UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q

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|                                                               |                                                                             
|-------------------------------------------------------------- | ----------------------------------------------------------------------------
|þ                                                              | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
|                                                               | ACT OF 1934                                                                 
|For the quarterly period ended: June 30, 2012                 
|Or                                                            
|                                                               |                                                                             
| ̈                                                              | 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: 000-53539



As Seen On TV, Inc.

(Exact name of registrant as specified in its charter)





|                                  |                    
|--------------------------------- | -------------------
|Florida                           | 80-149096          
|(State or other jurisdiction      | (I.R.S. Employer   
|of incorporation or organization) | Identification No.)

14044 Icot Boulevard, Clearwater, Florida 33760

(Address of Principal Executive Office) (Zip Code)

(727) 288-2738

(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 1934 during 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.                                                                                                                                                                                                                                                                              | þ | Yes                                      |  ̈ | No                       
|                                                                                                                                                                                                                                                                                                                                                                                       
|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).
|                                                                                                                                                                                                                                                                                                                                                                                        | þ | Yes                                      |  ̈ | No                       
|                                                                                                                                                                                                                                                                                                                                                                                       
|Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                        |  
|Large accelerated filer                                                                                                                                                                                                                                                                                                                                                                 |  ̈ |                                          |   | Accelerated filer         |  ̈ | 
|Non-accelerated filer                                                                                                                                                                                                                                                                                                                                                                   |  ̈ | (Do not check if a smaller               |   | Smaller reporting company | þ | 
|                                                                                                                                                                                                                                                                                                                                                                                        |   | reporting company)                       |   |                           |   | 
|                                                                                                                                                                                                                                                                                                                                                                                        |  
|Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                        |  ̈ | Yes                                      | þ | No                       
|                                                                                                                                                                                                                                                                                                                                                                                        |  
|Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.                                                                                                                                                                                                                                                          
|Class                                                                                                                                                                                                                                                                                                                                                                                   |   | Shares Outstanding as of August 10, 2012
|Common Stock, $0.0001 Par Value Per Share                                                                                                                                                                                                                                                                                                                                               |   | 32,370,784                              









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As Seen On TV, Inc. and Subsidiaries



TABLE OF CONTENTS





|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Page
Number                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|PART I. FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Item 1.
Financial Statements
1

Condensed Consolidated Balance Sheets as of June 30, 2012 (Unaudited)
March 31, 2011
1

Condensed Consolidated Statement of Operations (Unaudited) for the Three Month periods
ending June 30, 2012 and June 30, 2011
2

Condensed Consolidated Statement of Stockholders' Equity/(Deficiency) (Unaudited) for
the period April 1, 2012 to June 30, 2012
3

Consolidated Statement of Cash Flows (Unaudited) for the Three Month periods ending
June 30, 2012 and June 30, 2011
4

Notes to Condensed Consolidated Financial Statements (Unaudited)
5

Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations
21

Item 3.
Quantitative and Qualitative Disclosures About Market Risk
27

Item 4.
Controls And Procedures
28

PART II. OTHER FINANCIAL INFORMATION

Item 1.
Legal Proceedings.
29

Item 1A.
Risk Factors
29

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
29

Item 3.
Defaults Upon Senior Securities
29

Item 4.
Mine Safety Disclosure
29

Item 5.
Other Information
29

Item 6.
Exhibits
29

Signatures
32
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          









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PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

AS SEEN ON TV, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                       |  |               |             |                |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | -------------- | - | ----------- | -
|                                                                                                                                                                       |  | June 30,
2012 |             | March 31,
2012 |  
|                                                                                                                                                                       |  | (Unaudited)   |             |                |  
|ASSETS                                                                                                                                                                 |  |               |             |                |   |             |  
|Current Assets:                                                                                                                                                        |  |               |             |                |   |             |  
|Cash and cash equivalents                                                                                                                                              |  | $             | 2,754,371   |                | $ | 4,683,186   |  
|Accounts receivable, net                                                                                                                                               |  |               | 724,605     |                |   | 2,055,162   |  
|Advances on inventory purchases                                                                                                                                        |  |               | 338,095     |                |   | 304,702     |  
|Inventories                                                                                                                                                            |  |               | 1,533,715   |                |   | 1,561,314   |  
|Prepaid expenses and other current assets                                                                                                                              |  |               | 310,133     |                |   | 262,163     |  
|Total current assets                                                                                                                                                   |  |               | 5,660,919   |                |   | 8,866,527   |  
|                                                                                                                                                                       |  |               |             |                |   |             |  
|Certificate of deposit  non current                                                                                                                                   |  |               | 50,190      |                |   | 50,000      |  
|Property, plant and equipment, net                                                                                                                                     |  |               | 132,131     |                |   | 140,000     |  
|Intangible assets                                                                                                                                                      |  |               | 2,839,216   |                |   |            |  
|Deposit on asset acquisition                                                                                                                                           |  |               |            |                |   | 729,450     |  
|Other non-current assets                                                                                                                                               |  |               | 2,185       |                |   |            |  
|Total Assets                                                                                                                                                           |  | $             | 8,684,641   |                | $ | 9,785,977   |  
|                                                                                                                                                                       |  |               |             |                |   |             |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)                                                                                                                      |  |               |             |                |   |             |  
|Current Liabilities:                                                                                                                                                   |  |               |             |                |   |             |  
|Accounts payable                                                                                                                                                       |  | $             | 159,867     |                | $ | 433,591     |  
|Deferred revenue                                                                                                                                                       |  |               | 3,750       |                |   | 33,750      |  
|Accrued registration rights penalty                                                                                                                                    |  |               | 156,000     |                |   | 156,000     |  
|Accrued expenses and other current liabilities                                                                                                                         |  |               | 428,575     |                |   | 601,695     |  
|Notes payable  current portion                                                                                                                                        |  |               | 31,746      |                |   | 28,737      |  
|Warrant liability                                                                                                                                                      |  |               | 35,126,266  |                |   | 25,797,615  |  
|Total current liabilities                                                                                                                                              |  |               | 35,906,204  |                |   | 27,051,388  |  
|                                                                                                                                                                       |  |               |             |                |   |             |  
|Other liabilities  non current                                                                                                                                        |  |               | 40,000      |                |   |            |  
|                                                                                                                                                                       |  |               |             |                |   |             |  
|Total liabilities                                                                                                                                                      |  |               | 35,946,204  |                |   | 27,051,388  |  
|                                                                                                                                                                       |  |               |             |                |   |             |  
|Commitments and contingencies                                                                                                                                          |  |               |             |                |   |             |  
|                                                                                                                                                                       |  |               |             |                |   |             |  
|Stockholders' equity (deficiency):                                                                                                                                     |  |               |             |                |   |             |  
|Preferred stock, $.0001 par value; 10,000,000 shares
authorized; no shares issued and outstanding at June 30, 2012 
and March 31, 2012, respectively.                  |  |               |            |                |   |            |  
|Common stock, $.0001 par value; 750,000,000 shares authorized
and 32,370,784 and 31,970,784 issued and outstanding at 
June 30, 2012 and March 31, 2012, respectively. |  |               | 3,237       |                |   | 3,197       |  
|Additional paid-in capital                                                                                                                                             |  |               | 749,786     |                |   |            |  
|Accumulated deficit                                                                                                                                                    |  |               | (28,014,586 | )              |   | (17,268,608 | )
|Total stockholders' equity (deficiency)                                                                                                                                |  |               | (27,261,563 | )              |   | (17,265,411 | )
|                                                                                                                                                                       |  |               |             |                |   |             |  
|Total liabilities and stockholders' equity (deficiency)                                                                                                                |  | $             | 8,684,641   |                | $ | 9,785,977   |  





See accompanying notes to condensed consolidated financial statements



1



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AS SEEN ON TV, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)



|                                                                         |  |                             |             |      |   |            |  
|------------------------------------------------------------------------ |  | --------------------------- | ----------- | ---- | - | ---------- | -
|                                                                         |  | Three Months Ended June 30, |            
|                                                                         |  | 2012                        |             | 2011 |  
|                                                                         |  |                             |             |      |   |            |  
|Revenues                                                                 |  | $                           | 400,231     |      | $ | 485,888    |  
|Cost of revenues                                                         |  |                             | 483,827     |      |   | 454,229    |  
|Gross profit (loss)                                                      |  |                             | (83,596     | )    |   | 31,659     |  
|                                                                         |  |                             |             |      |   |            |  
|Operating expenses:                                                      |  |                             |             |      |   |            |  
|Selling and marketing expenses                                           |  |                             | 44,313      |      |   |           |  
|General and administrative expenses                                      |  |                             | 1,291,770   |      |   | 914,444    |  
|Loss from operations                                                     |  |                             | (1,419,679  | )    |   | (882,785   | )
|                                                                         |  |                             |             |      |   |            |  
|Other (income) expense:                                                  |  |                             |             |      |   |            |  
|Warrant revaluation                                                      |  |                             | 9,328,651   |      |   | (523,553   | )
|Revaluation of derivative liability                                      |  |                             |            |      |   | (147,674   | )
|Other income                                                             |  |                             | (3,062      | )    |   | (226       | )
|Interest expense                                                         |  |                             | 710         |      |   | 117,072    |  
|Interest expense - related party                                         |  |                             |            |      |   | 18,991     |  
|                                                                         |  |                             | 9,326,299   |      |   | (535,390   | )
|                                                                         |  |                             |             |      |   |            |  
|Loss before income taxes                                                 |  |                             | (10,745,978 | )    |   | (347,395   | )
|                                                                         |  |                             |             |      |   |            |  
|Provision for income taxes                                               |  |                             |            |      |   |           |  
|                                                                         |  |                             |             |      |   |            |  
|Net loss                                                                 |  | $                           | (10,745,978 | )    | $ | (347,395   | )
|                                                                         |  |                             |             |      |   |            |  
|Loss per common share  basic and diluted                                |  | $                           | (0.34       | )    | $ | (0.03      | )
|                                                                         |  |                             |             |      |   |            |  
|Weighted-average number of common shares
outstanding  basic and diluted |  |                             | 32,010,334  |      |   | 11,067,210 |  





See accompanying notes to condensed consolidated financial statements



2



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AS SEEN ON TV, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY/(DEFICIENCY)

FOR THE PERIOD FROM APRIL 1, 2012 THROUGH JUNE 30, 2012

(UNAUDITED)



|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|--------------------------------------------------------------------- |  |  | ----------------------------------------- |  | -------------------------- | ----- | ------------------- | - | ------- |  | - | ----------- | - | - | ----------- | -
|                                                                      |  |  | Common Shares,
$.0001 Par Value Per Share |  | Additional
Paid-In
Capital |       | Accumulated
Deficit |   | Total   | 
|                                                                      |  |  | Shares
Issued                             |  | Amount                     |       |                     |   |        
|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|Balance April 1, 2012                                                 |  |  | 31,970,784                                |  | $                          | 3,197 |                     | $ |        |  | $ | (17,268,608 | ) | $ | (17,265,411 | )
|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|Share based compensation                                              |  |  |                                           |  |                            |       |                     |   | 81,492  |  |   |             |   |   | 81,492      |  
|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|Common shares issued for services                                     |  |  | 150,000                                   |  |                            | 15    |                     |   | 167,483 |  |   |             |   |   | 167,498     |  
|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|Warrants issued for services                                          |  |  |                                           |  |                            |       |                     |   | 1,456   |  |   |             |   |   | 1,456       |  
|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|Common shares  issued for asset acquisition                           |  |  | 250,000                                   |  |                            | 25    |                     |   | 257,475 |  |   |             |   |   | 257,500     |  
|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|Warrants issued for asset acquisition, including warrant modification |  |  |                                           |  |                            |       |                     |   | 241,880 |  |   |             |   |   | 241,880     |  
|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|Net loss                                                              |  |  |                                           |  |                            |       |                     |   |         |  |   | (10,745,978 | ) |   | (10,745,978 | )
|                                                                      |  |  |                                           |  |                            |       |                     |   |         |  |   |             |   |   |             |  
|Balance June 30, 2012                                                 |  |  | 32,370,784                                |  | $                          | 3,237 |                     | $ | 749,786 |  | $ | (28,014,586 | ) | $ | (27,261,563 | )







