From: "Saved by Windows Internet Explorer 10" Subject: INTERNATIONAL COMMERCIAL TELEVISION INC (Form: 10-K, Received: 03/30/2012 10:08:26) Date: Wed, 20 Aug 2014 14:51:27 -0500 MIME-Version: 1.0 Content-Type: text/html; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8515277 X-MimeOLE: Produced By Microsoft MimeOLE V6.1.7601.17609 =20 INTERNATIONAL = COMMERCIAL=20 TELEVISION INC (Form: 10-K, Received: 03/30/2012 10:08:26) =20 =20 =20 =20 =20 = =20 =20


UNITED STATES
SECURITIES AND EXCHANGE COMMISSI ON
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT = OF 1934=20

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011

Commission File Number 0-49638
INTERNATIONAL COMMERCIAL TELEVISION INC.
(Name of Registrant as Specified in Its Charter)
 
Nevada
 
76-0621102
(State or Other Jurisdiction of Incorporation or Organization) = =20
 
(I.R.S. Employer Identification No.) =20

487 Devon Park Dr. Ste 212 Wayne, PA 19087
(Address of Principal Executive Offices) (Zip Code)

(206) 780-2921
(Registrant=92s Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act: NONE. = =20

Securities registered under Section 12(g) of the Exchange Act: COMMON = STOCK,=20 PAR VALUE, $0.001

Indicate by checkmark if registrant is a well-known seasoned issuer, as = defined=20 in Rule 405 of the Securities Act.   o Yes    x No

Indicate by checkmark if registrant is not required to file reports = pursuant to=20 Section 13 or 15(d) of the Exchange Act. o Yes    x No

Indicate by checkmark whether the registrant (1) has filed all reports = required=20 to be filed by Section 13 or 15(d) of the Securities Exchange Act of = 1934 during=20 the preceding 12 months (or for such shorter period that the registrant = was=20 required to file such reports), and (2) has been subject to such filing=20 requirements for the past 90 days.     o Yes     x No

Indicate by checkmark if disclosure of delinquent filers pursuant to = Item 405=20 of Regulation S-K is not contained herein, and will not be contained, to = the=20 best of the registrant=92s knowledge, in definitive proxy or information = statements incorporated by reference in part III of this Form 10-K or = any=20 amendment to this Form 10-K.   x

Indicate by check mark whether the registrant is a large accelerated = filer, an=20 accelerated filer, a non-accelerated filer, or a small reporting=20 company.  See definition of =93large accelerated filer=94, = =93accelerated=20 filer=94, and =93smaller reporting company=94 in Rule 12B-2 of the = Exchange Act.=20

Larger Accelerated Filer o
Accelerated Filer o
Non-Accelerated Filer o
Small Reporting Company x

Indicate by checkmark whether the registrant is a shell company (as = defined in=20 Rule 12B-2 of the Securities Act).   o Yes    x No

The=20 aggregate market value of the voting common stock held by non-affiliates = on June=20 30, 2011 (the last business day of our most recently completed second = fiscal=20 quarter) was $1,750,776 using the closing price of $0.10 on June 30, = 2011.=20

As of=20 March 26, 2012, the registrant had issued and outstanding 20,227,756 = shares of=20 common stock.

Documents Incorporated by Reference:  None.
 


 
 

=20
 
 
INTERNATIONAL COMMERCIAL TELEVISION INC.

Inde x to
Annual Report on Form 10- K
For the Year Ended December 31, 2011

Part I
 
Page
Item 1.
3=20
Item 1A.
10
Item 1B.
12
Item 2.
12
Item 3.
12
Item 4.
12
 
 
 
Part II
 
 
Item 5.
13
Item 6.
14
Item 7.
14
Item 7A.
18
Item 8
18
Item 9
18
Item 9A
18
Item 9B
19
 
 
 
Part III
 
 
Item 10.
20
Item 11.
21
Item 12.
21
Item 13.
22
Item 14.
22
 
 
 
Part IV
 
 
Item 15.
23

 
 

=20
Index

=20
Part I

FORWARD-LOOKING STATEMENTS

The=20 matters discussed in this Form 10- K may contain =93forward looking = statements=94=20 (as such term is defined in the Private Securities Litigation Reform Act = of=20 1995).  These statements can be identified by the use of=20 forward-looking terminology such as =93believes,=94 =93expects,=94 = =93may,=94 =93will,=94=20 =93intends,=94 =93should,=94 or =93anticipates=94 or the negative = thereof or other=20 variations thereon or comparable terminology, or by discussions of = strategy that=20 involve risks and uncertainties.  The safe harbor provisions = of=20 Section 21E of the Securities Exchange Act of 1934, as amended, and = Section 27A=20 of the Securities Act of 1933, as amended, apply to forward-looking = statements=20 made by International Commercial Television Inc. = (=93ICTV=94).  You should=20 not place undue reliance on forward-looking=20 statements.  Forward-looking statements involve risks and=20 uncertainties.  The actual results that ICTV achieves may = differ=20 materially from any forward-looking statements due to such risks and=20 uncertainties.  These forward-looking statements are based on = current=20 expectations, and ICTV assumes no obligation to update this=20 information.  Readers are urged to carefully review and = consider the=20 various disclosures made by ICTV in our reports filed with the = Securities and=20 Exchange Commission that attempt to advise interested parties of the = risks and=20 factors that may affect its business.

=20
ITEM=20 1.  DESCRIPTION OF BUSINE SS = =20

Overview

International Commercial Television, Inc. (=93ICTV=94 or the = =93Company=94 or =93we=94 or=20 =93us=94) sells various consumer products via infomercials and through = other=20 channels.  We produce long-form infomercials and short-form=20 advertising spots and sell our proprietary brands of advertised products = directly to our viewing audience. In addition, we sell products via = televised=20 shopping networks, the internet, and retail distribution channels. = =20

The=20 goal of our business plan is to create brand awareness through our = infomercial=20 and spot advertising so that these brands and their families of products = may be=20 sold in dedicated shelf-space areas by product category in traditional = retail=20 stores.  We acquire the rights to our products that we market = via=20 licensing agreements, acquisition and in-house = development.  We=20 currently sell these products domestically and internationally. =

A=20 short-form spot is a 30-second, 60-second, or 120-second commercial, = while a=20 long-form infomercial is a 28 1/2-minute direct response=20 commercial.  Short-form spots generally feature products that = can be=20 explained or demonstrated in two minutes or less, with a selling price = of $29 or=20 less.  Long-form infomercials generally feature products with = a=20 selling price of $30 - $300 and are usually unique, with more benefits = and=20 features, and thus require a lengthier demonstration and explanation. = =20

For the=20 fiscal years ended December 31, 2011 and December 31, 2010, 58% and = 49%,=20 respectively, of our product sales were generated from products sold=20 domestically.

Our=20 international division represented 42% and 51% of our sales volume for = the years=20 ended December 31, 2011 and 2010, respectively. International revenues = resulted=20 primarily from the sale of products to international distributors who in = turn=20 marketed our products to their respective markets via direct response = and retail=20 marketing channels.

We are=20 a Nevada corporation, and our headquarters are located at 487 Devon Park = Drive,=20 Suite 212, Wayne, PA 19087.

The ICTV Strategy

Many of=20 our competitors who produce successful infomercials fail to capitalize = on their=20 success by associating the products featured in their infomercials with = a=20 particular brand.  We think that there is a unique opportunity = to do=20 so.   Our goal is to create several brands of products = and to=20 introduce our brands of products to the market by airing infomercials = featuring=20 one or a few anchor products for each particular brand.  As = our brands=20 achieve recognition through the infomercial of the anchor product(s), we = plan to=20 sell the anchor product(s) and related families of products under those = brands=20 in traditional retail stores.  Our objective is to have our = brands of=20 proprietary products sold in retail stores in dedicated shelf space = areas by=20 product category.  We are currently developing the = infrastructure we=20 will need to develop our brands and to take families of products under = those=20 brands to the traditional retail environment.
 
Our Proposed Brands and Current Products

We=20 continually seek to develop, acquire or obtain the license to consumer = products=20 that we believe can be distributed and marketed profitably, especially = in the=20 retail environment.  Our success depends, in part, on our = ability to=20 market products that appeal to viewers and that can be easily associated = with a=20 particular brand.  In order to succeed, we are also aware of = the need=20 to identify new products to supplement and possibly replace our existing = product=20 lines as they mature through product life cycles.
 
 
3

=20
Index
 
Our=20 product development and marketing department is the backbone of our=20 Company.  We put forth extensive effort to research and = develop new=20 products that are unique and that will be suitable both for direct = response=20 marketing in infomercials and for sale in traditional retail=20 stores.  Our development of new product ideas stems from a = variety of=20 sources, including inventors, trade shows, strategic alliances with=20 manufacturing and consumer product companies, industry conferences, and = the=20 continuous review of new developments within targeted brand and product=20 categories.  In addition, we also receive unsolicited new = product=20 proposals from independent parties.

The=20 Company also internally generates ideas for new products that it wishes = to=20 develop.  If the Company has an idea for a product, it will = present=20 prototype specifications to one of its manufacturers to develop a = prototype, and=20 the Company will then evaluate the feasibility of selling the product = through an=20 infomercial.

When we=20 evaluate a product for its suitability for an infomercial, we consider = how=20 appropriate it is for television demonstration and how consumers will = perceive=20 the value of the product.  Part of our selection criteria for = new=20 products are as follows:

 
Products must be = unique,=20 demonstrable, have mass-market appeal and generally be unavailable = elsewhere in the marketplace.  Benefits must be capable = of being=20 demonstrated visually, preferably with support from customer = testimonials;=20
 
Must support a = minimum 5 times=20 mark-up from landed cost while still representing good perceived = value to=20 the consumer; =
 
 
Must have a unique = =93hook=94 to be=20 able to catch the attention of the viewer - infomercials simply = portray=20 the consumer=92s problem and the solution provided by the product = and=20 usually present a significant before and after state - the bigger = the=20 problem solved by the product, the greater the sales potential; = =20
 
Easily and = effectively promoted=20 through sustained television branding; =20
 
Supports a margin = sufficiently=20 high enough to maintain profitability to us when sold through = conventional=20 retailers;
 
Has high volume sales = potential, to ensure retailer interest; =20
 
Exhibits potential = for=20 =93back-end=94 sales either through traditional retail or by = company-run =93auto=20 ship=94 continuity programs - the more related products that are = available=20 for upsell/back-end campaigns, the wider the advantage in the = infomercial=20 marketplace; =
 
Should have the = potential to be=20 turned into a long-term retail item =96 a product can drive retail = sales by=20 capitalizing on awareness advertising that is created with a = successful=20 infomercial; and =
 
Must be relatively = easy to=20 ship.

Our=20 primary product categories are health and beauty, diet and fitness, and = leisure=20 and toy products.  These categories have performed well in = Direct=20 Response Television (=93DRTV=94) campaigns and they move smoothly to = retail sales=20 channels.  Retail buyers seek out new and better products in = these=20 categories, especially branded products that have gained a high profile = through=20 television.
=  
The=20 following is a list of products we own or have certain rights to and = that we are=20 currently marketing or plan to market over the next twelve months. = =20

Health and = Beauty Products=20

The=20 Health and Beauty category is a strong and proven DRTV category as = products in=20 this category demonstrate well on television with before and after = clinicals,=20 possess high profit margins, and are aimed at the highly motivated = =93Fountain of=20 Youth=94 markets.

Derma Wand = TM = =20
We have=20 a worldwide exclusive license to sell the DermaWand, a skin care = appliance that=20 reduces fine lines and wrinkles and improves overall skin=20 appearance.  The price consumers pay for DermaWand TM = varies=20 from country to country, however, it generally ranges from approximately = $90-$120.  The DermaWand is sold and marketed with DermaVital = skin=20 care products which are offered with a monthly continuity program. = =20

On=20 March 3, 2010, ICTV terminated its agreement in which it granted = exclusive=20 distribution rights of the Derma Wand TM to Allstar Marketing Group (=93Allstar=94) for all U.S. = distribution=20 channels with the exception of televised home shopping and beauty=20 salons,  with an effective date of March 13, 2010. After a = =93sell-off=94=20 period granted to Allstar that ended April 30, 2010, ICTV secured its = rights=20 back for complete U.S. distribution of the DermaWand.  The = $94,000 in=20 non-refundable royalty advance was recognized as revenue upon the = termination of=20 the agreement.

On=20 November 9, 2011, ICTV began airing a new Derma Wand TM long-form infomercial.   Through December 31, = 2011,=20 the new DermaWand TM infomercial aired 579 times on both national cable stations = and=20 throughout a variety of major and minor broadcast markets in the United=20 States.  The Company recognized approximately $128,000 of = revenue=20 relate to the new DermaWand TM=20 infomercial during 2011.  The infomercial has = continued to run=20 through March 2012, and it is the Company=92s plan to continue airing it = throughout the entire year.

 
4

=20
Index
 
DermaVital Hydra = Infusion=20 Treatment

DermaVital TM   is a product that allows water to penetrate the = skin's=20 surface, thus re-hydrating the deeper layers.  Medical = experts,=20 including dermatologists, agree that dehydration or lack of water is a = major=20 cause of skin problems.  The problem is that the skin   by itself is virtually waterproof   and water cannot penetrate its resilient = surface.  This=20 moisturizing formula has the ability to send water into the deeper = layers of the=20 skin where it is most needed.  The result is a deeper = moisturization=20 that softens, cleanses and hydrates the skin in a way that enhances and = supports=20 the skin's own natural functions.

DermaVital TM has been offered to DermaWand buyers through U.S. DRTV and = Internet=20 distribution channels as a monthly continuity program, and to HSN = customers as=20 an =93add on=94 product to their DermaWand purchase.

Additional = Products =96=20 Various Categories

Smart Stacks TM   
We=20 acquired the rights to exclusively manufacture and market an innovative = storage=20 system known as =93Smart Stacks TM =94.  Since the long-form infomercial was first = aired in=20 October 1998, one million Smart Stacks TM storage systems have been sold worldwide, of which 400,000 = of those=20 were sold on QVC in triple pack form.
 
In the=20 fall of 2010, the Company did a DRTV media test of Smart Stacks.   There were no sales of Smart Stacks TM during 2011 and the Company has no immediate plans for = selling this=20 product.
 
