anticipated to provide ample space for
operations and growth during the term of the lease.


                                       6
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

On April 1, 1998, an action was commenced in the New York State Supreme Court in
New York County, Index #601272/98, by Charles Schwab & Co., Inc. against Quintin
A. Prospero, LA Group, Inc. and CDR Transfer, Inc. Charles Schwab & Co., Inc.
sold stock of the Company allegedly owned by Schwab's customer, Quentin A
Prospero. The stock was subject to a stop-transfer order (i.e., the stock
transfer agent was under instructions not to transfer the shares unless there
had been a default by the Company in performing under terms of the loan
agreement) and the customer could not make good delivery of the shares. Charles
Schwab was forced to go into the market and buy shares, resulting in an
out-of-pocket loss of $33,850. Charles Schwab claims that there was no legend on
the face of its customer's certificates and that it is not bound by the
stop-transfer order given to the stock transfer agent. The Company had valid
cross-claims against the other Defendants; however, they are both judgment
proof. While the Company may prevail on its defenses against Charles Schwab,
there is the possibility that the Company could be liable for the entire amount
for which it is being sued. It is likely that this case will be settled prior to
trial.


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 2000      .20         .56         1st 2001     .179        .375

         2nd 2000      .16         .32         2nd 2001     .094        .469

         3rd 2000      .14        1.1875       3rd 2001     .047        .156

         4th 2000      .25         .625        4th 2001     .06         .33


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 25, 2001, 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.

                                       7
<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, 2001 VS. FISCAL YEAR ENDED JUNE 30, 2000

Revenue for the fiscal year ended June 30, 2001 was $1,754,385, an increase of
approximately 224% over fiscal year 2000 revenue of $541,955. 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 Company believes that this
exposure will result in a customer easily remembering the AsSeenOnTV.com domain
name and accessing that site for his/her product needs. While management expects
revenue growth to continue during fiscal year 2002, as the economy is
experiencing uncertainty, particularly in view of the recent disaster in New
York City, a somewhat lesser rate of increase is anticipated.

The cost of goods sold, as a percentage of revenue, was 44% for the current
fiscal year ending June 30, 2001, as compared with 23% for the fiscal year ended
June 30, 2000. The lower cost percentage in the prior period resulted from the
sale of product that was acquired at less than normal cost, along with the
recognition of a full years income from the revenue sharing agreement which was
in effect. Management believes that these higher percentages will continue for
the immediate future due to the termination of the revenue sharing agreement, as
further described in the following paragraph.

Gross profit, as a percentage of revenue, was 56% for the fiscal year ended June
30, 2001, as compared with 77% for the prior fiscal year. This decrease in
margin resulted from the sale of "as seen on tv" products in the prior period,
which were acquired at the previously described less than normal cost. In
addition, gross profits during prior reporting period were inclusive of a higher
percentage of profits resulting from revenue derived from a revenue sharing
agreement with a customer, for whom the Company managed its website. These
revenues have limited direct costs applied against them, thus result in higher
gross profit than the sales segment. It is the belief of management that these
lower margins may continue to be realized as a result of the termination of the
revenue sharing agreement, as well as the sale of products which have been
purchased at current market costs.

                                       8
<PAGE>

Operating expenses, as a percentage of revenue, approximated 53% for the fiscal
year ended June 30, 2001, as compared with 68% for the prior year. The
improvement in this percentage is primarily due to the economies generated from
absorption of fixed expenses against the increased revenue base. During the
current reporting period, costs included a full year of salaries of management
and staff employees hired to carry out the business plan of the Company.
Management believes that although additional staff will be necessary to support
growth, this operating expense ratio will decrease in future reporting periods
as anticipated increased revenues are realized.

Net income for the fiscal year ending June 30, 2001 was $417,562, or $.02 per
share, as compared to $ 38,651 or $.00 per share for the fiscal year ended June
30, 2000. Included in income for the current fiscal year was the gain resulting
from the stock redemption by Net e-Vantage, Inc., a previous majority owned
subsidiary of the Company. This gain, $365,000, comprised most of the income for
the year, with operations providing $43,011. Operating income for the previous
year was $52,826. The decrease in the current year operating income was a result
of the decreased gross profit margin. As management anticipates revenue growth,
with the margin and operating percentages remaining relatively stable, they
expect the income from operations to increase in the immediate future. Net
income also changed from the prior year due to an increase in income taxes
resulting from increased taxable income. The tax effect was minimized by use of
approximately $395,000 in loss carry forward of operating losses from prior
years. In addition, the Company recognized accrued interest income, amounting to
$3,600, on note receivable from Net e-Vantage, Inc. for the redemption of the
above reverenced Net e stock.


