10QSB 1 mediatv_10q-123102.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended December 31, 2002. Commission file number: 333-81520 MEDIATELEVISION.TV, INC. (Exact name of small business issuer as specified in its charter) Delaware 98-0361568 (State or other jurisdiction of (IRS Employee Identification No.) incorporation or organization) 1904 West 16th Avenue, Suite 1, Vancouver, BC, V6J 2M4 (Address of principal executive offices) (604) 732-4804 (Issuer's telephone number) Securities Registered pursuant to section 12(b) of the Act: None Securities Registered pursuant to section 12(g) of the Act: Common stock par value $0.0001 per share 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 and 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. Yes No X -------------- -------------- Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part II of this Form 10-QSB or any amendment to this Form 10-QSB. X ------------- State issuer's revenues for its most recent fiscal year. $0 Aggregate market value of the voting stock held by non-affiliates of the registrant as of February 13, 2003, n/a Number of outstanding shares of the registrant's par value $0.0001 common stock, as of February 13, 2003. 2,313,912 MEDIATELEVISION.TV, INC. FORM 10-QSB INDEX Page ---- Part I Financial Information Item 1. Financial Information...............................................3 Item 2. Management's Discussion and Analysis or Plan of Operation...........9 Item 3. Controls and Procedures............................................16 Part II Other Information Item 1. Legal Proceedings..................................................17 Item 2. Changes in Securities..............................................17 Item 3. Defaults Upon Senior Securities....................................17 Item 4. Submission of Matters to a vote of Security Holders................17 Item 5. Other Information..................................................17 Item 6. Exhibits and Reports on Form 8-K ..................................18 Signatures ..................................................................18 2 PART I ITEM 1. FINANCIAL INFORMATION Condensed Consolidated Balance Sheet at December 31, 2002 and September 30, 2002 Condensed Consolidated Statements of Losses for the three months ended December 31, 2002 and 2001 and for the period from October 11, 2000 (date of inception) to December 31,2002 Condensed Consolidated Statement of Deficiency in Stockholders' Equity for the period from October 11, 2000 (date of inception) to December 31, 2002 Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2002 and 2001 and for the period from October 11, 2000 to December 31, 2002 Notes to Condensed Consolidated Financial Statements 3 MEDIATELEVISION.TV, INC (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS December 31,2002 September 30,2002 ---------------- ----------------- ( Unaudited ) Current assets: Cash and equivalents $ 304 $ 327 Deposits 877 877 Advance to related parties 3,614 2,496 -------------- -------------- Total current assets 4,795 3,700 Property & Equipment- at cost Furniture, Equipment & Leasehold Improvements 887 887 Less: Accumulated Depreciation (334) (289) -------------- -------------- 553 598 -------------- -------------- $ 5,348 $ 4,298 LIABILITIES AND DEFICIENCY IN STOCKHOLDER'S EQUITY Current Liabilities: Accounts payable 33,508 31,664 Advances from shareholder 20,950 20,925 -------------- -------------- Total Current Liabilities 54,458 52,589 Commitments and Contingencies Deficiency in Stockholders' Equity Preferred stock, par value $ 0.001 per share ; 20,000,000 authorized, none issued and outstanding at December 31, 2002 and September 30, 2002 -- -------------- Common stock, par value $0.0001 per share; 80,000,000 authorized, 2,313,912 and 2,296,632 shares issued and outstanding at December 31, 2002 and September 30, 2002, respectively 233 230 Additional paid in capital 82,381 79,097 Deficit accumulated during development stage (131,724) (127,618) -------------- -------------- Total Deficiency in Stockholders' Equity (49,110) (48,291) -------------- -------------- $ 5,348 $ 4,298 See accompanying notes to the unaudited condensed consolidated financial statements. 4
MEDIATELEVISION.TV, INC (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENT OF LOSSES (Unaudited)
October 11, 2000(Date Three Months Ended Three Months Ended of Inception) through December 31,2002 December 31, 2001 December 31, 2002 ---------------- ----------------- ----------------- OPERATING EXPENSES: Selling, general and administrative $ 3,843 $ 6,286 $ 144,048 Depreciation 45 40 334 ------------ ------------ ------------ Total Operating Expenses 3,888 6,326 144,382 Other Income Miscellaneous Income 11,274 Foreign currency translation Loss (218) 45 1,383 ------------ ------------ ------------ Total Other Income (loss) (218) 45 12,657 Net loss before taxes (4,106) 6,281 (131,725) Provision for income taxes -- -- -- ------------ ------------ ------------ NET LOSS $ (4,106) $ 6,281 $ (131,725) ============ ============ ============ Loss per common Share (Basic and Diluted) $ (0.03) $ (0.01) $ (0.06) ============ ============ ============ Weighted Average Common Shares Outstanding 2,377,419 2,043,038 2,377,419 ============ ============ ============ See accompanying notes to the unaudited condensed consolidated financial statements. 5