See accompanying notes to condensed consolidated financial statements



3



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AS SEEN ON TV, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

|                                                                            |  |                             |             |      |   |            |  
|--------------------------------------------------------------------------- |  | --------------------------- | ----------- | ---- | - | ---------- | -
|                                                                            |  | Three Months Ended June 30, |            
|                                                                            |  | 2012                        |             | 2011 |  
|Cash flows from operating activities:                                       |  |                             |             |      |   |            |  
|Net loss                                                                    |  | $                           | (10,745,978 | )    | $ | (347,395   | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                             |             |      |   |            |  
|Depreciation and amortization                                               |  |                             | 11,496      |      |   | 10,285     |  
|Amortization of discount on convertible debt                                |  |                             |            |      |   | 78,521     |  
|Amortization of deferred financing costs                                    |  |                             |            |      |   | 39,168     |  
|Warrants issued for services                                                |  |                             | 1,456       |      |   |           |  
|Share-based compensation                                                    |  |                             | 81,492      |      |   | 76,359     |  
|Interest accretion in related party note payable                            |  |                             |            |      |   | 15,781     |  
|Shares issued for consulting services                                       |  |                             | 167,498     |      |   | 153,673    |  
|Change in fair value of warrants                                            |  |                             | 9,328,651   |      |   | (523,553   | )
|Change in derivative liability                                              |  |                             |            |      |   | (147,674)  |  
|Changes in operating assets and liabilities:                                |  |                             |             |      |   |            |  
|Accounts receivable                                                         |  |                             | 1,330,557   |      |   | (129,355   | )
|Advances on inventory purchases                                             |  |                             | (33,393     | )    |   |           |  
|Inventories                                                                 |  |                             | 27,599      |      |   | (130,000   | )
|Prepaid expenses and other current assets                                   |  |                             | (11,442     | )    |   | (967       | )
|Other non-current assets                                                    |  |                             | (2,185      | )    |   |           |  
|Accounts payable                                                            |  |                             | (273,725    | )    |   | (162,393   | )
|Deferred revenue                                                            |  |                             | (30,000     | )    |   | (88,652    | )
|Accrued expenses and other current liabilities                              |  |                             | (133,120    | )    |   | 83,451     |  
|Other                                                                       |  |                             |            |      |   | 3,487      |  
|Net cash used in operating activities                                       |  |                             | (281,094    | )    |   | (1,069,264 | )
|                                                                            |  |                             |             |      |   |            |  
|Cash flows from investing activities:                                       |  |                             |             |      |   |            |  
|Deposit on asset acquisition                                                |  |                             |            |      |   | (25,000    | )
|Certificate of deposit  non current                                        |  |                             | (190        | )    |   |           |  
|Purchase of intangible assets                                               |  |                             | (1,610,386  | )    |   |           |  
|Additions to property, plant and equipment                                  |  |                             | (3,627      | )    |   | (28,833    | )
|Net cash used in investing activities                                       |  |                             | (1,614,203  | )    |   | (53,833    | )
|                                                                            |  |                             |             |      |   |            |  
|Cash flows from financing activities:                                       |  |                             |             |      |   |            |  
|Proceeds from issuance of convertible debt                                  |  |                             |            |      |   | 750,000    |  
|Costs associated with convertible debt                                      |  |                             |            |      |   | (90,000    | )
|Repayment of notes payable                                                  |  |                             | (33,518     | )    |   | (8,994     | )
|Proceeds from private placements of common stock                            |  |                             |            |      |   | 1,170,000  |  
|Costs associated with private placement of common stock                     |  |                             |            |      |   | (192,400   | )
|Net cash provided by financing activities                                   |  |                             | (33,518     | )    |   | 1,628,606  |  
|                                                                            |  |                             |             |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                        |  |                             | (1,928,815  | )    |   | 505,509    |  
|Cash and cash equivalents - beginning of period                             |  |                             | 4,683,186   |      |   | 35,502     |  
|Cash and cash equivalents - end of period                                   |  | $                           | 2,754,371   |      |   | 541,011    |  
|                                                                            |  |                             |             |      |   |            |  
|Supplemental disclosures of cash flow information                           |  |                             |             |      |   |            |  
|Interest paid in cash                                                       |  | $                           | 710         |      | $ | 3,210      |  
|Taxes paid in cash                                                          |  | $                           |            |      | $ |           |  
|Non Cash Investing and Financing Activities                                 |  |                             |             |      |   |            |  
|Common shares issued towards asset acquisition                              |  | $                           | 257,500     |      | $ | 500,000    |  
|Warrants issued with debt                                                   |  | $                           |            |      | $ | 527,326    |  
|Cashless exercise of placement agent warrants                               |  | $                           |            |      | $ | 2,350,604  |  
|Deferred offering costs                                                     |  | $                           |            |      | $ | 63,500     |  
|Warrant issued for asset acquisition                                        |  | $                           | 241,880     |      | $ |            |  
|Insurance premiums financed through notes payable                           |  | $                           | 36,527      |      |   |           |  







See accompanying notes to condensed consolidated financial statements



4



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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Note 1.

Description of Our Business

As Seen On TV, Inc., a Florida corporation (the Company or ASTV), was organized in November 2006. ASTV and its operating subsidiaries (collectively referred to as the Company)  market and distribute products and services through direct response channels. Our operations are conducted principally through our wholly-owned subsidiary, TV Goods, Inc., a Florida corporation organized in October 2009 (TVG).

Our primary channels of distribution are through television via infomercials (28.5 minute shows), short form spots (30 seconds to 5 minutes) and via shopping channels such as QVC and HSN. Our business model is to initially test the potential commercial viability of a product or service with a limited media campaign to determine if a full-scale marketing campaign would be justified. If preliminary marketing results appear to justify an expanded campaign, we will develop and launch an expanded program. Secondary channels of distribution include the Internet, retail, catalog, radio and print media.

Our executive offices are located in Clearwater, Florida.

Due to the similar nature of the underlying business and the overlap of our operations, we view and manage these operations as one business; accordingly, we do not report as segments.

Note 2.

Basis of Presentation.

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for reporting of interim financial information. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. Accordingly, these statements do not include all the disclosures normally required by accounting principles generally accepted in the United States for annual financial statements and should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations contained in this report. The accompanying consolidated condensed balance sheet as of March 31, 2012 has been derived from our audited financial statements. The condensed consolidated statements of operations and cash flows for the three months  ended June 30, 2012 are not necessarily indicative of the results of operations or cash flows to be expected for any future period or for the year ending March 31, 2013.

The accompanying unaudited condensed consolidated financial statements have been prepared by management and should be read in conjunction to our consolidated financial statements, including the notes thereto, appearing in our Annual Report on Form 10-K for the year ended March 31, 2012. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position and results of operations as of the dates and for the periods presented.

The condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All inter-company account balances and transactions have been eliminated in consolidation and certain prior period amounts have been reclassified to conform with the current period presentation.

Note 3.

Liquidity

As of June 30, 2012, we had approximately $2,754,000 in cash and cash equivalents. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation as a going concern. We have sustained substantial operational losses since our inception, and such operational losses have continued through June 30, 2012 and have financed our operations primarily through the issuance of shares of our common stock and the issuance of convertible notes.  At June 30, 2012, we had an accumulated deficit of approximately $27,262,000.  The Company cannot predict how long it will continue to incur further losses or whether it will ever become profitable which is dependent upon the frequency and success of new and existing products.  The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Management believes the Company has sufficient cash resources to sustain operations through at least August 2013.





5



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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





We have commenced implementing, and will continue to implement, various measures to address our financial condition, including:

| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Continuing to seek debt and equity financing and possible funding through strategic partnerships. However, there can be no assurances that the Company will be able to raise additional capital on favorable terms, or at all.
| | · | Curtailing operations where feasible to conserve cash through deferring certain of our marketing activities until our cash flow improves and we can recommence these activities with appropriate funding.                     
| | · | Investigating and pursuing transactions including mergers, and other business combinations and relationships deemed by the board of directors to present attractive opportunities to enhance stockholder value.               



Note 4.

Summary of Significant Accounting Policies

Accounting 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 amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reported periods. Our management believes the estimates utilized in preparing our consolidated financial statements are reasonable. Actual results could differ from these estimates.

Significant estimates for the periods reported include the allowance for doubtful accounts, sales, returns and fair value assumption is based on an evaluation of our outstanding accounts receivable including the age of amounts due, the financial condition of our specific customers, knowledge of our industry segment and historical bad debt experience. This evaluation methodology has proved to provide a reasonable estimate of bad debt expense in the past and we intend to continue to employ this approach in our analysis of collectability.

In the direct response industry, purchased items are generally returnable for a certain period after purchase. We attempt to estimate returns and provide an allowance for sales returns where applicable. Our estimates are based on historical experience and knowledge of the products sold. The allowance for estimated sales returns totaled $209,858 and $275,000 at June 30, 2012 and March 31, 2012, respectively, and is included in accrued expenses.

We also rely on assumptions such as volatility, forfeiture rate, and expected dividend yield when deriving the fair value of share-based compensation and warrants. Assumptions and estimates employed in these areas are material to our reported financial conditions and results of operations. Actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents are recorded in the balance sheets at cost, which approximates fair value. All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents.

Revenue Recognition

We recognize revenue from product sales in accordance with FASB ASC 605  Revenue Recognition. Following agreements or orders from customers, we ship product to our customers often through a third party facilitator. Revenue from product sales is only recognized when substantially all the risks and rewards of ownership have transferred to our customers, the selling price is fixed and collection is reasonably assured. Typically, these criteria are met when our customers order is received and we receive acknowledgment of receipt by a third party shipper and collection is reasonably assured.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





The Company has a return policy whereby the customer can return any product within 60-days of receipt for a full refund, excluding shipping and handling. However, historically the Company has accepted returns past 60-days of receipt. The Company provides an allowance for returns based upon specific product warranty agreements and past experience and industry knowledge. All significant returns for the periods presented have been offset against gross sales.  The Company also provides a reserve for warranty, which is not significant and is included in accrued expenses.

Receivables

Accounts receivable consists of amounts due from the sale of our direct response and home shopping related products.  Accounts receivables, net of allowances, totaled $724,605 and $2,055,162 at June 30, 2012 and March 31, 2012,  respectively. Our allowance for doubtful accounts at June 30, 2012 and March 31, 2012, was approximately $23,000 and $75,000, respectively. The allowances are estimated based on historical customer experience and industry knowledge.

Inventories and Advances on Inventory Purchases

Inventories are stated at the lower of cost or market. Cost is determined using a first-in, first-out, or FIFO, method. We review our inventory for excess or obsolete inventory and write-down obsolete or otherwise unmarketable inventory to its estimated net realizable value. Inventories totaled $1,533,715 and $1,561,314 at June 30, 2012 and March 31, 2012, respectively. As we do not internally manufacture any of our products, we do not maintain raw materials or work-in-process inventories. In addition, the Company had made advanced deposits against inventory orders placed totaling $338,095 and  $304,702 at June 30, 2012 and March 31, 2012, respectively.This balance represents payments made to our product suppliers in advance of delivery to the Company. It is common industry practice to require a substantial deposit against products ordered before commencement of manufacturing, particularly with off-shore suppliers. Additional advance payments may also be required upon achievement of certain agreed upon manufacturing or shipment benchmarks. Upon delivery and receipt by the Company of the items ordered, and the Company taking  title to the goods, the balances are transferred to inventory.

Property, Plant and Equipment, net

We record property, plant and equipment and leasehold improvements at historical cost. Expenditures for maintenance and repairs are recorded to expense; additions and improvements are capitalized. We provide for depreciation and amortization using the straight-line method at rates that approximate the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvement or the remaining term of the lease.

