- Annual Report (10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

X ANNUAL REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2011

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

For the transition period from _______ to ___________.

Commission file number 0-29651

OCULUS VISIONTECH INC.

(formerly USA VIDEO INTERACTIVE CORP.)

(Exact name of registrant as specified in its charter)

WYOMING

06-1576391

(State or Other Jurisidiction of

(I.R.S. Employer Identification No.)

Incorporation of Organization)

#507, 837 West Hastings Street, Vancouver, BC

V6C 3N6

( Address of principal executive offices)

(ZIP Code)

Registrant’s telephone number, including area code:

(604) 685-1017

Securities registered pursuant to Section 12(b) of the Act

None

Securities registered pursuant to Section 12(g) of the Act:

Common Shares

(Title of Class)

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

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

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 shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ].

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

Large Accelerated filer

Accelerated Filer

Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No x .

State the aggregate market value of the voting and non-voting equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal quarter: $2,578,787.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 13,572,568

Documents Incorporated by Reference : NONE

TABLE OF CONTENTS

Part 1

Item 1

Business

Item 1A

Risk Factors

Item 1B

Unresolved Staff Comments

Item 2

Properties

Item 3

Legal Proceedings

Item 4

Submission of Matters to a Vote of Security Holders

Part II

Item 5

Market for Registration’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities

Item 6

Selected Financial Data

Item 7

Management’s Discussion and Analysis of Financial Condition and

Results of Operation

Item 7A

Quantitative and Qualitative Disclosures About Market Risk

Item 8

Financial Statements and Supplementary Data

Item 9

Changes in and Disagreements with Accountants on Accounting and

Financial Disclosure

Item 9A

Controls and Procedures

Item 9B

Other Information

PART III

Item 10

Directors and Executive Officers of the Registrant

Item 11

Executive Compensation

Item 12

Security Ownership of Certain Beneficial Owners and Management and

Related Stockholder Matters

Item 13

Certain Relationships and Related Transactions

Item 14

Principal Accountant Fees and Services

PART IV

Item 15

Exhibits, Financial Statement Schedules, and Reports on Form 8-K

PART I

Item 1.

Business

Forward-looking Statements

Statements in this annual report on Form 10-K that are not historical facts constitute forward-looking statements which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance 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. Those factors include, among other things, those listed under ‘‘Risk Factors’’ and elsewhere in this annual report. In some cases, you can identify forward-looking statements by terminology such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’ ‘‘potential’’ or ‘‘continue’’ or the negative of these terms or other comparable terminology; as well as terms such as “is expected to continue to increase over the next several years”, “is increasing at an exponential rate”, and “to take advantage of this anticipated shift”.

These statements are only predictions. Actual events or results may differ materially. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of these statements. We are under no duty to update any of the forward-looking statements after the date of this annual report to conform these statements to actual results. References herein to “we,” “us,” and “the Company” are to Oculus VisionTech Inc.

Introduction

We design and market to business customers digital watermarking, streaming video and video-on-demand systems, services and source-to-destination digital media delivery solutions that allow live or recorded digitized and compressed video to be transmitted through Internet, intranet, satellite or wireless connectivity. Our systems, services and delivery solutions include digital watermark solutions and video content production, content encoding, media asset management, media and application hosting, multi-mode content distribution, transaction data capture and reporting, e-commerce, specialized engineering services, and Internet streaming hardware.

Although we have generated nominal sales for the 2011 year, we continue to explore opportunities that will result in new products for new revenue streams, but there can be no assurances that such efforts will be successful.

Our products and services are based on our proprietary rich media delivery infrastructure and software and our Store and Forward Video-on-Demand (" VOD ") patent. Our patent expired in February of 2010. These technologies, together with video compression technology, facilitate the delivery of video to an end user in a timely and interactive fashion.

We have developed a number of specific products and services based on these technologies. These include MediaSentinel ™ and SmartMarks ™ , a process that watermarks digital video content; StreamHQ ™ , a collection of source-to-destination media delivery services marketed to businesses; EncodeHQ ™ , a service that digitizes and compresses analog-source video; hardware server and encoder system applications under the brand name Hurricane Mediacaster ™ ; ZMail ™ , a service that delivers web and rich media content to targeted audiences, and mediaClix ™ , a service that delivers content similar to Zmail ™ but originating from an existing web presence.

Corporate Background

Our company was incorporated on April 18, 1986, as “ First Commercial Financial Group Inc. ” in the Province of Alberta, Canada. In 1989, our name was changed to “ Micron Metals Canada Corp. ”, which purchased 100% of the outstanding shares of USA Video Inc., a Texas corporation, in order to focus on the digital media business. In 1995, we changed our name to “ USA Video Interactive Corp. ” and continued our corporate existence to the State of Wyoming. At a shareholders meeting held on December 30, 2011, shareholders voted to change our name to " Oculus VisionTech Inc ." and alter our share capital by way of a reverse stock split on a fifteen old for one new common share basis and on January 25, 2012 we changed our name to "Oculus VisionTech Inc." and completed the reverse stock split. We have one wholly-owned subsidiary, USVO Inc. In 2010, we dissolved: USA Video (California) Corp., USA Video Corporation, Old Lyme Productions Inc. and USA Video Technology Corporation.

Oculus’ executive and corporate offices are located in Vancouver, British Columbia.

Business Environment

The increase of video content distribution over IP, particularly theatrical releases on demand to households or individuals on the road, by utilizing wire-line and/or wireless communication networks is expected to continue to increase over the next several years, bringing expanded use of content security technologies embedded in the content and video transmission packets. In the interm, content transcoding technologies continue to improve, allowing delivery of higher quality content using existing streaming over IP connectivity. Digital content piracy is increasing at an exponential rate which enables and emphasizes rapid introduction and implementation of forensic video watermarking technologies.

Strategic Plan

We believe that the expected substantial increase of video content proliferation over Cloud Computing clusters (elastic computing, mass storage blobs), known as streaming video and video-on-demand services that allow live or recorded encoded video to be transmitted through Internet, intranet, satellite or wireless connectivity, clearly provide an enormous business case for applying digital watermarking as a content security technology of choice for content owners. Today’s Cloud Computing systems have expressed a clear need for digital watermark solutions. Also, media asset management, media and application hosting, multi-mode content distribution, transaction data capture and reporting, e-commerce, specialized engineering services, and Internet streaming hardware are indicating real-time watermarking as a mandatory content protection solution, moving forward. To position ourselves to take advantage of this anticipated shift, protecting our technology ownership rights, including pursuing licensing arrangements and other forms of enforcement and pursuing marketing of our patent-pending digital watermarking technology.

We continue to research and develop our patent-pending digital watermarking technology while pursuing marketing of our new releases of MediaSentinel ™ and other related products.

We discontinued the sale of select services from our prototype StreamHQ ^TM after customers' satisfaction and proof of concept. We no longer sell our individual functions of StreamHQ ^TM . We intend to continue to develop and expand our StreamHQ ™ services business, while pursuing opportunities to sell replicated StreamHQ ™ systems to corporations and organizations that prefer systems solutions to services solutions.

