UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-Q  x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended June 30, 2011   ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from ________________________ to ___________________________________  Commission file number: 0-29651  USA VIDEO INTERACTIVE CORP. (Exact name of registrant as specified in its charter)  WYOMING                                                                  06-1576391 (State or Other Jurisdiction of                                                (I.R.S. Employer Identification No.) Incorporation or Organization)  1224 Mill Street Bldg B, Suite 117, East Berlin, Connecticut              06023 (Address of principal executive offices)                                        (ZIP code)  (860) 828-2107 (Registrant's Telephone Number, including Area Code)  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YesxNo  o  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YesoNo o  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filero Accelerated filero Non-accelerated filero Small reporting company x  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YesoNox  At August 12, 2011, there were 191,596,364 shares of the registrant's common stock outstanding.  2    PART I. FINANCIAL INFORMATION  Item 1. Financial Statements    3


USA VIDEO INTERACTIVE CORP.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2011  (Unaudited)  (Stated in US Dollars)


4


USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Stated in US Dollars)


|                                                               |                    |                  
|-------------------------------------------------------------- | ------------------ | -----------------
|                                                               | June 30,           | December 31,     
|                                                               | 2011               | 2010             
|                                                               | (Unaudited)        |                  
|                                                               |                    |                  
|ASSETS                                                         |                    |                  
|                                                               |                    |                  
|Current Assets:                                                |                    |                  
|Cash and cash equivalents                                      | $           2,933  | $           5,254
|Accounts receivable                                            | 3,000              | 12,070           
|Prepaid expenses and other current assets                      | 2,767              | 2,755            
|Total current assets                                           | 8,700              | 20,079           
|Property and Equipment - at cost, net                          | -                  | -                
|Intangible assets. Net                                         | -                  | -                
|Deferred Tax Assets, net of valuation allowance                |                    |                  
|of $9,937,000 and $9,890,000, respectively                     | -                  | -                
|Total Assets                                                   | $           8,700  | $          20,079
|LIABILITIES AND STOCKHOLDERS' DEFICIENCY                       |                    |                  
|                                                               |                    |                  
|Current Liabilities:                                           |                    |                  
|Accounts payable and accrued expenses                          | $        210,418   | $       224,380  
|Accounts payable and accrued expenses - related parties        | 382,721            | 243,285          
|Total current liabilities                                      | 593,139            | 467,665          
|Commitment and Contingencies                                   |                    |                  
|Stockholders' Deficiency:                                      |                    |                  
|Preferred stock - no par value; authorized 500,000,000 shares, |                    |                  
|none issued                                                    |                    |                  
|Common stock and additional paid-in capital -                  |                    |                  
|no par value; authorized 500,000,000 shares,                   |                    |                  
|issued and outstanding 191,596,364                             | 38,637,690         | 38,637,690       
|Common stock subscribed                                        | -                  | -                
|Accumulated deficit                                            | (39,222,129)       | (39,085,276)     
|                                                               |                    |                  
|Stockholders' deficiency                                       | (584,439)          | (447,586)        
|                                                               |                    |                  
|Total Liabilities and Stockholders' Deficiency                 | $            8,700 | $         20,079 

SEE ACCOMPANYING NOTES


5


USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Stated in US Dollars) (Unaudited)


