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EX-31.1 - EXHIBIT 31.1 - Convenience TV Inc.exhibit31-1.htm
EX-31.2 - EXHIBIT 31.2 - Convenience TV Inc.exhibit31-2.htm
EX-32.2 - EXHIBIT 32.2 - Convenience TV Inc.exhibit32-2.htm
EX-32.1 - EXHIBIT 32.1 - Convenience TV Inc.exhibit32-1.htm
EXCEL - IDEA: XBRL DOCUMENT - Convenience TV Inc.Financial_Report.xls

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2011

or

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___________ to ______________

Commission File Number 005-86532

CONVENIENCE TV INC.
(Exact name of registrant as specified in its charter)

Nevada 30-0518293
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
   
248 Main Street, Venice, CA 90291
(Address of principal executive offices) (Zip Code)

877-943-3210
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] YES     [   ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] YES [   ] NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ] Accelerated filer [   ]
Non-accelerated filer [   ]
(Do not check if a smaller reporting company)
Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act
[   ] YES    [X] NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange after the distribution of securities under a plan confirmed by a court.
[   ] YES     [   ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
105,647,684 common shares issued and outstanding as of February 13, 2012.


CONVENIENCE TV INC.

FORM 10-Q
December 31, 2011

INDEX

PART I – FINANCIAL INFORMATION 3
  Item 1. Financial Statements 3
  Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5
  Item 3. Quantitative and Qualitative Disclosure about Market Risk 8
  Item 4. Controls and Procedures 8
PART II – OTHER INFORMATION 9
  Item 1. Legal Proceedings 9
  Item 1A. Risk Factors 9
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 9
  Item 3. Defaults Upon Senior Securities 10
  Item 4. Mining Safety Disclosures 10
  Item 5. Other Information 10
  Item 6. Exhibits 11
SIGNATURES 12

2


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited consolidated interim financial statements for the three and nine month periods ended December 31, 2011 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

3


CONVENIENCE TV INC.
(A Development Stage Company)
December 31, 2011
(Expressed in US dollars)
(unaudited)

  Index
Consolidated Balance Sheets F–1
Consolidated Statements of Operations F–2
Consolidated Statements of Cash Flows F–3
Notes to the Consolidated Financial Statements F–4



CONVENIENCE TV INC.
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in US Dollars)

    December 31,     March 31,  
    2011     2011  
     
    (unaudited)        
             
ASSETS            
Current Assets            
   Cash   1,128     51,518  
   Due from related party (Note 6)   19,161     19,161  
Total Current Assets   20,289     70,679  
Property and equipment (Note 3)   4,562     37,140  
Deferred financing costs (Note 4(e))   2,867     3,472  
Total Assets   27,718     111,291  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)            
Current Liabilities            
   Accounts payable   23,378     3,324  
   Accrued liabilities   12,356     2,155  
   Convertible debt, less unamortized discount of $60,812 (Note 4)   62,188     63,065  
   Derivative liabilities (Note 5)   133,148      
Total Liabilities   231,070     68,544  
             
Going Concern (Note 1)            
Subsequent Events (Note 10)            
             
Stockholders’ Equity (Deficit)            
Preferred Stock
   Authorized: 100,000,000 preferred shares, $0.00001 par value
   Issued and outstanding: no shares
 

   

 
Common Stock
   Authorized: 600,000,000 common shares, $0.00001 par value
   Issued and outstanding: 97,769,272 shares (March 31, 2011 - 56,070,000)
 

979
   

561
 
Additional paid-in capital   1,061,629     788,025  
Deficit accumulated during the development stage   (1,265,960 )   (745,839 )
Total Stockholders' Equity (Deficit)   (203,352 )   42,747  
Total Liabilities and Stockholders' Equity (Deficit)   27,718     111,291  

(The accompanying notes are an integral part of these consolidated financial statements)

F-1



CONVENIENCE TV INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in US Dollars)
(unaudited)