                               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 2001, working capital was $407,753, an increase of
$5,434,404 over the prior fiscal year. The increase in working capital was
primarily due to a decrease of notes payable, a result of the restructure of the
purchase of the AsSeenOnTV.com domain name, as more fully described in the
subsequent paragraph. Cash flow from operating activities increased to $232,141
for the current fiscal year, from $105,292 in the year ending June 30, 2000.
This increase resulted from the previously described increase in revenues.

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.

                                       9
<PAGE>

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.

Included in the revenue of the Company, through the first three quarters of this
current reporting period, was income derived from a revenue sharing agreement
with a major customer, for whom the Company managed a web site. This agreement
has now been terminated and the shared revenue no longer is reflected in the
Company's income. This revenue amounted to $254,281 for the fiscal year ended
June 30, 2001, and $298,818 for the prior reporting period. Management
anticipates that the increase in future Internet sales from Seen On TV, Inc.
will partially offset that loss of revenue.

The Company is in the final year of a lease contract for its office and
warehouse space in Rochester, New York. This lease, which expires 6/30/02,
requires monthly payments of $2,439 plus applicable real estate taxes.

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
ending June 30, 2001, sales orders received during the holiday period comprised
over 22% of the orders received over the entire fiscal year. In spite of the
current uncertain economy, management expects to see an increase in orders over
the holiday season this year.

Management believes that income generated from operations may not 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 new 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.


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 2001, 2000,
or 1999.

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.


                                       10
<PAGE>

                                    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 17, 2001, and position
of each executive officer.


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

Daniel M. Fasano          39        Chairman, Chief Executive Officer, and
                                        President

Curt B. Westrom           58        Treasurer and Chief Financial Officer

Ronald J. Axelrod         55        Secretary

Frank T. Costanzo         53        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.

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.

CURT B. WESTROM, of Bemus Point, New York, was appointed Treasurer and Chief
Financial Officer of the Company in January 2000. In addition, he was elected as
a Director of the Company in November 2000. From 1997 until 2000, Mr. Westrom
was the sole principal of Curt B. Westrom, P.A., a public accounting firm in
Jamestown, NY. During the period 1993 through 1997, Mr. Westrom was the
President and sole shareholder of Standard Portable Products, Inc., a
manufacturing company in Mayville, NY. Prior to 1993, he was a co-founder and
Chief Financial Officer for an electronics manufacturer, Electronic Technology
Group, Inc., a Buffalo, NY based public company. He holds a BS Degree in
Accounting from St. Bonaventure University.


                                       11
<PAGE>

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 2001
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 annual salary and bonus in excess of $100,000 during such
period.

<TABLE>

                           SUMMARY COMPENSATION TABLE
<CAPTION>

                                                                               Number of Securities
                               Year                         Other Annual     Underlying Stock Options
Name and Principal Position   Ending  Salary ($)   Bonus   Compensation ($)         Granted
---------------------------   ------  ----------   -----   ----------------         -------
<S>                           <C>       <C>         <C>         <C>                 <C>
Daniel M. Fasano              6/30/01   100,000     -0-         6,000                 -0-
CEO                           6/30/00    41,677     -0-         6,000               400,000
                              6/30/99      -0-      -0-         6,000                 -0-
</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.

3)       All options were granted pursuant to Mr. Fasano's employment agreement
         dated January 1, 2000.


                              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. 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

                                       12
<PAGE>


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 17, 2001 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        AMOUNT AND NATURE OF         PERCENT OF COMMON
BENEFICIAL 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 - Treasurer                         1,000,000 (2)                 4.2%

Ronald J. Axelrod - Secretary                         360,000                     1.5%

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

----------
</TABLE>

(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.



                                       13
<PAGE>

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.


                                       14
<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 28, 2001                       ONTV, Inc.