MEDIATELEVISION.TV, INC (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY FOR THE PERIOD OCTOBER 11, 2000 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2002
Accumulated Additional During Common Stock Common Stock Paid in Development Common Shares Amount Subscriptions Capital Stage Total ------------- ------------ ------------- ---------- ----------- ---------- Common stock issued in October 2000 to founders in exchange for services rendered at $.01 per share 1,000,000 100 -- 9,900 -- 10,000 Common stock issued in October 2000 to founder in exchange for License and Distribution Agreement at $.01 per share 1,000,000 100 -- 9,900 -- 10,000 Common Stock subscribed March 2001, at $.20 per share -- -- 3,833 -- -- 3,833 Common Stock subscribed April 2001, at $.20 per share -- -- 6,720 -- -- 6,720 Common Stock issued in April 2001 in exchange for services rendered at $.20 per share 18,000 2 -- 3,598 -- 3,600 Common Stock subscribed May 2001, at $.20 per share -- -- 12,080 -- -- 12,080 Common Stock issued in May 2001 in exchange for services rendered at $.20 per share 67,000 7 -- 13,393 -- 13,400 Common Stock subscribed June 2001, at $.20 per share -- -- 1,200 -- -- 1,200 Common Stock subscribed July 2001, at $.20 per share -- -- 1,026 -- -- 1,026 Common Stock issued in July 2001 in exchange for services rendered at $.20 per share 8,000 1 -- 1,599 -- 1,600 Common Stock subscribed August 2001, at $.20 per share -- -- 1,000 -- -- 1,000 Common Stock issued in August 2001 in exchange for services rendered at $.20 per share 14,666 1 -- 2,932 -- 2,933 Common Stock subscribed September 2001, at $.20 per share -- -- 2,533 -- -- 2,533 Conversion of Common Stock Subscriptions on September 10, 2001 into Common Stock, 141,966 14 (28,392) 28,378 -- -- Common stock issued for cash, January 2002 at $0.20 per share 37,500 3 -- 7,722 -- 7,725 Common stock issued April 2002 in exchange for services rendered at $.18 per share 8,167 1 -- 1,409 -- 1,410 Common stock issued for cash, May 2002, at $0.20 per share 1,333 1 -- 266 -- 267 Net Loss -- -- -- -- (63,814) (63,814) ---------- ---------- ---------- ---------- ---------- ---------- Balance at September 30, 2002 2,296,632 $ 230 $ -- $ 79,097 $(127,618) $ (48,291) ========== ========== ========== ========== ========== ========== Common stock issued for cash, October 2002 At $ 0.19 per share 7,800 1 1,483 2,340 Common stock issued for cash, October 2002 At $ 0.19 per share 7,800 1 1,483 2,340 Common stock issued for cash, November 2002 At $ 0.19 per share 1,680 1 318 504 Net Loss (4,106) (4,106) ---------- ---------- ---------- ---------- ---------- ---------- Balance at December 31, 2002 2,313,912 $ 233 $ -- $ 82,381 $(131,724) $ (49,110) ========== ========== ========== ========== ========== ========== See accompanying notes to the unaudited condensed consolidated financial statements 6
MEDIATELEVISION.TV, INC (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
October 11, 2000 (Date of Three Months Ended Three Months Ended Inception) through December 31,2002 December 31, 2001 December 31, 2002 ---------------- ----------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss from operating activities $ (4,106) $ (6,281) $ (131,724) Adjustments to reconcile net loss to net cash: Common stock issued to founders in exchange for services -- -- 10,000 Common stock issued in exchange for services -- -- 22,943 Depreciation 45 40 334 Write off of License fees -- -- 10,000 Change in: Prepaid expenses and other assets -- 7 (877) Advances to related parties (1,118) 6,983 (3,614) Accounts payable 1,844 799 33,508 -------------- -------------- -------------- NET CASH USED IN OPERATING ACTIVITIES (3,335) 1,548 (59,431) CASH FLOWS USED IN INVESTING ACTIVITIES: Capital expenditures, net of disposals -- 9 (887) -------------- -------------- -------------- NET CASH USED IN INVESTING ACTIVITIES -- 9 (887) CASH FLOWS (USED IN) / PROVIDED BY FINANCING ACTIVITIES: Proceeds from stockholder advances 25 (2,057) 20,950 Proceeds from issuance of common stock 3,287 -- 39,671 -------------- -------------- -------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 3,312 (2,057) 60,321 Net cash increase (decrease) in cash and cash equivalents (23) (500) 304 Cash and cash equivalents at beginning of the period 327 6 -- -------------- -------------- -------------- Cash and cash equivalents at end of the period $ 304 $ (494) $ 304 ============== ============== ============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for interest $ -- $ -- $ -- Cash paid during the period for taxes -- -- -- Common stock issued in exchange for services -- -- 22,943 Common stock issued to founders in exchange for services -- -- 10,000 Common stock issued to founders in exchange for License -- -- 10,000 Agreement See accompanying notes to unaudited condensed consolidated financial statements 7