                            Accumulated  
                            from March 31,  
    Three Months     Three Months     Nine months     Nine months     2008 (date of
    Ended     Ended     Ended     Ended     inception) to  
    December 31,     December 31,     December 31,     December 31,     December 31,  
    2011     2010     2011     2010     2011  
           
                               
Revenue           6,628         20,954  
                               
Expenses                              
   Amortization   10,282     13,090     32,578     39,131     151,254  
   Consulting fees   22,098     2,500     28,098     13,800     41,298  
   Content services                   6,470  
   Foreign exchange loss (gain)   384     95     309     (2,705 )   17,359  
   Investor relations       4,140         94,140     112,840  
   Management fees (Note 6)   4,500     30,000     34,500     80,000     270,805  
   Network management   3,962     17,510     34,000     75,083     178,245  
   Office and general   328     2,972     2,964     7,071     17,760  
   Professional fees   11,368     11,931     41,777     49,937     90,590  
   Transfer agent and filing fees   2,964     6,276     12,958     12,798     21,746  
   Travel and promotion   40     63     220     63     24,331  
Total Operating Expenses   55,926     88,577     187,404     369,318     932,698  
Loss from Operations   (55,926 )   (88,577 )   (180,776 )   (369,318 )   (911,744 )
Other Income (Expense)                              
   Accretion of discounts on convertible debt   (15,002 )   (1,446 )   (98,628 )   (1,446 )   (109,316 )
   Amortization of deferred financing costs   (1,704 )       (5,605 )       (7,633 )
   Interest expense   (2,965 )   (362 )   (7,045 )   (362 )   (9,200 )
   Gain (loss) on change in fair value of
        derivative liabilities
 
335,058
   
   
(193,196
)  
   
(193,196
)
   Loss on extinguishment of debt   (34,871 )       (34,871 )       (34,871 )
Total Other Income (Expense)   280,516     (1,808 )   (339,345 )   (1,808 )   (354,216 )
Net Income (Loss) for the Period   224,590     (90,385 )   (520,121 )   (371,126 )   (1,265,960 )
                               
Net Earnings (Loss) Per Share, Basic and Diluted           (0.01 )   (0.01 )    
                               
Weighted Average Shares Outstanding   82,270,000     56,070,000     66,569,000     52,857,000        

(The accompanying notes are an integral part of these consolidated financial statements)

F-2



CONVENIENCE TV INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in US Dollars)
(unaudited)

                Accumulated from  
    Nine months     Nine months     March 31, 2008  
    Ended     Ended     (date of inception) to  
    December 31,     December 31,     December 31,  
    2011     2010     2011  
   $      
                   
Operating Activities                  
   Net loss   (520,121 )   (371,126 )   (1,265,960 )
   Adjustments to reconcile net loss to net cash used in
   operating activities:
 
   
   
 
       Accretion of discounts on convertible debt   98,628     1,446     109,316  
       Amortization of property and equipment   32,578     39,131     151,254  
       Amortization of deferred financing costs   5,605         7,633  
       Loss on change in fair value of derivative liabilities   193,196         193,196  
       Loss on extinguishment of debt   34,871         34,871  
       Stock-based compensation   9,598     90,000     99,598  
   Changes in operating assets and liabilities:                  
       Due from related party           (19,161 )
       Prepaid expenses       8,457      
       Accounts payable   20,054     (1,687 )   20,424  
       Accrued liabilities   10,201     (775 )   12,356  
Net Cash Used In Operating Activities   (115,390 )   (234,554 )   (656,473 )
Investing Activities                  
   Acquisition of property and equipment           (155,816 )
   Net cash acquired on acquisition of subsidiary       6,755     6,755  
Net Cash Provided By (Used In) Investing Activities       6,755     (149,061 )
Financing Activities                  
   Advances from related party           348,482  
   Proceeds from convertible debt   65,000     55,000     162,500  
   Deferred financing costs           (5,500 )
   Proceeds from issuance of common stock       278,700     278,701  
Net Cash Provided By Financing Activities   65,000     333,700     784,183  
Effect of Exchange Rate Changes on Cash       (17,063 )   22,479  
Change in Cash   (50,390 )   88,838     1,128  
Cash, Beginning of Period   51,518          
Cash, End of Period   1,128     88,838     1,128  
                   
Supplemental Disclosures:                  
   Interest paid            
   Income taxes paid            

(The accompanying notes are an integral part of these consolidated financial statements)

F-3



CONVENIENCE TV INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2011
(Expressed in US dollars)
(unaudited)

1.