Property, plant and equipment, net consists of the following:

|                                                |  |                        |  |          |         |           |   |         |   | 
|----------------------------------------------- |  | ---------------------- |  | -------- | ------- | --------- | - | ------- | - | 
|                                                |  |                        |  | June 30, |         | March 31, |  
|Property, plant and equipment                   |  | Estimated
Useful Lives |  | 2012     |         | 2012      |  
|Computers and software                          |  | 3 Years                |  | $        | 67,751  |           | $ | 64,724  |  
|Office equipment and furniture                  |  | 5-7 Years              |  |          | 85,945  |           |   | 85,345  |  
|Leasehold improvements                          |  | 1-3 Years              |  |          | 62,610  |           |   | 62,610  |  
|                                                |  |                        |  |          | 216,306 |           |   | 212,679 |  
|Less: accumulated depreciation and amortization |  |                        |  |          | (84,175 | )         |   | (72,679 | )
|                                                |  |                        |  | $        | 132,131 |           | $ | 140,000 |  



Depreciation and amortization expense totaled $11,496 and $10,285 for the three month period ended June 30, 2012 and 2011, respectively.

Earnings (Loss) Per Share

Basic earnings per share is based on the weighted effect of all common shares issued and outstanding and is calculated by dividing net income (loss) available to common stockholders by the weighted average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of common shares used in the basic earnings per share calculation plus the number of common shares, if any, that would be issued assuming conversion of all potentially dilutive securities outstanding. For the three month periods ending June 30, 2012 and 2011, no potentially issuable shares were reflected in a diluted calculation as the inclusion of potentially issuable shares would be anti-dilutive.



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The following securities were not included in the computation of diluted net earnings per share as their effect would be anti-dilutive:

|                               |  |  |  |            |  |          
|------------------------------ |  |  |  | ---------- |  | ---------
|                               |  |  |  | June 30,  
|                               |  |  |  | 2012       |  | 2011     
|                               |  |  |  |            |  |          
|Stock options                  |  |  |  | 1,055,000  |  | 800,000  
|Warrants                       |  |  |  | 40,859,253 |  | 7,891,500
|Convertible notes              |  |  |  |           |  | 187,500  
|Related party convertible note |  |  |  |           |  | 71,333   
|                               |  |  |  | 41,914,253 |  | 8,950,333



Share-Based Payments

We recognize share-based compensation expense on stock option awards. Compensation expense is recognized on that portion of option awards that are expected to ultimately vest over the vesting period from the date of grant. All employee options granted vest over their requisite service periods as follows: 6 months (50% vesting); 12 months (25% vesting) and 18 months (25% vesting). We granted no stock options or other equity awards which vest based on performance or market criteria. We apply an estimated forfeiture rate of 10% to all share-based awards which represents that portion we expected would be forfeited over the vesting period. We re-evaluate this analysis periodically and adjust our estimated forfeiture rate as necessary.

We utilized the Black-Scholes option pricing model to estimate the fair value of our stock options. Calculating share-based compensation expense requires the input of highly subjective judgment and assumptions, including estimates of expected life of the award, stock price volatility, forfeiture rates and risk-free interest rates. The assumptions used in calculating the fair value of share-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future.

Impairment of Long-Lived Assets

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from future undiscounted cash flows. Impairment losses are recorded for the excess, if any, of the carrying value over the fair value of the long-lived assets. No indicators of impairment existed at June 30, 2012 or March 31, 2012, respectively.

Income Taxes

We account for income taxes in accordance with FASB ASC 740  Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the more likely than not criteria of FASB ASC 740  Income Taxes.

FASB ASC 740 also requires that we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Concentration of Credit Risk

Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash, cash equivalents and trade accounts receivable. Cash and cash equivalents are held with financial institutions in the United States and from time to time we may have balances that exceed the amount of insurance provided by the Federal Deposit Insurance Corporation on such deposits. Concentration of credit risk with respect to our trade accounts receivable to our customers is limited to $724,605 at June 30, 2012. Credit is extended to our customers, based on an evaluation of a customers financial condition and collateral is not required. To date, we have not experienced any material credit losses.

Marketing and Advertising Costs

Marketing, advertising and promotional costs are expensed when incurred and totaled $22,972 and $3,987 for the three month periods ending June 30, 2012 and 2011, respectively.

Fair Value Measurements

FASB ASC 820  Fair Value Measurements and Disclosures,defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to us on June 30, 2012 and March 31, 2012, respectively. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.

FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

Level 1  Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

Level 2  Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models consider various assumptions, including volatility factors, current market prices and contractual prices for the underlying financial instruments. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3  Unobservable inputs for the asset or liability.Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents, accounts receivable, accounts payable, notes payable and accrued expenses approximate their fair value based on the short-term maturity of these instruments. Determination of fair value of related party payables is not practicable due to their related party nature.

The Company recognizes all derivative financial instruments as assets or liabilities in the financial statements and measures them at fair value with changes in fair value reflected as current period income or loss unless the derivatives qualify as hedges. As a result, certain warrants issued in connection with various offerings were accounted for as derivatives. Additionally, the Company determined that the conversion feature on the convertible debentures issued in August 2011 and May 2011 qualifies for derivative accounting. See Note 9, Warrant Liabilitiesand Note 11, Notes Payable, for additional discussion.



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Debt Issuance Costs

The Company capitalizes debt issuance costs and amortizes these costs to interest expense over the term of the related debt.

New Accounting Standards

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended June 30, 2012, as compared to the recent accounting pronouncements described in the Company Audited 2011 Financial Statements that are of material significance or have potential material significance to the Company.

Note 5.

Asset Purchase

On May 27, 2011, the Company entered into a binding letter agreement with Seen on TV, LLC, a Nevada limited liability company, with no affiliation with the Company, and Ms. Mary Beth Gearhart (formerly Fasano), its president. The letter agreement provided that we would obtain ownership of certain Seen on TV intangible assets, primarily consisting of the domain names asseenontv.com and seenontv.com. Upon entering into the binding letter agreement, we issued 250,000 shares of restricted common stock, with a fair value of $500,000 on the contract date, and an initial cash payment of $25,000 to Ms. Gearhart. In addition, we granted 50,000 warrants to issue common shares, initially exercisable at $7.00 per share for a period of three years with a grant date fair value of approximately $162,000. Further, we made five additional monthly payments of $5,000 to the seller and a $10,000 contribution to a designated charitable organization. All payments made under the initial letter agreement, including the fair value of securities and an additional $7,000 paid for use of the URL asseenontv.co.uk totaled $729,450 at March 31, 2012.

On June 28, 2012, the Company finalized the asset purchase agreement with Seen on TV, LLC agreeing to (i) pay an additional $1,560,000 in cash, (ii) issue an additional 250,000 shares of restricted stock, (iii) issue 250,000 common stock purchase warrants, exercisable at $0.64 per share exercisable for three years from issuance, (iv) modifying the exercise price of the 50,000 common stock purchase warrants issued in May 2011 from $7.00 per share to $1.00 per share and extending their term, and (v) making five annual payments of $10,000 per year to a charitable organization designated by Seen on TV. This obligation was recorded with the current component of $10,000 being reported with accrued expenses and $40,000, the non-current portion, being reported as other liabilities  long-term. The Company agreed that so long as the seller owns at least 250,000 common shares received under the purchase agreement, if we were to issue additional shares of common stock, the seller will be entitled to receive  additional shares sufficient to maintain their proportional ownership in the Company.

This transaction did not meet the criteria of a business combination within the guidelines of ASC 805Business Combinations, and therefore was accounted for as an asset purchase. The transaction contained no contingent consideration and no liabilities were assumed contingent or otherwise. Accordingly, the assets acquired, all identifiable intangible assets, were recognized based on our costs of the assets acquired.

A summary of the total costs of the assets both under the initial May 27, 2011 binding letter agreement and the June 22, 2012 Asset Purchase Agreement were as follows:

|                                            |   |           | 
|------------------------------------------- | - | --------- | 
|Cash at closing                             | $ | 1,620,000 | 
|May 2011 common shares issued               |   | 500,000   | 
|June 2012 common shares issued              |   | 257,500   | 
|Fair value of modified May 2011 warrants(*) |   | 168,320   | 
|Fair value of June 2012 warrants            |   | 235,756   | 
|Additional cash payments and commitments    |   | 66,640    | 
|                                            | $ | 2,839,216 | 



(*) includes approximately $6,000 related to warrant modification.

The Company accounted for the intangible assets in accordance with the provisions of ASC 350Intangibles-Goodwill and Other.  As the intangibles we acquired are not subject to legal, regulatory, contractual or other factors which limit their useful life, the potential economic benefits to the Company are considered indefinite within the meaning of the related guidance.  Accordingly, no amortization of the related costs is being recognized. However, the Company recognizes the intangible assets are subject to review for potential impairment and if impairment were to be noted, an appropriate reduction in the carrying value of the assets would be recorded.



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Note 6.

Prepaid expenses and other current assets

Components of prepaid expenses and other current assets consist of the following:

|                               |  |          |         |           |   |        
|------------------------------ |  | -------- | ------- | --------- | - | -------
|                               |  | June 30, |         | March 31,
|                               |  | 2012     |         | 2012     
|                               |  |          |         |           |   |        
|Prepaid production costs       |  | $        | 196,200 |           | $ | 93,100 
|Prepaid shipping and freight   |  |          | 9,110   |           |   | 14,225 
|Prepaid license fees           |  |          | 21,676  |           |   | 37,549 
|Prepaid insurance              |  |          | 56,155  |           |   | 45,385 
|Prepaid investor relations fee |  |          |        |           |   | 45,000 
|Prepaid expenses  other       |  |          | 26,992  |           |   | 26,904 
|                               |  | $        | 310,133 |           | $ | 262,163



Note 7.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

|                          |  |          |         |           |   |         | 
|------------------------- |  | -------- | ------- | --------- | - | ------- | 
|                          |  | June 30, |         | March 31, |  
|                          |  | 2012     |         | 2012      |  
|                          |  |          |         |           |   |         | 
|Accrued compensation      |  | $        | 93,347  |           | $ | 63,115  | 
|Accrued warranty          |  |          | 79,240  |           |   | 90,000  | 
|Accrued sales returns     |  |          | 209,858 |           |   | 275,000 | 
|Accrued professional fees |  |          | 27,000  |           |   | 164,999 | 
|Accrued rents             |  |          | 1,434   |           |   |        | 
|Accrued other             |  |          | 17,696  |           |   | 8,581   | 
|                          |  | $        | 428,575 |           | $ | 601,695 | 



Note 8.

Private Placements

On June 15, 2011 the Company and approximately twenty accredited investors entered into a securities purchase agreement and completed a closing of a private offering of 292,500 shares of the Companys common stock and three series of warrants to purchase up to 585,000 shares of common stock, in the aggregate, for aggregate gross proceeds of $1,170,000. The Company sold the shares at an initial purchase price of $4.00 per share, which may be adjusted downward, but not to less than $2.00 per share, under certain circumstances. In addition to the shares, the Company issued: (i) Series A Common Stock purchase warrants to purchase up to 292,500 shares of common stock at an exercise price of $3.00 per share; (ii) Series B Common Stock purchase warrants to purchase up to 146,250 shares of common stock at an exercise price of $5.00 per share and (iii) Series C Common Stock purchase warrants to purchase up to 146,250 shares of common stock at an exercise price of $10.00 per share.

In August 2011, a majority of the investors in the June 15, 2011 private offering, entered into a Notice, Consent, Amendment and Waiver Agreement (Amendment Agreement) with the Company in connection with the Bridge Debenture (defined below) offering. Under the terms of the Amendment Agreement, all the investors (i) waived any right to participate in the Bridge Debenture offering or related offerings, (ii) waived a provision prohibiting certain subsequent equity sales and (iii) amendment to per share price protection. In exchange, the Company lowered the sale price of the June 15, 2011 private offering from $4.00 per share to $2.00 per share and according issued an additional 292,500 common shares under that agreement to the investors.

The Company engaged a registered broker dealer in connection with the offering and the broker dealer received a selling commission in cash of 10 percent of the aggregate funds raised, with an additional two percent in non-accountable cash expense allowance. In addition, the Company issued to the broker dealer common stock purchase warrants equal to 10 percent of (i) the number of shares and (ii) the number of shares of common stock issuable upon exercise of the warrants, with an exercise price of $3.00 per share.