MEDIATELEVISION.TV, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE A - SUMMARY OF ACCOUNTING POLICIES --------------------------------------- General ------- The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB, and therefore, do not include all the information necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended December 31, 2002 are not necessarily indicative of the results that may be expected for the year ended September 30, 2003. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated September 30, 2002 financial statements and footnotes thereto included in the Company's Annual Report as filed on SEC Form 10-KSB. Business and Basis of Presentation ---------------------------------- Mediatelevision.tv, Inc (the "Company") was formed on October 11, 2000 under the laws of the State of Delaware. The Company is a development stage enterprise, as defined by Statement of Financial Accounting Standards No. 7 ("SFAS. 7") and is in the business of producing, acquiring and syndicating episodic series designed especially for the Internet. From its inception through the date of these financial statements, the Company has incurred significant operating expenses and accumulated losses of $ 131,724. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise. The consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary, Mediatelevision.tv Distribution, Ltd. Significant inter company transactions have been eliminated in consolidation. Reclassification ---------------- Certain prior period amounts have been reclassified for comparative purposes 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains forward-looking statements that are subject to significant risks and uncertainties. There are several important factors that could cause actual results to differ materially from historical results and percentages and results anticipated by the forward-looking statements. The Company has sought to identify the most significant risks to its business, but cannot predict whether or to what extent any of such risks may be realized nor can there be any assurance that the Company has identified all possible risks that might arise. Investors should carefully consider all of such risks before making an investment decision with respect to the Company's stock. In particular, investors should refer to the section entitled, "Factors that May Affect Future Results and Market Price of Stock". Overview -------- Mediatelevision.tv, Inc, is a development stage company whose efforts have been principally devoted to the business of producing, acquiring, and syndicating episodic series designed especially for the Internet. The Company anticipates that its business will incur significant operating losses in the future. At this time, the Company believes that its success depends on its ability to build a selection of quality content available for distribution on the Internet. As of December 31, 2002, the Company had a cash balance of $304. The Company's existence is dependent upon management's ability to develop profitable operations and resolve it's liquidity problems. Management anticipates the Company will attain profitable status and improve its liquidity through the continued developing of its products, establishing a profitable market for the Company's products and additional equity investment in the Company. In order to improve the Company's liquidity, the Company is actively pursuing additional equity financing through discussion with investment bankers and private investors. There can be no assurance the Company will be successful in its effort to secure additional equity financing. If operations and cash flow continue to improve through these efforts, management believes that the Company can continue to operate. However, no assurance can be given that management's actions will result in profitable operations or the resolution of its liquidity problems. QUARTER ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001 Results Of Operations --------------------- During the quarter ended December 31, 2002 and 2001, the Company received no revenues from operations and incurred expenses of $3,888 and $6,326 respectively. The expenses stem from general, administrative and development expenses relating to the development of the Company's websites and administrative fees. 9 The Company intends to continue negotiating with a large media company for licensing of episodes of Fashionfreakz.com. The Company has also been negotiating with several content producers regarding acquiring their content for distribution by the Company. These alliances may involve significant amounts of intangible assets, or non-cash charges that may affect operating results over the next several fiscal periods. The Company has been negotiating with companies to build marketing alliances. These alliances may involve significant amounts of intangible assets, or non-cash charges that may affect operating results over the next several fiscal periods. The Company sustained a net losses of $4,106 and $6,281 for the quarter ended December 31, 2002 and 2001 respectively. As of December 31, 2002, we had a deficit in working capital of approximately $49,663. We intend to continue to make financial investments in marketing, content, technology and website development. The Company expects to have revenues from digital production services within the next quarter. We have entered into various license agreements and strategic alliances in order to build our audience, provide content, and generate on-line traffic, and generate revenue