|                                                  |                            |                          |                 |                
|------------------------------------------------- | -------------------------- | ------------------------ | --------------- | ---------------
|                                                  | For the three months ended | For the six months ended
|                                                  | June 30                    | June 30                  | June 30,        | June 30,       
|For the three months ended                        | 2011                       | 2010                     | 2011            | 2010           
|                                                  |                            |                          |                 |                
|Revenue                                           | 9,000                      | 12,000                   | $      18,000   | $      21,000  
|                                                  |                            |                          |                 |                
|Expenses:                                         |                            |                          |                 |                
|Cost of sales                                     | 1,350                      | 1,800                    | 2,700           | 3,150          
|Research and development                          | 75,000                     | 2,400                    | 75,000          | 3,300          
|Selling, general and administrative               | 40,336                     | 58,661                   | 77,153          | 158,675        
|                                                  |                            |                          |                 |                
|Total expenses                                    | 116,686                    | 62,861                   | 154,853         | 165,125        
|Loss from operations                              | (107,686)                  | (50,861)                 | (136,853)       | (114,125       
|                                                  |                            |                          |                 |                
|Other income (expense)                            |                            |                          |                 |                
|Interest income (expense)                         |                            | (862)                    | -               | (3,711)        
|                                                  |                            |                          |                 |                
|                                                  | -                          | (862)                    | -               | (3,711)        
|                                                  |                            |                          |                 |                
|Net Income ( loss )                               | (107,686)                  | (51,723)                 | $ (136,853)     | $  (147,836)   
|                                                  |                            |                          |                 |                
|Net Income ( loss ) per share - basic and diluted | $         (.00)            | $         (.00)          | $         (.00) | $         (.00)
|Weighted-average number of common                 |                            |                          |                 |                
|shares outstanding - basic and diluted            | 191,596,364                | 188,526,364              | 191,596,364     | 188,526,364    
|                                                  |                            |                          |                 |                

SEE ACCOMPANYING NOTES


6


USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (Stated in US Dollars) (Unaudited)   Common Stock andAdditional Paid inCapitalAccumulatedStockholders'SharesAmountDeficitDeficiencyBalance at December 31, 2010191,596,364$ 38,637,690$ (39,085,276)$      (447,586)Net loss-(136,853)(136,853)Balance at June 30, 2011191,596,364$ 38,637,690$ (39,222,129)$      (584,439)        SEE ACCOMPANYING NOTES





7





|                                               
|-----------------------------------------------
|USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES   
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Stated in US Dollars)                         
|(Unaudited)                                    
|                                               




|                                                 |  |  |                    |                 
|------------------------------------------------ |  |  | ------------------ | ----------------
|                                                 |  | 
|                                                 |  |  | June 30,           | June 30,        
|For the three months ended                       |  |  | 2011               | 2010            
|                                                 |  |  |                    |                 
|Cash flows from operating activities:            |  |  |                    |                 
|Net Income (loss)                                |  |  | $      (136,853)   | $   (147,836)   
|Adjustments to reconcile net loss to net cash    |  |  |                    |                 
|used in operating activities:                    |  |  |                    |                 
|Capital contributions                            |  |  | -                  | 158,039         
|Changes in operating assets and liabilities:     |  |  |                    |                 
|(Increase) decrease  in accounts receivables     |  |  | 9,070              | 39,000          
|(Increase) decrease in prepaid expenses          |  |  |                    |                 
|and other current assets                         |  |  | (12)               | 907             
|Increase (decrease) in accounts payable and      |  |  |                    |                 
|accrued expenses                                 |  |  | (13,962)           | 21,526          
|Increase (decrease) in accounts payable and      |  |  |                    |                 
|accrued expenses - related parties               |  |  | 139,436            | (67,870)        
|                                                 |  |  |                    |                 
|Net cash provided by operating activities        |  |  | (2,321)            | 3,766           
|                                                 |  |  |                    |                 
|Net increase in cash and cash                    |  |  |                    |                 
|equivalents                                      |  |  | (2,321)            | 3,766           
|                                                 |  |  |                    |                 
|Cash and cash equivalents at beginning of period |  |  | 5,254              | 765             
|                                                 |  |  |                    |                 
|Cash and cash equivalents at end of period       |  |  | $            2,933 | $          4,531
|                                                 |  |  |                    |                 