Basis of Presentation

   

The accompanying financial statements of Convenience TV Inc. (the “Company”) should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.

   

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.

   

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and is unlikely generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at December 31, 2011, the Company has not generated significant revenues, has a working capital deficit of $210,781, and has accumulated losses of $1,265,960 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

   
2.

Recent Accounting Pronouncements

   

In January 2010, the FASB issued an amendment to ASC 820, “Fair Value Measurements and Disclosures”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The adoption of the applicable standard on April 1, 2011 did not have a material effect on the Company’s consolidated financial statements.

   

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

   
3.

Property and Equipment


                  December 31,     March 31,  
                  2011     2011  
            Accumulated     Net Carrying     Net Carrying  
      Cost     Amortization     Value     Value  
           
  Computer equipment   16,147     16,147         1,517  
  Equipment   139,669     135,107     4,562     35,623  
      155,816     151,254     4,562     37,140  

F-4



CONVENIENCE TV INC.

(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2011
(Expressed in US dollars)
(unaudited)

4.

Convertible Debt

     
(a)

On December 3, 2010, the Company issued a $55,000 convertible note which bears interest at 8% per annum and matures on September 3, 2011. The note is convertible into shares of common stock 180 days after the date of issuance (June 1, 2011) at a conversion rate of 58% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. On July 25, 2011, the conversion rate was amended to 31% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date of conversion. Upon an event of default, the entire principal balance and accrued interest outstanding is due immediately, and interest shall accrue on the unpaid principal balance at 22% per annum.

     

In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $16,019 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note. On June 1, 2011, the Company recorded a derivative liability of $89,014 and a further discount of $38,981 which will be charged to operations over the term of the convertible note. During the nine months ended December 31, 2011, the Company issued 41,699,272 shares of common stock pursuant to the conversion of $44,500 of the convertible note. The fair value of the conversion option derivative liability related to this converted amount of $157,548 was recorded as additional paid-in capital. As at December 31, 2011, $10,500 had been accreted increasing the carrying value of the convertible note to $10,500. During the nine months ended December 31, 2011, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $128,936 and as of December 31, 2011, the fair value of the conversion option derivative liability was $26,385.

     
(b)

On January 14, 2011, the Company issued a $42,500 convertible note which bears interest at 8% per annum and matures on October 18, 2011. The note is convertible into shares of common stock 180 days after the date of issuance (July 13, 2011) at a conversion rate of 58% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. On July 25, 2011, the conversion rate was amended to 31% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date of conversion. Upon an event of default, the entire principal balance and accrued interest outstanding is due immediately, and interest shall accrue on the unpaid principal balance at 22% per annum.

     

In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $29,105 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note. On July 13, 2011, the Company recorded a derivative liability of $60,250 and a further discount of $13,395 which will be charged to operations over the term of the convertible note. The Company records accretion expense over the term of the convertible note up to its face value of $42,500. As at December 31, 2011, $42,500 had been accreted increasing the carrying value of the convertible note to $42,500. During the nine months ended December 31, 2011, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $64,260 and as of December 31, 2011, the fair value of the conversion option derivative liability was $106,763.

     
(c)

On July 26, 2011, the Company issued a $37,500 convertible note which bears interest at 8% per annum and matures on April 30, 2012. The note is convertible into shares of common stock 180 days after the date of issuance (January 22, 2012) at a conversion rate of 58% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. Upon an event of default, the entire principal balance and accrued interest outstanding is due immediately, and interest shall accrue on the unpaid principal balance at 22% per annum.

     

In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $37,500 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note. The Company records accretion expense over the term of the convertible note up to its face value of $37,500.