Slender Lift = TM = =20
In=20 November 2009, we acquired worldwide exclusive license to manufacture = and sell=20 the Slender Lift TM , a slimming garment system for women. In the spring of = 2010, the=20 Company did a DRTV media test of Slender Lift TM. In February 2012, we tested Slender Lift TM on a televised home shopping channel.   The = product=20 sold at an introductory price of $24.95.  The test consisted = of one=20 airing of approximately eight minutes and generated sales of = approximately 200=20 units.  Three additional airing are scheduled for early April = 2012.=20

BetterBlocks = TM = =20
In=20 April 2000 we acquired the exclusive, royalty-free worldwide license to=20 manufacture market and distribute BetterBlocks TM , a patented plastic toy building system, under the Share = and Option=20 Purchase Agreement with The Better Blocks Trust, a=20 shareholder.   BetterBlocks TM has been sold mainly through DRTV, mail order catalogues, = retail and=20 the television shopping channel QVC.
=  
The=20 Company tested the BetterBlocks TM product line on televised shopping in the fall of 2009, and = has=20 continued to sell the product on the internet in 2011 and=20 2010.  Revenue for BetterBlocks TM was approximately $6,000 and $300 during 2011 and 2010,=20 respectively.  The Company plans to continue selling = BetterBlocks=20 TM=20 through the web during 2012 and plans to sell this product in=20 conjunction with the promotion of the new line of BetterBlocks TM , = Glo-B=92s=20 TM . = =20
 
Glo-B=92s = TM = =20
 
On=20 March 14, 2012, the Company completed the execution of an agreement with = Hutton=20 Miller LLC for the production of one and two minute direct response = television=20 commercials to be aired on major US children=92s cable channels, = featuring Glo-B=92s=20 TM=20 .
 
Glo-B=92s=20 TM=20 is a toy building block system that bends, moves, shapes and=20 curves.  Solidly made of quality glow-in-the-dark neon colored = plastic, the blocks glow in their respective colors. Glo-B=92s TM are designed for children 3 + years and will connect with = and=20 enhance other popular building block sets. Recent years have seen the=20 =93construction toy=94 segment of the toy market in the USA on a sharp = increase,=20 with actual =93building and doing=94 once again enjoying a resurgence of = popularity=20 with both children and parents alike.
 
The=20 production agreement calls for =93best efforts=94 completion of the TV = spots by May=20 31, 2012 and the Company expects to begin testing the commercials on = kids=92 cable=20 stations during the summer months, while children are home from school = on summer=20 vacation.  If we achieve positive restuls from these tests, = our goal=20 will  to be in a good position for a profitable DRTV, = internet, and=20 live television home shopping for a 2012 Christmas promotion, with a = continued=20 DRTV push through 2013. We plan to begin a progressive retail rollout = beginning=20 summer 2013, climaxing in an anticipated full Christmas retail placement = later=20 in that year.
 
 
5

=20
Index
 
Strike N=92 Set = =20 TM=20

In July=20 2010, we entered into an exclusive, royalty-free worldwide agreement to=20 distribute Strike N=92 Set TM , a patented fishing lure system manufactured by MBCT Global = Ventures, LLC.  As part of the agreement, ICTV was required to = develop=20 and produce at its own expense, 60-second, 120-second, and 15 minute=20 infomercials.   In January 2011, ICTV began production of = these=20 infomercials and in July 2011 ran a U.S. media test of the=20 product.  Revenue for Strike N Set was approximately $4,000 = during=20 2011.  The Company plans to continue selling Strike N Set = TM   through the web during 2012, in addition to re-testing = two minute=20 infomercial later this year.

Marketing, Sales, Production and Distribution

We use=20 infomercials to build brand awareness and identity.

Infomercials are designed to motivate the viewer to purchase the = product=20 immediately (or in the case of lead-generation DRTV, to inquire about = the=20 product).  As a result, where brand TV spots generally focus = on one=20 key benefit, infomercials give the viewer all the information they need = to make=20 a purchasing decision, including presenting multiple features and = benefits, and=20 providing price and quality comparisons.  Most infomercials = also=20 include a special time-sensitive offer designed to induce immediate = response.=20

Infomercials are characterized by benefit-driven copy, captivating=20 demonstrations and attractive offers.  A typical infomercial = consists=20 of two or three "pods" that each last from 6 -12 = minutes.  Each pod=20 contains product and benefit information for consumers to make a = decision on=20 whether or not to purchase.  The pod concludes with a = call-to-action=20 (CTA) during which the seller asks for the order.

More=20 importantly, we feel that infomercials build brand = awareness.  Viewers=20 of a long-form infomercial are exposed to the name and features of a = particular=20 brand and product for nearly thirty minutes.  We think that = this brand=20 recognition will make it easier to market the featured product in the = retail=20 environment, because consumers who have seen our infomercials will = already have=20 been exposed to the brand.  We expect other products within = the=20 featured product=92s family to benefit from brand association in the = retail=20 environment.  We believe this introduction of product family = brands=20 through infomercials will save much time, money and effort that we would = otherwise have to spend on marketing if we were to introduce our = products to=20 traditional retail without airing the infomercials first.

We also=20 think infomercials are an easy means by which to measure the success of = our=20 marketing efforts.  We can measure how successful an = infomercial is or=20 will be by doing a media test.  If the product performs well = during=20 test marketing, we can increase the media time for the=20 infomercial.  We can also target certain markets by buying = media time=20 in particular locations or cities.  The products we sell via = our=20 infomercials may do well in some markets, but not in = others.  When=20 orders are placed, we gather demographic information about the purchaser = and use=20 this information to determine our future target markets.

We=20 contract with several independent companies to manufacture our=20 products.  In general, we place an order with the manufacturer = and we=20 pay the manufacturer cash upon shipment of the goods.  In some = instances, we provide the manufacturer with an advance payment to cover = a=20 portion of the manufacturers=92 costs, and we pay the balance after the = goods are=20 shipped.

We=20 contract with telemarketing firms to answer phones and capture orders = for=20 products sold through our infomercials.  Our storage of = inventory,=20 customer service, order processing, and order shipping functions are = performed=20 by an outside third party contracted fulfillment company - Motivational=20 Fulfillment in Chino, California.

We=20 generally fulfill our orders within one to five days of the date = customers order=20 our products.  If for some reason we are unable to fulfill an = order=20 within five days of the date of a customer=92s order, then we provide = the customer=20 with a letter explaining the reason for the delay.  The letter = will=20 also provide the customer with a revised shipping date not to exceed = thirty=20 days, and will offer the customer an option to either consent to the = delay in=20 shipping or to cancel their order and receive a prompt refund. =

Infomercial Production

In the=20 past, we have produced our infomercials with internal management = resources, but=20 we also have utilized independent production companies to produce our=20 infomercials.  We have relationships with several independent=20 producers, and we contract out such functions as a way to keep our = overhead to a=20 minimum. We, along with the owner or inventor of the product (as the = case may=20 be) will always have input in the production process.  Even = when we=20 out-source production, we utilize a company specialist to oversee all = scripting,=20 filming and editing of the infomercial, and we take great care to ensure = that=20 the infomercial is produced in such a way that it can easily be adapted = to=20 international markets.
 
 
6

=20
Index
 
Media Testing

Once=20 the infomercial is produced, we acquire a minimal amount of inventory = and=20 purchase $10,000-$20,000 worth of media time through one of our = preferred direct=20 response television specialist media agencies to test the infomercial in = select=20 target markets.  The agencies generally have comprehensive = records of=20 the markets and time slots in which certain product categories have = historically=20 sold well.  The agencies also have comprehensive tracking and=20 analyzing programs to test and track the sales response in the markets = where we=20 air our infomercials.  The agencies will provide us with a = report=20 showing the amount of revenue generated from the infomercial as a ratio = to media=20 dollars spent.  For example, a 2.5:1 ratio means that for = every $1.00=20 spent on media, $2.50 was generated in sales.  We take this=20 information, along with other things such as cost of goods, fulfillment = charges,=20 telemarketing costs, insurance, returns, credit card commissions and = shipping=20 costs and generate our own reports to assess the success of the = infomercial in=20 our target markets.

Product Rollout

If a=20 positive result is achieved during media testing, we will begin to build = up=20 inventory of the product and =93roll out=94 the infomercial on a wider = scale by=20 increasing media spending on a weekly basis until a point just before = returns=20 diminish.  When we roll out infomercials, we generally begin = with a=20 media spend of $75,000-$100,000 per week for media time for a long-form=20 infomercial and a minimum of $50,000 per week for a short-form = infomercial or=20 spot.  We monitor results, payoffs and profitability of our=20 infomercials on a daily basis and aim to be very cautious as to when and = how we=20 go about rolling out our infomercials.

In our=20 experience, a =93good average=94 infomercial, which we define as having = a media=20 ratio of 2.5:1, will have a life span of eight to twelve months and = will, at its=20 peak, sustain $150,000-$200,000 in media spending per week.  A = =93hit=94=20 infomercial, which we define as having a media ratio of 4:1 or greater, = will=20 have a life span of 12 to 24 months, and at its peak, will sustain=20 $600,000-$700,000 in media spending per week.

International Sales

The=20 goal of our international division is to establish solid distribution=20 relationships in each country where our products are marketed. By doing = so, we=20 can tailor our products and production for each individual region, and = develop=20 relationships with local experts and established companies that are = intimate=20 with the marketplace.  When a product that was domestically = sold in an=20 infomercial is prepared for international distribution, the = international=20 infomercial operator will dub the infomercial, develop product = literature in the=20 appropriate foreign language and review the infomercial=92s compliance = with local=20 laws.  The international infomercial operator will then test = the=20 infomercial and roll it out on a larger scale if the test marketing is=20 successful.  We believe that many well-produced infomercials = can=20 produce profitable margins somewhere internationally, even if they have = failed=20 in the United States.
 
We do=20 expect to continue to devote attention to the international market and = to have=20 our infomercials aired internationally through our strategic alliances = that we=20 have and will continue to develop throughout the world.  We = are=20 working to leverage our line of products that we market internationally = and test=20 which shows sell best in each country and region.

Traditional Retail Sales

We aim=20 to capitalize on the brand and product awareness we create through our=20 infomercials by selling our proprietary brands of products and related = families=20 of products under those brands in dedicated shelf-space areas by product = category in traditional retail stores.  We believe that = traditional=20 retail sales are a logical step to take after we create brand and = product=20 awareness through our infomercials, because we will not have to incur = any=20 significant marketing costs and expenses that consumer product companies = would=20 otherwise have to incur when introducing their products to the = traditional=20 retail environment.

We are=20 currently working toward creating the infrastructure that we will need = in order=20 to take our brands and products to the traditional retail environment. = The=20 objective of the DRTV strategy is to build brands that are attractive to = our=20 main target market - national retailers.

Other Direct Response Sales Methods

Once we=20 have rolled out a product in an infomercial, we prepare to distribute = the=20 product via other direct response methods, such as mail order catalogs, = direct=20 mail, credit card statement inserts and live appearances on television = home=20 shopping channels such as HSN and QVC.  We believe that this = is an=20 additional means by which to use the brand awareness we create in our=20 infomercials, and to reach consumers who might not watch=20 television.  These other direct response methods also extend = the time=20 period during which each of our products can generate revenue. =

Customer Service

We seek=20 to provide our customers with quality customer service.  We = generally=20 offer an unconditional 30-day money back return policy to purchasers of = our=20 products.  Our policy is to investigate the cause of returns = if=20 returns begin to undermine our expectations for a product=92s = profitability.=20

 
7

=20
Index
 
Competition

We=20 compete directly with several established companies that generate sales = from=20 infomercials and direct response television, as well as small = independent direct=20 response television producers.    Products similar = to ours=20 may be sold in department stores, pharmacies, general merchandise = stores,=20 magazines, newspapers, direct mail advertising, catalogs and over the=20 internet.  Many of our major competitors, who include Thane=20 International Inc. and Guthy-Renker Corp., have substantially greater = financial,=20 marketing and other resources than us.

We=20 expect that we will face additional competition from new market entrants = and=20 current competitors as they expand their direct marketing business=20 models.  The barriers to entry in the infomercial industry are = fairly=20 low, but there are many difficult hurdles for young entrants to overcome = if they=20 are to be successful in the long-term.  To be competitive, we = believe=20 we must respond promptly and effectively to the challenges of = technological=20 change, evolving standards and our competitors=92 = innovations.  We must=20 also source successful products, create brand awareness and utilize good = sales=20 pitches for our products.  We believe that although we have a = limited=20 operating history, we are strategically positioned to compete because of = our=20 management=92s experience and strong relationships in the = industry.  In=20 addition, we feel that associating our products with particular brands = and=20 focusing on the traditional retail environment, as we intend to do, will = give us=20 a competitive advantage over traditional infomercial companies who fail = to=20 capitalize on the consumer awareness they create via their infomercials. = =20
 
Intellectual Property

Our=20 success is dependent, in part, upon our proprietary rights to our = primary=20 products.  The following consists of a description of our = intellectual=20 property rights.

 
● = =20
Trademarks = =20

We have=20 several registered trademarks for BetterBlocks TM = in=20 countries throughout the world.  We have also registered = trademarks in=20 the United States for Derma Wand TM , DermaVital TM , = Smart=20 Stacks TM , = Slender=20 Lift TM , BetterBlocks TM , Glo-B=92s TM , and Strike N=92 Set TM .

 
● = =20
= Patents=20

We have=20 patents for the toy building elements of BetterBlocks TM = in several=20 countries throughout the world.  We also have the exclusive = right to=20 the use of the worldwide patent for DermaWand TM = , as is=20 necessary to manufacture, market and distribute DermaWand TM .  In addition, we have the exclusive right to the use of the = worldwide patent for the distribution of Strike N=92 Set TM .

 
● = =20
= Copyrights=20

We have=20 copyright registrations for all versions of our infomercials for = DermaWand TM = and BetterBlocks TM .

 
● = =20
= Registered=20 Designs

We have=20 registered designs for BetterBlocks TM = in several=20 countries throughout the world.

There=20 can be no assurance that our current or future intellectual property = rights, if=20 any, will not be challenged, invalidated or circumvented, or that any = rights=20 granted under our intellectual property will provide competitive = advantages to=20 us.  In addition, there can be no assurance that claims = allowed on any=20 future patents will be sufficiently broad to protect our=20 products.  The laws of some foreign countries may not protect = our=20 proprietary rights to the same extent as do the laws of the United=20 States.  We intend to enforce our proprietary rights through = the use=20 of licensing agreements and, when necessary, = litigation.  Although we=20 believe the protection afforded by our patents, trademarks, copyrights = and=20 registered designs has value, rapidly changing technology and industry = standards=20 make our future success depend primarily on the innovative skills, = expertise,=20 and management abilities of our team rather than on patent and trademark = protection.