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


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


                                Chief Executive Officer
                                And Chairman of the
/s/ Daniel M. Fasano            Board of Directors            September 28, 2001
---------------------------
Daniel M. Fasano



                                Chief Financial Officer
                                And Treasurer (Principal
                                Accounting and Financial
/s/  Curt B. Westrom            Officer) and Director         September 28, 2001
---------------------------
Curt B. Westrom




                                       15
<PAGE>

                           ONTV, INC. AND SUBSIDIARIES
                            (FORMERLY LA GROUP, INC.
                                 & SUBSIDIARIES)
                            (A DELAWARE CORPORATION)
                               ROCHESTER, NEW YORK

                     --------------------------------------
                                FINANCIAL REPORTS
                                       AT
                                  JUNE 30, 2001
                     --------------------------------------






                                       16
<PAGE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


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


Independent Auditors' Report                                                 F-1

Consolidated Balance Sheets at June 30, 2001 and 2000                        F-2

Consolidated Statements of Changes in Stockholders' Equity for the
  Years Ended June 30, 2001, 2000 and 1999                                   F-3

Consolidated Statements of Operations for the Years Ended June 30,
  2001, 2000 and 1999                                                        F-4

Consolidated Statements of Cash Flows for the Years Ended June 30,
  2001, 2000 and 1999                                                  F-5 - F-6

Notes to Consolidated Financial Statements                            F-7 - F-15



                                       17
<PAGE>



                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors
ONTV, Inc. and Subsidiaries
(Formerly LA Group, Inc. & Subsidiaries)
Rochester, New York


         We have audited the accompanying consolidated balance sheets of ONTV,
Inc. and Subsidiaries (Formerly LA Group, Inc. & Subsidiaries) (A Delaware
Corporation) as of June 30, 2001 and 2000, 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, 2001. 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 (Formerly LA Group, Inc. & Subsidiaries) as of June 30, 2001 and
2000, and the results of its operations and its cash flows for each of the three
years in the period ended June 30, 2001, in conformity with accounting
principles generally accepted in the United States of America.




/s/ Rotenberg & Co., LLP


Rotenberg & Co., LLP
Rochester, New York
  July 23, 2001



                                      F-1
<PAGE>

<TABLE>
ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

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

June 30,                                                                 2001           2000
------------------------------------------------------------------------------------------------
<S>                                                                   <C>           <C>
ASSETS

CURRENT ASSETS
Cash and Cash Equivalents                                             $     1,253   $   243,897
Accounts Receivable                                                        37,300        16,995
Note Receivable - Related Party                                           368,610            --
Investments in Affiliates                                                 133,524        53,096
Inventory                                                                  81,946        38,547
Due from Officer                                                           60,531        40,177
Prepaid Expenses and Deposits                                               2,500        15,011
------------------------------------------------------------------------------------------------

TOTAL CURRENT ASSETS                                                      685,664       407,723

PROPERTY AND EQUIPMENT - NET OF ACCUMULATED DEPRECIATION                   30,465        33,340

OTHER ASSETS
Intangible Assets - Net of Accumulated Amortization                     3,011,597     5,073,039
------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                          $ 3,727,726   $ 5,514,102
================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts Payable and Accrued Expenses                                 $   217,911   $   209,374
Notes Payable - Due Within One Year                                        60,000     5,225,000
------------------------------------------------------------------------------------------------

TOTAL CURRENT LIABILITIES                                                 277,911     5,434,374

OTHER LIABLITIES
Notes Payable - Due After One Year                                      2,371,900            --
------------------------------------------------------------------------------------------------

TOTAL LIABILITIES                                                       2,649,811     5,434,374
------------------------------------------------------------------------------------------------

MINORITY INTEREST                                                              --           700
------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
Common Stock:  $.001 Par; 100,000,000 Shares Authorized,
               23,720,861 and 16,777,938 Shares Issued
               and Outstanding at June 30, 2001 and
               June 30, 2000, respectively                                 23,721        16,778
Additional Paid-In Capital                                              1,052,099       465,630
Retained Earnings (Deficit)                                                15,682      (401,880)
------------------------------------------------------------------------------------------------
                                                                        1,091,502        80,528
Less: Stock Held in Trust                                                   1,500         1,500
          Treasury Stock - 57,500 Shares at Cost                           12,087            --
------------------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' EQUITY                                              1,077,915        79,028
------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $ 3,727,726   $ 5,514,102
================================================================================================
</TABLE>

    The accompanying notes are an integral part of this financial statement.