     

On October 6, 2011, the conversion rate was amended to be 35% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date of conversion.

F-5



CONVENIENCE TV INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2011
(Expressed in US dollars)
(unaudited)

4.

Convertible Debt (continued)


 

In accordance with ASC 470-60, “Debt - Troubled Debt Restructurings by Debtors”, the Company determined that the creditor did not grant a concession as the only modification to the debt was the decrease in the conversion price.

     
 

The modification was then analyzed under ASC 470-50, “Debt - Modifications and Extinguishments”. The change of the fair value of the conversion feature was greater than 10% of the carrying value of the debt. As a result, in accordance with ASC 470-50, the Company determined the terms of the amendment to be substantially different and treated the July 26, 2011 convertible note extinguished and exchanged for a new convertible note. The Company recorded a loss on extinguishment of debt of $34,871.

     
 

Prior to the modification, the Company recorded $2,629 of accretion expense related to the original convertible debt, and the carrying value of the original note was $2,629 at October 6, 2011. In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $37,500 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the modified convertible note. The Company will record accretion expense over the term of the modified convertible note up to its face value of $37,500.

     
 

As at December 31, 2011, the Company recorded $6,991 of accretion expense related to the modified convertible note increase the carrying value of the convertible note to $6,991.The Company paid $8,000 in financing costs relating to the convertible debt.

     
  (d)

On October 12, 2011, the Company issued a $32,500 convertible note which bears interest at 8% per annum and matures on July 17, 2012. The note is convertible into shares of common stock 180 days after the date of issuance (April 10, 2011) at a conversion rate of 35% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. Upon an event of default, the entire principal balance and accrued interest outstanding is due immediately, and interest shall accrue on the unpaid principal balance at 22% per annum.

     
 

In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $32,500 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note. The Company records accretion expense over the term of the convertible note up to its face value of $32,500.

     
 

As at December 31, 2011, $2,197 had been accreted increasing the carrying value of the convertible note to $2,197. The Company paid $2,500 in financing costs relating to the convertible debt.

     
  (e)

The Company paid a total of $10,500 in financing costs relating to the above convertible debt. As at December 31, 2011, the Company had deferred financing costs of $2,867 (March 31, 2011 – $3,472).


5.

Derivative Liabilities

The conversion options of the convertible debt disclosed in Notes 4(a) and 4(b) are required to record a derivative at their estimated fair values on each balance sheet date with changes in fair value reflected in the statement of operations.

The fair value of the derivative liability for the December 3, 2010 convertible note was $89,014 on vesting. The fair value of the derivative liability for the January 14, 2011 convertible note was $60,250 on vesting.

The fair values of these convertible notes as at December 31, 2011 and March 31, 2011 are as follows:

      December 31,     March 31,  
      2011     2011  
       
               
   $10,500 convertible debenture issued December 3, 2010   26,385      
   $42,500 convertible debenture issued January 14, 2011   106,763      
      133,148      
               
  During the nine months ended December 31, 2011, the Company recorded a loss on the change in fair value of the derivative liabilities of $193,196.

F-6



CONVENIENCE TV INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2011
(Expressed in US dollars)
(unaudited)

5.

Derivative Liabilities (continued)

The Company uses the Black-Scholes option pricing model to calculate the fair values of the derivative liabilities. The following table shows the assumptions used in the calculations:

            Risk-free     Expected     Expected  
      Expected     Interest     Dividend     Life (in  
      Volatility     Rate     Yield     years)  
  December 3, 2010 convertible note:                        
  As at June 1, 2011 (date of vesting)   388%     0.05%     0%     0.26  
                           
  January 14, 2011 convertible note:                        
  As at July 13, 2011 (date of vesting)   392%     0.01%     0%     0.27  
                           
  As at December 31, 2011   326%     0.02%     0%     0.25  

6.

Related Party Transactions


  (a)

As at December 31, 2011, the Company is owed $19,161 (March 31, 2011 – $19,161) from a company under common control which is unsecured, non-interest bearing and due on demand.