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On August 29, 2011, the Company raised aggregate gross proceeds of $1,800,000 under a private placement of 12% Senior Convertible Debentures (the Bridge Debentures) with six accredited investors. Investors purchased Debentures, in the aggregate principal amount of $1,800,000. The Bridge Debentures carried an interest at a rate of 12% per annum and were payable quarterly. Principal and accrued interest on the Bridge Debentures would automatically convert into equity securities identical to those sold to investors in the Companys next offering of at least $4 million of gross proceeds of equity or equity linked securities (excluding the principal amount under the Bridge Debentures) that is consummated during the term of the Bridge Debentures (a Qualified Financing) at a conversion price equal to 80% of the price paid by investors in the Qualified Financing (the Conversion Price). Furthermore, the Bridge Debentures could have been converted at any time at the option of the each Investor into shares of the Company's common stock, $0.0001 par value per share at an initial conversion price of $2.00 per share, subject to adjustment. The Debenture was due and payable on March 1, 2012 (the Maturity Date). In the event a Qualified Financing was not consummated on or before the Maturity Date, the entire principal amount of the Bridge Debenture, along with all accrued interest thereon, would, at the option of the holder, be convertible into the Companys common stock at a conversion price equal to $2.00 per share.  The Company determined that the conversion option in the debentures was beneficial at issuance.  As such, the Company recorded a discount from the beneficial conversion option of approximately $244,000 which was accreted to interest expense throughout the term of the Bridge Debentures.

Each investor also received a Bridge Warrant exercisable for a period of three years from the Closing Date to purchase a number of shares of the Companys common stock equal to the quotient obtained by dividing the principal amount of the Debenture by the Conversion Price at an exercise price equal to $2.00, subject to adjustment. If a Qualified Financing did not occur on or before the Maturity Date, then each Warrant would have been exercisable for that number of shares of common stock equal to the principal amount of the Debenture purchased divided by $0.90. Under the terms of the Bridge Warrant, the investor received cashless exercise rights in the event the underlying shares of common stock are not registered at the time of exercise. The Bridge Debentures and Bridge Warrants also provided for full-ratchet anti-dilution protection in the event that any shares of common stock, or securities convertible into common stock, are issued at less than the Exercise Price of the Warrants, except in connection with the following issuances of the Company's common stock, or securities convertible into common stock: (i) shares issuable under currently outstanding securities, including those authorized under stock plans, (ii) securities issuable upon the exchange or exercise of the Bridge Debenture or Bridge Warrants, (iii) securities issued pursuant to acquisitions or strategic transactions, or (iv) securities issued to the Placement Agent. See Note 9 for additional information about the Bridge Warrants.

On October 28, 2011 (the Closing Date) the Company, entered into and consummated a Securities Purchase Agreement with certain accredited investors for the private sale (the Offering) of 243.1 units (Unit) at $50,000 per Unit. Each Unit consisting of (i) 62,500 shares of common stock, and (ii) warrants to purchase 62,500 shares of common stock at an initial exercise price of $1.00 per share (the Warrants). Accordingly, for each $0.80 invested, investors received one share of common stock and one Warrant. The Company received gross proceeds of $12,155,000 (net proceeds of approximately $10,610,653 after commissions and offering related expenses) and issued an aggregate of 15,194,695 shares of common stock and 15,193,750 Warrants to the investors pursuant to the Securities Purchase Agreement.

On November 18, 2011, the Company sold an additional 6.9 Units under the Securities Purchase Agreement, receiving an additional $345,000 in gross proceeds (net proceeds of $283,600 after commissions and offering related expenses), issuing an additional aggregate of 431,250 shares of Common Stock and 431,250 Warrants to investors.

The October 28, 2011 and November 18, 2011, closings brought the total raised under the Securities Purchase Agreement to $12,500,000.

The Warrants are exercisable at any time within five years from the Closing Date at an exercise price of $1.00 per share with cashless exercise in the event a registration statement covering the resale of the shares underlying the Warrants is not in effect within six months of the completion of the Offering. The Warrants also provide for full-ratchet anti-dilution protection in the event that any shares of common stock, or securities convertible into common stock, are issued at less than the exercise price of the Warrants during any period in which the Warrants are outstanding, subject to certain exceptions as set forth in the Warrants.



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If during a period of two years from the completion of the Offering, the Company issues additional shares of common stock or other equity or equity-linked securities at a purchase, exercise or conversion price less than $0.80 (subject to certain exceptions and such price is subject to adjustment for splits, recapitalizations, reorganizations), then the Company shall issue additional shares of common stock to the investors so that the effective purchase price per share paid for the common stock included in the Units shall be the same per share purchase, exercise or conversion price of the additional shares.

The Company has provided the investors with piggyback registration rights with respect to the resale of the common stock and the shares of common stock issuable upon exercise of the Warrants.

The Company engaged a registered broker dealer to serve as placement agent (the Placement Agent) who received (a) selling commissions aggregating 10% of the gross proceeds of the Offering, (b) a non-accountable expense allowance of 2% of the gross proceeds of the Offering to defray offering expenses, (c) five-year warrants to purchase such number of shares of common stock as is equal to 10% of the shares of common stock (i) included as part of the Units sold in this Offering at an exercise price equal to $0.80 per share, and (ii) issuable upon exercise of the Warrants sold in this Offering at an exercise price equal to $1.00 per share, and (d) 100,000 restricted shares of common stock.

The closing of the Offering triggered the automatic conversion of all principal and accrued interest on the Bridge Debentures into Units in the Offering at a conversion price equal to 80% of the price paid by investors in the Offering, or $0.64 per share of common stock and Warrant (the Debenture Conversion Price). The holders of the Bridge Debentures received an aggregate of 2,869,688 shares of common stock and Warrants to purchase 2,869,688 shares of common stock. Each investor in the Bridge Offering also received a Bridge Warrant exercisable for a period of three years from the closing date of the Bridge Offering to purchase a number of shares of the Companys common stock equal to the quotient obtained by dividing the principal amount of the Bridge Debenture by the Debenture Conversion Price of $0.64 per share. Accordingly, at the closing of the Offering and based on the full ratchet anti-dilution provisions of the Bridge Warrants, investors in the Bridge Offering received Bridge Warrants to purchase an aggregate of 8,789,063 shares of common stock. The Bridge Warrants continue to provide for full-ratchet anti-dilution protection if the Company issues at any time prior to August 30, 2012, any shares of common stock, or securities convertible into common stock, at a price less than the Bridge Warrant Exercise Price, subject to certain exceptions.

Further, in connection with the Offering, Octagon, the holder of the Companys debenture in the principal amount of $750,000 issued on April 8, 2011, agreed to amend the Debenture to provide for automatic conversion into the Units in the Offering at the Debenture Conversion Price. Accordingly, the holder of the Debenture received 1,171,875 shares of common stock and warrants to purchase 1,171,875 shares of common stock exercisable at $1.00 per share.

The Placement Agent also served as exclusive placement agent for the Bridge Offering. Accordingly, pursuant to the terms of the Bridge Offering, at the Closing of the Offering the Placement Agent and its assignees received warrants with full ratchet and anti-dilution protection to purchase an aggregate of 1,164,375 shares of common stock exercisable at $0.64 per share, each warrant exercisable on or before August 29, 2014.

In connection with the Offering, Steve Rogai, the Companys President and Chief Executive Officer, agreed to convert a 12% convertible promissory note payable to him by the Company in the principal amount of $107,000 (the Rogai Note), together with accrued interest thereon, into Units in this Offering at a conversion price of $0.80 per Share and Warrant. As such, Mr. Rogai was issued 133,750 shares of common stock and 133,750 Warrants in satisfaction of the Rogai Note. Also, the Companys executive officers each executed a lock up agreement (the Lock Up Agreement) which provides that each officer shall not sell, assign, transfer or otherwise dispose of their shares of common stock or other securities of the Company for a period ending 270 days after the completion of the Offering. Following this initial lock-up period, each officer has agreed to an additional six-month lock-up period for their shares during which they each may not sell more than 5,000 shares of common stock per month.



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Note 9.

Warrant Liabilities

Warrants issued to the placement agent in connection with the 2010 Private Placement contained provisions that protect holders from a decline in the issue price of its common stock (or down-round provisions) or that contain net settlement provisions. The Company accounted for these warrants as liabilities instead of equity. Down-round provisions reduce the exercise or conversion price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise or conversion price of those instruments or issues new warrants or convertible instruments that have a lower exercise or conversion price. Net settlement provisions allow the holder of the warrant to surrender shares underlying the warrant equal to the exercise price as payment of its exercise price, instead of physically exercising the warrant by paying cash. The Company evaluated whether warrants to acquire its common stock contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective warrant agreements based on a variable that is not an input to the fair value of a fixed-for-fixed option.

The warrants issued to the placement agent, in conjunction with the 2010 Private Placement, contained a down-round provision. The triggering event of the down-round provision was not based on an input to the fair value of fixed-for-fixed option and therefore was not considered indexed to the Companys stock. Since the warrant contained a net settlement provision, and it was not indexed to the Companys stock, it is accounted for as a liability.

The Company recognized these warrants as a liability equal to their fair value on each reporting date. On June 22, 2011, the warrant holders converted their warrants on a cashless basis into 331,303 common shares at an agreed upon stock price of $16.40 per share. As a result of the warrant conversion we re-measured the fair value of these warrants as of June 22, 2011, and recorded other income associated with the re-measurement of $523,553.

In connection with our $1,800,000 12% convertible debenture issuance in August 2011, the Company issued warrants to the investors and placement agent which contained provisions that protect holders from a decline in the issue price of our common stock or down-round provisions. The warrants also contain net settlement provisions. Accordingly, the Company accounted for these warrants as liabilities instead of equity. In addition, we considered the dilution and repricing provisions triggered by the Companys October 2011 follow-on offering which impacted the accounting recognition of this financing.

The Company recognized an initial warrant liability for the warrants issued in connection with our $1,800,000 12% convertible debenture of $1,556,289 which was recorded as a debt discount. The initial warrant liability recognized on the related placement agent warrants totaled $1,522,784 which was recorded as debt issuance costs. Due to the fluctuation in the market value of our common stock from March 31, 2012 through June 30, 2012, we recognized $2,581,139 in warrant revaluation expense.

We recognized an initial warrant liability valuation on the series of warrants issued in connection with of $12,500,000 Unit Offering of $27,647,424. On October 28, 2011, at the initial closing of $12,155,000 of the Unit Offering, the closing price of our common stock as reported on OTC Markets was $1.25. On November 17, 2011, at the final closing of $345,000 of the Unit Offering, the closing price of our common stock as reported on OTC Markets was $0.90. On June 30, 2012, the closing price of our common stock as reported on OTC Markets was $1.15. Due to the fluctuations in the market value of our common stock from March 31, 2012 through June 30, 2012, we recognized $6,747,512 in warrant revaluation expense.

Accordingly, warrant revaluation expense for the three-month period ending June 30, 2012 related to our $1,800,000 12% convertible debenture, and $12,500,000 Unit Offering totaled $9,328,651.

The assumptions used in connection with the valuation of warrants issued were as follows:

|                                         |  |               |  |                | 
|---------------------------------------- |  | ------------- |  | -------------- | 
|                                         |  | June 30,
2012 |  | March 31,
2012 | 
|Number of shares underlying the warrants |  | 32,880,252    |  | 32,880,252     | 
|Exercise price                           |  | $0.64-$1.00   |  | $0.64-$1.00    | 
|Volatility                               |  | 185%          |  | 211%           | 
|Risk-free interest rate                  |  | 0.33%         |  | 1.04%          | 
|Expected dividend yield                  |  | 0.00%         |  | 0.00%          | 
|Expected warrant life (years)            |  | 2.00  4.08   |  | 2.24  4.33    | 





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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Recurring Level 3 Activity and Reconciliation

The tables below provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3). The table reflects gains and losses for the three month period ending June 30, 2012 for all financial liabilities categorized as Level 3 as of June 30, 2012.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):

|                               |  |                    |  |                              |            |                        |   |                             |  |   |           
|------------------------------ |  | ------------------ |  | ---------------------------- | ---------- | ---------------------- | - | --------------------------- |  | - | ----------
|Description                    |  | Number of
Warrants |  | Fair Value
at
March 31, 2012 |            | Increase in
Fair Value |   | Fair Value
at
June 30, 2012
|                               |  |                    |  |                              |            |                        |   |                            
|Bridge Warrant                 |  | 8,789,064          |  | $                            | 6,604,706  |                        | $ | 2,278,849                   |  | $ | 8,883,555 
|                               |  |                    |  |                              |            |                        |   |                             |  |   |           
|Bridge Warrant Placement Agent |  | 1,165,875          |  |                              | 876,119    |                        |   | 302,291                     |  |   | 1,178,410 
|                               |  |                    |  |                              |            |                        |   |                             |  |   |           
|Unit Offering                  |  | 19,800,313         |  |                              | 15,816,980 |                        |   | 5,824,227                   |  |   | 21,641,207
|                               |  |                    |  |                              |            |                        |   |                             |  |   |           
|Unit Offering Placement Agent  |  | 3,125,000          |  |                              | 2,499,810  |                        |   | 923,284                     |  |   | 3,423,094 
|                               |  | 32,880,252         |  | $                            | 25,797,615 |                        | $ | 9,328,651                   |  | $ | 35,126,266



Note 10.