                                      F-2
<PAGE>
<TABLE>

ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, 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, 1998                          15,202,938    $    15,203   $    335,705      $ (346,046)    $     4,862

Common Stock Issued                                  75,000             75         29,925              --          30,000

Capital Contributed in the Form
 of Services                                             --             --        100,000              --         100,000

Net Loss                                                 --             --             --         (94,485)        (94,485)
--------------------------------------------------------------------------------------------------------------------------

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
==========================================================================================================================
</TABLE>

    The accompanying notes are an integral part of this financial statement.

                                      F-3
<PAGE>

<TABLE>

ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

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

Years Ended June 30,                                                              2001            2000             1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>              <C>              <C>
Revenues, Net of Returns                                                      $1,754,385       $ 541,955        $ 129,050
----------------------------------------------------------------------------------------------------------------------------

COST OF GOODS SOLD                                                               778,621         124,851           26,084
----------------------------------------------------------------------------------------------------------------------------

Gross Profit                                                                     975,764         417,104          102,966
----------------------------------------------------------------------------------------------------------------------------

EXPENSES
Amortization                                                                      27,130          21,282           21,242
Contributed Services                                                                  --              --          100,000
Depreciation                                                                       9,303           1,000              143
Freight and Delivery                                                             248,352          25,664            7,245
Interest                                                                             200           1,292            1,119
Payroll and Payroll Taxes                                                        363,918         133,523               --
Other Expenses                                                                   273,716         186,222           64,625
----------------------------------------------------------------------------------------------------------------------------

TOTAL EXPENSES                                                                   922,619         368,983          194,374
----------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) BEFORE OTHER INCOME AND (EXPENSES)                                  53,145          48,121          (91,408)

OTHER INCOME AND (EXPENSES)
Interest Income                                                                    3,600              --               --
Equity in Income (Loss) of Unconsolidated Investment                              (5,545)          5,030           (1,934)
----------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES                                   51,200          53,151          (93,342)

Provision for Income Taxes                                                         8,189             325            1,143
----------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM CONTINUING OPERATIONS                                          43,011          52,826          (94,485)
----------------------------------------------------------------------------------------------------------------------------

DISCONTINUED OPERATIONS (NOTE K)
Income (Loss) from Operations of Significant Disposition Subsidiary                9,551         (14,175)              --
Gain from Significant Disposition of Subsidiary, Net of Taxes                    365,000              --               --
----------------------------------------------------------------------------------------------------------------------------

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

NET INCOME (LOSS)                                                              $ 417,562       $  38,651       $  (94,485)
----------------------------------------------------------------------------------------------------------------------------

EARNINGS PER SHARE
----------------------------------------------------------------------------------------------------------------------------

Weighted Average Number of Common Shares Outstanding                          19,372,416      15,339,413       14,679,760

Income (Loss) from Continuing Operations
     per Common Share - Basic and Diluted                                       $   0.00        $   0.00       $    (0.01)

Net Income (Loss) Per Common Share - Basic and Diluted                          $   0.02        $   0.00       $    (0.01)
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

    The accompanying notes are an integral part of this financial statement.

                                      F-4
<PAGE>
<TABLE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

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


Years Ended June 30,                                                                2001            2000           1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>              <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)                                                                $ 417,562        $ 38,651     $  (94,485)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
  TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
Bad Debts                                                                           17,234              --             --
Amortization                                                                        27,130          21,282         21,242
Depreciation                                                                         9,303           1,000            143
Contributed Services                                                                    --              --        100,000
Payment of Officers' Salaries via Common Stock                                     152,499              --             --
Gain from Significant Disposition of Subsidiary                                   (365,000)             --             --
Income from Operations of Disposed Subsidiary                                       (9,551)             --             --
Equity in (Income) Loss of Unconsolidated Investments                                5,545          (5,030)          1,934
Increase (Decrease) in Value of Minority Interest                                     (700)            700             --
CHANGES IN ASSETS AND LIABILITIES:
Accounts Receivable                                                                (23,905)         (6,687)       (10,308)
Inventory                                                                          (43,399)        (34,546)        (3,106)
Prepaid Expenses and Security Deposits                                              12,511         (14,411)          (600)
Accounts Payable and Other                                                          32,912         104,333         35,640
----------------------------------------------------------------------------------------------------------------------------