     
  (b)

During the nine months ended December 31, 2011, the Company paid $17,500 (2010 - $40,000) in management fees to a company controlled by the President of the Company.

     
  (c)

During the nine months ended December 31, 2011, the Company paid $17,000 (2010 - $40,000) in management fees to the Chief Financial Officer of the Company.


7.

Common Stock

     
(a)

Effective July 20, 2011, the Company increased the authorized number of shares of common stock from 100,000,000 to 600,000,000 shares, with no change in par value.

     
(b)

On June 10, 2011, the Company issued 1,690,141 shares of common stock pursuant to the conversion of $12,000 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $35,830 on the date of conversion and was recorded as additional paid-in capital.

     
(c)

On August 10, 2011, the Company issued 2,500,000 shares of common stock pursuant to the conversion of $4,000 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $14,291 on the date of conversion and was recorded as additional paid-in capital.

     
(d)

On August 22, 2011, the Company issued 2,500,000 shares of common stock pursuant to the conversion of $3,000 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $7,113 on the date of conversion and was recorded as additional paid-in capital.

     
(e)

On September 15, 2011, the Company issued 2,500,000 shares of common stock pursuant to the conversion of $1,500 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $8,881 on the date of conversion and was recorded as additional paid-in capital.

     
(f)

On September 20, 2011, the Company issued 2,500,000 shares of common stock pursuant to the conversion of $1,500 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $6,238 on the date of conversion and was recorded as additional paid-in capital.

     
(g)

On October 14, 2011, the Company issued 2,777,778 shares of common stock pursuant to the conversion of $2,500 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $6,533 on the date of conversion and was recorded as additional paid-in capital.

     
(h)

On October 20, 2011, the Company issued 2,857,143 shares of common stock pursuant to the conversion of $2,000 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $13,090 on the date of conversion and was recorded as additional paid-in capital.

     
(i)

On October 21, 2011, the Company issued 2,857,143 shares of common stock pursuant to the conversion of $2,000 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $8,640 on the date of conversion and was recorded as additional paid-in capital.

F-7



CONVENIENCE TV INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2011
(Expressed in US dollars)
(unaudited)

7.

Common Stock (continued)

     
(j)

On October 31, 2011, the Company issued 2,857,143 shares of common stock pursuant to the conversion of $2,000 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $7,082 on the date of conversion and was recorded as additional paid-in capital.

     
(k)

On November 10, 2011, the Company issued 3,424,658 shares of common stock pursuant to the conversion of $2,500 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $6,675 on the date of conversion and was recorded as additional paid-in capital.

     
(l)

On November 21, 2011, the Company issued 3,571,429 shares of common stock pursuant to the conversion of $2,500 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $14,588 on the date of conversion and was recorded as additional paid-in capital.

     
(m)

On December 1, 2011, the Company issued 3,684,211 shares of common stock pursuant to the conversion of $3,500 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $9,987 on the date of conversion and was recorded as additional paid-in capital.

     
(n)

On December 13, 2011, the Company issued 3,947,368 shares of common stock pursuant to the conversion of $3,000 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $11,210 on the date of conversion and was recorded as additional paid-in capital.

     
(o)

On December 22, 2011, the Company issued 4,032,258 shares of common stock pursuant to the conversion of $2,500 of the convertible note described in Note 4(a). The fair value of the conversion option was determined to be $7,390 on the date of conversion and was recorded as additional paid-in capital.


8.

Stock Options

On October 18, 2011, the Company granted 4,000,000 stock options to consultants, employees and a director which are exercisable at $0.0024 per share and expire on October 18, 2013. The fair value of these stock options was estimated at the date of grant using the Black-Scholes option-pricing model assuming an expected life of 2 years, a risk-free rate of 0.05%, an expected volatility of 522%, and a 0% dividend yield. The weighted average fair value of stock options granted was $0.0024 per share.

During the nine month period ended December 31, 2011, the Company recorded stock-based compensation of $9,598 (2010 - $nil), as consulting fees.

