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**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION **

**Washington,      D.C. 20549 **

**Form 10-K/A**

**(Amendment      No. 2) **

|  | x | **ANNUAL                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT                    OF 1934**  |
|--|---|-------------------------------------------------------------------------------------------------------------------------------------------|

**For          the fiscal year ended December 31, 2006 **

|  | o | **TRANSITION****REPORT                          PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                          1934.** |
|--|---|---------------------------------------------------------------------------------------------------------------------------------------------------------|

**Commission      file number 1-15117**

**On2      Technologies, Inc. **

*(Exact      name of registrant as specified in its charter) *

| **Delaware**                                                                                                                     |   | **84-1280679**                                        |
|----------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|
| *(State                or other jurisdiction of incorporation or organization)*                                                  |   | *(I.R.S.                Employer Identification No.)* |
| **21                Corporate Drive, Suite 103, Clifton Park, NY***(Address                of principal executive offices)* |   | **12065***(Zip                Code)*                  |

**Registrant’s      telephone number, including area code: **

**(518) 348-0099      **

**Securities      to be Registered Pursuant to Section 12(b) of the Act:**

| **Title                of Each Class** |   | **Name(s)                of Each Exchange on Which Listed** |
|----------------------------------------|--------|-------------------------------------------------------------|
| Common                Stock            |   | American                Stock Exchange                      |

**Securities      Registered Pursuant to Section 12(g) of the Act: **

**NONE      **

**(APPLICABLE      ONLY TO CORPORATE REGISTRANTS)**

**EXPLANATORY      NOTE**

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**Item        9A.   ***Controls        and Procedures*****

*Evaluation      of Disclosure Controls and Procedures *

*Management’s      Annual Report on Internal Control over Financial Reporting*

*Attestation      Report of the Registered Public Accounting Firm*

*Changes      in Internal Controls *

**Item        14.   ***Principal        Accounting Fees and        Services.*****

**AUDIT      FEES**

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**AUDIT-RELATED      FEES**

**TAX      FEES**

**FINANCIAL      INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES**

**ALL      OTHER FEES**

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**SIGNATURES**

|         |                                                           |                                    |
|--------------|----------------------------------------------------------------|-----------------------------------------|
|         | ON2                TECHNOLOGIES, INC.                          |
|    |                                                      |                               |
|              | By:                                                  | /s/              Bill              Joll |
|         | Bill              Joll                                         |
|         | *Director, President and Chief Executive              Officer* |
|         | *(Principal Executive Officer)*                                |
|         |                                                           |
|         | Date: May 10, 2007                                             |

| **Signature**                                                                          |   | **Title**                                                                                                                                               |   | **Date**                            |
|----------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|
|   /s/                  Anthony Principe(Anthony                  Principe)   |   |  Senior                  Vice President and Chief Financial Officer (Principal Financial                  and                  Accounting Officer) |   | May                  10, 2007       |
|   /s/                  J. Allen Kosowsky(J.                  Allen Kosowsky) |   |  Chairman                  of the Board and Director                                                                                               |   |  May                  10, 2007 |
|   /s/                  William A. Newman(William                  A. Newman) |   |  Director                                                                                                                                          |   |  May                  10, 2007 |
|   /s/                  Mike Kopetski(Mike                  Kopetski )        |   |  Director                                                                                                                                          |   |  May                  10, 2007 |
|   /s/                  Thomas Weigman(Thomas                  Weigman)       |   |  Director                                                                                                                                          |   |  May                  10, 2007 |
|   /s/                  Afsaneh Naimollah(Afsaneh                  Naimollah) |   |  Director                                                                                                                                          |   | May                  10, 2007       |
|   /s/                  James Meyer(James                  Meyer)             |   | Director                                                                                                                                                |   | May                  10, 2007       |