Proprietary Technologies

Our proprietary technologies include our (1) Digital watermarking piracy deterrence technology; (2) StreamHQ ™ infrastructure, software, and service delivery processes, and (3) VOD patent (expired in February 2010).

The objective of our patent-pending Digital Watermarking technology is to deter digital video piracy once a user has been authorized to view a video. This is one of the major concerns preventing content owners from committing more of their content to the digital medium. Digital watermarking helps trace content to incidents of piracy, thus deterring piracy.

The ability of StreamHQ ™ to deliver services to clients with market-specific value propositions stems from its scalable, streaming-enabled web infrastructure, the software functionality that resides on this infrastructure (such as innovative asset management and user transaction data capture and reporting), and the processes developed for delivering media campaigns to clients. By delivering features unique to individual markets, such as advertising, corporate communications and customer service, StreamHQ ™ services are differentiated from the generic services delivered by competitors.

Products and Services

Our principal products and services are our proprietary Digital Watermarking technology. These technologies, together with video compression technology, facilitate the delivery of video to end users with piracy deterring Digital Watermarks.

We have developed a number of specific products and services based on these technologies. These include:

MediaSentinel ™ , digital watermarking technology used to deter piracy of digital content;

SmartMarks ™ , are invisible, unremovable, forensic “ digital watermarks ” imbedded in every video frame to protect digital video from piracy.

We propose to grant licenses to use our patent-pending digital watermarking technology on terms comparable to the “ reasonable royalty ” provided for by U.S. patent laws. Upon successfully licensing our patent, we could earn an initial licensing fee and/or per-use royalties, meaning that each time a licensed event occurs (e.g. each time a digital watermark is encoded in a video) a specified royalty will be paid to us. Upon suitable negotiated terms, we may also consider bulk-fee licensing agreements, either apart from or in addition to per-use royalties.

Our future plans include the marketing and selling of our StreamHQ ™ systems, whereby a customer would purchase an entire system, comprised of hardware assembled by us and software developed and installed by us. After sale and delivery of the system to a customer, our service to the customer would then include updates of software and service and maintenance of hardware, as necessary, for additional compensation. The services of Zmail ™ and mediaClix ™ are available to a customer only through the purchase of a StreamHQ ™ system.

As a cost cutting measure, we have terminated the operation of our StreamHQ ^TM infrastructure, which provided individual functionality of StreamHQ ^TM for small customers, as this service was no longer cost effective or deemed necessary at this time.

Status of Products and Services

We are taking aggressive steps to advance our patent-pending digital watermarking technology. These steps include actively seeking licensing initiatives. Our product is designed to be easily customized to individual customer needs.

We have recognized a rising need for anti piracy applications, which we developed under the brand “ MediaSentinel ™ ” . MediaSentinel ™ utilizes SmartMarks ™ which are digitally encoded forensic data invisibly embedded into a video stream. Currently, research and development is focused on our MediaSentinel ™ products. The current release of MediaSentinel ™ is designed for the motion picture industry.

Customers and Markets

The principal market for our services is the digital content owners and distributors. The market for digital watermarking technology may be required by copyright-owning content providers who have concerns about the potential for digital piracy of their material. Protocols may develop which will require participants in the video industry to embrace some form of digital watermarking. We will follow those developments closely, and, if necessary, take steps to promote and protect our digital watermarking technology.

Additionally, companies within the business-to-business sector, rather than the individual consumer, generally possess the greater financial wherewithal and purpose for purchasing StreamHQ ™ systems. Our focus is on companies that can benefit from an engaging rich media and web presentation directed at a target audience. Our customers for these services have included film companies, event promoters, ministries, travel companies, sports entertainment centers and political candidates.

Our customers for StreamHQ ™ systems may also be businesses or organizations that are dissatisfied with response rates from traditional email campaigns, or who have in the past been unable to track the response rate to such traditional email campaigns. Additionally, any business that wishes to increase brand or product awareness

in a more cost effective manner than television advertising would be an appropriate candidate for the StreamHQ ™ services.

Sources and Availability of Raw Materials

We assemble our hardware systems from components manufactured by others. We specify, procure, assemble, test and deploy the various system components according to a precisely developed set of procedures. We consult on an as-needed basis, with companies that supply the major materials needed to build our systems. Systems are programmed and configured to meet a wide variety of individual customer requirements.

We procure the materials and hardware to assemble systems and their components from various companies, as needed, and in sufficient quantities to preclude any danger of significant sourcing problems in the immediate future. There are no seasonal limitations on our operations.

Competitive Conditions

AquaMobile, Civolution, Isan, MarkAny, MSI, Verimatrix and other companies large and small are active in the field of digital watermark technologies. The video streaming market is currently dominated by a small number of larger companies, including Real Networks, Microsoft, Yahoo and several others, some of which offer source-to-destination streaming media solutions. Most of our current and potential competitors have longer operating histories, larger customer bases, greater name recognition and significantly greater financial, marketing and other resources than us. In addition, larger, well-established and well-financed entities may acquire, invest in or form joint ventures with online competitors as the use of the Internet and other online services increases. In addition, new technologies and the expansion of existing technologies are expected to result in additional competition.

The streaming media market is new, rapidly evolving and extremely competitive and we expect that competition will intensify in the future. We compete with other companies that provide all or certain aspects of our services, including other streaming media providers, content encoders, video production companies, Internet data management companies, and others, and expect that additional competition in the future will be provided by those types of providers. Our current market share is insignificant.

We are, and will continue to be dependent on vendors and other providers to supply the hardware, software and co-location resources that comprise our products and services. Further, we currently compete with, and expect to compete with in the future, providers of some of our technology or system components. Competition is expected in all areas of business, including pricing, service, product performance, and our ability to keep up with rapidly improving technology, changing market conditions, evolving industry standards and changing customer demands.

Research and Development

Our current research and development is the evolution of our digital watermark technology. We redirected our Wavelet development effort toward the creation of a content protection technology that is grounded in similar science as Wavelet compression. Products currently in development:

MediaEscort ™ and MediaEscort ™ Streaming Edition are solutions which embed visually imperceptible unique watermarks within each frame of video, such that these watermarks can be recovered (read back) from reclaimed video in order to identify the source (where they came from), thus allowing the tracking of the video assets.

MediaEscort ™ has been designed for offline physical video file watermarking. Videos are queued by the operator for processing, whereby the system, with various pre-set configured parameters, will process and apply unique watermarks to each video.

MediaEscort ™ Streaming Edition has been designed primarly as an online real-time video watermarking distribution system. This system has been specifically designed for uniquely watermarking online streaming videos in real time, that are typically deployed in a cloud computing environment.

During fiscal 2011 and 2010, our research and development expenditures were $75,000 and $3,300, respectively.

Intellectual Property

Our success is dependent, in part, upon our proprietary technology. We generally rely upon patents, trademarks, and trade secret laws to establish and maintain our proprietary rights in our technology products and services.

On June 19, 2001, United States Patent Application No. 09/884,787, “ Method and Apparatus for Digitally Fingerprinting Videos ”, was officially filed with the U.S. Patent and Trademark Office. This patent is for “ MediaSentinel ™ ” .