SEE ACCOMPANYING NOTES





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USA VIDEO INTERACTIVE CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2011 (Unaudited) (Stated in US Dollars)  NOTE A  BASIS OF PRESENTATION  The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01(a)(5) of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of the management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included.  The results for the interim periods are not necessarily indicative of the results that may be attained for an entire year or any future periods.  For further information, refer to the Financial Statements and footnotes thereto in the Companys annual report on Form 10-K for the fiscal year ended December 31, 2010.  Presentation for prior periods has be reclassified to be consistent with current presentation.   This is not considered to be a restatement.  NOTE B  GOING CONCERNS:  The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern.  As shown in the financial statements, the Company has incurred loss of $136,853 for the six month period ended June 30, 2011 and, in addition the Company incurred losses of $89,175 and $811,004 for the years ended December 31, 2010 and 2009, respectively. As of June 30, 2011, the Company had an accumulated deficit of $39,222,129 and a working capital deficit of $584,439. These conditions raise doubt about the Company's ability to continue as a going concern.  The Company's ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations as they come due which management believes it will be able to do.  To date, the Company has funded operations primarily through the issuance of common stock and warrants to outside investors and the Company's management.  The Company believes that its operations will generate additional funds and that additional funding from outside investors and the Company's management will continue to be available to the Company when needed.  The Company also has certain lawsuits pending which could result in additional liabilities.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary in the event the Company cannot continue as a going concern.


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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations  CAUTIONARY STATEMENT  This document includes statements that may constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution readers regarding certain forward-looking statements in this document, press releases, securities filings, and all other documents and communications.  All statements, other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position, made in this Quarterly Report on Form 10-Q ("Report") are forward looking.  The words "believes," "anticipates," "estimates," "expects," and words of similar import, constitute "forward-looking statements."  While we believe in the veracity of all statements made herein, forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us, are inherently subject to significant business, economic and competitive uncertainties and contingencies and known and unknown risks.  As a result of such risks, our actual results could differ materially from those expressed in any forward-looking statements made by, or on behalf of, our company.  We will not necessarily update information if any forward-looking statement later turns out to be inaccurate.  Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including risks and uncertainties set forth in our Annual Report on Form 10-K, as well as in other documents we file with the Securities and Exchange Commission ("SEC").  The following information has not been audited.  You should read this information in conjunction with the unaudited financial statements and related notes to the financial statements included in this report.  OVERVIEW OF THE COMPANY  We design and market to business customers digital watermarking, streaming video and video-on-demand systems, services and source-to-destination digital media delivery solutions that allow live or recorded digitized and compressed video to be transmitted through Internet, intranet, satellite or wireless connectivity.  Our systems, services and delivery solutions include digital watermark solutions and video content production, content encoding, media asset management, media and application hosting, multi-mode content distribution, transaction data capture and reporting, e-commerce, specialized engineering services, and Internet streaming hardware.  Although we have generated nominal sales for the second quarter of 2011, we continue to explore opportunities that will result in new products for new revenue streams, but there can be no assurances that such efforts will be successful.  We held the patent for Store-and-Forward Video-on-Demand (#5,130,792), filed in 1990 and issued by the United States Patent and Trademark Office on July 14, 1992.  Our patent expired in February 2010.  We have developed a number of specific products and services based on these technologies. These include MediaSentinelTM and SmartMarksTM a process that watermarks digital video content, StreamHQTM, a collection of source-to-destination media delivery services marketed to businesses; EncodeHQTM, a service that digitizes and compresses analog-source video; hardware server and encoder system applications under the brand name Hurricane MediacasterTM; ZMailTM, a service that delivers web and rich media content to targeted audiences; mediaClixTM, a service that delivers content similar to Zmail but originating from an existing web presence; and MediaSentinelTM, a patent-pending digital watermarking technology to deter digital video piracy.