NET CASH FLOWS FROM OPERATING ACTIVITIES                                           232,141         105,292         50,460
----------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Affiliates                                                          (69,752)        (15,060)       (35,000)
Acquisition of Property and Equipment                                              (10,304)        (24,470)        (3,850)
Acquisition of Intangible Assets                                                   (69,188)        (27,571)          (400)
----------------------------------------------------------------------------------------------------------------------------

NET CASH FLOWS FROM INVESTING ACTIVITIES                                          (149,244)        (67,101)       (39,250)
----------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Borrowings                                                                --         250,000             --
Cash Advance (Repayment) to Former Subsidiary                                     (200,000)             --             --
Repayment of Debt                                                                  (93,100)        (25,000)            --
Advances to Officer                                                                (20,354)        (35,843)       (24,746)
Proceeds from Issuance of Common Stock                                                  --              --         30,000
Purchase of Treasury Stock                                                         (12,087)             --             --
----------------------------------------------------------------------------------------------------------------------------

NET CASH FLOWS FROM FINANCING ACTIVITIES                                          (325,541)        189,157          5,254
----------------------------------------------------------------------------------------------------------------------------

Net Increase (Decrease) in Cash and Cash Equivalents                              (242,644)        227,348         16,464

Cash and Cash Equivalents - Beginning of Year                                      243,897          16,549             85
----------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS - END OF YEAR                                           $  1,253       $ 243,897       $ 16,549
============================================================================================================================
</TABLE>

    The accompanying notes are an integral part of this financial statement.

                                      F-5
<PAGE>

<TABLE>

ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------------------------------------------------------------------------------------

<CAPTION>

Years Ended June 30,                                                                   2001           2000            1999
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>               <C>             <C>
SUPPLEMENTAL DISCLOSURES
Interest Paid                                                                   $       200       $  1,292        $  1,119
Income Taxes Paid                                                               $     9,077       $     --        $  1,915
-----------------------------------------------------------------------------------------------------------------------------

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

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       $     --        $     --
Issuance of Common Stock in Exchange for Intangible Assets                      $        --       $     --        $ 65,000
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

    The accompanying notes are an integral part of this financial statement.

                                      F-6
<PAGE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, 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, 2001. 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 or majority owned subsidiaries. All significant
         intercompany balances and transactions have been eliminated in
         consolidation.

         SEGMENT DATA, GEOGRAPHIC INFORMATION AND SIGNIFICANT CUSTOMERS
         The corporation operates in two industry segments and generates revenue
         from customers throughout the United States.

         NAME CHANGE
         On March 13, 2000, the Company amended its Certificate of Incorporation
         to change its name from the LA Group, Inc. to ONTV, Inc.

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. AND SUBSIDIARIES
(FORMERLY LA GROUP, 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 cash balances that exceeded insured limits at June 30, 2001
         and 2000 of $-0- and $143,897, respectively. Cash is placed primarily
         in high quality short term interest bearing financial instruments.
         Sales recorded by the Company from one significant customer amounted to
         55.1% of total revenue for the fiscal year ending June 30, 2000. At
         June 30, 2000, the Company had trade accounts receivable with the
         customer representing 62.8% of total receivables. There were no
         significant customers for the fiscal year ending June 30, 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 has an equity investment of 23% in a non-majority owned
         affiliate. The investment is 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 holds a material interest in 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. AND SUBSIDIARIES
(FORMERLY LA GROUP, 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                              5 - 7 Years
              Office Furniture and Equipment                  5 - 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
         The Company has made expenditures in designing and developing a
         website. The company is amortizing the cost of the website as a charge
         to operations using the straight line method over 5 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 will be 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.

         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 $45,581, $890 and
         $0 for the years ended June 30, 2001, 2000 and 1999, respectively. The
         Company did not incur any direct-response advertising costs during 1999
         through 2000.

                                                                   - continued -

                                      F-9
<PAGE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

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

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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

         NET INCOME 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 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 there
         are no outstanding warrants, options, or convertible securities, for
         periods ending June 30, 2001, 2000, or 1999.