Employees

As of April 10, 2012, we employed three people without compensation, including our senior executive officer, one technology and one administrative employee. We consider the relationships with our employees to be good.

Competition for technical personnel in the industry that we compete in is intense. Our future success will depend, in part, on our continued ability to contract or hire, assimilate, and retain qualified personnel. To date, we believe we have been successful in recruiting qualified contractors or employees, but there is no assurance that we will continue to do so in the future.

Item 1A.

Risk Factors

Our business and operations are subject to a number of risks and uncertainties as described below. However, the risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we may currently deem immaterial, may become important factors that harm our business, financial condition or results of operations. If any of the following risks actually occur, our business, financial condition or results of operations could suffer.

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS AND PROSPECTS.

We have a very limited operating history and have made very limited sales of our products and services and we were in the development stage through December 31, 1999. Our business and prospects must be considered in light of the risks encountered by companies in their early stages of development, particularly companies in new and rapidly evolving markets such as digital watermarking. Some of these risks relate to our ability to:

maintain or develop relationships with suppliers and marketing partners;

establish a customer base;

continue to develop and upgrade our technology, products and services;

provide superior customer service;

respond to competitive developments; and

retain and motivate qualified personnel.

WE HAVE INCURRED SUBSTANTIAL LOSSES; WE EXPECT TO INCUR LOSSES IN THE FUTURE, AND MAY NEVER ACHIEVE PROFITABILITY.

To date,

we have not been profitable, have not generated significant revenue from operations, and have incurred substantial losses. For the year ended December 31, 2011 we had a net loss of $161,612. As of December 31, 2011, we had an accumulated deficit of $39,246,888 and a working capital deficit of $491,250. We intend to continue to expend significant financial and management resources on the development of our proposed products and services, and other aspects of our business. As a result, we expect operating losses and negative cash flows to

increase for the foreseeable future. Consequently, we will need to generate significant revenues to achieve and maintain profitability. We may be unable to do so. If our revenues grow more slowly than anticipated or if operating expenses increase more than expected, or are not reduced sufficiently, we may never achieve profitability. Because of factors discussed in this paragraph, our auditors, in their report on our financial statements, have expressed substantial doubt concerning our ability to continue as a going concern.

IF WE ARE UNABLE TO OBTAIN SUBSTANTIAL ADDITIONAL FINANCING, WE MAY NOT BE ABLE TO REMAIN IN BUSINESS.

We require substantial working capital to fund our business. We have had significant operating losses and negative cash flow from operations since inception of our current business and expect to continue to do so for the foreseeable future. Our capital requirements will depend on several factors, including the rate of market acceptance of our products and services, the ability to establish and expand a client base and the growth and effectiveness of our sales and marketing efforts. We estimate we will require approximately $1.25 Million to $1.75 Million in financing to meet our working capital needs over the remainder of 2012 and substantial additional financing thereafter. Further, if capital requirements vary materially from those currently planned, we may require additional financing. We have no arrangements or commitments for any financing. Financing may not be available when needed on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, we may be unable to further develop or enhance our products and services, take advantage of future opportunities or respond to competitive pressures, or ultimately, to continue in business.

OUR OPERATING RESULTS IN FUTURE PERIODS ARE EXPECTED TO BE SUBJECT TO SIGNIFICANT FLUCTUATIONS, WHICH WOULD LIKELY AFFECT THE TRADING PRICE OF OUR COMMON SHARES .

Our quarterly and annual operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which are outside of our control. Some of these factors include:

our ability to attract and retain customers;

the introduction of new enhancements in digital watermarking;

price competition;

our ability to remain competitive in our product and service offerings;

our ability to attract new personnel; and

U.S. and foreign regulations relating to the Internet.

As a result of the factors listed above, and others, period-to-period comparisons of our operating results may not be meaningful in predicting our future performance. It is possible that our operating results will not meet market expectations in some future quarter or quarters, which would likely result in a significant decline in our stock price.

THE DIGITAL WATERMARKING BUSINESS IS HIGHLY COMPETITIVE, AND OUR FAILURE TO COMPETE SUCCESSFULLY WOULD LIMIT OUR ABILITY TO RETAIN AND INCREASE OUR MARKET SHARE.

The digital watermarking market is new, rapidly evolving and extremely competitive. We expect competition to intensify in the future. We compete with companies that provide all or certain aspects of our services, including other streaming media providers, content encoders, video production companies, Internet data management companies, and others, and expect that additional competition in the future will be provided by those types of providers and others. Our current market share is insignificant.

The digital watermarking market is currently dominated by a small number of larger companies, including

AquaMobile, Civolution, Isan, MarkAny, MSI, Verimatrix and other companies large and small, some of which offer digital watermarking products. Most of our current and potential competitors have longer operating histories, larger customer bases, greater name recognition and significantly greater financial, marketing and other resources than us. In addition, larger, well-established and well-financed entities may acquire, invest in or form joint ventures with online competitors as the use of the Internet and other online services increases. In addition, new technologies and the expansion of existing technologies are expected to result in additional competition.

We may not be able to compete successfully against current and future competitors, and any inability to do so could decrease our revenues, contribute to our not achieving profitability and adversely affect our ability to establish, maintain and increase our market share.

THE MARKET FOR OUR PRODUCTS AND SERVICES IS RELATIVELY NEW AND IS EVOLVING, AND OUR SUCCESS WILL DEPEND ON OUR ABILITY TO ADAPT TO CHANGING MARKET CONDITIONS.

Our future financial performance will depend in large part on the growth in demand for our digital watermarking services and products. This market is emerging and rapidly evolving, is characterized by an increasing number of market entrants and will be subject to frequent and continuing changes in customer preferences and technology. As is typical in new and evolving markets, demand and market acceptance for our products and services is subject to a high level of uncertainty. Because the market for our products is evolving, it is difficult to assess or predict with any assurance the size or growth rate, if any, of this market. There can be no assurance that a significant market for our products will develop, or that it will develop at an acceptable rate or that new competitors will not enter the market. In addition, even if a significant market develops for such products, there can be no assurance that our products will be successful in such a market. If a significant market fails to develop, develops more slowly than expected or attracts new competitors, or if our products do not achieve market acceptance, our business prospects, financial condition and results of operations will be materially adversely affected.

WE ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE, WHICH COULD RENDER OUR PRODUCTS AND SERVICES OBSOLETE.

Our future success will depend in part on our ability to offer products and services that incorporate leading technology and address the increasingly sophisticated and varied needs of our current and prospective customers. Our market is characterized by rapidly changing and unproven technology, evolving industry standards, changes in customer needs, emerging competition and frequent new service introductions. Future advances in technology may not be beneficial to or compatible with our business. In addition, we may not be able to incorporate technological advances into our products and services in a cost-effective and timely basis. Keeping pace with the technological advances may require substantial expenditures and lead time, particularly with respect to acquiring updated hardware and infrastructure components of our systems. We may require additional financing to fund such acquisitions. Any such financing may not be available on commercially reasonably terms, if at all, when needed.

WE ARE DEPENDENT UPON VENDORS AND OTHER THIRD PARTY SERVICE PROVIDERS, AND WILL BE COMPETING WITH SOME OF THESE COMPANIES.