through on-line sales of products and services. We expect that we will continue to enter into such arrangements. We have been negotiating with a large media company for licensing of episodes of Fashionfreakz.com We have also been negotiating with several content producers regarding acquiring their content for distribution by Mediatv. These alliances may involve significant amounts of intangible assets, or non-cash charges that may affect our operating results over the next several fiscal periods. We have been negotiating with companies to build marketing alliances. These alliances may involve significant amounts of intangible assets, or non-cash charges that may affect our operating results over the next several fiscal periods. LIQUIDITY At December 31, 2002, the Company had total current assets of $4,795 and total liabilities of $54,458. As of December 31, 2002, the Company had an accumulated deficit of approximately $131,724. The Company intends to continue to make financial investments in marketing, content, technology and website development. The Company expects to have revenues from digital production services within the next quarter. The Company's independent certified public accountants have stated in their report that the Company has incurred operating losses since inception, and that the Company is dependent upon managements ability to develop profitable operations. These factors among others may raise substantial doubt about the Company's ability to continue as a going concern. As a result of the Company's operating loss of $ 131,724 from its inception on October 11, 2000 through December 31, 2002, the Company incurred a cash flow deficit of $ 59,431 from operating activities, adjusted principally for depreciation and amortization of $ 334 and equity based compensation of $32,943 The Company met its cash requirements during this period through the receipt of $ $20,950 of cash advanced from an entity controlled by the Company's President as well as $39,671 received in exchange for the sales of the Company's common stock in a private placement to sophisticated investors 10 While the Company has raised capital to meet its working capital requirements in the past, additional financing is required, in order to meet current and projected cash flow deficits from operations. The Company plans to seek financing in the form of equity and debt. The Company believes that once it goes fully reporting and obtains a listing, it will be able to attain sufficient equity financing through the sale of its securities in order to continue its current level of operations. Until that time, the Company's President will be deferring any cash compensation, as will the Company's attorney. The Company will continue to engage outside contractors and consultants who are willing to be paid in stock rather than cash, which will mitigate the Company's deficiency in liquidity. Expenses incurred which cannot be paid in stock, such as Auditors fees, will be paid through shareholders loans from the Company's President until such time as the Company can raise sufficient equity financing. As the Company continues to expand, the Company will incur additional costs for personnel. In order for the Company to attract and retain quality personnel, management anticipates it will continue to offer competitive salaries, issue common stock to consultants and employees, and grant Company stock options to current and future employees. The effect of inflation on the Company's revenue and operating results was not significant. The Company's operations are located primarily in Canada and there are no seasonal aspects that would have a material effect on the Company's financial condition or results of operations. 11 Discussion and Analysis of Financial Condition ---------------------------------------------- FUTURE PROSPECTS: The Company is unable to predict when it may launch intended operations, or failing to do so, when and if it may elect to participate in a business acquisition opportunity. The reason for this uncertainty arises from its limited resources, and competitive disadvantage to other public or semi-public issuers. REVERSE ACQUISITION CANDIDATE: The Company is not currently searching for a profitable business opportunity. This contingency is disclosed for the possibility that the Company's intended business might fail. The Company is not presently a reverse acquisition candidate. Should the Company's business fail, management does not believe the Company would be able to effectively, under current laws and regulations, attract capital, and would be required to seek such an acquisition to achieve profitability for shareholders. Factors That May Affect Future Results and Market Price of Stock. ----------------------------------------------------------------- The business of the Company involves a number of risks and uncertainties that could cause actual results to differ materially from results projected in any forward-looking statement, or statements, made in this report. These risks and uncertainties include, but are not necessarily limited to the risks set forth below. The Company's securities are speculative and investment in the Company's securities involves a high degree of risk and the possibility that the investor