A summary of the Company’s stock option activity is as follows:

            Weighted      
            Average       Aggregate  
            Exercise     Intrinsic  
      Number of     Price     Value  
      Options      
  Outstanding, March 31, 2011                
     Granted   4,000,000     0.0024        
  Outstanding and exercisable, December 31, 2011   4,000,000     0.0024      

As at December 31, 2011, the weighted average remaining contractual life was 1.8 years and there was no unrecognized compensation costs related to non-vested share-based compensation.

9.

Proposed Acquisition

During the nine months ended December 31, 2011, the Company entered into a Letter of Intent with HFT Management Inc. (“HFT”) to purchase the static advertising business known as Go Media for $2,000,000 to be paid in cash. The terms and conditions will be outlined in an Asset Purchase Agreement. In conjunction with the closing of the Asset Purchase Agreement, the parties will sign an agreement with HFT to manage the acquired static advertising business. As of December 31, 2011, the transaction had not been completed.

F-8



CONVENIENCE TV INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2011
(Expressed in US dollars)
(unaudited)

10.

Subsequent Events


  (a)

On January 10, 2012, the Company signed a term sheet for a $3,250,000 credit facility to finance the acquisition of Go Media. The term of the financing is 3 years and any amounts borrowed would bear interest at 6.5% and a default interest rate of 10%. The financing would be secured by all of the assets of Go Media and by the revenue stream of all current and future service contracts. During the first 18 months following the financing, the Company would be required to make interest payments only. During the next 12 months the Company would be required to make interest and principal payments and fully repay the financing prior to the third anniversary. The Company paid an origination fee of $12,500.

     
  (b)

Subsequent to December 31, 2011, the Company converted $4,500 of the convertible note payable described in Note 4(a) into 7,878,412 shares of the Company’s common stock.

F-9


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

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this annual report, the terms we", "us", "our" and "our company" mean Convenience TV Inc. and our wholly owned subsidiary, C-Store Networks LLC, unless otherwise indicated.

General Overview

We were incorporated in Nevada on December 4, 2008, under the name "Costa Rica Paradise Inc.", to engage in the business of real estate investment consulting with respect to properties located in Costa Rica. On April 23, 2010 our board of directors authorized a change in name to “Convenience TV Inc.” and a forward split of our common stock on a basis of 7 for 1 which became effective with the OTC Bulletin Board on June 15, 2010. On May 5, 2010 we experienced a change of control upon the closing of the acquisition of C-Store Networks LLC. Our statutory registered agent is National Registered Agents Inc. of Nevada located at 1000 East William Street, Suite 204, Carson City, Nevada 89701. Our business office is located at 248 Main Street, Venice, CA, 90219 and our telephone number is 877-943-3210.

Effective July 20, 2011, our authorized shares of common stock increased from 100,000,000 to 600,000,000 shares of common stock, par value of $0.00001 per share. Our preferred stock remains unchanged.

Our Current Business

We are engaged in the provision of advertising services through a network of in-location televisions installed at various convenience store locations.

5


Results of Operations

For the three and six month periods ended December 31, 2011 and December 31, 2010

    Three Months Ended     Nine Months Ended  
    December 31,     December 31,  
    2011     2010     2011     2010  
Revenue $  Nil   $  Nil     6,628     Nil  
Operating Expenses $  55,926   $  88,577     187,404     369,318  
Net Income (Loss) $  224,590   $  (90,385 )   (520,121 )   (371,126 )

Revenues

During the three months ended December 31, 2011 we earned $Nil in revenues and incurred a net income of $224,590 compared to a net loss of $90,385 for the three months ended December 31, 2010. During the nine months ended December 31, 2011 we earned $6,628 in revenues and incurred a net loss of $520,121 compared to a net loss of $371,126 for the nine months ended December 31, 2010.