We are, and will continue to be dependent on vendors and other providers to supply the hardware, software and co-location resources that comprise our products and services. We have no long-term or exclusive contracts or arrangements with any of these vendors or providers. We cannot be certain that our current and proposed vendors and service providers will continue to do business with us or that we will be able to establish relationships with new vendors and service providers, if necessary. If we are unable to establish and maintain satisfactory relationships and arrangements with these third parties, our business could be harmed. In addition, we will be dependent upon our third party vendors and other suppliers to adequately test their products before release, and to provide support for the products after delivery. The failure of any of these third party providers to do so could have a material adverse effect on our business.

Further, we currently compete with, and expect to compete with in the future, providers of some of our technology or system components. Our inability to, at the same time, effectively cooperate and compete with these companies could harm our business.

IF WE DO NOT CONTINUOUSLY IMPROVE OUR TECHNOLOGY IN A TIMELY MANNER, OUR PRODUCTS COULD BE RENDERED OBSOLETE.

The markets for our products and services are characterized by:

rapidly changing technology;

evolving industry standards;

frequent new product and service introductions; and

changing customer demands.

These changes and developments may render our products and technologies obsolete in the future. As a result, our success depends on our ability to adapt to these changes, particularly to develop or adapt products and services or to acquire new products and services that can compete successfully. There can be no assurance that we will be successful in these efforts.

OUR SERVICES ARE COMPLEX AND WE MAY NOT BE ABLE TO PREVENT DEFECTS THAT COULD DECREASE THEIR MARKET ACCEPTANCE, RESULT IN PRODUCT LIABILITY OR HARM OUR REPUTATION.

Our digital water marketing and streaming media products and services are complex, and the steps we take to ensure that they are free of errors or defects, particularly when first introduced or when new versions or enhancements are released, may not be successful. We cannot guarantee that current versions or enhanced versions or our products will be free of significant software defects or bugs. Despite our testing, and testing by our third-party vendors and providers, current or future products may contain serious defects. Serious defects or errors could result in lost revenue or a delay in market acceptance of our products and could seriously harm our business and operating results. Errors in our products may be caused by defects in third-party hardware or software incorporated into our products. If so, we may be unable to fix these defects without the co-operation of these third-party providers. Because these defects may not be as significant to these providers as they are to us, we may not receive the rapid co-operation that we may require. Errors, defects or other performance problems with our products could also harm our customers' businesses or result in potential product liability claims. Even if unsuccessful, a product liability claim brought against us would likely be time-consuming, costly and harmful to our reputation. Nor can there be any assurance that our product liability insurance coverage will be sufficient to satisfy any successful claim.

ANY LOSS OF OUR PERSONNEL OR INABILITY TO ADD NEW PERSONNEL COULD HARM OUR BUSINESS.

Our future success depends significantly on the continued services and performance of our senior management. Our performance also depends on our ability to retain and motivate our other key personnel. The loss of the services of any member of our senior management team or other key employees could cause significant disruption in our business. We have no long-term employment agreements with senior management and do not currently maintain any " key person " life insurance. Our future success also depends on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, operations, sales and marketing and customer service personnel. Competition for such personnel is intense, and we may not successfully attract, assimilate or retain sufficiently qualified personnel. The failure to retain and attract the necessary personnel could impede our future success.

IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS. AS A RESULT, CURRENT AND POTENTIAL STOCKHOLDERS COULD LOSE CONFIDENCE IN OUR FINANCIAL REPORTING, WHICH COULD HAVE A NEGATIVE IMPACT ON OUR STOCK PRICE .

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to include in our Annual Report on Form 10-K our assessment of the effectiveness of our internal controls over financial reporting. Our Chief Executive Officer and Chief Financial Officer have determined that our internal controls are ineffective. The material weaknesses in our internal controls related to a lack of segregation of duties due to inadequate staffing within our accounting department and upper management, the assignment of authority and responsibility, lack of consistent policies and procedures, inadequate monitoring controls and inadequate disclosure controls. If we cannot adequately maintain the effectiveness of our internal controls over financial reporting, we may be subject to liability and/or sanctions or investigation by regulatory authorities, such as the Securities and Exchange Commission. Any such action could adversely affect our financial results and the market price of our common stock.

WE DO NOT CURRENTLY HAVE ANY PAYING CUSTOMERS.

Our sales were $36,000 in 2011 and $39,070 in 2010. One customer accounted for 100% of our revenue for the years ended December 31, 2011 and 2010. We expect a small number of customers will continue to account for a substantial portion of our revenue for the foreseeable future. Our inability to increase the number of our customers could limit our ability to maintain or increase our market share, or could cause revenue to drop quickly and unexpectedly.

OUR BUSINESS MAY SUFFER IF WE CANNOT PROTECT OUR INTELLECTUAL PROPERTY.

We seek to protect our proprietary rights through a combination of patents, trade secrets and trademark laws, confidentiality procedures and contractual provisions with employees and third parties. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we consider as proprietary. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets and to determine the validity and scope of the proprietary rights of others. Any litigation could result in substantial costs and diversion of management and other resources with no assurance of success and could seriously harm our business and operating results.

OUR PRODUCTS MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, CAUSING US TO INCUR SIGNIFICANT COSTS OR PREVENT US FROM LICENSING OUR PRODUCTS.

Other companies, including our competitors, may have or obtain patents or other proprietary rights that would prevent, limit or interfere with our ability to make, use or license our products. We cannot be certain that our products do not and will not infringe patents or other proprietary rights of others. We may be subject to legal proceedings, including claims of alleged infringement by others of the intellectual property rights of third parties. If a successful claim of infringement is brought against us and we fail to or are unable to license the infringed technology on commercially reasonable terms, our business and operating results could be significantly harmed. Companies in the technology market are increasingly bringing suits alleging infringement of their proprietary rights, particularly patent rights. Although we are not currently subject to any litigation or claims, any future claims, whether or not valid, could result in substantial costs and diversion of resources with no assurance of success. Intellectual property litigation or claims could force us to do one or more of the following:

cease selling, incorporating or using products or services that incorporate the challenged intellectual property;

obtain a license from the holder of the infringed intellectual property right, which license may not be available on commercially reasonable terms, or at all; or

redesign our products or services.

If we are forced to take any of these actions, our business could be substantially harmed.

OUR SUCCESS DEPENDS ON THE CONTINUED GROWTH IN DEMAND FOR E-BUSINESS APPLICATIONS.

Our primary business strategy involves the development of products and services that enable users to transmit video over the Internet. As a result, our future sales and any future profits will be substantially dependent upon the widespread acceptance and use of the Internet as an effective medium of business by consumers and businesses. To be successful, consumers and businesses that historically have used traditional means of commerce to transact business must continue to accept and utilize the Internet as a medium for conducting business and exchanging information. Consumers and businesses may reject the Internet as a viable commercial medium for a number of reasons, including potentially inadequate network infrastructure, slow development of enabling technologies, insufficient commercial support and privacy concerns. In addition, delays in the development or adoption of new standards and protocols required to handle increased levels of Internet activity or increased government regulation could cause the Internet to lose its viability as a commercial medium. If the demand for e-business applications does not grow or grows more slowly than expected, demand for our products and services would be reduced and our revenue would suffer.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD ADD ADDITIONAL COSTS AND RISKS TO DOING BUSINESS ON THE INTERNET.