will suffer the loss of the entire amount invested. NO OPERATING HISTORY; POTENTIAL OF INCREASED EXPENSES. The Company was organized in 2000, and has no operating history upon which an evaluation of its business and prospects can be based. There can be no assurance that the Company will be profitable on a quarterly or annual basis. In addition, as the Company expands its business network and marketing operations it will likely need to increase its operating expenses, broaden its customer support capabilities, and increase its administrative resources. POSSIBLE NEED FOR ADDITIONAL FINANCING. It is possible that revenues from the Company's operations may not be sufficient to finance its initial operating cost to reach breakeven. If this were to occur, the Company would need to raise or find additional capital. While the Company expects to be able to meet its financial obligations for approximately the next twelve months, there is no assurance that, after such period, the Company will be operating profitably. If they are not, there can be no assurance that any required capital will be obtained on terms favorable to the Company. Failure to obtain adequate additional capital on favorable terms could result in significant delays in the expansion of new services and market share and could even result in the substantial curtailment of existing operations and services to clients. 12 UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. As a result of the Company's lack of operating history and the emerging nature of the market in which it competes, the Company is unable to forecast its revenues accurately. The Company's current and future expense levels are based largely on its investment/operating plans and estimates of future revenue and are to a large extent based on the Company's own estimates. Sales and operating results generally depend on the volume of, timing of, and ability to obtain customers, orders for services received, and revenues therefrom generated. These are, by their nature, difficult at best to forecast. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall or delay. Accordingly, any significant shortfall or delay in revenue in relation to the Company's planned expenditures would have an immediate adverse affect on the Company's business, financial condition, and results of operations. Further, in response to changes in the competitive environment, the Company may from time to time make certain pricing, service, or marketing decisions that could have a material adverse effect on the Company's business, financial condition, operating results, and cash flows. DEVELOPING MARKET; ACCEPTANCE OF THE INTERNET AS A MEDIUM FOR COMMERCE JUST NOW BEING PROVEN. The Company's long-term viability is substantially dependent upon the continued widespread acceptance and use of the Internet as a medium for business commerce, in terms of the sales of both products and services to businesses and individuals. The use of the Internet as a means of business sales and commerce has only recently reached a point where many companies are making reasonable profits from their endeavors therein, and there can be no assurance that this trend will continue. The Internet has experienced, and is expected to continue to experience, significant growth in the number of users and amount of traffic. There can be no assurance that the Internet infrastructure will continue to be able to support the demands placed on it by this continued growth. In addition, delays in the development or adoption of new standards and protocols to handle increased levels of Internet activity or increased governmental regulation could slow or stop the growth of the Internet as a viable medium for business commerce. Moreover, critical issues concerning the commercial use of the Internet (including security, reliability, accessibility and quality of service) remain unresolved and may adversely affect the growth of Internet use or the attractiveness of its use for business commerce. The failure of the necessary infrastructure to further develop in a timely manner, or the failure of the Internet to continue to develop rapidly as a valid medium for business would have a material adverse effect on the Company's business, financial condition, operating results, and cash flows. 13 UNPROVEN ACCEPTANCE OF THE COMPANY'S SERVICES AND/OR PRODUCTS. The Company is still in its development stage. As a result, it does not know with any certainty whether its services and/or products will be accepted within the business marketplace. If the Company's services and/or products prove to be unsuccessful within the marketplace, or if the Company fails to attain market acceptance, it could materially adversely affect the Company's financial condition, operating results, and cash flows. DEPENDENCE ON KEY PERSONNEL. The Company's performance and operating results are substantially dependent on the continued service and performance of its officer and directors. The Company intends to hire additional technical, sales, and other personnel as they move forward with their business model. Competition for such personnel is intense, and there can be no assurance that the Company can retain its key technical employees, or that it will be able to attract or retain highly