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We were incorporated on April 18, 1986, as First Commercial Financial Group Inc. in the Province of Alberta, Canada.  In 1989, our name was changed to Micron Metals Canada Corp., which purchased 100% of the outstanding shares of USA Video Inc., a Texas corporation, in order to focus on the digital media business.  In 1995, we changed our name to USA Video Interactive Corp. and continued our corporate existence to the State of Wyoming.  We have one wholly-owned subsidiary: USVO Inc.  In the last four months of 2010 we dissolved: USA Video (California) Corp., USA Video Corporation, Old Lyme Productions Inc. and USA Video Technology Corporation.  USA Video's executive and corporate offices are located in East Berlin, Connecticut, and our Canadian offices are located in Vancouver, British Columbia.  BUSINESS OBJECTIVES:  We have established the following near-term business objectives:  1. Patent and license new technology developed within the corporate research and development program;  2. Attain industry recognition for the superior architectural, functional, and business differentiators of our MediaSentinelTM architecture;  3. Demonstrate proof of concept on a commercial project with MediaSentinelTM architecture;  4. Establish StreamHQTMas the industry standard in the streaming video and rich media marketplace;  5. Expand StreamHQTM functionality to provide enhanced support for corporate training and education markets.  CRITICAL ACCOUNTING POLICIES (AND ESTIMATES)  Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an ongoing basis, we evaluate these estimates, including those related to customer programs and incentives, bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, impairment or disposal of long-lived assets, contingencies and litigation.  We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.  We have identified the policies below as critical to our business operations and to the understanding of our financial results. The impact and any associated risks related to these policies on our business operations is discussed throughout managements discussion and analysis of financial condition and results of operations where such policies affect our reported and expected financial results:   Revenue recognition;  Impairment or disposal of long-lived assets;


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 Deferred taxes;  Accounting for stock-based compensation; and  Commitments and contingencies.  REVENUE RECOGNITION.  Revenue is recognized for digital water marking based on a contracted usage schedule on a monthly billing cycle.  Software revenue and other services are recognized in accordance with the terms of the specific agreement, which is generally upon delivery and when accepted by customer.  Maintenance, support and service revenue are recognized ratably over the term of the related agreement.  In order to recognize revenue, we must not have any continuing obligations and it must also be probable that we will collect the accounts receivable.  IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS.  Long-lived assets are reviewed in accordance with ASC Topic 360 (formally Statement of Financial Accounting Standard (SFAS) 144).  Impairment or disposal of long-lived assets losses are recognized in the period the impairment or disposal occurs.  DEFERRED TAXES.  We record a valuation allowance to reduce deferred tax assets when it is more likely than not that some portion of the amount may not be realized.  ACCOUNTING FOR STOCK-BASED COMPENSATION- ASC Topic 718, Stock Compensation (formerly referred to as SFAS No. 123(R)), the Company estimates the fair value of stock options granted using the Black-Scholes option pricing model.  The fair value for awards that are expected to vest is then amortized on a straight-line basis over the requisite service period of the award, which is generally the option vesting term.  The amount of expense attributed is based on estimated forfeiture rate, which is updated based on actual forfeitures as appropriate.  This option pricing model requires the input of highly subjective assumptions, including the expected volatility of the Companys common stock, pre-vesting forfeiture rate and an options expected life.  The financial statements include amounts that are based on the Companys best estimates and judgments.  COMMITMENTS AND CONTINGENCIES.- We account for commitments and contingencies in accordance with ASC 440 (Accounting for Commitments) and ASC 450 (Accounting for Contingencies). We record a liability for commitments and contingencies when the amount is both probable and reasonably estimable.  RESULTS OF OPERATIONS  Sales  Sales for the six-month period ended June 30, 2011 and June 30, 2010 were $18,000 and $21,000, respectively.  Sales for the three-month period ended June 30, 2011 and June 30, 2010 were $9,000 and $12,000, respectively.  Revenues were generated from Software License Agreement from our SmartmarkTM Software.  During the period January 1, 2011 to June 30, 2011, sales of the Company were from one customer.  Cost of Sales  The cost of sales for the six months ended June 30, 2011 was $2,700 as compared to $3,150 for the comparable period in 2010.  For the three-month period ended June 30, 2011, the cost of sales was $1,350 as compared to $1,800 for the comparable period in 2010.  Costs are the royalties on our video watermarking license agreement.