We are not currently subject to direct regulation by any governmental agency, other than regulations applicable to businesses generally, export control laws and laws or regulations directly applicable to electronic commerce. However, due to the increasing popularity and use of the Internet, it is possible that a number of laws and regulations may be adopted with respect to the Internet covering issues such as: user privacy, pricing, content, copyrights, distribution, and characteristics and quality of products and services.

Furthermore, the growth and development of the market for electronic commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on those companies conducting business online. The adoption of additional laws or regulations may decrease the growth of the Internet or other online services, which could, in turn, decrease the demand for our products and services and increase our cost of doing business.

The applicability to the Internet of existing laws governing issues such as property ownership, copyrights, encryption and other intellectual property issues, taxation, libel, export or import matters, obscenity and personal privacy is uncertain. The vast majority of such laws were adopted prior to the advent of the Internet and related technologies. As a result, they do not contemplate or address the unique issues of the Internet and related technologies. Changes to such laws intended to address these issues, including some recently proposed changes, could create uncertainty in the Internet marketplace. Such uncertainty could reduce demand for our products and services or increase the cost of doing business due to increased costs of litigation or increased service delivery costs.

OUR SHARE PRICE HAS BEEN AND COULD BE HIGHLY VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES TO INVESTORS.

The trading price of our common shares has been and is likely to continue to be highly volatile and could be subject to wide fluctuations in response to a number of factors including: variations in quarterly operating results; new products or services offered by us or our competitors; conditions or trends in the Internet and online commerce industries; changes in the economic performance and/or market valuations of other Internet and online service companies; and other events or factors, many of which are beyond our control. In addition, the stock market in general, and the market for Internet-related and technology companies in particular, has experienced extreme price and volume fluctuations, including large price drops in 2011, 2010, 2009, 2008, 2003, 2002 and 2001, that have often been unrelated or disproportionate to the operating performance of such companies. These broad market and industry factors may materially adversely affect the market price of our common shares, regardless of our actual operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted against such companies. Such litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS COULD PREVENT OR DELAY A CHANGE IN CONTROL OF THE COMPANY.

Our Articles of Continuance and bylaws contain anti-takeover provisions that could discourage, delay or even prevent an acquisition of our company at a premium price or at all. Any of these provisions might prevent the market price of our common shares from increasing in response to takeover attempts, and could prevent our shareholders from realizing a premium over the then-prevailing market price for the common shares.

WE INTEND TO ISSUE ADDITIONAL EQUITY SECURITIES, WHICH MAY DILUTE THE INTERESTS OF CURRENT SHAREHOLDERS OR CARRY RIGHTS OR PREFERENCES SENIOR TO THE COMMON SHARES.

We intend to issue additional equity securities in order to raise working capital. Accordingly, existing shareholders may experience additional dilution of their percentage ownership interest in our company. In addition, the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common shares.

LIMITED LIABILITY OF EXECUTIVE OFFICERS AND DIRECTORS MAY DISCOURAGE SHAREHOLDERS FROM BRINGING A LAWSUIT AGAINST THEM.

Our bylaws contain provisions that limit the liability of directors for monetary damages and provide for indemnification of officers and directors. These provisions may discourage shareholders from bringing a lawsuit against officers and directors for breaches of fiduciary duty and may also reduce the likelihood of derivative litigation against officers and directors even though such action, if successful, might otherwise have benefited the shareholders. In addition, a shareholder's investment in Oculus may be adversely affected to the extent that costs of settlement and damage awards against officers or directors are paid by Oculus pursuant to the indemnification provisions of the bylaws.

REQUIREMENTS OF THE SEC WITH REGARD TO LOW-PRICED " PENNY STOCKS " MAY ADVERSELY AFFECT THE ABILITY OF SHAREHOLDERS TO SELL THEIR SHARES IN THE SECONDARY MARKET.

" Penny stocks " are low-priced, and usually highly speculative, stock selling at less than $5.00 per share. Our securities are subject to Rule 15g-9 under the Securities Exchange Act of 1934 , which imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and " accredited investors " (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse). For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. The rule also requires the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer must also disclose the commissions payable for the transaction, current quotations for the stock, and, if applicable, the fact that it is the sole market maker in the stock. Consequently, the rule may adversely affect the ability of broker-dealers to sell our securities and may adversely affect the ability of shareholders to sell their shares in the secondary market.

WE DO NOT ANTICIPATE PAYING DIVIDENDS TO SHAREHOLDERS IN THE FORESEEABLE FUTURE.

We have not paid dividends on our common shares and we intend, for the foreseeable future, to invest any earnings in the further development of our business. Accordingly, shareholders should not expect to receive any dividends on their shares.

Our failure to manage or adequately address any one or more of these rights could result in our business suffering a material adverse effect.

Item 1B.

Unresolved Staff Comments.

Not applicable.

Item 2.

Properties.

Our headquarters and executive offices are located in East Berlin, Connecticut consisting of 144 square feet with a month to month lease. The annual base rent is $1,590.

We also lease 800 square feet of office space located in Vancouver, British Columbia, on a month-to-month lease. The annual base rent is $20,000.

Item 3.

Legal Proceedings. None.

Item 4.

Submission of Matters to a Vote of Security Holders.

We held our annual meeting of shareholders on December 30, 2011, in Calgary, Alberta, Canada. At the meeting the shareholders voted to retain Anton Drescher, Maurice Loverso, and Rowland Perkins and elect Tom Pervic and Ron Wages our Directors.

Also at the meeting, the shareholders approved the appointment of KWCO, PC (formerly known as Killman, Murrell & Company) as auditors for the year ending December 31, 2011.


Matter Voted Upon	No. of Votes For	No. of Votes Against	No. of Votes Withheld	Not Voted
1. Set number of directors at five.	48,755,243	1,045,107
2. Election of Directors Anton J. Drescher Maurice Loverso Rowland Perkins Tom Perovic Ron Wages	48,216,811 48,216,811 48,216,811 48,216,811 48,216,811		1,605,978 1,605,978 1,605,978 1,045,107 1,045,107	131,186
3. Appointment of KWCO PC (formerly Killman, Murrel & Company) as auditors and authorize directors to fix remuneration	48,811,050		1,531,900	3,000
4. Adoption of 2011Stock Option Plan	44,112,715	5,555,740		131,187
5. Alter share capital by consolidating share capital on a one new for fifteen old share basis	41,340,214	9,327,766
6. Increase authorized share capital to 500,000,000 shares of common stock	43,008,815	5,187,942		1
7. Change of name to “Oculus VisionTech Inc.”	47,403,768	2,372,730

PART II

Item 5.

Market for Registrant's Common Equity and Related Stockholder Matters.

There is a limited public market for our common shares. Our common shares trade on the TSX Venture Exchange (the “ TSX ”) under the trading symbol " OV ", and on the NASD OTC Bulletin Board under the symbol " OVTZ ".