qualified technical and managerial personnel in the future. The loss of the services of any of the Company's key employees or the inability to attract and retain the necessary technical, sales, and other personnel could have a material adverse effect upon the Company's business, financial condition, operating results, and cash flows. The Company does not currently maintain "key man" insurance for any of its key employees. LIABILITY FOR INFORMATION DISPLAYED ON THE COMPANY'S INTERNET WEB SITES. The Company may be subjected to claims for defamation, negligence, copyright, or trademark infringement and various other claims relating to the nature and content of materials it publishes on its Internet Web site, or those set up for its clients. These types of claims have been brought, sometimes successfully, against online businesses in the past. The Company could also face claims based on the content that is accessible from its own, or its clients' Internet Web sites through links to other Web SITES. DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET. The success of the Company's business depends, in part, on continued acceptance and growth in the use of the Internet for business commerce and would suffer if Internet usage does not continue to grow. Internet usage may be inhibited for a number of reasons, such as: o Inadequate network infrastructure. o Security concerns. o Inconsistent quality of service. o Lack of available cost-effective, high-speed service. o The adoption of new standards or protocols for the Internet. o Changes or increases in government regulation. Online companies have experienced interruptions in their services as a result of outages and other delays occurring due to problems with the Internet network infrastructure, disruptions in Internet access provided by third-party providers or failure of third party providers to handle higher volumes of user traffic. If Internet usage grows, the Internet infrastructure or third-party service providers may be unable to support the increased demands which may result in a decline of performance, reliability or ability to access the Internet. If outages or delays frequently occur in the future, Internet usage, as well as usage of the Company's Internet Web-sites, could grow more slowly or decline. 14 RELIANCE ON OTHER THIRD PARTIES. The Company's and its clients' operations may depend, to a significant degree, on a number of other third parties, including but not limited to ISPs. The Company has no effective control over these third parties and no long-term contractual relationships with any of them. From time to time, the Company and/or its clients could experience temporary interruptions in their Internet Web-site connections and related communications access. Continuous or prolonged interruptions in the Internet Web-site connections or communications access would have a material adverse effect on the Company's business, financial condition and results of operations. Most agreements with ISPs place certain limits on a company's ability to obtain damages from the service providers for failure to maintain the company's connection to the Internet. COMPETITION. The business of online entertainment is very competitive and the Company believes such competition will continue to grow and intensify. In addition to competition on the Internet, the Company faces competition from new forms of digital entertainment distribution such as DVDs. The Company also competes with other forms of leisure for consumer spending, such as sports. The Company will be competing with more established on-line entertainment distribution companies. These competitors may include major music labels, movie studios, major technology companies, as well as established on-line companies. Many of these competitors have substantially greater access to capital, greater financial, technical, marketing, sales and distribution resources, and more experience in distribution of on-line entertainment and in the production of entertainment. Some of the Company's competitors for content distribution are: Screaming Media Inc., which is in the business of content aggregation and distribution, iSyndicate, a provider of syndication solutions and content, and Atom Films Inc., which is in the business of distributing short films. RISKS OF POTENTIAL GOVERNMENT REGULATION AND OTHER LEGAL UNCERTAINTIES RELATING TO THE INTERNET. The Company is not currently subject to direct federal, state, or local regulation in the United States and Canada other than regulations applicable to businesses generally or directly applicable to electronic commerce. However, because the Internet is becoming increasingly popular, it is possible that a number of laws and regulations may be adopted with respect to the Internet. These laws may cover issues such as user privacy, freedom of expression, pricing, content, and quality of products and services, taxation, advertising, intellectual property rights and information security. Furthermore, the growth of electronic commerce may prompt calls for more stringent consumer protection laws. The adoption of such consumer protection laws could create uncertainty in Internet usage and reduce the demand for all products and services.In addition, the Company is not certain how its business may be affected by the application of existing laws governing issues such as property ownership, copyrights, encryption, and other intellectual property issues, taxation, libel, obscenity, and export or import matters. It is possible that future applications of these laws to the Company's business could reduce demand for its products and services or increase the cost of doing business as a result of litigation costs or increased service delivery costs. 