    Three Months Ended     Nine Months Ended  
    December 31,     December 31,  
    2011     2010     2011     2010  
Amortization of property and equipment $  10,282   $  13,090   $  32,578   $  39,131  
Consulting fees $  22,098   $  2,500   $  28,098   $  13,800  
Foreign exchange loss (gain) $  384   $  95   $  309   $  (2,705 )
Investor relations $  Nil   $  4,140   $  Nil   $  94,140  
Management fees $  4,500   $  30,000   $  34,500   $  80,000  
Network management $  3,962   $  17,510   $  34,000   $  75,083  
Office and general $  328   $  2,972   $  2,964   $  7,071  
Professional fees $  11,368   $  11,931   $  41,777   $  49,937  
Transfer agent and filing fees $  2,964   $  6,276   $  12,958   $  12,798  
Travel and promotion $  40   $  63   $  220   $  63  

Expenses

Operating expenses for three month period ended December 31, 2011 decreased by 58.38% as compared to the comparative period in 2010 primarily as a result of decreased expenses for amortization of property and equipment, investor relations, management fees, network management, office and general, professional fees and transfer agent and filing fees. Operating expenses for nine month period ended December 31, 2011 decreased by 49.26% as compared to the comparative period in 2010 primarily as a result of decreased expenses for amortization of property and equipment, investor relations, management fees, network management, office and general and professional fees.

Liquidity and Capital Resources

For the nine months ended December 31, 2011

Working Capital

    At     At     Percentage  
    December 31,     March 31,     Increase/  
    2011     2011     (Decrease)  
Current Assets $  20,289   $  70,679     (84.03 )%
Current Liabilities $  231,070   $  68,544     70.34%  
Working Capital (Deficit) $  (210,781 ) $  2,135     (9772.65 )%

6


Cash Flows

    Nine Months     Nine Months  
    Ended     Ended  
    December 31,     December 31,  
    2011     2010  
Net Cash used in Operating Activities $  (115,390 ) $  (234,544 )
Net Cash provided by (used in) Investing Activities $  Nil   $  6,755  
Net Cash provided by Financing Activities $  65,000   $  333,700  
Cash – End of Period $  1,128   $  88,838  

On May 5, 2010 we closed the acquisition of C-Store Network, LLC and have since adopted the business of C-Store Network, LLC, which is now our wholly owned subsidiary. We anticipate that we will meet our ongoing cash requirements by retaining income as well as through equity or debt financing. We plan to cooperate with various individuals and institutions to acquire the financing required to produce and distribute our products and anticipate this will continue until we accrue sufficient capital reserves to finance all of our productions independently.

We estimate that our expenses over the next 12 months will be approximately $1,202,600 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.

    Estimated     Estimated  
                                                               Description   Completion Date     Expenses  
          ($)  
Legal and accounting fees   12 months     100,000  
Marketing and advertising   12 months     17,600  
Management and operating costs   12 months     250,000  
Salaries and consulting fees   12 months     100,000  
Fixed asset purchases   12 months     660,000  
General and administrative expenses   12 months     75,000  
Total         1,202,600  

We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any private placement financings. If we are not able to successfully complete any private placement financings, we plan to cooperate with film and television producers or obtain shareholder loans to meet our cash requirements. However, there is no assurance that any such financing will be available or if available, on terms that will be acceptable to us. We may not raise sufficient funds to fully carry out our business plan.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Inflation

The effect of inflation on our revenues and operating results has not been significant.

7


Critical Accounting Policies

Basis of Presentation

The accompanying financial statements of our company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in our company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments of a recurring nature considered necessary to present fairly our company’s financial position and the results of its operations and its cash flows for the periods shown.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.

These financial statements have been prepared on a going concern basis, which implies our company will continue to realize its assets and discharge its liabilities in the normal course of business. Our company has not generated significant revenues since inception and is unlikely generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from its shareholders, the ability of our company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at December 31, 2011, our company has not generated significant revenues, has a working capital deficit of $210,781, and has accumulated losses of $1,265,960 since inception. These factors raise substantial doubt regarding our company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our company be unable to continue as a going concern.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

We are a smaller reporting company and are not required to provide the information under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation under the supervision and with the participation of our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) concluded that our disclosure controls were not effective as of the end of the period covered by this report.

Changes in Internal Controls

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

8


PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors

We are a smaller reporting company and are not required to provide the information under this item.