         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. The Company utilized net
         operating losses of approximately $395,000 to offset taxable income,
         during 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.

NOTE C - BUSINESS SEGMENTS
         The Company operates 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 is also engaged in website hosting and development. (Segment
         II)

         The accompanying Segment II information for fiscal years 2001, 2000,
         and 1999 includes business generated by one significant customer. As of
         April 2001, the Company is no longer providing services to that
         significant customer.

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

         ---------------------------- ------------------------------------------
                                                   Years Ended June 30,
                                            2001          2000         1999
         ---------------------------- --------------- ------------- ------------

         SEGMENT I
         Sales                           $ 1,515,104     $ 268,341     $ 94,025
         Cost of Sales                      (746,676)     (122,290)     (24,175)
         ---------------------------- --------------- ------------- ------------
         Gross Profit                      $ 768,428     $ 146,051     $ 69,850
         Expenses                           (455,869)      (96,498)     (36,903)
         ---------------------------- --------------- ------------- ------------

         Net Income                        $ 312,559      $ 49,553     $ 32,947
         ---------------------------- --------------- ------------- ------------

         Total Assets                      $ 466,995      $ 93,669     $ 27,907
         ============================ =============== ============= ============

                                                                   - continued -

                                      F-10

<PAGE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

<TABLE>

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

NOTE C - BUSINESS SEGMENTS - CONTINUED
<CAPTION>

                                                                               Years Ended June 30,
                                                                        2001           2000           1999
         =====================================================================================================
         <S>                                                         <C>             <C>             <C>
         SEGMENT II
         Sales                                                       $ 254,281       $ 298,818       $ 58,673
         Cost of Sales                                                      --              --             --
         -----------------------------------------------------------------------------------------------------
         Gross Profit                                                $ 254,281       $ 298,818       $ 58,673
         Interest Revenue                                                4,527              --             --
         Other Revenue                                                 417,047              --             --
         Expenses                                                     (578,368)       (277,380)      (143,904)
         -----------------------------------------------------------------------------------------------------

         Net Income(Loss)                                            $  97,487       $  21,438      $ (85,231)
         -----------------------------------------------------------------------------------------------------

         Total Assets                                              $ 3,555,133     $ 5,485,837      $ 150,659
         =====================================================================================================


         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          1999
         -----------------------------------------------------------------------------------------------------

         REVENUES
         Total Revenues for Reportable Segments                    $ 1,769,385       $ 567,159    $   152,698
         Other Revenues                                                     --           4,796          6,352
         Elimination of Intercompany Revenues                          (15,000)        (30,000)       (30,000)
         -----------------------------------------------------------------------------------------------------

         Total Consolidated Revenues                               $ 1,754,385       $ 541,955    $   129,050
         =====================================================================================================

         PROFIT OR LOSS
         Total Profit or Loss for Reportable Segments                $ 327,946        $ 70,991    $   (82,284)
         Other Profit or Loss                                           11,516         (19,890)          4,299
         General Corporate Expenses                                         --         (14,950)      (16,500)
         -----------------------------------------------------------------------------------------------------

         Total Consolidated Net Income                               $ 339,462        $ 36,151    $   (94,485)
         =====================================================================================================

         ASSETS
         Total Assets for Reportable Segments                      $ 6,222,128     $ 5,555,095    $   178,566
         Reduction of Domain Name Cost
            Due to Renegotiation of Price                           (2,200,000)             --             --
         Elimination of Intersegment Receivables                      (368,461)        (97,584)       (92,556)
         Assets Not Attributable to Segments                            74,059          70,086         59,408
         -----------------------------------------------------------------------------------------------------

         Total Consolidated Assets                                 $ 3,727,726     $ 5,527,597    $   145,418
         =====================================================================================================
</TABLE>

                                      F-11
<PAGE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK

<TABLE>

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

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

         ================================================================================
         June 30,                                                   2001         2000
         --------------------------------------------------------------------------------
<S>                                                             <C>           <C>
         Warehouse Equipment                                    $    8,196    $    6,000
         Office Furniture and Equipment                             15,745         7,346
         Computer Equipment                                         11,013        16,262
         Leasehold Improvements                                      5,957         4,875
         --------------------------------------------------------------------------------
                                                                $   40,911    $   34,483
         Less:  Accumulated Depreciation                            10,446         1,143
         --------------------------------------------------------------------------------

         Net Property and Equipment                             $   30,465    $   33,340
         ================================================================================

         Depreciation expense for the years ended June 30, 2001 and 2000 was
         $9,303 and $1,000, respectively.