Related Party Transactions

Our Chief Executive Officer had loaned $107,000 to the Company in the past to meet short-term working capital needs. The loan was unsecured and carried an interest rate of 12% per annum. In May 2010, this obligation was formalized through the issuance of a 12% Convertible Promissory Note payable in the principal amount of $107,000, due May 25, 2011. The 12% Convertible Promissory Note was convertible into common shares of the Company at $1.50 per share and carried an interest rate of 12% per annum. The conversion feature of the Promissory Note proved beneficial under the guidance of ASC 470--Debt. Accordingly, a beneficial conversion feature of $107,000 was recognized and was accreted to interest expense over the initial one year term of the note.  The accreted note payable to officer balance totaled $0 and $91,219 at March 31, 2012 and 2011, respectively.  On May 25, 2011, the Promissory Note was amended to extend the maturity one additional year under the same terms.

On August 18, 2011, our Chief Executive Officer entered into a Subordination Agreement relating to his note. In connection with our Bridge Debenture offering in the amount of $1,800,000, Mr. Rogai agreed to subordinate his position to that of the Bridge Offering investors. On October 28, 2011, the note in the principal amount of $107,000 was converted into Units offered in connection with the Companys October 28, 2011 financing. As a result, Mr. Rogai received 133,750 common shares and 133,750 warrants exercisable at $1.00 per share. Interest expense recognized under the note totaled $0 and $18,991 for the three month periods ending June 30, 2012 and 2011, respectively. See Note 7.

Note 11.

Notes Payable

At June 30, 2012 and March 31, 2012, the Company had notes payable of $31,746 and $28,737, respectively, reflecting amounts due on insurance related note financings payable under terms of less than one year.

Note 12.

Commitments

Leases

On January 20, 2010, the Company entered into a 38-month lease agreement for our 10,500 square foot headquarters facility in Clearwater, Florida. Terms of the lease provide for base rent payments of $6,000 per month for the first six months; a base rent of $7,500 per month for the next 18 months and $16,182 per month from January 2012 through February 2013. The increase in minimum rental payments over the lease term is not dependent upon future events or contingent occurrences. In accordance with the provisions of ASC 840 - Leases,the Company recognized lease expenses on a straight-line basis, which total $10,462 per month over the lease term.



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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





On February 1, 2012, the Company entered into a new 36-month lease agreement on our existing headquarters facility. Terms of the lease provide for a base rent payments of $7,875 per month for the first twelve months, increasing 3% per year thereafter. The lease contains no provisions for a change in the base rent based on future events or contingent occurrences. In accordance with the provisions ASC 840-Leases, the Company is recognizing lease expenses on a straight-line basis, which total $8,114 per month over the lease term. In connection with the entering into the new leases, the Company recognized income of approximately $71,000 attributable to the recovery of the deferred rent obligation under the previous lease and wrote-off to lease expense $12,420 in security deposits attributable to the prior lease.

The following is a schedule by year of future minimum rental payments required under our lease agreement on June 30, 2012:

|       |  |                  |         | 
|------ |  | ---------------- | ------- | 
|       |  | Operating Leases |        
|Year 1 |  | $                | 95,918  | 
|Year 2 |  |                  | 98,795  | 
|Year 3 |  |                  | 50,128  | 
|Year 4 |  |                  |        | 
|Year 5 |  |                  |        | 
|       |  | $                | 244,841 | 



Base rent expense recognized by the Company, all attributable to its headquarters facility, totaled $24,342 and $31,386 for the three month periods ending June 30, 2012 and 2011, respectively.

Under the terms of the 2010 Private Placement, the Company provided that it would use its best reasonable efforts to cause the related registration statement to become effective within 180 days of the termination date, July 26, 2010, of the offering. We have failed to comply with this registration rights provision and are obligated to make pro rata payments to the subscribers under the 2010 Private Placement in an amount equal to 1% per month of the aggregate amount invested by the subscribers up to a maximum of 6% of the aggregate amount invested by the subscribers. The maximum amount of penalty to which the Company may be subject is $156,000. The Company had recognized an accrued penalty of $156,000 at June 30, 2012 and March 31, 2012, respectively.

Note 13.

Stockholders Equity

Preferred Stock

We are authorized to issue up to 10,000,000 shares of preferred stock, $.0001 par value per share. Our board of directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of preferred stock in series, and by filing a certificate pursuant to the applicable law of the state of Florida, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. No shares of preferred stock have been issued or were outstanding at June 30, 2012 and March 31, 2012, respectively.

Common Stock

At June 30, 2012 and March 31, 2012, we were authorized to issue up to 750,000,000 shares of common stock, $.0001 par value per share, respectively.

At June 30, 2012 and March 31, 2012, the Company had 32,370,784 and 31,970,784 shares outstanding, respectively. Holders are entitled to one vote for each share of common stock (or its equivalent).

Effective June 15, 2011, based on a majority shareholder vote, our articles of incorporation were amended to increase our authorized common stock from 400,000,000 to 750,000,000 shares.

All share and per share information contained in this report gives retroactive effect to a 1 for 20 (1:20) reverse stock split of our outstanding effective October 27, 2011.



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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Share Issuances

Common Stock and Warrants

On June 1, 2011, the Company issued 75,000 warrants to a consulting firm representing the Company in Canada. The warrants vest over fourteen months, are exercisable for a period of three years from grant date and exercisable at $3.15 per share. The Company valued these warrants using the Black-Scholes model. The initial grant date fair value was $205,962 which is being recorded as consulting expenses in general and administrative expenses, over the vesting period with unvested components being marked-to-market every reporting period throughout the vesting term.

The assumptions used in the valuation on June 1, 2011 were as follows:

|                                         |  |  |        |  
|---------------------------------------- |  |  | ------ | -
|Number of shares underlying the warrants |  |  | 75,000 |  
|Exercise price                           |  |  | $3.15  |  
|Volatility                               |  |  | 175    | %
|Risk-free interest rate                  |  |  | .74    | %
|Expected dividend yield                  |  |  | 0.00   | %
|Expected warrant life (years)            |  |  | 3.00   |  



The assumptions in the re-measurement of the unvested warrants at June 30, 2012, were as follows:

|                                         |  |  |        |  
|---------------------------------------- |  |  | ------ | -
|Number of shares underlying the warrants |  |  | 18,750 |  
|Exercise price                           |  |  | $3.15  |  
|Volatility                               |  |  | 185    | %
|Risk-free interest rate                  |  |  | 0.33   | %
|Expected dividend yield                  |  |  | 0.00   | %
|Expected warrant life (years)            |  |  | 1.92   |  

The Company recognized consulting expense under this agreement of $1,456 and $62,807 for the three month periods ending June 30, 2012 and 2011, respectively.

The assumptions used in connection with the valuation of the initial warrants issued on May 27, 2011 for the acquisition of the Seen on TV intangible assets, and the remeasurement of those warrants and issuance of additional warrants on June 28, 2012, were as follows:

|                                         |  |               |  |             
|---------------------------------------- |  | ------------- |  | ------------
|                                         |  | June 28,
2012 |  | May 27,
2011
|Number of shares underlying the warrants |  | 250,000       |  | 50,000      
|Exercise price                           |  | $0.64         |  | $7.00       
|Volatility                               |  | 185%          |  | 190         
|Risk-free interest rate                  |  | 0.69%         |  | 1.65        
|Expected dividend yield                  |  | 0.00%         |  | 0.00        
|Expected warrant life (years)            |  | 3             |  | 5           



The 250,000 shares issued on June 28, 2012 in connection with the acquisition of the Seen on TV intangible assets had a fair value of $257,500 based on the Companys stock price on June 28, 2012.

Effective December 6, 2011 the Company entered into an independent contractor agreement with Stratcon Partners, LLC pursuant to which Stratcon has agreed to provide the Company consulting and advisory services, including, but not limited to business marketing, management, budgeting, financial analysis, and investor and press relations. Under the agreement, Stratcon is also required to establish and maintain executive facilities and a business presence in New York City for the Company. The agreement is for an initial term of two years and may be terminated by either party upon written notice. In consideration of providing the services, Stratcon shall receive $12,500 per month. In addition, the Company has agreed to issue Stratcon an aggregate of 500,000 shares of restricted common stock, such shares vesting over a period of two years in four equal tranches. The closing price of the Companys common stock as reported on the OTC Markets on the Effective Date was $1.00. The Company has agreed to provide Stratcon rent reimbursement up to $2,500 per month for the New York office.  Through June 30, 2012, the Company expensed approximately $142,000 related to these shares. During June 2012 the first tranche of 125,000 shares of restricted common stock vested and the $142,000 was reclassified from accrued expense to equity.



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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Effective December 6, 2011 the Company agreed to issue 25,000 shares of common stock to Mediterranean Securities Group, LLC in consideration of consulting services.  As the agreement did not contain any vesting or forfeiture provisions, the entire fair value of $25,000, based on our stock price on the commitment date, was charged to consulting expenses and included in accrued expenses at March 31, 2012. During June 2012 these 25,000 shares were issued to Mediterranean Securities Group, LLC and $25,000 was reclassified from accrued expenses to equity.

Equity Compensation Plans

In May 2010, the Company adopted its 2010 Executive Equity Incentive Plan and 2010 Non Executive Equity Incentive Plan (collectively, the Plans) and granted 600,000 options and 450,000 options, respectively, under TV Goods stock option plans.

In May 2010, our Board of Directors granted 600,000 options under the Executive Equity Incentive Plan, exercisable at $1.50 per share to two officers and directors of the Company. The shares vested over eighteen months from grant and are exercisable for five (5) years from grant date (May 26, 2010). In September 2011, October 2011, December 2011 and March 2012, our Board of Directors granted an additional 225,000 options to an officer and two directors under the Executive Equity Incentive Plan. The options vest over eighteen months (150,000 options) and two years (50,000 options) and are exercisable for five years from date of grant. At June 30, 2012, there were 350,000 options available for issuance under the Executive Equity Incentive Plan.

In May 2010, our Board also granted options to purchase an aggregate of 450,000 shares of our common stock with an exercise price of $1.50 per share under the Non Executive Equity Incentive Plan. The options granted vest over eighteen months from the date of the grant (May 26, 2010) and are exercisable for five (5) years from their grant date. On July 15, 2010, the Company issued an additional 50,000 shares under the Non Executive Incentive Plan under terms similar to the May 2010 grant. During the quarter ending December 31, 2010, 400,000 shares were forfeited due to termination of employment. In December 2010, an additional 100,000 options were granted under this plan. On September 26, 2011 and March 31, 2012, our Board granted an additional 300,000 and 75,000 options, respectively, under the Non Executive Plan to nine employees and one consultant. The options vest over eighteen months and are exercisable for five years from date of grant. At June 30, 2012, there were 295,000 shares available for future issuance under the Non Executive Equity Incentive Pan.

The fair value of each option is estimated on the date of grant using the Black Scholes options pricing model using the assumptions established at that time.