Royalty = Agreements =20
In=20 April 2000, we assumed from R.J.M. Ventures Limited and Better Blocks=20 International Limited, by virtue of the Share and Option Purchase = Agreement we=20 signed with The Better Blocks Trust, the obligation to pay royalties on = the=20 sales of the DermaWand TM = under the=20 following agreements:

 
8

=20
Index
 
DermaWand = TM
 
 
● = =20
Under a marketing and = royalty=20 agreement with the developer of DermaWand TM = =20 , we are = obligated to pay=20 them a royalty at a fixed rate per unit sold.  The = agreement is=20 silent as to its duration. =20

Governmental Regulation

We are=20 subject to regulation by a variety of federal, state and local agencies, = including the Federal Trade Commission, the Federal Communications = Commission,=20 the Consumer Product Safety Commission and the FDA under the FDC=20 Act.  The government regulations to which we are subject vary=20 depending on the types of products we manufacture and = market.  As we=20 begin to market a broader variety of products and services, we may = become=20 subject to regulation by additional agencies.
 
We are=20 also subject to the Federal Mail/Telephone Order Rule.  Under = the=20 Mail/Telephone Order Rule, it is an unfair or deceptive act or practice = for a=20 seller to solicit any order for the sale of merchandise to be ordered by = the=20 buyer through the mail or by telephone unless, at the time of the = solicitation,=20 the seller has a reasonable basis to expect that it will be able to ship = the=20 ordered merchandise to the buyer within 30 days after the seller=92s = receipt of a=20 properly completed order from the buyer.  If the buyer uses = credit to=20 pay for the merchandise, the time period within which the seller must = ship the=20 merchandise to the buyer is extended to 50 days.  Under the=20 Mail/Telephone Order Rule, the seller, among other things, must provide = the=20 buyer with any revised shipping date.  If the seller is unable = to=20 fulfill an order within 30 or 50 days, as the case may be, then the = seller must=20 provide the buyer an option either to consent to a delay in shipping or = to=20 cancel their order and receive a prompt refund.

There=20 can be no assurance that new laws, rules, regulations or policies that = may have=20 an adverse effect on our operations will not be enacted or promulgated = at a=20 future date.

Employees

During=20 the course of 2011 we employed a total of six employees, five full-time=20 employees and one part-time employee.    We consider = our=20 labor relations to be good.  None of our employees are covered = by a=20 collective bargaining agreement.
 
Research and Development

Our=20 research and development costs have consisted of efforts to discover and = develop=20 new products and the testing and development of direct-response = advertising=20 related to these products.

Available Information and Reports to Stockholders

We are=20 subject to the information and periodic reporting requirements under = Section=20 12(g) of the Securities Exchange Act and, accordingly, will file = periodic=20 reports, proxy statements and other information with the Securities and = Exchange=20 Commission.  Any document we file may be read and copied at = the=20 Commission=92s Public Reference Room located at 450 Fifth Street NW, = Washington DC=20 20549.  Please call the Commission at 1-800-SEC-0330 for = further=20 information about the public reference rooms.  Our filings = with the=20 Commission are also available to the public from the Commission=92s = website at=20 http://www.sec.gov.

 
9

=20
Index
=20

=20
ITEM = 1A.  RISK=20 FA CTORS
Shareholders and prospective purchasers of our common stock should = carefully=20 consider the following risk factors in addition to the other information = appearing in this Annual Report on Form 10-K.

There is no = assurance that=20 our strategy to leverage brand awareness created by our infomercials = into the=20 retail market will work, and the value of your investment may decline if = we do=20 not attain retail sales.

The=20 goal of our business plan is to create brand awareness through = infomercials so=20 that we can use this brand awareness to sell our products under our = brands in=20 traditional retail stores in dedicated shelf-space areas.  Our = success=20 will depend on our ability to associate our products with particular = brands to=20 create consumer awareness and to enter the traditional retail=20 market.  If our strategy to leverage brand awareness created = by our=20 infomercials into the retail market does not work and we do not attain = retail=20 sales, the value of your investment may decline.

If the=20 response rates to our infomercials are lower than we predict, we may not = achieve=20 the customer base necessary to become or remain profitable, and the = value of=20 your investment may decrease .

Our=20 revenue projections assume that a certain percentage of viewers who see = our=20 infomercials will purchase our products.  If a lower = percentage of=20 these viewers purchase our products than we project, we will not achieve = the=20 customer base necessary to become or remain profitable, and the value of = your=20 investment may decrease.

If our=20 infomercials are not successful, we will not be able to recoup = significant=20 advance expenditures spent on production and media times, and our = business plan=20 may fail .=20

Our=20 business involves a number of risks inherent in operating a direct = response=20 television business.  The production of infomercials and = purchase of=20 media time for television involves significant advance=20 expenditures.  A short-form infomercial generally costs around = $15,000-$40,000 to produce, while production costs for a long-form = infomercial=20 are generally around $120,000-$180,000.  We are dependent on = the=20 success of the infomercials we produce and the public=92s continued = acceptance of=20 infomercials in general.  If our infomercials do not generate = consumer=20 support and create brand awareness and we cannot recover the initial = money we=20 spend on production and media time, we will not be able to recoup the = advance=20 expenditures and may go out of business if new products and additional = capital=20 are not available.

We depend on key = management and employees, the loss of whom may prevent us from = implementing our=20 business plan, limit our profitability and decrease the value of your = stock.=20

We are=20 dependent on the talent and resources of our key executives and=20 employees.  In particular, the success of our business depends = to a=20 great extent on Kelvin Claney, our Chief Executive Officer and a member = of our=20 Board of Directors.  Mr. Claney has extensive experience in = the=20 infomercial industry, and his services are critical to our=20 success.  The market for persons with experience in the direct = response television industry is very competitive, and there can be no = guarantee=20 that we will be able to retain the services of Mr. = Claney.   We=20 have not obtained key man insurance with respect to Mr. Claney or any of = our=20 executive officers.  The loss of Mr. Claney may prevent us = from=20 implementing our business plan, which may limit our profitability and = decrease=20 the value of your stock.

If we cannot = protect our=20 intellectual property rights, our operating results will suffer, and you = could=20 ultimately lose your investment.

We seek=20 to protect our proprietary rights to our products through a combination = of=20 patents, trademarks, copyrights and design = registrations.  Despite our=20 efforts to protect our proprietary rights, unauthorized parties may = attempt to=20 copy aspects of our products or obtain and use information that we = consider=20 proprietary.  Litigation may be necessary to enforce our = intellectual=20 property rights and to determine the validity and scope of the = proprietary=20 rights of others.  Any litigation could result in substantial = costs=20 and diversion of management and other resources with no assurance of = success and=20 could seriously harm our business and operating = results.  Investors=20 could lose their entire investment.

If we do not = continue to=20 source new products, our ability to compete will be undermined, and we = may be=20 unable to implement our business plan.

Our=20 ability to compete in the direct marketing industry and to expand into = the=20 traditional retail environment depends to a great extent on our ability = to=20 develop or acquire new innovative products under particular brands and = to=20 complement these products with related families of products under those=20 brands.  If we do not source new products as our existing = products=20 mature through their product life cycles, or if we do not develop = related=20 families of products under our brands, we will not be able to implement = our=20 business plan, and the value of your investment may decrease. =
 
 
10

=20
Index
 
Our shares are = classified=20 as =93penny stock,=94 which will make it more difficult to sell than = exchange-traded=20 stock.

Our=20 securities are subject to the Securities and Exchange Commission rule = that=20 imposes special sales practice requirements upon broker-dealers that = sell such=20 securities to other than established customers or accredited=20 investors.  For purposes of the rule, the phrase =93accredited = investors=94 means, in general terms, institutions with assets exceeding = $5,000,000 or individuals having a net worth in excess of $1,000,000 or = having=20 an annual income that exceeds $200,000 (or that, combined with a = spouse=92s=20 income, exceeds $300,000).  For transactions covered by the = rule, the=20 broker-dealer must make a special suitability determination for the = purchaser=20 and receive the purchaser=92s written agreement to the transaction prior = to the=20 sale.  Consequently, the rule may affect the ability of = purchasers of=20 our securities to buy or sell in any market that may develop. =

In=20 addition, the Securities and Exchange Commission has adopted a number of = rules=20 to regulate =93penny stocks=94.  A =93penny stock=94 is any = equity security=20 that has a market price of less than $5.00 per share or with an exercise = price=20 of less than $5.00 per share, subject to certain = exceptions.  Such=20 rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and = 15g-7=20 under the Securities and Exchange Act of 1934, as = amended.  The rules=20 may further affect the ability of owners of our shares to sell their = securities=20 in any market that may develop for them.  Shareholders should = be aware=20 that, according to the Securities and Exchange Commission Release No. = 34-29093,=20 the market for penny stocks has suffered in recent years from patterns = of fraud=20 and abuse.  Such patterns include:

 
● = =20
control of the market = for the=20 security by one or a few broker-dealers that are often related to = the=20 promoter or issuer; =
 
● = =20
manipulation of = prices through=20 prearranged matching of purchases and sales and false and = misleading press=20 releases;
 
● = =20
=93boiler room=94 = practices=20 involving high pressure sales tactics and unrealistic price = projections by=20 inexperienced sales persons; =20
 
● = =20
excessive and = undisclosed=20 bid-ask differentials and markups by selling broker-dealers; and = =20
 
● = =20
the wholesale dumping = of the=20 same securities by promoters and broker-dealers after prices have = been=20 manipulated to a desired level, along with the inevitable collapse = of=20 those prices with consequent investor losses. =20

Our issuance of additional shares may have the effect of diluting the = interest=20 of shareholders .

Any=20 additional issuances of common stock by us from our authorized but = unissued=20 shares may have the effect of diluting the percentage interest of = existing=20 shareholders.  Out of our 100,000,000 authorized common = shares,=20 81,942,244 shares, or approximately 82%, remain unissued at December 31, = 2011.  The board of directors has the power to issue such = shares=20 without shareholder approval.  None of our 20,000,000 = authorized=20 preferred shares are issued.  We fully intend to issue = additional=20 common shares or preferred shares in order to raise capital to fund our = business=20 operations and growth objectives.

The board of = directors=92=20 authority to set rights and preferences of preferred stock may prevent a = change=20 in control by shareholders of common stock.

Preferred shares may be issued in series from time to time with such=20 designation, rights, preferences and limitations as our board of = directors=20 determines by resolution and without shareholder = approval.  This is an=20 anti-takeover measure.  The board of directors has exclusive=20 discretion to issue preferred stock with rights that may trump those of = common=20 stock.  The board of directors could use an issuance of = preferred=20 stock with dilutive or voting preferences to delay, defer or prevent = common=20 stockholders from initiating a change in control of the Company or = reduce the=20 rights of common stockholders to the net assets upon=20 dissolution.  Preferred stock issuances may also discourage = takeover=20 attempts that may offer premiums to holders of our common stock. =

Concentration of = ownership=20 of management and directors may reduce the control by other shareholders = over=20 ICTV.

Our=20 executive officers and directors own or exercise full or partial control = over=20 approximately 36.6% of our outstanding common stock.  As a = result,=20 other investors in our common stock may not have much influence on = corporate=20 decision-making.  In addition, the concentration of control = over our=20 common stock in the executive officers and directors could prevent a = change in=20 control of ICTV.
 
Our board of = directors is=20 staggered, which makes it more difficult for a stockholder to acquire = control of=20 the Company.

Our=20 articles of incorporation and bylaws provide that our board of directors = be=20 divided into three classes, with one class being elected each year by = the=20 stockholders.  This generally makes it more difficult for = stockholders=20 to replace a majority of directors and obtain control of the board. = =20

Stockholders do = not have=20 the authority to call a special meeting, which discourages takeover = attempts.=20

Our=20 articles of incorporation permit only our board of directors to call a = special=20 meeting of the stockholders, thereby limiting the ability of = stockholders to=20 effect a change in control of the Company.
 
 
11

=20
Index
 
We do not = anticipate=20 paying dividends to common stockholders in the foreseeable future, which = makes=20 investment in our stock speculative or risky.

We have=20 not paid dividends on our common stock and do not anticipate paying = dividends on=20 our common stock in the foreseeable future.  The board of = directors=20 has sole authority to declare dividends payable to our=20 stockholders.  The fact that we have not and do not plan to = pay=20 dividends indicates that we must use all of our funds generated by = operations=20 for reinvestment in our operating activities.  Investors also = must=20 evaluate an investment in our Company solely on the basis of anticipated = capital=20 gains.

Limited = liability of our=20 executive officers and directors may discourage stockholders from = bringing a=20 lawsuit against them.

Our=20 articles of incorporation and bylaws contain provisions that limit the = liability=20 of directors for monetary damages and provide for indemnification of = officers=20 and directors.  These provisions may discourage stockholders = from=20 bringing a lawsuit against officers and directors for breaches of = fiduciary duty=20 and may also reduce the likelihood of derivative litigation against = officers and=20 directors even though such action, if successful, might otherwise have = benefited=20 the stockholders.  In addition, a stockholder=92s investment = in our=20 Company may be adversely affected to the extent that costs of settlement = and=20 damage awards against officers or directors are paid by us under the=20 indemnification provisions of the articles of incorporation and=20 bylaws.  The impact on a stockholder=92s investment in terms = of the cost=20 of defending a lawsuit may deter the stockholder from bringing suit = against one=20 of our officers or directors.  We have been advised that the = SEC takes=20 the position that this provision does not affect the liability of any = director=20 under applicable federal and state securities laws.

We face risk = related to=20 late tax filings.

The=20 Company has not filed its mandatory tax filings since inception. = Management=20 believes that the potential income tax liability to the Company is not=20 significant since the Company reported significant losses for most years = since=20 inception. Moreover, to the best of management=92s knowledge, the = Company does not=20 believe that not filing tax returns is a violation of any of its = contractual=20 covenants. The Company is working to become current with its mandatory = tax=20 filings and plans to do so during the 2012 fiscal year.
 
We have material = weaknesses in our controls over financial reporting and the = effectiveness of our=20 disclosure controls and procedures.

Due in=20 large part to our limited management personnel, we have identified = material=20 weaknesses in our financial reporting and disclosure controls and = procedures,=20 including an inadequate number of personnel with requisite expertise in = the key=20 functional areas of finance and accounting, an inadequate number of = personnel to=20 properly implement control procedures, insufficient written policies and = procedures for accounting and financial reporting, and lack of an audit=20 committee.  While identified, these material weaknesses = continue as of=20 December 31, 2011.
=20
=20
ITEM=20 1B.  UNRESOLVED STAFF COMM ENTS = =20

None=20
=20

=20
ITEM=20 2.  DESCRIPTION OF PROPERTY = =20

PROPERTIES
Our=20 executive offices are located in Wayne, Pennsylvania with a monthly = lease=20 payment of $2,692.

On=20 February 1, 2011, we entered into a 6 month office leases in Bainbridge = Island,=20 WA, with a monthly lease payment of $650. The lease expired on August 1, = 2011=20 and was not renewed.