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

On October 14, 2011, we issued 2,777,778 shares of common stock pursuant to the conversion of $2,500 of a convertible note. The fair value of the conversion option was determined to be $6,533 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On October 20, 2011, we issued 2,857,143 shares of common stock pursuant to the conversion of $2,000 of a convertible note. The fair value of the conversion option was determined to be $13,090 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On October 21, 2011, we issued 2,857,143 shares of common stock pursuant to the conversion of $2,000 of a convertible note. The fair value of the conversion option was determined to be $8,640 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On October 31, 2011, we issued 2,857,143 shares of common stock pursuant to the conversion of $2,000 of a convertible note. The fair value of the conversion option was determined to be $7,082 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On November 10, 2011, we issued 3,424,658 shares of common stock pursuant to the conversion of $2,500 of a convertible note. The fair value of the conversion option was determined to be $6,675 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On November 21, 2011, we issued 3,571,429 shares of common stock pursuant to the conversion of $2,500 of a convertible note. The fair value of the conversion option was determined to be $14,588 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On December 1, 2011, we issued 3,684,211 shares of common stock pursuant to the conversion of $3,500 of a convertible note. The fair value of the conversion option was determined to be $9,987 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On December 13, 2011, we issued 3,947,368 shares of common stock pursuant to the conversion of $3,000 of a convertible note. The fair value of the conversion option was determined to be $11,210 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

9


On December 22, 2011, we issued 4,032,258 shares of common stock pursuant to the conversion of $2,500 of a convertible note. The fair value of the conversion option was determined to be $7,390 on the date of conversion. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mining Safety Disclosures

Not applicable.

Item 5. Other Information

None.

10


Item 6. Exhibits

Exhibit  
No. Document Description
(2) Plan of acquisition, reorganization, arrangement, liquidation or succession
2.1 Acquisition Agreement between our company and Global Fusion Media Inc. dated April 1, 2010 (incorporated by reference to our Current Report on Form 8-K filed on April 9, 2010).
(3) (i) Articles of Incorporation; (ii) By-laws
3.1 Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on February 2, 2009).
3.2 By-laws (incorporated by reference to our Registration Statement on Form S-1 filed on February 2, 2009).
3.3 Certificate of Amendment filed with the Nevada Secretary of State on May 4, 2010 (incorporated by reference to our Current Report on Form 8-K filed on February 2, 2009).
3.4 Certificate of Amendment filed with the Nevada Secretary of State on July 20, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 26, 2011).
(10) Material Contracts
10.1 Share Cancellation Agreement with Rhonda Esparza dated May 4, 2010 (incorporated by reference to our Quarterly Report on Form 10-Q filed on May 18, 2010).
(14) Code of Ethics
14.1 Code of Ethics 2010 (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 31, 2010).
(21) Subsidiaries of Registrant
21.1 C-Store Networks LLC
(31) Rule 13a-14(a)/15d-14(a) Certifications
31.1* Section 302 Certifications under Sarbanes-Oxley act of 2002 of Norman Knowles (Chief Executive Officer)
31.2* Section 302 Certifications under Sarbanes-Oxley act of 2002 of Greg Trevor (Chief Financial Officer and Chief Accounting Officer)
(32) Section 1350 Certifications
32.1* Section 906 Certifications under Sarbanes-Oxley act of 2002 of Norman Knowles (Chief Executive Officer)
32.2* Section 906 Certifications under Sarbanes-Oxley act of 2002 of Greg Trevor (Chief Financial Officer and Chief Accounting Officer)
101** Interactive Data File
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

*

Filed herewith.

   
**

Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.

11


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    CONVENIENCE TV INC.
     
     
     
Date: February 14, 2012   /s/ Norman Knowles
    Norman Knowles
    President and Director
    (Principal Executive Officer)
     
     
Date: February 14, 2012   /s/ Greg Trevor
    Greg Trevor
    Chief Financial Officer, Secretary, Treasurer and Director
    (Principal Financial Officer and Principal Accounting
    Officer)

12