12


Selling, General and Administrative Expenses  Selling, general and administrative expenses, consisting of product marketing expenses, consulting fees, office, professional fees and other expenses to execute our business plan and for our day-to-day operations, decreased in the six months ending June 30, 2011.  We have a contract for our SmartmarkTM Software and delivered acceptable release to start billing and delivered additional server licenses.  Product marketing costs decreased due to management’s decision to direct our efforts toward the current customer in additional divisions and direct marketing to other possible customers.  Consulting and management fees decreased due to a reduction of salaries and fees.  Administrative expenses have decreased as a result.  Selling, general and administrative expenses for the three months ended June 30, 2011 decreased by $18,325 to $40,336 from $58,661 for the three months ended June 30, 2010.  The decrease was the result of expenses incurred related to a reduction in consulting fees, salaries and product marketing expenses.  For the six months ended June 30, 2010 the costs decreased by $81,522 to $77,153 from $158,675 for the comparable period in 2010.  The decrease was the result of expenses incurred related to a reduction in consulting fees, salaries and product marketing expenses.  Consulting fees for the six months ended June 30, 2011, decreased to $-0- from $9,000 for the comparable period in 2010.  We incurred decreased costs in 2011 due to managements decision to eliminate their salaries.  Salaries and fees for the three months ended June 30, 2011 decreased to $-0- from $14,100 for the comparable period in 2010.  We incurred decreased costs in 2011 due to management and employee reductions.  We have arranged for additional staff and consultants to engage in marketing activities in an effort to identify and assess appropriate market segments, develop business arrangements with prospective partners, create awareness of new products and services, and communicate to the industry and potential customers.  Other components of selling, general and administrative expense did not change significantly.  Research and Development Expenses  Research and development expenses consisted primarily of contractor fees, compensation, hardware, software, licensing fees, and new product applications for our proprietary MediaSentinelTM.  Research and development expenses increased to $75,000 for the six months ended June 30, 2011, from $3,300 for the comparable period in 2010 and to $75,000 for the three months ended June 30, 2011 from $2,400 for the comparable period in 2010.  The increase was the result of a concentration in one application of research and development efforts for MediaSentinelTM.  Non-Cash Compensation Charges  Non-cash compensation charges were$-0- for the six months ended June 30, 2011 and 2010.


13


Net Losses  To date, we have not achieved profitability and, we expect to incur substantial net losses for the remainder of 2011.  Our net loss for the six months ended June 30, 2011 was $136,853, compared with a net loss of $147,836 for the six months ended June 30 2010.  The increase in losses for the three months ended June 30, 2011 compared to June 30, 2010 is directly related to the research and development of MediaSentinelTM products.  LIQUIDITY AND CAPITAL RESOURCES  At June 30, 2011, we had a cash position of $2,933, compared to $5,254 at December 31, 2010.  We anticipate capital requirements of $700,000 for the continued development of our MediaSentinelTM products and 700,000 for commercialization of our MediaSentinelTM products.  We will require additional financing to fund current operations through fiscal 2011.  We have historically satisfied our capital needs primarily by issuing equity securities.  We will require an additional $0.75 million to $1.25 million to finance operations through fiscal 2011 and we intend to seek such financing through sales of our equity securities.  Assuming the aforementioned $0.75 million to $1.25 million in financing is obtained, we believe that continuing operations for the longer term will be supported through anticipated licensing revenues and through additional sales of our securities.  We have no binding commitments or arrangements for additional financing, and there is no assurance that we will be able to obtain any additional financing on terms acceptable to us, if at all.  OFF-BALANCE SHEET ARRANGEMENTS  We do not maintain any off-balance sheet transactions, arrangements, or obligations that are reasonably likely to have a material effect on our financial condition, results of operations, liquidity, or capital resources.  Item 3. Quantitative and Qualitative Disclosures About Market Risk  We believe our exposure to overall foreign currency risk is not material.  We do not manage or maintain market risk sensitive instruments for trading or other purposes and are not exposed to the effects of interest rate fluctuations as we do not carry any long-term debt.  We report our operations in US dollars and our currency exposure, although considered by us as immaterial, is primarily between US and Canadian dollars.  Exposure to other currency risks is also not material as international transactions are settled in US dollars.  Any future financing undertaken by us will be denominated in US dollars.  As we increase our marketing efforts, the related expenses will be primarily in US dollars.  In addition, 90% of our bank deposits are in US dollars.  Item 4. Controls and Procedures  Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and 15d-15(e), as of the end of the period covered by this report.