We=20 believe that our present facilities will be suitable for the operation = of our=20 business for the foreseeable future and should we need to expand, we = expect that=20 suitable additional space will be available on commercially reasonable = terms,=20 although no assurance can be made in this regard.  Our = property is=20 adequately covered by insurance in the Wayne location. =20
=20
=20
ITEM = 3.  LEGAL=20 PROCEEDING S

We are=20 not a party to any material pending legal proceeding or litigation and = none of=20 our property is the subject of a pending legal = proceeding.  Further,=20 our officers and directors know of no material legal proceedings against = us or=20 our property contemplated by any entity including any governmental = authority.=20
=20
=20
ITEM = 4.  MINE=20 SAFTEY DISCL OSURES =

Not=20 applicable

 
12

=20
Index
=20
=20

=20
PART II

=20
ITEM = 5.  MARKET=20 FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER=92S PURCHASES OF EQUITY SECURI = TIES =20

=20
MARKET FOR COMMON EQUITY
 
Our=20 common stock is currently traded in the =93OTC.BB,=94 which does not = constitute an=20 =93established trading market=94.  The range of reported high = and reported=20 low bid prices per share for our common stock for each fiscal quarter = within the=20 last two fiscal years, as reported by Stockwatch is set forth=20 below.  These quotations reflect inter-dealer prices, without = retail=20 mark-up, markdown or commission and may not represent actual = transactions.=20
 
Quarter ended
 
High
 
 
Low
 
Quarter ended
 
High
 
 
Low
 
 
 
$=20
 
 
$=20
 
 
 
$=20
 
 
$=20
 
December 31, 2011
 
 
0.20
     
0.05
 
December 31, 2010
   
0.15
     
0.03
 
September 30, 2011
 
 
0.13
     
0.04
 
September 30, 2010
   
0.23
     
0.07
 
June 30, 2011
 
 
0.15
     
0.03
 
June 30, 2010
   
0.30
     
0.05
 
March 31, 2011
 
 
0.21
     
0.02
 
March 31, 2010
   
0.80
     
0.05
 =20
=20
 
HOLDERS

As of=20 March 26, 2012, there were 20,227,756 shares of common stock=20 outstanding.   We estimate these shares are held by = approximately=20 300 shareholders of record.

DIVIDENDS

To date=20 we have not paid any dividends on our common stock, and we do not expect = to=20 declare or pay any dividends on our common stock in the foreseeable=20 future.  Payment of any dividends will be dependent upon our = future=20 earnings, if any, our financial condition, and other factors the board = of=20 directors determines are relevant.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS = =20

In June=20 2001, our shareholders approved our 2001 Stock Option Plan (the=20 =93Plan=94).  The Plan is designed for selected employees, = officers and=20 directors to the Company and its subsidiaries, and is intended to = advance the=20 best interests of the Company by providing personnel who have = substantial=20 responsibility for the management and growth of the Company and its = subsidiaries=20 with additional incentive by increasing their proprietary interest in = the=20 success of the Company, thereby encouraging them to remain in the employ = of the=20 Company or its subsidiaries.  The Plan is administered by the = Board of=20 Directors of the Company, and authorizes the issuance of stock options = not to=20 exceed a total of 3,000,000 shares.  The terms of any awards = under the=20 Plan are determined by the Board of Directors, provided that no options = may be=20 granted at less than the fair market value of the stock as of the date = of the=20 grant.  The Plan expired in February 2011.  As of = December=20 31, 2011, 1,650,000 options are outstanding under the Plan. =

In=20 December 2011, our Board of Directors approved our 2011 Incentive Stock = Option=20 Plan (the =932011 Plan=94).  The 2011 Plan will be submitted = to our=20 shareholders for approval in 2012.  The 2011 Plan is designed = for=20 selected employees of the Company and its subsidiaries, and is intended = to=20 advance the best interests of the Company by providing personnel who = have=20 substantial responsibility for the management and growth of the Company = and its=20 subsidiaries with additional incentive by increasing their proprietary = interest=20 in the success of the Company, thereby encouraging them to remain in the = employ=20 of the Company or its subsidiaries.  The 2011 Plan is = administered by=20 the Board of Directors of the Company, and authorizes the issuance of = stock=20 options not to exceed a total of 3,000,000 shares.  The terms = of any=20 awards under the Plan are determined by the Board of Directors, provided = that no=20 options may be granted at less than the fair market value of the stock = as of the=20 date of the grant.  As of December 31, 2011, zero options are=20 outstanding under the 2011 Plan.

 
13

=20
Index
 
The=20 following table presents information as to the number of shares of our = common=20 stock which are authorized for issuance under the Plan as of December = 31, 2011.=20

=20
 
 
(a)
 
 
(b)
 
 
(c)
 
Plan Category
 
Number of
securities to be
 issued upon
exercise of
outstanding
options
 
 
Weighted-average
 exercise price of
outstanding
options
 
 
Number of
securities
remaining
available for future
issuance under the
Plan (excluding
securities reflected
in column (a))
 
Equity compensation plans approved by security holders =20
 
 
1,650,000
 
 
$=20
0.08
 
 
 
3,000,000
 
Equity compensation plans not approved by security holders = =20
 
 
250,000
 
 
 $
0.08
 
 
 
n/a
 
Total
 
 
1,900,000
 
 
$=20
0.08
 
 
 
3,000,000
 =20
=20
=20

=20
ITEM=20 6.  SELECTED FINANCIAL DATA = =20

Not applicable = =20
=20
=20
ITEM=20 7.  MANAGEMENT=92S DISCUSSION AND ANALYSIS OF FINANCIAL = CONDITION AND=20 RESULTS OF OP ERATIONS =

The=20 following discussion should be read in conjunction with the consolidated = financial statements in Item 7.  Certain statements contained = in this=20 report may constitute forward-looking statements within the meaning of = the=20 Private Securities Litigation Reform Act of 1995.  Because = such=20 statements include risks and uncertainties, actual results may differ = materially=20 from those expressed or implied by such forward-looking=20 statements.  Factors that could cause or contribute to such=20 differences include those discussed in the =93Outlook: Issues and = Uncertainties=94=20 section of this Form 10- K.

Overview

Although we currently sell products through infomercials, the goal of = our=20 business plan is to use the brand awareness we create in our = infomercials so=20 that we can sell the products featured in our infomercials, along with = related=20 families of products, under distinct brand names in traditional retail=20 stores.  Our goal is to have these families of products sold = in the=20 traditional retail environment in shelf-space dedicated to the product=20 category.  We are developing the infrastructure to create = these brands=20 of products so that we can implement our business plan.

Fluctuations in our revenue are driven by changes in our product=20 mix.  Revenues may vary substantially from period-to-period = depending=20 on our product line-up.  A product that generates revenue in = one=20 quarter may not necessarily generate revenues in each quarter of a = fiscal year=20 for a variety of reasons, including, seasonal factors, number of = infomercials=20 run, the product=92s stage in its life-cycle, the public=92s general = acceptance of=20 the infomercial and other outside factors, such as the general state of = the=20 economy.

Just as=20 fluctuations in our revenues are driven by changes in our product mix, = our gross=20 margins from period to period depend on our product mix.  Our = gross=20 margins vary according to whether the products we are selling are = primarily our=20 own products or third-party products.  As a general rule, the = gross=20 margins for our own products are considerably higher based on = proportionately=20 smaller cost of sales.  For third-party products, our general=20 experience is that our gross margins are lower, because we record as = cost of=20 sales the proportionately higher cost of acquiring the product from the=20 manufacturer.  Within each category (i.e., our own products = versus=20 third-party products), gross margins still tend to vary based on factors = such as=20 market price sensitivity and cost of production.

Many of=20 our expenses for our own products are incurred up-front.  Some = of our=20 up-front expenditures include infomercial production costs and purchases = of=20 media time.  If our infomercials are successful, these = up-front=20 expenditures produce revenue as consumers purchase the products aired on = the=20 infomercials.  We do not incur infomercial production costs = and media=20 time for our third-party products, because we merely act as the = distributor for=20 pre-produced infomercials.  It is the responsibility of the=20 international infomercial operators to whom we sell the third-party = products to=20 take the pre-produced infomercial, adapt it to their local standards and = pay for=20 media time.

=20
Results of Operations

The=20 following discussion compares operations for the fiscal year ended = December 31,=20 2011, with the fiscal year ended December 31, 2010.

 
14

=20
Index
 
Revenues

Net=20 sales decreased $801,000 or 20.5% to approximately $3,102,000 in 2011 = from=20 approximately $3,903,000 in 2010, primarily as a result of decline in=20 international sales. During 2011, international sales revenue for the = DermaWand=20 TM was approximately $1,299,000, as compared to = approximately=20 $2,005,000 in the prior year, a decrease of approximately=20 $706,000.  The decline in international sales can be = attributed to the=20 global recession, as well as the age of the DermaWand TM infomercial that was running internationally for the = majority of=20 2011.   With the production of the new infomercial, the = Company=20 is anticipating an increase in sales through international distributors = during=20 2012.

In=20 addition, during March 2010, the Company recognized approximately = $94,000 of=20 royalty income relating to the non-refundable royalty advance paid under = the=20 Allstar agreement. No revenue was recognized under the Allstar agreement = in=20 2011.

One=20 hundred percent of net sales were generated by the sale of our own = products in=20 2011 and 2010.

Gross=20 Margin

Gross=20 margin percentage increased to approximately 49.5% in 2011 from = approximately=20 46.1% in 2010.  There are three factors that affect the = increase in=20 gross margin.  The first factor is the decrease in = International sales=20 during 2011 of approximately $706,000 compared to 2010. DermaWand TM is sold wholesale internationally with an average price of=20 approximately $21.

A=20 second reason gross margin increased in 2011 was the transition of = televised=20 home shopping networks.  In May 2011 the Company made the = decision to=20 move the televised home shopping sales of Derma Wand from Home Shopping = Network=20 (HSN)  to ShopNBC, upon where a higher screen price for the = DermaWand=20 is offered on ShopNBC as compared to HSN.  Finally, the sales=20 generated from the new DermaWand TM infomercial have an average selling price of approximately = $145,=20 including shipping and handling.   There were no = infomercial=20 sales of DermaWand TM during 2010.

In=20 2011, we generated approximately $1,534,000 in gross margin, compared to = approximately $1,801,000 in 2010.

Operating Expenses

Total=20 operating expenses decreased to approximately $2,020,000 in 2011, down = from=20 approximately $2,597,000 in 2010, a decrease of $577,000, or=20 22.2%.  Management=92s efforts to reduce the level of expenses = over the=20 past twelve months are one of the reasons for the decrease in operating=20 expenses.  A significant amount of the decrease in operating = expenses,=20 approximately $576,000, can be attributed to a decrease in payroll and = severance=20 expenses.  In addition, the Company has decreased accounting = expenses=20 by approximately $198,000 and consulting expenses by approximately=20 $139,000.  In addition to the decrease, certain expenses = increased due=20 to the re-launching of the Derma Wand infomercial in November of=20 2011.  Offsetting these decreases were increases in operating = costs of=20 approximately $161,000 in media expense, $136,000 in production = expenses, and=20 $32,000 in answering service expenses.

Net=20 Loss

Our net=20 loss for the year ended December 31, 2011 was approximately $485,900, = compared=20 to a 2010 net loss of approximately $796,000. The major reason for the = decreased=20 2011 net loss was the increased profit margins the Company achieved with = the=20 higher selling price for Derma Wand on ShopNBC, combined with = management=92s=20 efforts to reduce operating expenditures. =20
=20
=20
Liquidity and Capital Resources

At=20 December 31, 2011, we had approximately $59,000 in cash and cash = equivalents=20 (including restricted cash), compared to approximately $161,000 at = December 31,=20 2010. We incurred a negative cash flow from operations of approximately = $353,000=20 in 2011, compared to a negative cash flow from operations of = approximately=20 $319,000 in 2010. In addition to the approximately $485,900 net loss, = the=20 Company=92s cash flow from operations were impacted by an increase in = inventory on=20 hand of approximately $192,000, a decrease in accounts receivable of=20 approximately $30,000, a decrease in prepaid expense and deposits of=20 approximately $26,000, an increase in accounts payable of approximately=20 $235,000, a decrease in severance payable of approximately $94,000, a = decrease=20 in deferred revenue of approximately $8,000, an increase in tax = penalties=20 payable of approximately $10,000, and depreciation expense of = approximately=20 $14,000.

The=20 Company has a note payable to The Better Blocks Trust (=93BB Trust=94), = a=20 shareholder, in the amount of approximately $591,000.  This = loan is=20 interest-free and has no specific terms of repayment.

On=20 April 1, 2011, the Company issued 1,000,000 shares of common stock in a = private=20 placement at $0.10 for total consideration of $100,000.
 
 
15

=20
Index
 
On May=20 16, 2011, the Company issued 250,000 shares of common stock in a private = placement at $0.10 for total consideration of $250,000.

In=20 December 2011, the Company entered into a note payable with a Canadian = lender in=20 the amount of approximately $98,000 (C$100,000).   This = loan=20 accrues interest of prime plus 1%.   Interest is paid=20 monthly.   Principal payments are to be paid in monthly=20 installments of approximately $6,500 (C$6,667), beginning in March=20 2012.   The loan permits payment in advance without = penalty at=20 any time.  On January 24, 2012, the Company modified its loan = with the=20 Canadian lender.  The note was modified and increased the = outstanding=20 balance to approximately $137,000 (C$140,000) as additional borrowings = were made=20 to the Company.  In addition, the interest was modified to = lender=92s=20 cost, plus two-percent interest and the note became convertible into = shares of=20 common stock at a fixed conversion rate of $0.196 (C$.20) per=20 share.  The Company considered this a modification of debt = that was=20 not substantive, thus no gain or loss was recorded upon=20 modification.  The amount of the beneficial conversion upon=20 modification was deemed insignificant to the consolidated financial = statements.=20
 
On=20 February 17, 2012, the Board authorized the issuance of up to 2,500,000 = shares=20 of common stocks to be purchased at $0.15 per share through February 29, = 2012.  On February 29, 2012, the Board amended the resolution = to=20 authorize the issuance of up to 3,000,000 shares of common stock to be = purchased=20 at $0.15 per share through March 23, 2012.  A total of = 2,695,000=20 shares were purchased through March 23, 2012 for proceeds of=20 $404,250.  In addition, for every three shares of common stock = purchased, the purchasers will receive one warrant to purchase common = stock at=20 $0.25 per share.    The warrant will expire three = years=20 after its issuance date.    The warrants have a = weighted=20 average fair value of $0.33.  The fair value of the warrant = has been=20 estimated on the date of grant using a Black-Scholes Pricing=20 Model.  See Note 11.
 