The following table shows the high and low sales prices (in Canadian dollars) of our common shares as reported by the TSX for the periods indicated (post 15 to 1 reverse split).


	TSX (Symbol “OV”)
Period	High (Cdn $)	Low (Cdn $)
First Quarter 2010	0.900	0.375
Second Quarter 2010	0.450	0.150
Third Quarter 2010	0.225	0.150
Fourth Quarter 2010	0.675	0.150
First Quarter 2011	0.600	0.150
Second Quarter 2011	0.600	0.150
Third Quarter 2011	0.300	0.150
Fourth Quarter 2011	0.300	0.150

The following table shows the high and low prices of our common shares on the NASD OTC Bulletin Board. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:


OTC Bulletin Board (Symbol “OVTZ”)
Period	High (US $)	Low (US $)
First Quarter 2010	0.90	0.30
Second Quarter 2010	0.45	0.15
Third Quarter 2010	0.30	0.15
Fourth Quarter 2010	0.90	0.15
First Quarter 2011	0.56	0.19
Second Quarter 2011	0.57	0.20
Third Quarter 2011	0.44	0.12
Fourth Quarter 2011	0.34	0.08

As of April 10 ^th , 2012 there were 13,572,568 common shares outstanding, held by 1,288 shareholders of record.

To date, we have not paid any dividends on our common shares and do not expect to declare or pay any dividends on such common shares in the foreseeable future. Payment of any dividends will depend upon future earnings, if any, our financial condition, and other factors as deemed relevant by our Board of Directors.

No sales of securities made by us during the year ended December 31, 2011.

Item 6.

Selected Financial Data.

The following table presents selected historical financial data. The consolidated statement of operations data for the years ended December 31, 2011 and 2010 and the balance sheet data as of December 31, 2011 and 2010 are derived from our consolidated financial statements included elsewhere in this report, which have been audited by KWCO, PC. The selected financial data should be read in conjunction with our consolidated financial statements, including the related notes, and the information in Item 7, " Management's Discussion and Analysis of Financial Condition and Results of Operations ."


	December 31
Item	2011 $	2010 $	2009 $	2008 $	2007 $
Revenue	36,000	39,070	48,000	24,000	--
Net loss	(161,612)	(89,175)	(811,004)	(915,918)	(1,784,193)
Loss per share	(0.01)	(0.01)	(0.07)	(0.15)	(0.15)
Total assets	107,418	20,079	52,668	3,055	73,905
Long-term obligations	--	--	--	--	--
Cash dividends per share	--	--	--	--	--

Item 7.

Management's Discussion and Analysis of Financial Conditions and Results of Operation.

You should read the following discussion and analysis of our financial condition and results of operations together with ‘‘Selected Consolidated Financial Data’’ and our consolidated financial statements and related notes appearing elsewhere in this annual report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under ‘‘Risk Factors’’ and elsewhere in this annual report on Form 10-K.

Overview

We design and market to business customers digital watermarking, streaming video and video-on-demand (VOD) systems, services and source-to-destination digital media delivery solutions that allow live or recorded digitized and compressed video to be transmitted through Internet, intranet, satellite or wireless connectivity. The Company’s systems, services and delivery solutions include digital watermark solutions and video content production, content encoding, media asset management, media and application hosting, multi-mode content distribution, transaction data capture and reporting, e-commerce, specialized engineering services, and Internet streaming hardware.

The Company’s products and services are based on its media delivery infrastructure and software. It has developed a number of specific products and services. These include MediaSentinel and SmartMarks, a process that watermarks digital video content; StreamHQ, a collection of source-to-destination media delivery services marketed to businesses; EncodeHQ, a service that digitizes and compresses analog-source video; hardware server and encoder system applications under the brand name Hurricane Mediacaster; ZMail, a service that delivers Web and rich media content to targeted audiences, and mediaClix, a service that delivers content similar to Zmail but originating from an existing Web presence.

As more fully discussed below we have not been profitable, and our revenues for 2011 were $36,000. We cannot predict our revenue levels for the next 12 months, or thereafter, nor when, or if, our operations will become profitable. We will require additional financing, both for the remainder of fiscal 2012 and thereafter, to continue to operate and expand our business. There is no assurance that such financing will be available on commercially reasonable terms, if at all.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate these estimates, including those related to customer programs and incentives, bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, impairment or disposal of long-lived assets, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from

other sources. Actual results may differ from these estimates under different assumptions or conditions.

We have identified the policies below as critical to our business operations and to the understanding of our financial results. The impact and any associated risks related to these policies on our business operations is discussed throughout management’s discussion and analysis of financial condition and results of operations where such policies affect our reported and expected financial results:

—

Revenue recognition;

—

Impairment or disposal of long-lived assets;

—

Deferred taxes;

—

Accounting for stock-based compensation; and

—

Commitments and contingencies.

REVENUE RECOGNITION . Revenue is recognized for digital water marking based on a contracted usage schedule on a monthly billing cycle. Software revenue and other services are recognized in accordance with the terms of the specific agreement, which is generally upon delivery and when accepted by customer. Maintenance, support and service revenue are recognized ratably over the term of the related agreement. In order to recognize revenue, we must not have any continuing obligations and it must also be probable that we will collect the accounts receivable.

IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS . Long-lived assets are reviewed in accordance with ASC Topic 360-10-05. Impairment or disposal of long-lived assets losses are recognized in the period the impairment or disposal occurs.

DEFERRED TAXES . We record a valuation allowance to reduce deferred tax assets when it is more likely than not that some portion of the amount may not be realized.

ACCOUNTING FOR STOCK-BASED COMPENSATION . Under ASC Topic 718, Stock Compensation (formerly referred to as SFAS No. 123(R)), the Company estimates the fair value of stock options granted using the Black-Scholes option pricing model. The fair value for awards that are expected to vest is then amortized on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. The amount of expense attributed is based on estimated forfeiture rate, which is updated based on actual forfeitures as appropriate. This option pricing model requires the input of highly subjective assumptions, including the expected volatility of the Company’s common stock, pre-vesting forfeiture rate and an option’s expected life. The financial statements include amounts that are based on the Company’s best estimates and judgments.

COMMITMENTS AND CONTINGENCIES . We account for commitments and contingencies in accordance with ASC Topic 450 Contingencies (formerly referred to as financial accounting standards board Statement No. 5, Accounting for Contingencies). We record a liability for commitments and contingencies when the amount is both probable and reasonably estimable.

Results of Operations

Revenues

Revenues for the year ended December 31, 2011 (" fiscal 2011 ") were $36,000 and for the year ended December 31, 2010 (" fiscal 2010”) were $39,070. All revenues for fiscal 2011 and 2010 were derived from a license agreement for digital watermarking. We had one customer, which accounted for 100% of the revenue in both years.

Expenses

Total operating expenses for fiscal 2011 were $269,429, compared with $259,735 for fiscal 2010. For fiscal 2011, cost of sales were $5,400, as compared with $5,860 for fiscal 2010.