15 Because the Company's services will likely be available over the Internet in multiple states, and possibly foreign countries, other jurisdictions may claim that the Company is required to qualify to do business and pay taxes in each state or foreign country. The Company's failure to qualify in other jurisdictions when it is required to do so could subject the Company to penalties and could restrict the Company's ability to enforce contracts in those jurisdictions. The application of laws or regulations from jurisdictions whose laws do not currently apply to the Company's business may have a material adverse affect on its business, results of operations and financial condition. INTELLECTUAL PROPERTY RIGHTS. As part of its confidentiality procedures, the Company expects to enter into nondisclosure and confidentiality agreements with its key employees, and any consultants and/or business partners and will limit access to and distribution of its technology, documentation, and other proprietary information. Despite the Company's efforts to protect any intellectual property rights it may have, unauthorized third parties, including competitors, may from time to time copy or reverse-engineer certain portions of the Company's technology and use such information to create competitive services and/or products. It is possible that the scope, validity, and/or enforceability of the Company's intellectual property rights could be challenged by other parties, including competitors. The results of such challenges before administrative bodies or courts depend on many factors which cannot be accurately assessed at this time. Unfavorable decisions by such administrative bodies or courts could have a negative impact on the Company's intellectual property rights. Any such challenges, whether with or without merit, could be time consuming, result in costly litigation and diversion of resources, and cause service or product delays. If such events should occur, the Company's business, operating results and financial condition could be materially adversely affected. ITEM 3. CONTROLS AND PROCEDURES The Company's management including the Chief Executive Officer, President and Chief Financial Officer, have evaluated, within 90 days prior to the filing of this quarterly report, the effectiveness of the design, maintenance, and operation of the Company's disclosure controls and procedures. Management determined that the Company's disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Company in the reports that it files under the Exchange Act is accurate and is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity's disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors or mistakes or intentional circumvention of the established process. There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation thereof, including any corrective actions with regard to significant deficiencies and material weaknesses. 16 Part II ITEM 1. LEGAL PROCEEDINGS The Company is not aware of any pending or threatened legal proceedings against Mediatelevision.tv, Inc. or any of its properties or subsidiaries. ITEM 2. CHANGES IN SECURITIES NONE ITEM 3. DEFAULTS UPON SENIOR SECURITIES NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted during the fiscal year covered by this report to a vote of security holders of the Company, through the solicitation of proxies or otherwise. ITEM 5. OTHER INFORMATION NONE 17 ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (3) Exhibits The exhibits listed below are required by Item 601 of Regulation S-K. Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K has been identified. Exhibit Number Description of Document ------ ----------------------- 3.1 (a) Articles of Incorporation 3.2 (a) By-laws 99.1 Section 906 Certification of CEO (a) Included as an Exhibit to Mediatelevision.tv, Inc.'s registration statement on Form 10-SB filed January 29, 2002. b) Reports on Form 8-K No Current Reports on Form 8-K were filed during the quarter ended December 31, 2002 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 14, 2003 MEDIATELEVISION.TV, INC. /s/ Penny Green ------------------------------------ Penny Green President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Penny Green Director February 14, 2003 --------------------------- Penny Green 18 CERTIFICATIONS I, Penny Green, certify that: 1. I have reviewed this Quarterly report on Form 10-QSB of Mediatelevision.TV, Inc. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls an procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls, and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation including any corrective actions with regard to significant deficiencies and material weaknesses. Date: February 12, 2003 /s/ Penny Green ----------------------------- Penny Green 19