The=20 accompanying consolidated financial statements have been prepared = assuming the=20 Company will continue as a going concern.  The Company = generated=20 negative cash flows from operating activities during the year ended = December 31,=20 2011, of approximately $353,000, and the Company, for the most part, has = experienced recurring losses from operations. As of December 31, 2011, = the=20 Company had a negative working capital of approximately $1,043,000, = compared to=20 approximately $879,000 at December 31, 2010, and an accumulated deficit = of=20 approximately $6,704,000 as of December 31, 2011.

Although we currently sell our products primarily though infomercials, = the goal=20 of our business is to use the brand awareness we create in our = infomercials to=20 sell our products (along with additional line extensions) under distinct = brand=20 names in traditional retail stores.  Our objective is to have = these=20 families of products sold in the traditional retail environment in = shelf-space=20 dedicated to the product category.  We are developing the=20 infrastructure to create these brands of products so that we can = implement our=20 business plan.

There=20 is no guarantee that the Company will be successful in bringing our = products=20 into the traditional retail environment.  If the Company is=20 unsuccessful in achieving this goal, the Company will be required to = raise=20 additional capital to meet its working capital needs.  If the = Company=20 is unsuccessful in completing additional financings, it will not be able = to meet=20 its working capital needs or execute its business plan.  In = such case=20 the Company will assess all available alternatives including a sale of = its=20 assets or merger, the suspension of operations and possibly liquidation, = auction, bankruptcy, or other measures.  These conditions = raise=20 substantial doubt about the Company=92s ability to continue as a going=20 concern.  The accompanying consolidated financial statements = does not=20 include any adjustment relating to the recoverability of the carrying = amount of=20 recorded assets or the amount of liabilities that might result should = the=20 Company be unable to continue as a going concern.
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The=20 Securities and Exchange Commission (=93SEC=94) defines =93critical = accounting=20 policies=94 as those that require application of management=92s most = difficult,=20 subjective or complex judgments, often as a result of the need to make = estimates=20 about the effect of matters that are inherently uncertain and may change = in=20 subsequent periods. Our significant accounting policies are described in = Note 2=20 in the Notes to the Consolidated Financial Statements. Not all of these=20 significant accounting policies require management to make difficult, = subjective=20 or complex judgments or estimates. However, the following policies could = be=20 deemed to be critical within the SEC definition.
 
Accounts = receivable=20

Accounts receivable are recorded net of allowances for returns and = doubtful=20 accounts of approximately $13,000 and $7,000 for the years ended = December 31,=20 2011 and 2010 respectively.  The allowances are calculated = based on=20 historical customer returns and bad debts.

 
16

=20
Index
 
In=20 addition to reserves for returns on accounts receivable, an accrual is = made=20 against returns for product that have been sold to customer and had cash = collections, while the customer still has the right to return the=20 product.   The amounts of these accruals included in = accounts=20 payable and accrued liabilities in our Consolidated Balance Sheets were=20 approximately $42,000 and $9,000 at December 31, 2011 and 2010, = respectively.=20

Inventories = =20

Inventories consist primarily of products held for resale, and are = valued at=20 the lower of cost (first-in, first-out method) or market.  The = Company=20 adjusts inventory for estimated obsolescence when necessary based upon = demand=20 and market conditions. The Company has recorded approximately $12,000 = and $0 of=20 inventory of consigned product as of December 31, 2011 and 2010, = respectively,=20 that has been shipped to customers under the 30-day free trial period = for which=20 the trial period has not expired and as such the customer has not = accepted the=20 product.

Revenue = recognition=20

For our=20 domestic direct response television sales generated by our infomercials, = product=20 sales revenue is recognized when the following criteria are met: = persuasive=20 evidence of an arrangement exists, delivery has occurred, the selling = price is=20 fixed or determinable, and collectability is reasonably assured. The = Company=92s=20 revenues in the Consolidated Statement of Operations are net of sales = taxes.=20

The=20 Company offers a 30-day risk-free trial as one of its payment=20 options.  Revenue on the 30-day risk-free trial sales is not=20 recognized until customer acceptance and collectability are assured = which we=20 determine to be when the trial period ends. If the risk-free trial = expires=20 without action by the customer, product is determined to be accepted by = the=20 customer and revenue is recorded. Revenue for items purchased without = the 30-day=20 free trial is recognized upon shipment of the product to the customer = and=20 collectability is assured.

The=20 Company entered into an exclusive distribution agreement with Allstar = Marketing=20 (=93Allstar=94) in May 2009. As part of the agreement with Allstar, the = Company=20 received non-refundable royalty advances which were booked as deferred = revenue=20 until Allstar sold DermaWands. Allstar was required to provide ICTV with = monthly=20 royalty statements per the contract within 30 days of the end of each = month. The=20 Company recorded revenue in the month goods were sold per the Allstar = royalty=20 statements.

In=20 March 2010, the Allstar agreement was terminated and the Company = retained the=20 exclusive distribution rights for the DermaWand. Upon termination of the = contract, the Company recognized the remaining non-refundable royalty = advances=20 that were previously booked in deferred revenue. The Company recognized = $0 and=20 $94,000 in revenue related to the Allstar agreement for the years ended = December=20 31, 2011 and 2010 respectively.

Revenue=20 related to international wholesale customers is recorded at gross = amounts with a=20 corresponding charge to cost of sales.

The=20 Company has a return policy whereby the customer can return any product = received=20 within 30 days of receipt for a full refund excluding shipping and=20 handling.  However, historically the Company has accepted = returns past=20 30 days of receipt. The Company provides an allowance for returns based = upon=20 past experience.  All significant returns for the years = presented have=20 been offset against gross sales.

Income taxes = =20

In=20 preparing our consolidated financial statements, we make estimates of = our=20 current tax exposure and temporary differences resulting from timing = differences=20 for reporting items for book and tax purposes. We recognize deferred = taxes by=20 the asset and liability method of accounting for income taxes. Under the = asset=20 and liability method, deferred income taxes are recognized for = differences=20 between the financial statement and tax bases of assets and liabilities = at=20 enacted statutory tax rates in effect for the years in which the = differences are=20 expected to reverse. The effect on deferred taxes of a change in tax = rates is=20 recognized in income in the period that includes the enactment date. In=20 addition, valuation allowances are established when necessary to reduce = deferred=20 tax assets to the amounts expected to be realized. In consideration of = our=20 accumulated losses and lack of historical ability to generate taxable = income to=20 utilize our deferred tax assets, we have estimated that we will not be = able to=20 realize any benefit from our temporary differences and have recorded a = full=20 valuation allowance. If we become profitable in the future at levels = which cause=20 management to conclude that it is more likely than not that we will = realize all=20 or a portion of the net operating loss carry-forward, we would = immediately=20 record the estimated net realized value of the deferred tax asset at = that time=20 and would then provide for income taxes at a rate equal to our combined = federal=20 and state effective rates, which would be approximately 40% under = current tax=20 laws. Subsequent revisions to the estimated net realizable value of the = deferred=20 tax asset could cause our provision for income taxes to vary = significantly from=20 period to period.

The=20 Company=92s policy is to recognize interest and penalties related to tax = matters=20 in general and administrative expenses in the Consolidated Statements of = Operations.
 
 
17

=20
Index
 
Off-Balance Sheet Arrangements

We do=20 not have any off-balance sheet arrangements. =20
=20

=20
ITEM 7A.  MARKET RISK = DISCLOSURES. =20

Not=20 Applicable.
=20
=20
ITEM=20 8.  FINANCIAL STATEMEN TS = =20

Financial statements are set forth on pages F-1 through F-19. =20
=20
=20
ITEM = 9.  CHANGES=20 IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLO = SUR E

None=20
=20
 
=20
ITEM=20 9A.  CONTROLS AND PROCEDU RES = =20
Evaluation of Disclosure Controls and Procedures

Our=20 management is responsible for establishing and maintaining adequate = disclosure=20 controls and procedures.  Disclosure controls and procedures = are those=20 controls and procedures that are designed to ensure that information = required to=20 be disclosed in our reports filed or submitted under the Exchange Act = are=20 recorded, processed, summarized and reported within the time periods = specified=20 in the SEC's rules and forms. Disclosure controls and procedures = include,=20 without limitation, controls and procedures designed to ensure that = information=20 required to be disclosed in our reports filed under the Exchange Act is=20 accumulated and communicated to management, including our Chief = Executive=20 Officer and Chief Financial Officer, to allow timely decisions regarding = required disclosure.

We=20 carried out an evaluation as of December 31, 2011, under the supervision = and=20 with the participation of our management, including our Chief Executive = Officer=20 and Chief Financial Officer, of the effectiveness of the design and = operation of=20 our disclosure controls and procedures pursuant to Exchange Act Rules = 13a-15(b)=20 and 15d-15(b).  Based upon that evaluation, our Chief = Executive=20 Officer and Chief Financial Officer concluded that our disclosure = controls and=20 procedures were not effective as a result of the material weaknesses in = internal=20 control over financial reporting discussed below.

Management's Report on Internal Control Over Financial Reporting =

Our=20 management is responsible for establishing and maintaining adequate = internal=20 control over financial reporting.  Internal control over = financial=20 reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under = the=20 Exchange Act as a process designed by, or under the supervision of, our=20 principal executive and principal financial officers and effected by our = board=20 of directors, management and other personnel, to provide reasonable = assurance=20 regarding the reliability of financial reporting and the preparation of=20 financial statements for external purposes in accordance with generally = accepted=20 accounting principles and includes those policies and procedures that: = =20
 
 
=B7 =
Pertain to the maintenance of records that in reasonable detail=20 accurately and fairly reflect the transactions and disposition of = our=20 assets;
 
=B7 =
Provide reasonable assurance that transactions are recorded as = necessary=20 to permit preparation of financial statements in accordance with = generally=20 accepted accounting principles, and that our receipts and = expenditures are=20 being made only in accordance with authorizations of our = management and=20 directors; and
 
=B7 =
Provide reasonable = assurance=20 regarding prevention or timely detection of unauthorized = acquisition, use=20 or disposition of our assets that could have a material effect on = the=20 financial statements. =

Because=20 of its inherent limitations, internal control over financial reporting = may not=20 prevent or detect misstatements.  Therefore, even those = systems=20 determined to be effective can provide only reasonable assurance with = respect to=20 financial statement preparation and presentation.  Also, = projections=20 of any evaluation of effectiveness to future periods are subject to the = risk=20 that controls may become inadequate because of changes in conditions, or = that=20 the degree of compliance with the policies or procedures may = deteriorate.=20

Our=20 management assessed the effectiveness of our internal control over = financial=20 reporting as of December 31, 2011.  In making this assessment, = management used the criteria set forth in Internal Control =96 = Integrated=20 Framework issued by the Committee of Sponsoring Organizations of the = Treadway=20 Commission.

Based=20 on our assessment, management believes that, as of December 31, 2011, = our=20 internal control over financing reporting was not effective due to the = following=20 material weaknesses:
 
 
18

=20
Index
 
 
=B7 =20
A lack of sufficient = resources=20 and an insufficient level of monitoring and oversight, which = restricts the=20 Company's ability to gather, analyze and report information = relative to=20 the financial statement assertions in a timely manner, including=20 insufficient documentation and review of selection and application = of=20 generally accepted accounting principles. = =20
 
 
=B7 =20
The limited size of = the=20 accounting department makes it impracticable to achieve an = appropriate=20 segregation of duties. =20
 
 
=B7 =20
There are no formal = documented=20 closing and reporting calendar and checklists. =20

 
=B7 =20
There are no formal = cash flow=20 forecasts, business plans, and organizational structure documents = to guide=20 the employees in critical decision-making processes. = =20

 
=B7 =20
Documentation (and = retention=20 thereof) of certain transactions was not completed on a timely = basis.=20

 
=B7 =20
Income and sales tax = filings=20 have not been made timely. =20

 
=B7 =20
Material weaknesses = identified=20 in the past have not been remediated. =20

 
=B7 =20
Lack of an audit = committee=20 which results in ineffective oversight over the Company=92s = financial=20 reporting and accounting. =

 
=B7 =20
Controls over the = accounting=20 for certain equity transactions were ineffective. This material = weakness=20 is attributed to lack of technical expertise with respect to the=20 application of Accounting Standards Codification Topic 815-40 = which deals=20 with accounting for equity-based instruments that may require to = be=20 treated as derivative instruments. =20
 
A=20 material weakness is a deficiency, or combination of deficiencies, in = internal=20 control, such that there is a reasonable possibility that a material=20 misstatement of the entity's financial statements will not be prevented, = or=20 detected and corrected on a timely basis.
 
The=20 material weaknesses listed above are weaknesses that were discovered = during=20 prior assessments and continued during the current = year.  Management=20 is committed to improving its internal controls and will (1) continue to = use=20 third party specialists to address shortfalls in staffing and to assist = the=20 Company with accounting and finance responsibilities, (2) increase the = frequency=20 of independent reconciliations of significant accounts which will = mitigate the=20 lack of segregation of duties until there are sufficient personnel, (3) = prepare=20 and implement sufficient written policies and checklists for financial = reporting=20 and closing processes and (4) may consider appointing outside directors = and=20 audit committee members in the future. The Company cannot predict when = it will=20 be able to appropriately address such weaknesses. However, we believe = that these=20 measures, if effectively implemented and maintained, will remediate the = material=20 weaknesses discussed above.