Our management and employee agreed to fifty percent (50%) reduction of salaries and fees in the first quarter of

fiscal 2010 and no wages in the second, third and fourth quarters of fiscal 2010 and all of fiscal 2011. Product marketing costs decreased due to management’s decision to direct our efforts toward the current customer in additional divisions. Professional fees increased due a law suit of a dissolved subsidiary and preparation of the items voted on at the annual meeting. Administrative expenses have decreased due to management decision to reduce operating facilities.

During the period ended December 31, 2011 in connection with the settlements of accounts payable, we wrote off accounts payable obligations of $84,600 and recorded a gain of $84,600.

Fiscal 2011 versus fiscal 2010

Research and development expenses consisted primarily of contractors, compensation, hardware, software, licensing fees, and new product applications for our proprietary MediaSentinel ™ with a related party. Research and development expenses increased to $75,000 for fiscal 2011, from $3,300 for the comparable period in fiscal 2010.

Selling, general and administrative expenses were $189,029 for fiscal 2011, as compared to $250,575 for fiscal 2010. Selling, general and administrative expenses consisted of marketing expenses, consulting fees, noncash compensation, office, professional fees, and other expenses to execute our business plan and for day-to-day operations. The primary components of the decreases from fiscal 2011 to fiscal 2010 were:

a $27,779 decrease in fiscal 2011 in marketing expenses was due to management’s decision to direct our efforts toward the current customer in additional divisions and reduction in marketing salaries; and

a $29,500 decrease in salaries and fees in fiscal 2011 was due to management and employee reduction; and

a $7,150 decrease in fiscal 2011 in telephone and utilities due to decreased in operating facilities.

Net Losses

To date, we have not achieved profitability and expect to incur substantial losses for the foreseeable future. Our net loss for fiscal 20110 was $161,612, compared with a net loss of $89,175 for fiscal 2010.

Liquidity and Capital Resources

At December 31, 2011 our cash position was $99,833, a increase of $94,579 from December 31, 2010. We had a working capital deficit of $491,250 and an accumulated deficit of $39,246,888 at December 31, 2011.

Our principal source of cash during fiscal 2011 was proceeds of $579,347 received from the short term loans. This was offset by $484,768 of cash used in operating activities.

We have historically satisfied our capital needs primarily by issuing equity securities to our officers, directors, employees and a small group of investors, and from short-term bridge loans from members of management. During fiscal 2011 officers, directors, employees and a small group of investors short term loans, resulting in gross proceeds to us of $579,347.

Our independent registered public accounting firm, in their report accompanying our audited financial statements at and for the year ended December 31, 2011, have stated that there is substantial doubt about our ability to continue as a going concern. As of December 31, 2011, we had $99,833 in cash. We will require an additional $1.25 million to $1.75 million to finance operations for the fiscal 2012 and we intend to obtain such financing through sales of our equity securities. The threat to our ability to continue as a going concern will be removed only when revenues have reached a level that sustains our business operations.

Assuming the aforementioned $1.25 million to $1.75 million in financing is obtained, continuing operations for the longer-term will be supported through anticipated growth in revenues and through additional sales of our securities. Although longer-term financing requirements may vary depending upon our sales performance,

management expects that we will require additional financing of $2.0 million to $3.0 million for fiscal 2013. We have no binding commitments or arrangements for additional financing, and there is no assurance that management will be able to obtain any additional financing on terms acceptable to us, if at all.

Off-Balance Sheet Arrangements

As of fiscal 2011 we have no off-balance sheet arrangements.

Item 7A.

Quantitative and Qualitative Disclosure About Market Risk.

We believe our exposure to overall foreign currency risk is not material. We do not manage or maintain market risk sensitive instruments for trading or other purposes and we are not exposed to the effects of interest rate fluctuations as we do not carry any long-term debt.

We report our operations in US dollars and our currency exposure, although considered by us as immaterial, is primarily between US and Canadian dollars. Exposure to other currency risks is also not material as international transactions are settled in US dollars. Any future financing undertaken by us will be denominated in US dollars. As we increase our marketing efforts, the related expenses will be primarily in US dollars. At December 31, 2011, 4% of our bank deposits are maintained in U.S. dollars.

Item 8.

Financial Statements and Supplementary Data.

The financial statements and supplementary financial information required to be filed under this item are presented on pages F-1 through F-21 of this Report and are incorporated herein by reference.

OCULUS VISIONTECH, INC

AND SUBSIDIARY

(FORMERLY USA VIDEO INTERACTIVE CORP.)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

F-1

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

F-3

Comments by Auditors for Canadian Readers on U.S.-Canada Reporting Differences

F-4

Consolidated Financial Statements:

Balance Sheets

F-5

Statements of Operations

F-6

Statements of Stockholders' Deficiency

F-7

Statements of Cash Flows

F-8

Notes to Consolidated Financial Statements

F-9 - F-15

F-2

K W C O, PC

Certified Public Accountants


1931 East 37 ^th Street, Suite 7		2626 Royal Circle
Odessa, Texas 79762		Kingwood, Texas 77339
(432) 363-0067		(281) 359-7224
Fax (432) 363-0376		Fax (281) 359-7112

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Oculus Visiontech,Inc.

We have audited the accompanying consolidated balance sheets of Oculus Visiontech, Inc. as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ deficiency, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oculus Visiontech, Inc. as of December 31, 2011 and 2010 and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations, has not generated significant revenue from operations and has a net working capital deficiency and a stockholders’ deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also discussed in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/S/ KWCO, P.C.

KWCO, P.C.

(formerly Killman Murrell & Company, P.C.)

Houston, Texas

April 10, 2012

F-3

K W C O, PC

Certified Public Accountants


1931 East 37 ^th Street, Suite 7		2626 Royal Circle
Odessa, Texas 79762		Kingwood, Texas 77339
(432) 363-0067		(281) 359-7224
Fax (432) 363-0376		Fax (281) 359-7112

Comments by Auditors for Canadian Readers on U.S. – Canada Reporting Differences

In Canada, reporting standards do not require the addition of an explanatory paragraph (following the opinion paragraph) or a reservation of opinion when the consolidated financial statements are effected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern. Such doubt is accounted for and disclosed in accordance with United States generally accepted accounting principles.

Our report to the Board of Directors dated April 10, 2012, is expressed in accordance with the standards of the Public Company Accounting Oversight Board (United States), which requires an explanatory paragraph in the auditor’s report.

/S/ KWCO, P.C.

KWCO, P.C.

(formerly Killman Murrell & Company, P.C.)