NOTE E - INTANGIBLE ASSETS

         Intangible assets consisted of the following:

         ================================================================================
         June 30,                                                    2001        2000
         --------------------------------------------------------------------------------

         Website Development and Domain Name                   $ 2,895,352   $ 5,027,571
         Marketing Rights                                           97,906            --
         Goodwill                                                   95,145        95,145
         Trademarks                                                 15,382        15,382
         Other                                                       3,575         3,575
         --------------------------------------------------------------------------------
                                                               $ 3,107,360   $ 5,141,673
         Less:  Accumulated Amortization                            95,763        68,634
         --------------------------------------------------------------------------------

         Net Intangible Assets                                 $ 3,011,597   $ 5,073,039
         ================================================================================
</TABLE>

         Amortization expense for the years ended June 30, 2001 and 2000 was
         $27,130 and $21,282, respectively.


                                      F-12

<PAGE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, 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>

         ==============================================================================================
         2000                                                    Tirk         Ronco         What-A-
                                                              Enterprises,    Holding       Limited,
                                                                  Inc.       Group Inc.       Inc.
         ----------------------------------------------------------------------------------------------
<S>                                                            <C>         <C>             <C>
         Balance, Beginning of Year                            $  33,066   $        --     $        --
         Additional Investments                                   15,000            --              --
         Income (Loss) From Investee                               5,030            --              --
         ----------------------------------------------------------------------------------------------

         Net Intangible Assets                                 $  53,096   $        --     $        --
         ==============================================================================================

         ==============================================================================================
         2000                                                    Tirk         Ronco         What-A-
                                                              Enterprises,    Holding       Limited,
                                                                  Inc.       Group Inc.       Inc.
         ----------------------------------------------------------------------------------------------

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

           Net Intangible Assets                               $  63,547   $    31,829     $    38,148
         ==============================================================================================
</TABLE>

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

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 includes 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.
         The balance of the note at June 30, 2000 was $4,975,000. The original
         payment of $150,000 due on July 18, 2000 had been extended by the
         lender until September 1, 2000.

         In October, 2000, 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, 2001 was $2,422,764. - continued -

                                      F-13
<PAGE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


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

NOTE G - NOTES PAYABLE - CONTINUED
         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, 2001 and 2000. All rights associated with these
         shares remain with ONTV, Inc. The note was due in full on December 13,
         2000 together with accrued interest.

         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 $97,500 on June 30, 2001.

NOTE H - LEASES
         The Company has entered into a two-year lease beginning June, 2000 from
         an unrelated entity. The lease requires monthly payments of $2,279 per
         month for the first year increasing to $2,347 per month for year two.
         Tenant agrees to pay for all taxes, maintenance and a portion of common
         area fees. Future minimum lease payments for the five years succeeding
         June 30, 2001 are as follows:

             2002           2003         2004          2005          2006
         ------------- ------------- ------------- ------------- -------------
          $ 25,817        $    --      $    --       $    --        $   --
         ============= ============= ============= ============= =============

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 3 percent. The balance was $9,136 and
         $-0- at June 30, 2001 and 2000, respectively.

NOTE J - RELATED PARTY TRANSACTION
         Related party transactions consisted of transactions with Web Marketing
         FX and ONTV, Inc. and subsidiaries. The owner of Web Marketing FX is
         also a principal shareholder of ONTV, Inc. The net receivable balance
         was $37,310 and $6,310 at June 30, 2001 and 2000, respectively. Web
         Marketing FX provided online access services to the Companies in the
         amount of $27,000 and $18,000 for the years ended June 30, 2001 and
         2000, respectively.

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 require 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.



                                      F-14
<PAGE>


ONTV, INC. AND SUBSIDIARIES
(FORMERLY LA GROUP, INC. & SUBSIDIARIES)
(A DELAWARE CORPORATION)
ROCHESTER, NEW YORK


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

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







                                      F-15