This=20 annual report does not include an attestation report of our registered = public=20 accounting firm regarding internal control over financial=20 reporting.  Management=92s report was not subject to = attestation by our=20 registered public accounting firm pursuant to the rules of the SEC that = permit=20 us to provide only management=92s report in this annual report. =

Changes in internal control over financial reporting

As=20 described above, the Company=92s management assessed the effectiveness = of the=20 Company=92s internal control over financial reporting and identified = material=20 weakness in internal control over financial reporting as of December 31, = 2011.=20

There=20 were no changes in our internal control over financial reporting that = occurred=20 during the quarter ended December 31, 2011 that have materially = affected, or=20 that are reasonably likely to materially affect, our internal control = over=20 financial reporting.  We are continuing to actively assess and = evaluate our most critical business and accounting processes to identify = further=20 enhancements and improvement opportunities. =20
=20
=20
ITEM = 9B.  OTHER=20 INFORMATION

None.=20

 
19

=20
Index
=
=20
=  
=20
PART III

=20
ITEM=20 10.  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE G OVERNA NCE

The=20 following table sets forth the name, age and position of each director = and=20 executive officer of ICTV.  The directors serve staggered = terms of=20 one, two, or three years and until their successors are elected and=20 qualified.  Officers hold their positions at the pleasure of = the board=20 of directors, without prejudice to the terms of any employment = agreement.=20

NAME
AGE
POSITION
Kelvin Claney
61
Chief Executive Officer, Secretary and Director =20
Richard Ransom
33
President and Chief Financial Officer =
Stephen Jarvis
57
Director

Kelvin Claney =96Chief Executive Officer, Secretary, Director =

Kelvin=20 Claney has served as a director of the Company since January=20 2001.  Mr. Claney began working in the United States direct = response=20 business in 1989 as an independent contractor to National Media Corp., = where he=20 produced, sourced, and executive-produced various infomercial projects,=20 including Euro Painter, HP9000, Auri polymer sealant and Color Cote = 2000=99,=20 Dustmaster 2000, LeSnack, Iron Quick and Fatfree = Express.  Since 1992,=20 Mr. Claney has served as President of R.J.M. Ventures, Inc., a = television direct=20 response marketing company, where he was responsible for such things as=20 identifying projects the Company wants to become involved in, selecting=20 production companies to produce infomercials and selecting media times = to=20 promote the infomercials.  The creation of the Smart Stacks = TM infomercial, = which is now=20 owned by ICTV, was one of the projects Mr. Claney was responsible for as = President of R.J.M. Ventures, Inc.  He also created the = infomercial=20 for the children=92s toy product known as BetterBlocks TM , which was then owned by The Better Blocks Trust. =
 
Stephen Jarvis =96 Director

Stephen=20 Jarvis has served as a director of the Company since December 17,=20 2009.  Mr. Jarvis is the co-founder and President of Positive = Response=20 Vision, Inc., located in Manila, Philippines.  Formed in 1996, = Positive Response Vision is one of the largest infomercial-based direct = response=20 companies in Southeast Asia, and has approximately 400 = employees.  The=20 company markets and distributes a vast range of products throughout the=20 Philippines. As President, Mr. Jarvis is responsible for product = sourcing and=20 acquisition, inventory, finance control and design = issues.  Mr. Jarvis=20 also produces infomercials in a private capacity, licensing them to = Positive=20 Response Vision and other international infomercial = companies.  Mr.=20 Jarvis has been engaged in direct response marketing since 1983. =

Richard Ransom =96 President and Chief Financial Officer

Richard=20 Ransom joined ICTV in July of 2008 as the Company=92s Controller, and = was=20 appointed as Chief Financial Officer on December 8, 2008. Mr. Ransom = joined the=20 Company with eight years of experience in financial management roles at=20 Traffic.com, Hildebrandt International, and Grant Thornton. He is a = graduate of=20 Pennsylvania State University with a degree in Accounting, and received = his MBA=20 from Delaware Valley College in December, 2009.  In August = 2011, Mr.=20 Ransom was promoted to President of ICTV.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Control=20 persons, including all directors and executive officers, of our Company = are=20 required by Section 16(a) of the Securities Exchange Act of 1934, as = amended=20 (the =93Exchange Act=94), to report to the SEC their transactions in, = and beneficial=20 ownership of, the Company's common stock, including any grants of = options to=20 purchase common stock.  To the best of the Company's = knowledge, the=20 Company=92s directors and executive officers timely filed all required = reports=20 with the SEC during the year ended December 31, 2011.

Audit Committee and Code of Ethics

We have=20 not formally appointed an audit committee, and the entire Board of = Directors=20 (two persons) currently serves the function of an audit=20 committee.  Because of the small number of persons involved in = management of the Company, we do not have an audit committee financial = expert=20 serving on our Board.  We have not yet adopted a code of = ethics=20 applicable to our chief executive officer and chief financial officer, = or=20 persons performing those functions, because of the small number of = persons=20 involved in management of the Company.

 
20

=20
Index
=20

=20
ITEM=20 11.  EXECUTIVE COMPENSATION = =20

=20
Compensation of Named Executive Officers

The=20 following table sets forth all compensation paid or earned for services = rendered=20 to ICTV in all capacities during the years ended December 31, 2011 and = 2010, by=20 our chief executive officer and president, chief operating officer, and = chief=20 financial officer (the "Named Officers").    No = options or=20 SAR grants were made to the Named Officers in 2011 or 2010, nor were any = options=20 or SAR=92s exercised by the Named Officers.

Summary Compensation Table

Name And Principal Position
Year
 
Salary ($)
 
Bonus ($)
Kelvin Claney (Chief Executive Officer)
2011
 
 
180,000
 
nil
 
2010
 
 
180,000
 
nil
Richard Ransom  (President and Chief Financial Officer) = =20
2011
 
 
125,000
 
nil
 
2010
 
 
125,000
 
nil
Richard Scheiner (Chief Operating Officer) 1
2011
 
 
0=20
 
nil
 
2010
 
 
200,000
 
  nil =
=20
1=20
Mr. Scheiner resigned as of October 29, 2010 =20
 
Compensation of Directors

During=20 2011 and 2010, our directors received no compensation for their service = as=20 directors, although they did receive reimbursement for = expenses.  In=20 February 2012, Stephen Jarvis, one of our directors was paid $5,000 for=20 consulting work above and beyond his duties as a director. =

Employment Contracts

We=20 entered into an Employment Agreement with Kelvin Claney, our President = and Chief=20 Executive Officer, effective March 1, 2011.  The Agreement = provides,=20 among other things, that if Mr. Claney=92s employment is terminated = without cause,=20 he will be entitled to severance pay in a lump sum payment equal to one = year of=20 his base salary, health insurance reimbursement and automobile expenses=20 allowance as in effect on the date of termination. Under the Employment=20 Agreement, Mr. Claney will be considered terminated without cause if his = substantive responsibilities are changed without his prior approval, or = if all=20 or substantially all of the assets of the Company are sold, or a = controlling=20 interest in the Company is sold, unless in connection with such a sale = Mr.=20 Claney=92s Employment Agreement is assumed by the buyer or he is offered = an=20 employment contract for substantially the same responsibilities, for a = term of=20 at least one year, and at substantially the same compensation, terms and = benefits as provided in the Employment Agreement. =20
=20
 
=20
ITEM=20 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND = MANAGEMENT=20 AND RELATED STOCKHOLDER MATT =20 ERS = =20

The=20 following table sets forth, as of March 26, 2012 our outstanding common = stock=20 owned of record or beneficially by (1) each person who owned of record, = or was=20 known by us to own beneficially, more than 5% of our common stock, (2) = each=20 executive officer, (3) each director and (4) the shareholdings of all = executive=20 officers and directors as a group.  As of March 26, 2012, we = had=20 20,227,756 shares of common stock issued and outstanding.

=20
Name
 
Number of
Shares Owned
 
 
Percentage of Shares
 Owned
 
Kelvin Claney, President and Chief Executive Officer, Member of = the Board=20 of Directors = (1) =20
 
 
7,100,493
 
 
 
35.1
%=20
The Better Blocks Trust, declared January 1, 1994 (2)
 
 
7,078,826
 
 
 
35.0
%=20
                 
Stephen Jarvis, Member of the Board of Directors (3)
 
 
305,000
 
 
 
1.5
%=20
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP =96 3 INDIVIDUALS = =20
 
 
7,405,493
 
 
 
36.6
%=20 =
=20
 
 
21

=20
Index
 
Except=20 as noted below, all shares are held of record and each record = shareholder has=20 sole voting and investment power.

(1) =
Includes 7,078,826 = shares owned=20 by The Better Blocks Trust, of which Mr. Claney is a joint=20 trustee.  Mr. Claney disclaims beneficial ownership of = the=20 shares and options owned or controlled by The Better Blocks Trust = beyond=20 the extent of his pecuniary interest.  Mr. Claney=92s = business=20 address is 10245 Sunrise Place, NE , Bainbridge Island, Washington = 98110.=20
(2) =
The address for The Better Blocks Trust is 1 Kimberly Road, = Epson,=20 Auckland City, Auckland New Zealand, c/oBarry Stafford, Stafford = Klaassen.=20
(3) =
Mr. Jarvis=92s = business address=20 is 320 = J P Razal=20 Street, Unit 301, 3rd Floor Aralco Bldg., Poblacion, Makati City = 1210,=20 Philippines. =

There=20 are no arrangements known to ICTV, the operation of which may result in = a change=20 of control of the Company.
=20
=20
ITEM=20 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND = DIRECTOR=20 INDEPEND ENC E

The=20 Company has received short-term advances from a = shareholder.  These=20 advances amounted to approximately $40,000 and $2,500 during the years = ended=20 December 31, 2011 and 2010, respectively. The advances are offset by = repayments=20 which amounted to approximately $32,500 and $3,200 during the years = ended=20 December 31, 2011 and 2010, respectively.  These advances are=20 non-interest bearing and without specific terms of = repayment.  These=20 advances are included in Accounts Payable =96 Related Parties on the = accompanying=20 consolidated balance sheets.

The=20 Company has a note payable to the Better Blocks Trust, a major = shareholder, in=20 the amount of $590,723. This loan is interest-free and has no specific = terms of=20 repayment.
 
We have=20 two directors.  Under the definition of director independence = found in=20 NASD Rule 4200, Stephen Jarvis is our sole independent director. =
=20

=20
ITEM=20 14.  PRINCIPAL ACCOUNTING FEES AND SER VICE=20 S

Audit=20 Fees
 
On=20 August 18, 2010 the Company=92s Board of Directors engaged EisnerAmper = LLP to=20 serve as the Company=92s new independent registered public accounting = firm, after=20 it was notified on August 16, 2010 that Amper, Politziner and Mattia, = LLP=20 (=93Amper=94), an independent registered public accounting firm, would = not be able=20 to stand for re-appointment because it combined its practice on that = date with=20 that of Eisner LLP (=93Eisner=94) to form EisnerAmper LLP, an = independent registered=20 public accounting firm.  The Company filed Form 8-K on August = 18, 2010=20 acknowledging this change.

The=20 aggregate fees billed to the Company for professional services rendered = for the=20 audit of the Company's annual financial statements, review of the = Company's=20 quarterly financial statements, and other services normally provided in=20 connection with statutory and regulatory filings or engagements was=20 approximately $97,500 in 2011 and approximately $89,250 in=20 2010.  Approximately $68,250 and $21,000 were billed for = services=20 rendered from EisnerAmper, LLP and Amper, Politziner & Mattia, LLP,=20 respectively during 2010.
 
Audit-Related Fees
 
There=20 were no fees billed in each of the last two fiscal years for assurance = and=20 related services by our independent registered public accounting firm = that are=20 reasonably related to the performance of the audit or review of our = financial=20 statements, and are not reported above.
 
Tax=20 Fees
 
There=20 were no fees billed in each of the last two fiscal years for = professional=20 services rendered by our independent registered public accounting firm = for tax=20 compliance, tax advice, and tax planning.
 
All=20 Other Fees

There=20 were no other fees billed in each of the last two fiscal years for = professional=20 services rendered by our independent registered public accounting firm. = =20

All=20 fees for audit and non-audit services, and any material fees for other = services,=20 are approved in advance by the Chief Executive Officer and the Chief = Financial=20 Officer.

 
22

=20
Index
=
=20
 
=20
PART IV

=20
ITEM=20 15.  EXHIBITS AND FINANCIAL STATEMENT SC HEDULES

Financial Statements

Report of Independent Registered Public Accounting Firm =20
 
F-1
Consolidated Financial Statements:
 
 
Consolidated Balance Sheets
 
F-2
Consolidated Statements of Operations
 
F-3
Consolidated Statements of Shareholders=92 Deficit =
 
F-4
Consolidated Statements of Cash Flows
 
F-5
Notes to Consolidated Financial Statements =
 
F-6

Exhibits

2=20 *
Share and Option Purchase Agreement =20

3.1 *
Amended and Restated Articles of Incorporation =20
 
3.2 *
Amended and Restated Bylaws =
 
3.3 * 
First Amendment to Amended and Restated Bylaws =20
 
10.1 *
2001 Stock Option Plan =
 
10.2 *
Promissory Note by Moran Dome Exploration Inc. payable to the = Trustees of=20 the Better Blocks Trust, in the amount of $590,723.27 =20

10.3 *
Extension of Promissory Note dated August 23, 2001, by and = between the=20 Trustees of the Better Blocks Trust and International Commercial=20 Television Inc.
 
=20
10.4 **
Second Extension of Promissory Note dated March 25, 2002, by and = between=20 the Trustees of the Better Blocks Trust and International = Commercial=20 Television  Inc. =20
=20
 
10.5 ***
Assignment of Trademark by Dimensional Marketing Concepts, Inc. = =20
 
=20 31.1 = **** =20
Rule = 13a-14(a)/15d-14(a)=20 Certification =96 Chief Executive Officer =20
 
=20 31.2 = **** =20
Rule = 13a-14(a)/15d-14(a)=20 Certification =96 Chief Financial Officer =20
 
=20 32 **** = =20
Section 1350 = Certifications=20
 
101.INS****
XBRL Instance Document =
 
101.SCH****
XBRL Schema Document =
 
101.CAL****
XBRL Calculation Linkbase Document =20
 
101.LAB****
XBRL Label Linkbase Document =
 
101.PRE****
XBRL Presentation Linkbase Document =20
 
101.DEF****
XBRL Definition Linkbase Document =20
 
= *  Incorporated  by  reference  f= rom  Form  SB-2  filed  with=20 the Securities and=20 Exchange  Commission  on  October &nbs= p;3,  2001.=20

**  Incorporated  by  reference from=20 Post-Effective Amendment No. 1 to Form SB-2=20 filed  with  the  Securities  and=   Exchange  Commission  on  April=   12,  2002.=20

***  Incorporated  by reference from Amendment No. = 1 to=20 Form SB-2 filed with the=20 Securities  and  Exchange  Commission =  on  December  24,  2001.=20

****=20 Filed herewith
 
 
23

=20
Index
=20

=20
SIGNATURES = =20

In=20 accordance with Section 13 or 15(d) of the Exchange Act, the registrant = caused=20 this report to be signed on its behalf by the undersigned, thereunto = duly=20 authorized.
 
 
 
 
INTERNATIONAL COMMERCIAL TELEVISION INC.
 
 
 
 
 
Date:
March 30, 2012
 
By:
/s/  Kelvin Claney
 
 
 
 
Name: Kelvin Claney
 
 
 
 
Title: Chief Executive Officer and Director
 

In=20 accordance with the Exchange Act, this report has been signed below by = the=20 following persons on behalf of the registrant and in the capacities and = on the=20 dates indicated.