On June 4, 2012, the Company issued 30,000 options to a direct response consultant. The fair value of the options granted was estimated on the date of grant using the Black Scholes options pricing model using the assumptions established at that time. The following table includes the assumptions used in making this grant:

|                                         |  |       
|---------------------------------------- |  | ------
|Number of shares underlying the warrants |  | 30,000
|Exercise Price                           |  | $0.87 
|Volatility                               |  | 185%  
|Risk-free interest rate                  |  | 0.68% 
|Expected dividend yield                  |  | 0.00% 
|Expected warrant life (years)            |  | 5     



As the options vested upon grant, the entire fair value of $25,100 was charged to stock-based compensation immediately and is included in general and administrative expenses.

Stock based compensation for the three months ended June 30, 2012 was $81,492.



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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Information related to options granted under both our option plans at June 30, 2012 and June 30, 2011 and activity for the quarters then ended is as follows:

|                             |  |        |           |                                 |   |                                                     |  |                           |      |  |   |   | 
|---------------------------- |  | ------ | --------- | ------------------------------- | - | --------------------------------------------------- |  | ------------------------- | ---- |  | - | - | 
|                             |  | Shares |           | Weighted
Average
Exercise
Price |   | Weighted Average
Remaining
Contractual Life
(Years) |  | Aggregate
Intrinsic Value |     
|                             |  |        |           |                                 |   |                                                     |  |                           |      |  |   |   | 
|Outstanding at April 1, 2012 |  |        | 1,025,000 |                                 | $ | 1.31                                                |  |                           |     |  | $ |  | 
|Granted                      |  |        | 30,000    |                                 |   | .87                                                 |  |                           |     |  |   |  | 
|Exercised                    |  |        |          |                                 |   |                                                    |  |                           |     |  |   |  | 
|Forfeited                    |  |        |          |                                 |   |                                                    |  |                           |     |  |   |  | 
|Expired                      |  |        |          |                                 |   |                                                    |  |                           |     |  |   |  | 
|Outstanding at June 30, 2012 |  |        | 1,055,000 |                                 | $ | 1.30                                                |  |                           | 3.68 |  | $ |  | 
|Exercisable at June 30, 2012 |  |        | 755,000   |                                 | $ | 1.44                                                |  |                           | 3.37 |  | $ |  | 



|                             |  |        |         |                                 |   |                                                     |  |                           |      |  |   |   | 
|---------------------------- |  | ------ | ------- | ------------------------------- | - | --------------------------------------------------- |  | ------------------------- | ---- |  | - | - | 
|                             |  | Shares |         | Weighted
Average
Exercise
Price |   | Weighted Average
Remaining
Contractual Life
(Years) |  | Aggregate
Intrinsic Value |     
|                             |  |        |         |                                 |   |                                                     |  |                           |      |  |   |   | 
|Outstanding at April 1, 2011 |  |        | 800,000 |                                 | $ | 1.58                                                |  |                           | 4.24 |  | $ |  | 
|Granted                      |  |        |        |                                 |   |                                                    |  |                           |     |  |   |  | 
|Exercised                    |  |        |        |                                 |   |                                                    |  |                           |     |  |   |  | 
|Forfeited                    |  |        |        |                                 |   |                                                    |  |                           |     |  |   |  | 
|Expired                      |  |        |        |                                 |   |                                                    |  |                           |     |  |   |  | 
|Outstanding at June 30, 2011 |  |        | 800,000 |                                 | $ | 1.58                                                |  |                           | 4.00 |  | $ |  | 
|Exercisable at June 30, 2011 |  |        | 475,000 |                                 | $ | 1.50                                                |  |                           | 3.92 |  | $ |  | 



The weighted average grant date fair value of unvested options at June 30, 2012 was approximately $249,000 and will be expensed over a weighted average period of 4.25 years.

As of June 30, 2012, there were 350,000 options and 295,000 options available for further issuance through the 2010 Executive Equity Incentive Plan and the 2010 Non Executive Equity Incentive Plan, respectively.

No tax benefits are attributable to our share based compensation expense recorded in the accompanying financial statements because we are in a net operating loss position and a full valuation allowance is maintained for all net deferred tax assets. For stock options, the amount of the tax deductions is generally the excess of the fair market value of our shares of common stock over the exercise price of the stock options at the date of exercise.

In the event of any stock split of our outstanding common stock, the Board of Directors in its discretion may elect to maintain the stated amount of shares reserved under the Plans without giving effect to such stock split. Subject to the limitation on the aggregate number of shares issuable under the Plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. Plan options may either be (i) ISOs, (ii) NSOs (iii) awards of our common stock or (iv) rights to make direct purchases of our common stock which may be subject to certain restrictions. Any option granted under the Plans must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The Plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The term of each plan option and the manner in which it may be exercised is determined by the Board of Directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant.



19



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AS SEEN ON TV, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Note 14.

Litigation

In February 2012, SCI Direct, LLC (SCI), filed suit against TV Goods, Inc. in the United States District Court, Northern District of Ohio, Eastern Division. The complaint alleges trademark infringement by TV Goods arising from our Living Pure space heater as it relates to SCIs EDENPURE space heater. The plaintiff was seeking monetary and injunctive relief claiming TV Goods committed trademark infringement, unfair competition and violation of the Ohio Deceptive Trade Practices Act. The amount of damages the plaintiff was seeking was unspecified. We believed that the legal basis of the allegations was completely without merit. The potential monetary relief, if any, was not probable and could not be estimated at that time. On June 21, 2012, TV Goods, Inc. executed a settlement agreement with SCI Direct, LLC. Under the terms of the agreement, SCI agreed to dismiss the complaint and TV Goods, Inc. agreed to cease marketing any products under the Living Pure Trademark. The settlement agreement was contingent upon SCIs review of TV Goods, Inc. financial statements relating to Living Pure sales, which was completed with the dismissal of the complaint on July 5, 2012.

Note 15.

Subsequent Events.

On August 9, 2012 we entered into a letter of intent with eDiets.com, Inc. for the acquisition of that company in a stock for stock transaction.  The terms of the letter of intent provide that we will issue 16,185,392 shares of our common stock to the stockholders of eDiets.com, Inc. in exchange for 100% of the outstanding shares of that company.  The closing of the transaction is subject to a number of conditions precedent, including, but not limited to:



| |   |                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | the satisfaction completion of due diligence on each company by the other company,                                                                                                                                   
| | · | the execution of a binding Agreement and Plan of Merger by the parties,                                                                                                                                              
| | · | the effectiveness of a registration statement on Form S-4 which we will file the Securities and Exchange Commission to register the shares of our common stock to be issued to the eDiets.com, Inc. stockholders, and
| | · | requisite approval of the transaction by the stockholders of eDiets.com, Inc.                                                                                                                                        



We expect to promptly begin the due diligence process and our target closing date for the transaction, assuming the satisfaction of the conditions precedent to closing, is within the next 90 to 120 days.  However, as a result of the number of conditions precedent to close, investors should not place undue reliance on the execution of the letter of intent and there are no assurances that this transaction will ultimately be consummated.









20



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ITEM 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on our managements beliefs, assumptions and expectations and on information currently available to our management. Generally, you can identify forward-looking statements by terms such as may, will, should, could, would, expects, plans, anticipates, believes, estimates, projects, predicts, potential and similar expressions intended to identify forward-looking statements, which generally are not historical in nature. All statements that address operating or financial performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements, including without limitation our expectations with respect to product sales, future financings, or the commercial success of our products or services. We may not actually achieve the plans, projections or expectations disclosed in forward-looking statements, and actual results, developments or events could differ materially from those disclosed in the forward-looking statements. Our management believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on forward-looking statements because they speak only as of the date when made. We do not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by federal securities laws and the rules of the Securities and Exchange Commission (the SEC). We may not actually achieve the plans, projections or expectations disclosed in our forward-looking statements, and actual results, developments or events could differ materially from those disclosed in the forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, including without limitation those described from time to time in our future reports filed with the SEC.

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited interim consolidated condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.

Company Overview

We are a direct response marketing company. We identify, advise in development and market consumer products. We employ three primary channels: Direct Response Television (Infomercials), Television Shopping Networks and Retail Outlets. We have identified several candidate products for marketing which actively began in our third fiscal quarter of 2012.

We hold a wholly owned interest in TV Goods, Inc., a Florida corporation (TVG) and Tru Hair, Inc., a Florida corporation. Although we hold an interest in these various entities, primarily all of our operations are conducted through TVG. TVG was formed in October 2009 and as a result has a limited operating history. Due to the similar nature of the underlying business and the overlap of our operations, we view and manage these operations as one business, accordingly we do not report as segments. On May 27, 2011, the Company entered into an agreement to acquire the rights to the domain names asseenontv.com and seenontv.com.  This transaction, completed on June 28, 2012, did not meet the criteria of a business combination within the guidelines of ASC 805  Business Combinations, and therefore will be accounted for as an asset purchase.  This transaction provides the Company with exclusive use of the domain names asseenontv.com and seenontv.com. The term or phrase As Seen On TV is not subject to trademark protection and has been, and will continue to be, used by others including on-line and retail outlet applications with no connection with, or benefit to, the Company.

On May 27, 2011, the Company entered into a binding letter agreement with Seen on TV, LLC, a Nevada limited liability company, with no affiliation with the Company, and Ms. Mary Beth Gearhart (formerly Fasano), its president. The letter agreement provided that we would obtain ownership of certain Seen on TV intangible assets, primarily consisting of the domain names asseenontv.com and seenontv.com. Upon entering into the binding letter agreement, we issued 250,000 shares of restricted common stock, with a fair value of $500,000 on the contract date, and an initial cash payment of $25,000 to Ms. Gearhart. In addition, we granted 50,000 warrants to issue common shares, initially exercisable at $7.00 per share for a period of three years with a grant date fair value of approximately $162,000. Further, we made five additional monthly payments of $5,000 to the seller and a $10,000 contribution to a designated charitable contribution. All payments made under the initial letter agreement, including the fair value of securities and an additional $7,000 paid for use of the URL asseenontv.co.uk totaled $729,450 at March 31, 2012. The term or phrase As Seen On TV is not subject to trademark protection and has been, and will continue to be, used by others, including online and retail outlet applications with no connection with, or benefit to, the Company.



21



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On June 28, 2012, the Company finalized the asset purchase agreement with Seen on TV, LLC agreeing to (i) pay an additional $1,560,000 in cash, (ii) issue an additional 250,000 shares of restricted stock, (iii) issue 250,000 common stock purchase warrants, exercisable at $0.64 per share exercisable for three years from issuance, (iv) modifying the exercise price of the 50,000 common stock purchase warrants issued in May 2011 from $7.00 per share to $1.00 per share and extending their term, and (v) making five annual payments of $10,000 per year to a charitable organization designated by Seen on TV. This obligation was recorded with the current component of $10,000 being reported with accrued expenses and $40,000, the non-current portion, being reported as other liabilities  long-term. The Company agreed that so long as the seller owns at least 250,000 common shares received under the purchase agreement, if we were to issue additional shares of common stock, the seller will be entitled to receive  additional shares sufficient to maintain their proportional ownership in the Company.

This transaction did not meet the criteria of a business combination within the guidelines of ASC 805Business Combinations, and therefore was accounted for as an asset purchase. The transaction contained no contingent consideration and no liabilities were assumed contingent or otherwise. Accordingly, the assets acquired, all identifiable intangible assets, were recognized based on our costs of the assets acquired.

Due to the focus of our business on consumer items marketed through television infomercial spots and shopping channels, the Company believes there are strong synergies in owning and operating a web-based outlet for its own as well as other products.  As with potential retail sales, customers who may not have initially purchased from a television spot could, when recognizing the product, reconsider and purchase the item.  This provides the Company with a potentially higher return on our marketing expenditures. We believe this is particularly true on a well established web-site named AsSeenOnTV.com.

A summary of the total costs of the assets both under the initial May 27, 2011, binding letter agreement and the Asset Purchase Agreement were as follows:

|                                            |   |           | 
|------------------------------------------- | - | --------- | 
|Cash at closing                             | $ | 1,620,000 | 
|May 2011 common shares issued               |   | 500,000   | 
|June 2012 common shares issued              |   | 257,500   | 
|Fair value of modified May 2011 warrants(*) |   | 168,320   | 
|Fair value of June 2012 warrants            |   | 235,756   | 
|Additional cash payments and commitments    |   | 66,640    | 
|                                            | $ | 2,839,216 | 



(*) includes approximately $6,000 related to warrant modification.