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**INDEX      TO EXHIBITS**

|                              |   | **Incorporated                by Reference**                                                                                                                                                                                        |
|-----------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit                Number** |   | **Exhibit                Description**                                                                                                                                                                                              |   | **Form** |   | **Date                Filed** |   | **Filed                Herewith** |
| 3.1                               |   | Certificate                of Incorporation of the Company                                                                                                                                                                          |   | 10-K |   | April                2, 2001 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 3.2                               |   | Bylaws                of the Company                                                                                                                                                                                                |   | 8-K |   | Feb.                8, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.1                               |   | Securityholders                Agreement, dated as of Dec. 1, 1999, between the Company and thirteen                securityholders party thereto                                                                              |   | 10-K |   | March                30, 2000 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.2                               |   | Form                of Investor Rights Agreement, dated as of Dec. 1, 1999,between the                Company and each of nine investors                                                                                       |   | 10-K |   | March                30, 2000 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.3                               |   | Form                of Warrant issued to the investors party to the Investor Rights Agreement                                                                                                                                       |   | 10-K |   | March                30, 2000 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.4                               |   | Form                of Investors’ Rights Agreement between the Company and the holders of                Series C Preferred Stock, Series C-II Preferred Stock and                Series C-III Preferred Stock |   | S-3 |   | Dec.                8, 2000 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.5                               |   | Certificate                of Designations for the Company’s Series C Preferred Stock                                                                                                                                    |   | 10-K |   | April                2, 2001 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.6                               |   | Certificate                of Designations for the Company’s Series C-II Preferred Stock                                                                                                                                 |   | 10-K |   | April                2, 2001 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.7                               |   | Certificate                of Designations for the Company’s Series C-III Preferred Stock                                                                                                                                |   | 10-K |   | April                2, 2001 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.8                               |   | Form                of Warrant issued to the holders of Series C, Series C-II and Series                C-III Preferred Stock                                                                                                  |   | 10-K |   | April                2, 2001 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.9                               |   | Common                Stock Purchase Agreement, dated as of July 18, 2001 by and between                the Company and Real.                                                                                                  |   | SB-2/A |   | Sept.                13, 2001 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.10                              |   | Investor                Rights Agreement, dated as of July 18, 2001, between Real and the                Company                                                                                                               |   | SB-2/A |   | Sept.                13, 2001 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.11                              |   | Indemnity                Agreement, dated as of January 28, 2002, by and among The Travelers                Insurance Company, Travelers Indemnity Company, and the                Company                                          |   | S-3 |   | July                11, 2003 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.12                              |   | Investor’s                Rights Agreement, dated as of January 29, 2001, between the Company                and                Abanat Limited                                                                                |   | S-3 |   | Oct.                1, 2003 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 4.13                              |   | Common                Stock Purchase Warrant, dated as of August 24, 2006                                                                                                                                                           |   | 10-K |   | August                25, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.1                              |   | License                Agreement by and between the Company and Bevmax Office Centers 1560,                LLC                                                                                                                      |   | 10-K |   | March                15, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.2                              |   | Restated                Lease Agreement by and between the Company and Sitterly Associates                II                                                                                                                        |   | 10-K |   | March                15, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.3                              |   | Separation                and Consultancy Agreement by and between the Company and Douglas                A.                McIntyre, dated as of February 2, 2006                                                                  |   | 10-K |   | March                15, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.4                              |   | Employment                Agreement, dated May 1, 2006, by and between the Company and Bill                Joll                                                                                                                     |   | 10-Q |   | May                5, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.5                              |   | Amended                and Restated Employment Agreement, dated May 1, 2006, by and between                the                Company and Tim Reusing                                                                               |   | 10-Q |   | Aug.                2, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.6                              |   | Securities                Purchase Agreement, dated as of August 24, 2006                                                                                                                                                           |   | 8-K |   | Aug.                25, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.7                              |   | Registration                Rights Agreement, dated as of August 24, 2006                                                                                                                                                           |   | 8-K |   | Aug.                25, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.8                              |   | Stockholder                Voting Agreement                                                                                                                                                                                         |   | 8-K |   | Aug.                25, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.9                              |   | Asset                Purchase Agreement (Confidential Treatment Requested as to Redacted                Portions)                                                                                                                   |   | 8-K/A |   | Nov.                17, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.10                             |   | Exhibit                B [sic] to Asset Purchase Agreement (Form of Escrow                Agreement)                                                                                                                                |   | 8-K/A |   | Nov.                17, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.11                             |   | Exhibit                C [sic] to Asset Purchase Agreement (Form of Support and Maintenance                Agreement)                                                                                                               |   | 8-K/A |   | Nov.                17, 2006 |   |   |
|                              |   |                                                                                                                                                                                                                                |   |   |   |   |   |   |
| 10.12                             |   | Exhibit                D [sic] to Asset Purchase Agreement (Form of Registration Rights                Agreement)                                                                                                                   |   | 8-K/A |   | Nov.                17, 2006 |   |   |

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|                              |   |                                                                                                                                                                                           |   |  **Incorporated                by Reference** |
|-----------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|
| **Exhibit                Number** |   | **Exhibit                Description**                                                                                                                                                         |   | **Form**                                           |   | **Date                Filed** |   | **Filed                Herewith** |
|                              |   |                                                                                                                                                                                           |   |                                               |   |   |   |   |
| 10.13                             |   | Employment                Agreement, dated as of February 28, 2006, by and between the Company                and                Matt Frost                                                    |   |                                               |   | * |   |   |
|                              |   |                                                                                                                                                                                           |   |                                               |   |   |   |   |
| 21                                |   | Subsidiaries                                                                                                                                                                                   |   | 10-K                                               |   | March                31, 2003 |   |   |
|                              |   |                                                                                                                                                                                           |   |                                               |   |   |   |   |
| 23.1                              |   | Consent                of Eisner LLP                                                                                                                                                           |   |                                               |   | * |   |   |
|                              |   |                                                                                                                                                                                           |   |                                               |   |   |   |   |
| 31.1                              |   | Certification                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley                Action of 2002                                                            |   |                                               |   |   |   | X |
|                              |   |                                                                                                                                                                                           |   |                                               |   |   |   |   |
| 31.2                              |   | Certification                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley                Action of 2002                                                            |   |                                               |   |   |   | X |
|                              |   |                                                                                                                                                                                           |   |                                               |   |   |   |   |
| 32.1                              |   | Certification                of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as                Adopted                Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |   |                                               |   |   |   | X |
|                              |   |                                                                                                                                                                                           |   |                                               |   |   |   |   |
| 32.2                              |   | Certification                of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as                Adopted                Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |   |                                               |   |   |   | X |

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