By:
/s/ Kelvin Claney
 
Date:
March 30, 2012
 
Name: Kelvin Claney
 
 
 
 
Title: Chief Executive Officer and Director
 
 
 
 
 
 
 
 
By:
/s/  Richard Ransom
 
Date:
March 30, 2012
 
Name: Richard Ransom
 
 
 
 
Title: President and Chief Financial Officer, Principal = Accounting=20 Officer
 
 
 
 
 
 
 
 
By:
/s/  Stephen Jarvis
 
Date
March 30, 2012
 
Name: Stephen Jarvis
 
 
 
  Title: Director      

 
24

=20
Index

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

International Commercial Television Inc. and Subsidiaries =

Report of Independent Registered Public Accounting Firm for the = years=20 ended December 31, 2011 and 2010
    F-1
 
 
Consolidated Balance Sheets as of December 31, 2011 and 2010 = =20
F-2
 
 
Consolidated Statements of Operations for the years ended = December 31,=20 2011 and 2010
F-3
 
 
Consolidated Statements of Shareholders=92 Deficit for the years = ended=20 December 31, 2011 and 2010
F-4
 
 
Consolidated Statements of Cash Flows for the years ended = December 31,=20 2011 and 2010
F-5
 
 
Notes to the Consolidated Financial Statements =
F-6

 
25

=20
Index
=20
 
=20
Report of Independent Registered Public Accounting Firm

To the=20 Board of Directors and Stockholders of
International Commercial Television, Inc.

We have=20 audited the accompanying consolidated balance sheets of International = Commercial=20 Television, Inc. and Subsidiary (collectively, the =93Company=94) as of = December 31,=20 2011 and 2010, and the related consolidated statements of operations,=20 shareholders=92 deficit, and cash flows for each of the years in the = two-year=20 period ended December 31, 2011. The financial statements are the = responsibility=20 of the Company=92s management.  Our responsibility is to = express an=20 opinion on these financial statements based on our audits. =

We=20 conducted our audits in accordance with the standards of the Public = Company=20 Accounting Oversight Board (United States). Those standards require that = we plan=20 and perform the audit to obtain reasonable assurance about whether the = financial=20 statements are free of material misstatement. The Company is not = required to=20 have, nor were we engaged to perform, an audit of its internal control = over=20 financial reporting. Our audits included consideration of internal = control over=20 financial reporting as a basis for designing audit procedures that are=20 appropriate in the circumstances, but not for the purpose of expressing = an=20 opinion on the effectiveness of the Company=92s internal control over = financial=20 reporting. Accordingly we express no such opinion.   An audit includes examining, on a test basis, evidence = supporting=20 the amounts and disclosures in the financial statements. An audit also = includes=20 assessing the accounting principles used and significant estimates made = by=20 management, as well as evaluating the overall financial statement = presentation.=20 We believe that our audits provide a reasonable basis for our opinion. = =20

In our=20 opinion, the financial statements referred to above present fairly, in = all=20 material respects, the consolidated financial position of International=20 Commercial Television, Inc. and Subsidiary as of December 31, 2011 and = 2010, and=20 the consolidated results of their operations and their cash flows for = each of=20 the years in the two-year period ended December 31, 2011, in conformity = with=20 accounting principles generally accepted in the United States of = America.=20

The=20 accompanying consolidated financial statements have been prepared = assuming that=20 the Company will continue as a going concern.  As discussed in = Note 1=20 to the consolidated financial statements, the Company=92s recurring = losses from=20 operations and negative cash flows from operations raise substantial = doubt about=20 its ability to continue as a going concern.  Management=92s = plans=20 considering these matters are also described in Note 1 to the = consolidated=20 financial statements.  The consolidated financial statements = do not=20 include any adjustments that might result from the outcome of this = uncertainty.=20
 
/s/EisnerAmper, LLP
 
Edison, New Jersey
March 30, 2012
 
 
F-1

=20
Index
=20
 
=20
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER = 31, 2011=20 AND 2010
 
    2011     2010  
ASSETS
 
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
 
Cash and cash equivalents
 
$=20
53,337
 
 
$=20
158,482
 
Restricted cash
 
 
5,467
 
 
 
2,060
 
Accounts receivable, net of doubtful account reserves of $13,317 = and=20 $7,000, respectively
 
 
46,220
 
 
 
75,805
 
Inventories, net
 
 
718,450
 
 
 
526,821
 
Prepaid expenses and other current assets =
 
 
20,559
 
 
 
46,674
 
 
 
 
 
 
 
 
 
 
Total current assets
 
 
844,033
 
 
 
809,842
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Furniture and equipment
 
 
183,117
 
 
 
183,117
 
Less accumulated depreciation
 
 
162,868
 
 
 
148,776
 
Furniture and equipment, net
 
 
20,249
 
 
 
34,341
 
 
 
 
 
 
 
 
 
 
Total assets
 
$=20
864,282
 
 
$=20
844,183
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
=20 =20
LIABILITIES AND SHAREHOLDERS=92 = DEFICIT =20                
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
 
 
 
Note payable =96 short term
 
$=20
65,363
   
$=20
-=20
 
Accounts payable and accrued liabilities =
 
 
856,542
 
 
 
621,687
 
Accounts payable - related parties
 
 
38,359
 
 
 
30,859
 
Severance payable - short term
   
40,800
     
153,333
 
Deferred revenue
 
 
25,128
 
 
 
32,698
 
Tax penalties payable
 
 
270,000
 
 
 
260,000
 
Note payable to shareholder
 
 
590,723
 
 
 
590,723
 
Total current liabilities
 
 
1,886,915
 
 
 
1,689,300
 
 
 
 
 
 
 
 
 
 
Long-term severance payable
 
 
128,600
 
 
 
 110,000
 
Long-term note payable
   
32,681
     
-=20
 
Total long-term liabilities
   
161,281
     
110,000
 
                 
=20
COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SHAREHOLDERS=92 DEFICIT:
 
 
 
 
 
 
 
 
Preferred stock 20,000,000 shares authorized, no shares issued = and=20 outstanding
 
 
-=20
 
 
 
-=20
 
 
 
 
 
 
 
 
 
 
Common stock, $0.001 par value, 100,000,000 shares authorized, = 18,057,756=20 and 15,547,179 shares issued and outstanding as of December 31, = 2011 and=20 December 31, 2010, respectively
 
 
7,959
 
 
 
5,448
 
Additional paid-in-capital
 
 
5,511,877
 
 
 
5,257,293
 
Accumulated deficit
 
 
(6,703,750
)=20
 
 
(6,217,858
)=20
 
 
 
 
 
 
 
 
 
Total shareholders=92 deficit
 
 
(1,183,914
)=20
 
 
(955,117
)=20
 
 
 
 
 
 
 
 
 
Total liabilities and shareholders=92 deficit =
 
$=20
864,282
 
 
$=20
844,183
 
 
See=20 accompanying notes to consolidated financial statements.

 
F-2

=20
Index

=20
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS = ENDED=20 DECEMBER 31, 2011 AND 2010

 
 
2011
 
 
2010
 
 
 
 
 
 
 
 
NET SALES
 
$=20
3,102,041
 
 
$=20
3,903,219
 
 
 
 
   
 
 
 
 
COST OF SALES
 
 
1,567,876
 
 
 
2,102,448
 
 
 
 
   
 
 
 
 
GROSS PROFIT
 
 
1,534,165
 
 
 
1,800,771
 
 
 
 
   
 
 
 
 
OPERATING EXPENSES:
 
 
   
 
 
 
 
 
 
 
   
 
 
 
 
General and administrative
 
 
1,332,008
 
 
 
2,197,927
 
Selling and marketing
 
 
687,809
 
 
 
399,175
 
 
 
 
   
 
 
 
 
Total operating expenses
 
 
2,019,817
 
 
 
2,597,102
 
 
 
 
   
 
 
 
 
OPERATING LOSS
 
 
(485,652
)=20
 
 
(796,331
)=20
 
 
 
   
 
 
 
 
OTHER (EXPENSES) INCOME, NET:
 
 
   
 
 
 
 
Interest (expense) income, net
 
 
(240
)=20
 
 
418
 
Total other (expenses) income, net
 
 
(240
)=20
 
 
418
 
 
 
 
   
 
 
 
 
NET LOSS
 
$=20
(485,892
)=20
 
$=20
(795,913)
 
                 
BASIC AND DILUTED NET LOSS PER SHARE
 
$=20
(0.03
)=20
 
$=20
(0.05)
  =
=20

See=20 accompanying notes to consolidated financial statements.

 
F-3

=20
Index

=20
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS=92 DEFICIT

FOR THE=20 YEARS ENDED DECEMBER 31, 2011 AND 2010

   
Common Stock
   
Additional
             
 
 
$0.001 par value
 
 
Paid-In
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Deficit
 
 
Totals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2010
 
 
14,505,912
 
 
$=20
4,407
 
 
$=20
5,126,763
 
 
$=20
(5,421,945)
 
 
$=20
(290,775)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-=20
 
 
 
-=20
 
 
 
-=20
 
 
 
(795,913)
 
 
 
(795,913
)=20
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share based compensation
 
 
-=20
 
 
 
-=20
 
 
 
27,444
 
 
 
-=20
 
 
 
27,444
 
                                         
Exercise of warrants
   
1,041,267
     
1,041
     
103,086
     
-=20
 
   
104,127
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2010
 
 
15,547,179
 
 
$=20
5,448
 
 
$=20
5,257,293
 
 
$=20
(6,217,858)
 
 
$=20
(955,117
)=20
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-=20
 
 
 
-=20
 
 
 
-=20
 
 
 
(485,892)
 
 
 
  (485,892)
 
                                       
 
Share based compensation
   
-=20
       
-=20
   
70,163
     
-=20
     
70,163
 
                                         
Shares issued as part of BBI acquisition =
   
500,000
     
500
     
(500)
     
-=20
     
-=20
 
                                         
Exercise of warrants
   
168,649
     
169
     
16,696
     
-=20
 
   
16,865
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
   
Issuance of common stock
   
1,291,928
     
1,292
     
127,712
     
-=20
 
   
129,004
 
                                         
Issuance of common stock for consulting services =
 
 
550,000
     
550
     
18,478
     
-=20
 
   
19,028
 
                                         
Issuance of warrants for consulting services
   
-=20
     
-=20
     
22,035
     
-=20
     
22,035
 
                                         
Balance at December 31, 2011
 
 
18,057,756
 
 
$=20
7,959
 
 
$=20
5,511,877
 
 
$=20
(6,703,750)
 
 
$=20
(1,183,914
)=20 =
=20

See=20 accompanying notes to consolidated financial statements.

 
F-4

=20
Index

=20
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE=20 YEARS ENDED DECEMBER 31, 2011 AND 2010

=20
 
 
2011
 
 
2010
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
Net loss
 
$=20
(485,892
)=20
 
$
(795,913
Adjustments to reconcile net loss to net cash and cash = equivalents used=20 in operating activities:
 
 
   
 
 
 
 
Depreciation
 
 
14,092
 
 
 
14,339
 
Bad debt expense
   
43,594
     
-=20
 
Stock based compensation
 
 
111,226
 
 
 
27,444
 
Change in assets and liabilities
 
 
   
 
 
 
 
Accounts receivable
 
 
     (14,009
)=20
 
 
16,743
 
Inventories
 
 
(191,629
)=20
 
 
488,088
 
Prepaid expenses and other current assets =
 
 
26,115
 
 
 
2,902
 
Accounts payable and accrued liabilities =
 
 
234,855
 
 
 
(243,606
)=20
        Severance payable = =20          (93,933     263,333  
Tax penalties
 
 
10,000
 
 
 
10,000
 
Deferred revenue
 
 
(7,570
)=20
 
 
(102,702
)=20
Net cash and cash equivalents used in operating activities = =20
 
 
    (353,151
)=20
 
 
(319,372
)=20
 
 
 
   
 
 
 
 
 
 
 
   
 
 
 
 
=20
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
   
 
 
 
 
Proceeds from exercise of warrants
 
 
16,865
 
 
 
104,127
 
Proceeds from issuance of common stock
   
129,004
     
-=20
 
Proceeds from note payable
 
 
98,044
 
 
 
-=20
 
Advances from related parties
 
 
40,000
 
 
 
2,524
 
Payments to related parties
 
 
(32,500
)=20
 
 
(3,232
)=20
Net cash and cash equivalents provided by financing activities = =20
 
 
251,413
 
 
 
103,419
 
 
 
 
   
 
 
 
 
NET DECREASE IN CASH AND CASH EQUIVALENTS =
 
 
(101,738
)=20
 
 
(215,953
)=20
 
 
 
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS, beginning of the year =
 
 
160,542
 
 
 
376,495
 
 
 
 
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS, end of the year =
 
$=20
58,804
 
 
$=20
160,542
 
 
See=20 accompanying notes to consolidated financial statements.

 
F-5

=20
Index

INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

=20
NOTES=20 TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 and 2010

Note 1 -  Organization, Business of the Company and Liquidity = =20

Organization and = Nature of=20 Operations

International Commercial Television Inc., (the =93Company=94 or = =93ICTV=94) was=20 organized under the laws of the State of Nevada on June 25, 1998. =

Strategic Media Marketing Corp. (=93SMM=94), a wholly owned subsidiary, = was=20 incorporated in the Province of British Columbia on February 11, 2003 = and has a=20 December 31 fiscal year-end.   Effective February 7, = 2011, SMM=20 offices were closed down and the subsidiary was dissolved. Operations = performed=20 by SMM are now being managed out of our office.
 
Effective February 17, 2011, the Company acquired 100% of the equity = interest=20 in Better Blocks International Limited (=93BBI=94), see Note 7. =

The=20 Company sells various consumer products.  The products are = primarily=20 marketed and sold throughout the United States and internationally via=20 infomercials.  Although our companies are incorporated in = Nevada and=20 New Zealand, a substantial portion of operations are currently run from = the=20 Wayne, Pennsylvania office.

Liquidity and = Going=20 Concern

The=20 accompanying consolidated financial statements have been prepared = assuming the=20 Company will continue as a going concern.  The Company = generated=20 negative cash flows from operating activities in the past fiscal year of = approximately $353,000, and, for the most part, has experienced = recurring losses=20 from operations. The Company had negative working capital of = approximately=20 $1,043,000 and an accumulated deficit of approximately $6,704,000 as of = December=20 31, 2011.

Although=20 we currently sell products through infomercials, the goal of our = business plan=20 is to use the brand awareness we create in our infomercials so that we = can sell=20 the products featured in our infomercials, along with related families = of=20 products, under distinct brand names in traditional retail=20 stores.  Our goal is to have these families of products sold = in the=20 traditional retail environment in shelf-space dedicated to the product=20 category.  We are developing the infrastructure to create = these brands=20 of products so that we can implement our business plan.

There=20 is no guarantee that the Company will be successful in bringing our = products=20 into the traditional retail environment.  If the Company is=20 unsuccessful in achieving this goal, the Company will be required to = raise=20 additional capital to meet its working capital needs.  If the = Company=20 is unsuccessful in completing additional financings, it will not be able = to meet=20 its working capital needs or execute its business plan. In such case the = Company=20 will assess all available alternatives including a sale of its assets or = merger,=20 the suspension of operations and possibly liquidation, auction, = bankruptcy, or=20 other measures. These conditions raise substantial doubt about the = Company=92s=20 ability to continue as a going concern. The accompanying financial = statements do=20 not include any adjustments relating to the recoverability of the = carrying=20 amount of recorded assets or the amount of liabilities that might result = should=20 the Company be unable to continue as a going concern.