Revenue Generation

We generate revenues primarily from two sources: sales of consumer products and infomercial production fees. Inventors and entrepreneurs seek to leverage our experience in functions such as product selection, marketing development, media buying and direct response television production. We seek to offer, assist and enable inventors and entrepreneurs to market and sell consumer products.

Inventors and entrepreneurs submit products or business concepts for our review. Once we identify a suitable product/concept we negotiate to obtain global marketing and distribution rights. These marketing and distribution agreements stipulate profit sharing, typically a royalty to the inventor or product owner. As of the date of this report, we have marketed several products with limited success.



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Results of Operations for the Three Months Ended June 30, 2012 as Compared to the Three Months Ended June 30, 2011

The Companys revenues for the three month period ended June 30, 2012, are primarily from the direct response sale of products, which accounted for approximately 86% of total revenues.  Revenues have decreased primarily due to the Companys decision to shift its focus from the development and shooting of infomercial productions for third parties to marketing products for which the Company has direct contractual ownership.

A comparative summary of the source of our revenues generated for the periods presented is as follows:

|                                          |  |                             |         |      |      |  |   |         |  |     
|----------------------------------------- |  | --------------------------- | ------- | ---- | ---- |  | - | ------- |  | ----
|                                          |  | Three Months Ended
June 30,
|                                          |  | 2012                        |         | 2011
|                                          |  |                             |         |      |      |  |   |         |  |     
|Product sales                             |  | $                           | 343,624 |      | 86%  |  | $ | 317,178 |  | 65% 
|Speaking engagement fees and royalty fees |  |                             | 14,107  |      | 3%   |  |   | 53,606  |  | 11% 
|Infomercial production income             |  |                             | 42,500  |      | 11%  |  |   | 115,104 |  | 24% 
|                                          |  | $                           | 400,231 |      | 100% |  | $ | 485,888 |  | 100%



Our revenue model includes providing infomercial production for others as well as marketing specific products for which we have contractual right to the revenue stream. As detailed above, for the three months ended June 30, 2012 and 2011, approximately 11% and 24% of our revenue, respectively, was attributable to infomercial production income, with the balance being generated by specific product sales for which we contracted marketing and distribution rights. While there can be no assurance, management believes that continuing to develop a marketing strategy based upon distributing developed products for which the Company has ownership or the licensing rights, will ultimately prove a successful strategy.

Cost of Revenue

Cost of revenue for the three months ended June 30, 2012 was $483,827, an increase of $29,598 or approximately 7% from $454,229 for the three months ended June 30, 2011.  Cost of revenues represented 121% of revenues for the three month period ended June 30, 2012 as compared to 93% of revenues for the three month period ended June 30, 2011. For the quarter ending June 30, 2012, costs consist primarily of the direct costs to the Company of products sold including related shipping. These costs primarily consisted of the direct costs of products marketed as well as merchant fees of fees charged for the shooting and editing of infomercials primarily for our clients. The Company does not manufacture any products in-house and relies on third-party suppliers, located primarily outside of the United States, for its inventory.  Accordingly, our cost of products acquired for sale could vary significantly if fuel and transportation costs were to increase in the future.

The Company operates in a very competitive environment, competing in different media with products that may be very similar to those of our competitors.  Accordingly, management will often test a product, on a limited basis, in a targeted market and attempt to assess the products potential prior to investing in a larger roll-out. The Company attempts to price the product at a level that will prove both attractive to our customer while providing the Company with a reasonable return.  Often the test marketing will indicate that a particular product is not well received by a Direct Response program and the project will be dropped. This practice can, and sometimes does, as with the period ended June 30, 2012, result in the recognition of costs in excess of related revenues.

Operating Expenses

Operating expenses for the period ended June 30, 2012, were $1,336,083, and increase of $421,639 or 46% as compared to $914,444 for the period ended June 30, 2012.  Operating expenses consist of selling and marketing expenses and general and administrative expenses.



23



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Selling and marketing expenses are comprised of promotional costs incurred related to sales of the Companys own products. These costs totaled $44,313 for the three months ended June 30, 2012. The period ended June 30, 2011, did not contain these costs as prior period revenues were primarily related to fees for our planning, shooting and editing of promotional materials for others. Components of the expenses for the period ended June 30, 2012, include:

|                            |  |                                   |         |  |     
|--------------------------- |  | --------------------------------- | ------- |  | ----
|                            |  | Three Months Ended 
June 30, 2012
|Production and design costs |  | $                                 | 20,,293 |  | 84% 
|Media purchases             |  |                                   | 5,294   |  | 3%  
|Call center support         |  |                                   | 5,454   |  | 4%  
|Other                       |  |                                   | 13,272  |  | 9%  
|                            |  | $                                 | 44,313  |  | 100%



General and administrative costs for the three months ended June 30, 2012 were $1,291,770, as increase of $377,326 or 41% as compared to $914,444 for the period ended June 30, 2011.  General and administrative expenses consist primarily of administrative labor costs, consulting fees, marketing related travel expenses, business development costs, consulting and legal and accounting fees. The increase for the three months ended June 30, 2012 as compared to June 30, 2011 was primarily due to (i) an increase in compensation of approximately $36,000, (ii) an increase in insurance expense of $32,000, attributable to increased coverages on inventory levels and product coverage, (iii) an increase in investor relations and financial consulting fees of $230,000.

Included in general and administrative expenses for the three months ended June 30, 2012, include certain non-cash expenses including stock based compensation of approximately $81,000 and other equity based compensation to consultants totaling approximately $167,000.

General and administrative expenses for the three months ended June 30, 2011 consist primarily of administrative labor costs, marketing related travel, business development and investor relations related fees. Also included in these costs were certain non-cash expenses including stock based compensation expenses of approximately $76,000 and the fair value of shares issued for consulting services of approximately $175,000.

Other Income and Expenses

Other (income) expense totaled an expense of $9,326,299 for the three month period ended June 30, 2012 as compared to income of $535,390 for the three month period ended June 30, 2011.  Other income and expense in both periods is comprised principally of income or expense resulting from the periodic revaluation of the fair value of warrants outstanding that are recorded as liabilities.  For the three months ended June 30, 2012, we recognized $9,328,651 in expense resulting from the revaluation of the fair value of warrants outstanding which were recorded as a liability on our balance sheet as compared to income of $523,553 for the three months ended June 30, 2011. This periodic revaluation could result in a significant expense or income amount being recognized at the end of any given period depending on the market value of our stock on the remeasurement date. The warrants were issued in connection with a series of financings completed during the year ended March 31, 2012, and are revalued at the end of each reporting period to their fair value.

Liquidity and Capital Resources

As of June 30, 2012, we had approximately $2,754,000 in cash and cash equivalents. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation as a going concern. We have sustained substantial operational losses since our inception, and such operational losses have continued through June 30, 2012 and have financed our operations primarily through the issuance of shares of our common stock and the issuance of convertible notes.  At June 30, 2012, we had an accumulated deficit of approximately $27,262,000.  The Company cannot predict how long it will continue to incur further losses or whether it will ever become profitable which is dependent upon the frequency and success of new and existing products.  The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Management believes the Company has sufficient cash resources to sustain operations through at least August 2013.



24



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We have commenced implementing, and will continue to implement, various measures to address our financial condition, including:

·

Continuing to seek debt and equity financing and possible funding through strategic partnerships.  However, there can be no assurances that the Company will be able to raise additional capital on favorable terms, or at all.

·

Curtailing operations where feasible to conserve cash through deferring certain of our marketing activities until our cash flow improves and we can recommence these activities with appropriate funding.

·

Investigating and pursuing transactions including mergers, and other business combinations and relationships deemed by the board of directors to present attractive opportunities to enhance stockholder value.

Net cash used in operating activities for the quarter ending June 30, 2012, totaled $317,621, a relatively small amount relative to our loss from operations for the quarter of $1,419,679. This was due primarily to the wind-down of our Living Pure heater program, which is a seasonal product. Accordingly, during the quarter the Company was collecting heater sales related receivables without the cash outflow for inventory replacement and related media purchases. Accounts receivables declined by $1,330,557 during the quarter. This cash flow dynamic is unlikely to be repeated again until, and if, the Company again records significant sales on another seasonal product. This net reduction in cash flow usage for the quarter was off-set by a cash expenditure of approximately $1.6 million related to our asset purchase completed in June 2012, as described below. Our net cash decrease for the quarter totaled $1,928,816.

In April 2011, we consummated the issuance and sale of $750,000 in aggregate principal amount of convertible debentures.  The Company paid $90,000, plus warrants with a fair value of approximately $284,000, in issuance costs related to these debentures.  The convertible debentures have no stated interest rate.  The debentures were convertible at $4.00 per share, subject to adjustment, and matured on December 1, 2011, unless earlier exchanged or converted.

On May 27, 2011 and June 15, 2011, the Company and approximately twenty accredited investors entered into a securities purchase agreement and completed a closing of a private offering of 292,500 shares of the Companys common stock and three series of warrants to purchase up to 585,000 shares of common stock, in the aggregate, for aggregate gross proceeds of $1,170,000. The Company sold the shares at an initial purchase price of $4.00 per share, which may be adjusted downward, but not to less than $2.00 per share, under certain circumstances. In addition to the shares, the Company issued: (i) Series A common stock purchase warrants to purchase up to 292,500 shares of common stock at an exercise price of $3.00 per share; (ii) Series B common stock purchase warrants to purchase up to 146,250 shares of common stock at an exercise price of $5.00 per share and (iii) Series C common stock purchase warrants to purchase up to 146,250 shares of common stock at an exercise price of $10.00 per share.

In August 2011, the Company raised gross proceed of $1,800,000 through the private placement issuance of a series of 12% convertible debentures.  The debentures were convertible into common stock and warrants. In October 2011 the Company, entered into and consummated a securities purchase agreement with certain accredited investors for the private sale of 243.1 units at $50,000 per unit. Each unit consisted of (i) 62,500 shares of common stock, and (ii) warrants to purchase 62,500 shares of common stock at an initial exercise price of $1.00 per share.  The Company received gross proceeds of $12,155,000 and issued an aggregate of 15,194,695 shares of common stock and 15,193,750 warrants to the investors pursuant to the securities purchase agreement. In November 2011, the Company sold an additional 6.9 Units under the securities purchase agreement, receiving an additional $345,000 in gross proceeds, issuing an additional aggregate of 431,250 shares of common stock and 431,250 warrants to investors. The October 28, 2011, and November 18, 2011, closings brought the total raised under the securities purchase agreement to $12,500,000.



25



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Commitments

On January 20, 2010, the Company entered into a 38-month lease agreement for our 10,500 square foot headquarters facility in Clearwater, Florida. Terms of the lease provide for base rent payments of $6,000 per month for the first six months; a base rent of $7,500 per month for the next 18 months and $16,182 per month from January 2012 through February 2013. The increase in minimum rental payments over the lease term is not dependent upon future events or contingent occurrences. In accordance with the provisions of ASC 840 - Leases, the Company recognized lease expenses on a straight-line basis, which total $10,462 per month over the lease term.

On February 1, 2012, the Company entered into a new 36-month lease agreement on our existing headquarters facility. Terms of the lease provide for a base rent payments of $7,875 per month for the first twelve months, increasing 3% per year thereafter. The lease contains no provisions for a change in the base rent based on future events or contingent occurrences. In accordance with the provisions ASC 840-Leases, the Company is recognizing lease expenses on a straight-line basis, which total $8,114 per month over the lease term. In connection with the entering into the new leases, the Company recognized income of approximately $71,000 attributable to the recovery of the deferred rent obligation under the previous lease and wrote-off to lease expense $12,420 in security deposits attributable to the prior lease.