14


In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.  While we believe our disclosure controls and procedures and our internal control over financial reporting have improved, no system of controls can prevent errors and fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur. Controls can also be circumvented by individual acts of some people, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with its policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.  Subject to the limitations above, management believes that the consolidated financial statements and other financial information contained in this report, fairly present in all material respects our financial condition, results of operations, and cash flows for the periods presented.  Based on the evaluation of the effectiveness of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective at a reasonable assurance level. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.  PART II. OTHER INFORMATION  Item 1. Legal Proceedings  Our patent infringement litigation (filed by a our subsidiary that was dissolved in September 2010) against Movielink LLC came to a substantive conclusion on September 8, 2006, when the U.S. Court of Appeals for the Federal Circuit affirmed certain rulings of the U.S. District Court for the District of Delaware granting Movielink summary judgment of non-infringement. A further procedural determination was entered on September 26, 2007, taxing litigation costs against us.  On September 13, 2006, USA Video Technology Corp., our wholly-owned subsidiary, filed suit in the U.S. District Court for the Eastern District of Texas, alleging that its U.S. Patent No. 5,130,792 is infringed by cable technology interests including Time Warner, Inc., Charter Communications, Inc., and Comcast Cable Communications LLC, and seeking statutory compensation and a court injunction against further infringement.  In December 2007, the court issued rulings adverse to our interests: a claim construction ruling interpreting certain terms in the patent's claims, and a related summary judgment of non-infringement.  Defendants then filed motions for costs and attorney fees.  The court denied defendants' motions for attorney fees and granted the motions for costs, so that we now have a remaining liability from this litigation in the amount of approximately $30,000, not counting our own remaining attorney fees and litigation expenses.  Our subsidiary filed notice of appeal from the district court's


15


adverse substantive decisions, but was unable to prosecute the appeal and so it was dismissed.  USA Video Technology Corp has reported $30,000 accounts payable as of December 31, 2009.  .  USA Video Technology Corp was been dissolved and the previous record payable has been written off in 2010.  Subsequent to the year end the Company and its former subsidiary Old Lyme Production, Inc (dissolved) was served with a notice of claim in the amount of $30,000.  The Company was not party to the contract nor a guarantor.  Management believes this claim is without merit and plans to vigorously defend this claim.  The Company leases its United States and Canada office space under a month to month lease basis.  Rent expense in the United States and Canada amounted to $8,962 and $11,367 for the three months ended June 30, 2011 and 2010, respectively.  Item 1A.Risk Factors  A description of the risks associated with our business, financial condition, and results of operations is set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. These factors continue to be meaningful for your evaluation of our company and we urge you to review and consider the risk factors presented in the Form 10-K. There have been no material changes to these risks presented in the Form 10-K.  Item 2. Changes in Securities and Use of Proceeds  None.  Item 3. Defaults Upon Senior Securities.  None.  Item 4. Removed and Reserved.  N/A.  Item 5. Other Information.  None.  Item 6. Exhibits and Reports on Form 8-K  (a) Exhibit(s)  31.1 Certification of the Chief Executive Officer Pursuant To Rule 13a-14 Or 15d-14 of the Securities Exchange Act Of 1934,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  31.2 Certification of the Chief Financial Officer Pursuant To Rule 13a-14 Or 15d-14 of the Securities Exchange Act of 1934,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


16


32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (b) Reports on Form 8-K  None.


17


SIGNATURE  Pursuant to the requirements 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.   USA VIDEO INTERACTIVE CORP.   Dated:  August 15, 2011 By:  /s/  Anton J. Drescher -------------------------------- Name: Anton J. Drescher Title:  Chief Financial Officer