Note 2 - Summary of significant accounting policies

Principles of=20 consolidation

The=20 accompanying consolidated financial statements include the accounts of = the=20 Company and its wholly-owned subsidiary BBI for the period February 17, = 2011=20 through December 31, 2011 and SMM for the period January 1, 2011 through = February 7, 2011 and for the year ended December 31, = 2010.  All=20 significant inter-company transactions and balances have been = eliminated.=20

 
F-6

=20
Index
 
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

NOTES=20 TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 and 2010

Note 2 - Summary of significant accounting policies (continued) =

Use of estimates = =20

The=20 preparation of financial statements in conformity with generally = accepted=20 accounting principles of the United States of America requires = management to=20 make estimates and assumptions that affect the amounts reported in the=20 consolidated financial statements and accompanying = notes.  Management=20 believes that the estimates utilized in preparing its consolidated = financial=20 statements are reasonable and prudent.  Actual results could = differ=20 from these estimates.

Concentration of = credit=20 risk

Financial instruments, which potentially subject the Company to = concentrations=20 of credit risk, include cash and trade receivables.  The = Company=20 maintains cash in bank accounts that, at times, may exceed federally = insured=20 limits.  As of December 31, 2011, the Company did not exceed = the=20 federally insured limit in its investment savings. The Company has not=20 experienced any losses and believes it is not exposed to any significant = risks=20 on its cash in bank accounts. As of December 31, 2011 and December 31, = 2010, 39%=20 and 4% of the Company=92s accounts receivable were due from various = individual=20 customers to whom our products had been sold directly via Direct = Response=20 Television; the remaining 61% and 96% of the Company=92s accounts = receivable were=20 due from two and three wholesale infomercial operators,=20 respectively.  Major customers are considered to be those who=20 accounted for more than 10% of net sales.  The aggregate = accounts=20 receivable balances for these two major customers at December 31, 2011 = was=20 approximately $33,000.

Fair value of = financial=20 instruments

Fair=20 value estimates, assumptions and methods used to estimate fair value of = the=20 Company=92s financial instruments are made in accordance with the = requirements of=20 ASC 825-10, =93Disclosures about Fair Value of Financial Instruments.=94 = The Company=20 has used available information to derive its estimates. However, because = these=20 estimates are made as of a specific point in time, they are not = necessarily=20 indicative of amounts the Company could realize currently. The use of = different=20 assumptions or estimating methods may have a material effect on the = estimated=20 fair value amounts.  The carrying values=20 of   financial   instruments  &nb= sp;such=20 as cash, accounts receivable, accounts payable, and accrued liabilities=20 approximate their fair values due to the short settlement period for = these=20 instruments.  It is not practicable to estimate the fair value = of the=20 Note Payable to Shareholder due to its related party nature. =

Cash and cash = equivalents=20

The=20 Company considers all unrestricted highly liquid investments with an = original=20 maturity of three months or less to be cash equivalents.

Restricted Cash = =20

Transfirst ePayment Services (=93Transfirst=94), ICTV=92s credit card = processing=20 vendor for VISA and Mastercard transactions in the United States, = maintains a=20 reserve fund within our processing account to cover all fees, charges, = and=20 expenses due them, including those estimated for possible customer = charge backs.=20 These reserves are updated periodically by Transfirst and maintained for = a=20 rolling 180 days of activity. Based upon established levels of risk, = this=20 normally represents approximately 2% of transaction volume for the = period, and=20 is considered as =93Restricted Cash=94.  At December 31, 2011 = and 2010 the=20 amount of Transfirst reserves were approximately $5,000 and $2,000,=20 respectively.

Foreign currency = transactions

Transactions entered into by the Company in currencies other than its = local=20 currency, are recorded in its local currency and any changes in currency = exchange rates that occur from the initiation of a transaction until = settled are=20 recorded as foreign currency gains or losses in the Consolidated = Statements of=20 Operations.

 
F-7

=20
Index
 
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

NOTES=20 TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 and 2010

Note 2 - Summary of significant accounting policies (continued) =

Accounts = receivable=20

Accounts receivable are recorded net of allowances for returns and = doubtful=20 accounts of approximately $13,000 and $7,000 for the years ended = December 31,=20 2011 and 2010, respectively.  The allowances are calculated = based on=20 historical customer returns and bad debts.

In=20 addition to reserves for returns on accounts receivable, an accrual is = made=20 against returns for product that have been sold to customer and had cash = collections, while the customer still has the right to return the=20 product.   The amounts of these accruals included in = accounts=20 payable and accrued liabilities in our Consolidated Balance Sheets were=20 approximately $42,000 and $9,000 at December 31, 2011 and 2010, = respectively.=20

Inventories = =20

Inventories consist primarily of products held for resale, and are = valued at=20 the lower of cost (first-in, first-out method) or market.  The = Company=20 adjusts inventory for estimated obsolescence when necessary based upon = demand=20 and market conditions. The Company has recorded approximately $12,000 = and $0 in=20 inventory of consigned product as of December 31, 2011 and 2010, = respectively,=20 that has been shipped to customers under the 30-day free trial period = for which=20 the trial period has not expired and as such the customer has not = accepted the=20 product.

Furniture and = equipment=20

Furniture and equipment are carried at cost and depreciation is = computed over=20 the estimated useful lives of the individual assets ranging from 3 to 7=20 years.  Depreciation is computed using the straight-line = method. The=20 related cost and accumulated depreciation of assets retired or otherwise = disposed of are removed from the accounts and the resultant gain or loss = is=20 reflected in earnings.  Maintenance and repairs are expensed = currently=20 while major renewals and betterments are capitalized.

Depreciation expense amounted to approximately $14,000 for each of the = years=20 ended December 31, 2011 and 2010.

Impairment of = Long-Lived=20 Assets

In=20 accordance with ASC 360-10, =93Accounting for the Impairment or Disposal = of=20 Long-Lived Assets=94, long-lived assets are reviewed for impairment when = circumstances indicate that the carrying value of an asset may not be=20 recoverable. Recoverability of assets to be held and used is measured by = a=20 comparison of the carrying amount of the assets to the future net cash = flows=20 estimated by the Company to be generated by such assets. If such assets = are=20 considered to be impaired, the impairment to be recognized is the amount = by=20 which the carrying amount of the assets exceeds the fair value of the = assets.=20 Assets to be disposed of by sale are recorded as held for sale at the = lower of=20 carrying value or estimated net realizable value. No impairment losses = were=20 identified or recorded in the fiscal years ended December 31, 2011 and = 2010.=20

 
F-8

=20
Index
 
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

NOTES=20 TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 and 2010

Note 2 - Summary of significant accounting policies (continued) =

Revenue = recognition=20

For our=20 domestic direct response television sales generated by our infomercials, = product=20 sales revenue is recognized when the following criteria are met: = persuasive=20 evidence of an arrangement exists, delivery has occurred, the selling = price is=20 fixed or determinable, and collectability is reasonably assured. The = Company=92s=20 revenues in the Statement of Operations are net of sales taxes. =

The=20 Company offers a 30-day risk-free trial as one of its payment=20 options.  Revenue on the 30-day risk-free trial sales is not=20 recognized until customer acceptance and collectability are assured = which we=20 determine to be when the trial period ends. If the risk-free trial = expires=20 without action by the customer, product is determined to be accepted by = the=20 customer and revenue is recorded.  Revenue for items purchased = without=20 the 30-day free trial is recognized upon shipment of the product to the = customer=20 and collectability is assured.

The=20 Company entered into an exclusive distribution agreement with Allstar = Marketing=20 (=93Allstar=94) in May 2009. As part of the agreement with Allstar, the = Company=20 received non-refundable royalty advances which were booked as deferred = revenue=20 until Allstar sold DermaWands.   Allstar was required to = provide=20 ICTV with monthly royalty statements per the contract within 30 days of = the end=20 of each month.  The Company recorded revenue in the month = goods were=20 sold per the Allstar royalty statements.

In=20 March 2010, the Allstar agreement was terminated and the Company = retained the=20 exclusive distribution rights for the Derma Wand.   Upon=20 termination of the contract, the Company recognized the remaining = non-refundable=20 royalty advances that were previously booked in deferred revenue. The = Company=20 recognized $0 and $94,000 in revenue related to the Allstar agreement in = the=20 years ended December 31, 2011 and 2010, respectively.
 
Revenue=20 related to international wholesale customers is recorded at gross = amounts with a=20 corresponding charge to cost of sales upon shipment.

The=20 Company has a return policy whereby the customer can return any product = received=20 within 30 days of receipt for a full refund excluding shipping and=20 handling.  However, historically the Company has accepted = returns past=20 30 days of receipt. The Company provides an allowance for returns based = upon=20 past experience.  All significant returns for the years = presented have=20 been offset against gross sales.

Shipping and = handling=20

Amounts=20 billed to customers for shipping and handling are included in revenue: = shipping=20 and handling revenue approximated $61,000 and $13,000 for the years = ended=20 December 31, 2011 and 2010, respectively. Shipping and handling costs = are=20 included in cost of sales. Shipping and handling costs approximated = $233,000 and=20 $227,000 for the years ended December 31, 2011 and 2010, respectively. = =20

Research and = development=20

Research and development costs are expensed as incurred and are = included in=20 selling and marketing expense in the accompanying consolidated financial = statements.  Research and development costs primarily consist = of=20 efforts to discover and develop new products and the testing and = development of=20 direct-response advertising related to these products.

Media and = production costs=20

Media=20 and production costs are expensed as incurred and are included in = selling and=20 marketing expense in the accompanying consolidated financial=20 statements.  The Company incurred approximately $172,000 and = $11,000=20 in such costs for the years ended December 31, 2011 and 2010, = respectively.=20

 
F-9

=20
Index
 
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

NOTES=20 TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 and 2010

Note 2 - Summary of significant accounting policies (continued) =

Income taxes = =20

In=20 preparing our consolidated financial statements, we make estimates of = our=20 current tax exposure and temporary differences resulting from timing = differences=20 for reporting items for book and tax purposes. We recognize deferred = taxes by=20 the asset and liability method of accounting for income taxes. Under the = asset=20 and liability method, deferred income taxes are recognized for = differences=20 between the financial statement and tax bases of assets and liabilities = at=20 enacted statutory tax rates in effect for the years in which the = differences are=20 expected to reverse. The effect on deferred taxes of a change in tax = rates is=20 recognized in income in the period that includes the enactment date. In=20 addition, valuation allowances are established when necessary to reduce = deferred=20 tax assets to the amounts expected to be realized. In consideration of = our=20 accumulated losses and lack of historical ability to generate taxable = income to=20 utilize our deferred tax assets, we have estimated that we will not be = able to=20 realize any benefit from our temporary differences and have recorded a = full=20 valuation allowance. If we become profitable in the future at levels = which cause=20 management to conclude that it is more likely than not that we will = realize all=20 or a portion of the net operating loss carry-forward, we would = immediately=20 record the estimated net realized value of the deferred tax asset at = that time=20 and would then provide for income taxes at a rate equal to our combined = federal=20 and state effective rates, which would be approximately 40% under = current tax=20 laws. Subsequent revisions to the estimated net realizable value of the = deferred=20 tax asset could cause our provision for income taxes to vary = significantly from=20 period to period.

The=20 Company=92s policy is to recognize interest and penalties related to tax = matters=20 in general and administrative expenses in the Consolidated Statements of = Operations.

Stock options = =20
 
In June=20 2001, our shareholders approved our 2001 Stock Option Plan (the=20 =93Plan=94).  The Plan is designed for selected employees, = officers and=20 directors to the Company and its subsidiaries, and is intended to = advance the=20 best interests of the Company by providing personnel who have = substantial=20 responsibility for the management and growth of the Company and its = subsidiaries=20 with additional incentive by increasing their proprietary interest in = the=20 success of the Company, thereby encouraging them to remain in the employ = of the=20 Company or its subsidiaries.  The Plan is administered by the = Board of=20 Directors of the Company, and authorizes the issuance of stock options = not to=20 exceed a total of 3,000,000 shares.  The terms of any awards = under the=20 Plan are determined by the Board of Directors, provided that no options = may be=20 granted at less than the fair market value of the stock as of the date = of the=20 grant.  The Plan expired in February 2011.  As of = December=20 31, 2011, 1,650,000 options are outstanding under the Plan. =

In=20 December 2011, our shareholders approved our 2011 Stock Option Plan (the = =932011=20 Plan=94).  The 2011 Plan is designed for selected employees, = officers,=20 and directors to the Company and its subsidiaries, and is intended to = advance=20 the best interests of the Company by providing personnel who have = substantial=20 responsibility for the management and growth of the Company and its = subsidiaries=20 with additional incentive by increasing their proprietary interest in = the=20 success of the Company, thereby encouraging them to remain in the employ = of the=20 Company or its subsidiaries.  The 2011 Plan is administered by = the=20 Board of Directors of the Company, and authorizes the issuance of stock = options=20 not to exceed a total of 3,000,000 shares.  The terms of any = awards=20 under the Plan are determined by the Board of Directors, provided that = no=20 options may be granted at less than the fair market value of the stock = as of the=20 date of the grant.  As of December 31, 2011, zero options are=20 outstanding under the 2011 Plan.
 
The=20 Company uses ASC (=93Accounting Standards Codification=94) Topic 718, = =93Share-Based=20 Payments=94, to account for stock-based compensation. The Company = recognizes=20 compensation expense in an amount equal to the fair value of share-based = payments such as stock options granted to employees over the requisite = vesting=20 period of the awards. Stock options granted to non-employees are = remeasured at=20 each reporting period.

 
F-10

=20
Index

=20
INTERNATIONAL COMMERCIAL TELEVISION INC. AND SUBSIDIARY

NOTES=20 TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 and 2010

Note 2 - Summary of significant accounting policies (continued) =

Stock options = (continued)=20

The=20 following is a summary of stock options outstanding under the existing = stock=20 option plan for the years ended December 31, 2011 and 2010: =

 
 
Number of Shares
 
 
Weighted
Average
 
 
 
Employee
 
 
Non-
Employee
 
 
Totals
 
 
Exercise
Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2011
 
 
-=20
 
 
 
657,000
 
 
 
657,000
 
 
$=20
2.00
 
Granted
 
 
1,300,000
 
 
 
350,000
 
 
 
1,650,000
 
 
 
0.08
 
Exercised
 
 
-=20
 
 
 
-=20
 
 
 
-=20
 
 
 
-=20
 
Expired
 
 
-=20
 
 
 
(657,000)
 
 
 
(657,000)
 
 
 
(2.00)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2011
 
 
1,300,000