The following is a schedule by year of future minimum rental payments required under our lease agreement on June 30, 2012:

|       |  |                  |         | 
|------ |  | ---------------- | ------- | 
|       |  | Operating Leases |        
|Year 1 |  | $                | 95,918  | 
|Year 2 |  |                  | 98,795  | 
|Year 3 |  |                  | 58,128  | 
|Year 4 |  |                  |        | 
|Year 5 |  |                  |        | 
|       |  | $                | 244,841 | 



Base rent expense recognized by the Company, all attributable to its headquarters facility, totaled $24,342 and $31,386 for the three month periods ending June 30, 2012 and 2011, respectively.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with accounting principles generally accepted in the United States. We are required to make estimates and judgments in preparing our financial statements that affect the reported amounts of our assets, liabilities, revenue and expenses. We base our estimates on our historical experience to the extent practicable and on various other assumptions that we believe are reasonable under the circumstances and at the time they are made. If our assumptions prove to be inaccurate or if our future results are not consistent with our historical experience, we may be required to make adjustments in our policies that affect our reported results. Our most critical accounting policies and estimates include our allowance for doubtful accounts, share based compensation and estimated sales returns. We also have other key accounting policies that are less subjective and therefore, their application would not have a material impact on our reported results of operations. The following is a discussion of our most critical policies, as well as the estimates and judgments involved.

Revenue Recognition

We recognize revenue from product sales in accordance with FASB ASC 605  Revenue Recognition. Following agreements or orders from customers, we ship product to our customers often through a third party facilitator. Revenue from product sales is only recognized when substantially all the risks and rewards of ownership have transferred to our customers, the selling price is fixed and collection is reasonably assured. Typically, these criteria are met when our customers order is received by them and we receive acknowledgment of receipt by a third party shipper.

The Company has a return policy whereby the customer can return any product within 60-days of receipt for a full refund, excluding shipping and handling. However, historically the Company has accepted returns past 60-days of receipt. The Company provides an allowance for returns based upon specific product warranty agreements and past experience and industry knowledge. All significant returns for the periods presented have been offset against gross sales. The Company also provides a reserve for warranty, which is not significant and is included in accrued expense.



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Share-Based Payments and Warrants

We recognize share-based compensation expense on stock option awards. Compensation expense is recognized on that portion of option awards that are expected to ultimately vest over the vesting period from the date of grant. All options granted vest over their requisite service periods as follows: 6 months (50% vesting); 12 months (25% vesting) and 18 months (25% vesting). We granted no stock options or other equity awards which vest based on performance or market criteria. We had applied an estimated forfeiture rate of 10% to all share-based awards, which represents that portion we expected would be forfeited over the vesting period. We reevaluate this analysis periodically and adjust our estimated forfeiture rate as necessary.

We utilized the Black-Scholes option pricing model to estimate the fair value of our stock options and warrants. Calculating share-based compensation expense requires the input of highly subjective judgment and assumptions, including estimates of expected life of the award, stock price volatility, forfeiture rates and risk-free interest rates. The assumptions used in calculating the fair value of share-based awards represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future.

Subsequent Events

On August 9, 2012 we entered into a letter of intent with eDiets.com, Inc. for the acquisition of that company in a stock for stock transaction.  The terms of the letter of intent provide that we will issue 16,185,392 shares of our common stock to the stockholders of eDiets.com, Inc. in exchange for 100% of the outstanding shares of that company.  The closing of the transaction is subject to a number of conditions precedent, including, but not limited to:



·

the satisfaction completion of due diligence on each company by the other company,

·

the execution of a binding Agreement and Plan of Merger by the parties,

·

the effectiveness of a registration statement on Form S-4 which we will file the Securities and Exchange Commission to register the shares of our common stock to be issued to the eDiets.com, Inc. stockholders, and

·

requisite approval of the transaction by the stockholders of eDiets.com, Inc.



We expect to promptly begin the due diligence process and our target closing date for the transaction, assuming the satisfaction of the conditions precedent to closing, is within the next 90 to 120 days.  However, as a result of the number of conditions precedent to close, investors should not place undue reliance on the execution of the letter of intent and there are no assurances that this transaction will ultimately be consummated.

Off Balance Sheet Arrangements

None.

Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

Recent Accounting Pronouncements

For a discussion of new accounting pronouncements affecting the Company, refer to Note 4 to the Consolidated Financial Statements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.



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ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation with the participation of our Chief Executive Officer and Chief Financial Officer who serve as our principal executive officer and principal financial and accounting officer, required by Rule 13a-15 of the Securities Exchange Act of 1934 (the Exchange Act) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2012, our disclosure controls and procedures were effective such that the information relating to our company required to be disclosed in our SEC reports (i) is recorded processed, summarized and reported within the time periods specified in SEC rules and forms a (ii) is accumulated and communicated to our management to allow timely decisions regarding required disclosures.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.







28



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PART II.OTHER FINANCIAL INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

From time to time, we are periodically a party to or otherwise involved in legal proceedings arising in the normal and ordinary course of business. As of the date of this report, we are not aware of any proceeding, threatened or pending, against us which, if determined adversely, would have a material effect on our business, results of operations, cash flows or financial position.

ITEM 1A.

RISK FACTORS

Not applicable to smaller reporting companies.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Except to those unregistered securities previously disclosed in reports filed with the Securities and Exchange Commission, during the period covered by this report, we have sold securities without registration under the Securities Act of 1933, as amended, in reliance upon the exemption provided under Section 4(2), as provided below.  The securities issued contain a legend restricting transfer absent registration or applicable exemption.  The securities holders received current information about the Company and had the opportunity to ask questions about the Company.

During the period covered by this report we issued an aggregate of 150,000 shares of common stock to two consulting forms consultants in consideration of business consulting and other advisory services.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURE

None.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

|               |  |                                                                                                       
|-------------- |  | ------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description                                                                                           
|2.1            |  | Agreement and Plan of Merger effective May 28, 2010 (1)                                               
|3.1            |  | Articles of Incorporation (2)                                                                         
|3.2            |  | Amendment to Articles of Incorporation dated April 18, 2008 (2)                                       
|3.3            |  | Amendment to Articles of Incorporation dated August 5, 2010 (increase in authorized common stock) (16)
|3.4            |  | Amendment to Articles of Incorporation effective October 28, 2011 (name change and reverse split) (11)
|3.5            |  | Bylaws (2)                                                                                            
|4.1            |  | Form of Series A, B and C Warrant 2010 (1)                                                            
|4.2            |  | Form of Placement Agent Warrant 2010 (1)                                                              
|4.3            |  | Convertible Promissory Note issued to Steven Rogai (1)                                                
|4.4            |  | Form of Series A-1, B-1 and C-1 Warrant (14)                                                          
|4.5            |  | Convertible Debenture dated April 8, 2011(5)                                                          
|4.5.1          |  | Amendment to Convertible Debenture dated April 8, 2011 (10)                                           
|4.6            |  | Form of Convertible Debenture issued August 29, 2011 (10)                                             
|4.7            |  | Form of Warrant issued August 29, 2011 (10)                                                           



29



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|        |   |                                                                                                                                                                                                
|------- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.8     |   | Form of Warrant issued under Securities Purchase Agreement dated October 28, 2011 (11)                                                                                                         
|4.9     |   | Form of Placement Agent Warrant issued under Securities Purchase Agreement dated October 28, 2011 (11)                                                                                         
|4.10    |   | Form of Common Stock Warrant issued under Securities Purchase Agreement dated October 28, 2011 (11)                                                                                            
|10.1.1  |   | Services Agreement with Kevin Harrington (8)                                                                                                                                                   
|10.1.2  |   | Employment Agreement with Steve Rogai (8)                                                                                                                                                      
|10.1.3  |   | Employment Agreement with Dennis Healey (8)                                                                                                                                                    
|10.1.4  |   | Form of Independent Director Agreement (8)                                                                                                                                                     
|10.1.5  |   | Form of Lock Up Agreement (8)                                                                                                                                                                  
|10.2    |   | Executive Equity Incentive Plan (3)                                                                                                                                                            
|10.3    |   | Non Executive Equity Incentive Plan (3)                                                                                                                                                        
|10.5    |   | Form of 2010 Private Placement Subscription Agreement (14)                                                                                                                                     
|10.6    |   | Form of October 2010 Private Placement Subscription Agreement (14)                                                                                                                             
|10.6    |   | Infomercial Production and Brand License Agreement (7)                                                                                                                                         
|10.8    |   | Securities Purchase Agreement dated April 11, 2011 (5)                                                                                                                                         
|10.9    |   | Securities Purchase Agreement dated May 27, 2011 (6)                                                                                                                                           
|10.10   |   | Severance, Consulting and Release Agreement dated March 23, 2011 (14)                                                                                                                          
|10.11   |   | Securities Purchase Agreement effective August 29, 2011 (10)                                                                                                                                   
|10.12   |   | Notice, Consent, Amendment and Waiver Agreement between the Company and a majority of the Purchasers under the Securities Purchase Agreement dated May 27, 2011, effective August 29, 2011 (10)
|10.13   |   | Securities Purchase Agreement dated October 28, 2011 (11)                                                                                                                                      
|10.14   |   | Binding Letter Agreement dated May 27, 2011 (12)                                                                                                                                               
|10.15   |   | Stratcon Partners, LLC Agreement dated December 6, 2011 (13)                                                                                                                                   
|10.16   |   | Purchasing and Marketing Agreement with Presser Direct(14)                                                                                                                                     
|21.1    |   | List of subsidiaries of the Company (14)                                                                                                                                                       
|31.1    |   | Certification Pursuant to Rule 13a-14(a) (Provided herewith)                                                                                                                                   
|31.2    |   | Certification Pursuant to Rule 13a-14(a)/15d-14(a) (Provided herewith)                                                                                                                         
|32.1    |   | Certification Pursuant to Section 1350 (Provided herewith)                                                                                                                                     
|32.2    |   | Certification Pursuant to Section 1350 (Provided herewith)                                                                                                                                     
|101.INS | * | XBRL Instance Document                                                                                                                                                                         
|101.SCH | * | XBRL Taxonomy Extension Schema Document                                                                                                                                                        
|101.CAL | * | XBRL Taxonomy Calculation Linkbase Document                                                                                                                                                    
|101.DEF | * | XBRL Taxonomy Extension Definition Linkbase Document                                                                                                                                           
|101.LAB | * | XBRL Taxonomy Extension Label Linkbase Document                                                                                                                                                
|101.PRE | * | XBRL Taxonomy Extension Presentation Linkbase Document                                                                                                                                         



*

To be filed by within the earlier of 30 days from the due date or filing date of this report pursuant to the grace period provided for the filing of the first DFN interactive data exhibit.

(1)

Incorporated by reference to Form 8-K dated May 28, 2010 filed on June 4, 2010.

(2)

Incorporated by reference to Registration Statement on Form S-1 Registration Statement filed April 24, 2008 (333-150419).

(3)

Incorporated by reference to Schedule 14C Definitive Information Statement filed on July 8, 2010.

(4)

Incorporated by reference to Form 10-Q Quarterly Report for the period ended December 31, 2010.



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(5)

Incorporated by reference to Form 8-K dated April 11, 2011 filed on April 15, 2011.

(6)

Incorporated by reference to Form 8-K dated May 27, 2011 filed on June 8, 2011.

(7)

Incorporated by reference to Form 10-K Annual Report for the year ended March 31, 2011.

(8)

Incorporated by reference to Form 8-K dated October 28, 2011 filed on November 3, 2011.

(9)

Incorporated by reference to the Companys Definitive Information Statement filed on September 19, 2011.

(10)

Incorporated by reference to Form 8-K dated August 29, 2011 filed on August 31, 2011.

(11)

Incorporated by reference to Form 8-K dated November 18, 2011 as filed on November 21, 2011.

(12)

Incorporated by reference to Form 8-K dated May 27, 2011 filed on June 3, 2011.

(13)

Incorporated by reference to Form 8-K dated December 6, 2011 filed on December 12, 2011.

(14)

Incorporated by reference to Form S-1 Registration Statement (333-170778).



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SIGNATURES

In accordance with 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.

Date: August 14, 2012

| |                              
| | -----------------------------
| |                              
| | As Seen On TV, Inc.          
| |                              
| | /s/ STEVEN ROGAI             
| | Steven Rogai,                
| | Chief Executive Officer      
| |                              
| | /s/ DENNIS W. HEALEY         
| | Dennis W. Healey             
| | Chief Financial Officer      
| | (Principal Financial Officer)





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