Houston, Texas

April 10, 2012

F-4


OCULUS VISIONTECH INC. AND SUBSIDIARIES (FORMERLY USA VIDEO INTERACTIVE CORP)
CONSOLIDATED BALANCE SHEETS
December 31,	2011	2010

ASSETS
Current Assets:
Cash and cash equivalents	$ 99,833	$ 5,254
Accounts Receivable	3,000	12,070
Prepaid expenses and other current assets	4,585	2,755
Total current assets	107,418	20,079

Deferred Tax Assets, net of valuation allowance of $9,945,000 and
$9,890,000, respectively	-	-
Total Assets	$ 107,418	$ 20,079

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable and accrued expenses	$ 64,150	$ 87,066
Accounts payable and accrued expenses – related parties	63,286	380,599
Notes payable, net	47,588	-
Notes payable – related parties, net	423,644	-
Total current liabilities	598,668	467,665

Commitments and Contingencies

Stockholders' Deficiency:
Preferred stock - no par value; authorized 250,000,000 shares, none issued
Common stock - no par value; authorized 500,000,000
shares, issued and outstanding 12,772,568 in 2011 and 2010	38,637,690	38,637,690
Shares subscribed	117,948	-

Accumulated deficit	(39,246,888)	(39,085,276)
Stockholders' deficiency	(491,250)	(447,586)
Total Liabilities and Stockholders' Deficiency	$ 107,418	$ 20,079

See Notes to Consolidated Financial Statements

F-5


OCULUS VISIONTECH INC. AND SUBSIDIARIES (FORMERLY USA VIDEO INTERACTIVE CORP)
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,	2011	2010

Revenue	$ 36,000	$ 39,070

Expenses:
Cost of sales	5,400	5,860
Research and development	75,000	3,300
Selling, general and administrative	189,029	250,575
Total expenses	269,429	259,735
Loss from operations	(233,429)	(220,665)

Other income (expense), net:
Interest expense	(12,783)	(5,804)
Gain on settlement of accounts payable	84,600	135,794
Gain on sale of equipment	-	1,500
	71,817	131,490

Net loss	$ (161,612)	$ (89,175)

Net loss per share - basic and diluted	$ (.01)	$ (.01)
Weighted-average number of common shares outstanding -
basic and diluted	12,772,568	12,615,138

See Notes to Consolidated Financial Statements

F-6

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY


		Shares
	Common Stock	Subscribed	Accumulated	Stockholders'
	Shares	Amount	Amount	Deficit	Deficiency

Balance at January 1, 2010	12,567,901	38,303,544	-	(38,996,101)	(692,557)
Issuance of common stock and common stock warrants for cash	204,667	138,150		-	138,150
Noncash compensation charges	-	195,996	-	-	195,996
Net loss	-	-	-	(89,175)	(89,175)


Balance at December 31, 2010	12,772,568	38,637,690	-	(39,085,276)	(447,586)
Shares Subscribed	-	-	117,948	-	117,948
Net loss	-	-	-	(161,612)	(161,612)
Balance at December 31, 2011	12,772,568	$ 38,637,690	$ 117,948	$ (39,246,888)	$ (491,250)

See Notes to Consolidated Financial Statements

F-7


OCULUS VISIONTECH INC. AND SUBSIDIARIES (FORMERLY USA VIDEO INTERACTIVE CORP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,	2011	2010
Cash flows from operating activities:
Net loss	$ (161,612)	$ (89,175)
Adjustments to reconcile net loss to net cash used in operating
activities:
Amortization of debt discount	9,832	-
Gain on settlement of accounts payable	(84,600)	(135,794)
Changes in operating assets and liabilities:
Decrease in accounts receivable	9,070	35,930
Decrease (increase) in prepaid expenses and other current assets	(1,830)	1,148
Increase (decrease) in accounts payable and accrued expenses	(13,315)	(97,395)
Increase (decrease) in accounts payable and accrued expenses due to related parties	(242,313)	151,625
Net cash used in operating activities	(484,768)	(133,661)

Cash flows from financing activities :
Proceeds from the issuance of common stock and warrants	-	138,150
Proceeds from notes payable	58,400	-
Proceeds from notes payable – related parties	520,947	-
Net cash from financing activities	579,347	138,150
Net increase in cash and cash equivalents	94,579	4,489
Cash and cash equivalents at beginning of year	5,254	765
Cash and cash equivalents at end of year	$ 99,833	$ 5,254
Supplemental disclosures of cash flow information:
Cash paid during the year for interest	$ -	$ 5,084
Significant Non Cash Transactions
Accounts Payable	$ -	$ (195,996)
Common stock and additional paid in capital	$ -	$ 195,996
Notes payable	$ (117,947)	$ -
Shares subscribed	$ 117,947	$ -

See Notes to Consolidated Financial Statements

F-8

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION:

The following financial statements present the financial results of Oculus VisionTech, Inc. formerly USA Video Interactive Corp, and its wholly owned subsidiary USVO Inc. on a consolidated basis. The former subsidiaries, USA Video (California) Corp., USA Video Corporation, Old Lyme Productions Inc., USA Video Technology Corporation were dissolved in 2010.

BUSINESS:

Oculus VisionTech, Inc. (the " Company ") is a designer of digital watermarking services and solutions. At December 31, 2011 and for the two-year period then ended, substantially all of the Company's assets and substantially all its operations are located and conducted in the United States.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the financial statements, the Company has incurred losses of $161,612 and 89,175 for the years ended December 31, 2011 and 2010, respectively. In addition, the Company has a working capital deficiency of $491,250 and a stockholders’ deficiency of $39,246,888 at December 31, 2011. These conditions raise doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate sufficient revenue and cash flow to meet its obligations as they come due, which management believes it will be able to do. To date, the Company has funded operations primarily through the issuance of common stock, warrants and options to outside investors and to the Company's management. The Company believes that its operations will generate additional funds and that additional funding from outside investors and the Company's management will continue to be available to the Company when needed. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary in the event the Company cannot continue as a going concern.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated.

The Company maintains cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses on these accounts.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

The Company sells its products to customers on an open credit basis. The Company’s trade accounts receivable are due from such customers and are generally uncollateralized. Management closely monitors outstanding accounts receivable and charges off to expense any balances that are determined to be uncollectible or establishes an allowance for doubtful accounts. As of December 31, 2011 and 2010, the Company considered its accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts was recorded. Bad debt expense for the years ended December 31, 2011 and 2010 was zero.

F-9

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue from hardware product sales is recognized when the product has been shipped and the collection of payment is reasonably assured. Revenue recognized from these sales is net of applicable provisions for refunds, discounts and allowances. Engineering services sales are recognized upon the service having been provided.

Revenue from software sales is recognized when the product has been delivered. Revenue from multiple element contracts (hardware, software and engineering) is allocated to the various elements based on fair value. If objective evidence of fair value is not available, revenue from these contracts is deferred until the earlier of when objective evidence of fair value does exist or all elements of the contract have been delivered. Discounts will be applied to each element on a proportionate basis. No portion of the revenue will be recognized if the portion of the revenue allocable to delivered elements is subject to forfeiture, refund or other concession.

Revenue is recognized for digital water marking based on a contracted usage schedule on a monthly billing cycle.

Income taxes are accounted for under the liability method. Under this method, deferred tax assets and liabilities are recorded based on the temporary differences between the financial statement and the tax bases of assets and liabilities and for operating loss carry forwards measured using the enacted tax rates in effect for the year in which the differences are expected to reverse. The Company periodically evaluates the reliability of its net deferred tax assets and records a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The foreign assets and liabilities of the Company are translated into U.S. dollars at current exchange rates, and revenue and expenses are translated at average rates of exchange prevailing during the period. The aggregate effect of translation adjustments is immaterial at December 31, 2011 and 2010.

Basic loss per common share (" EPS ") is computed as net loss divided by the weighted-average number of common shares outstanding during the period. Diluted EPS includes the impact of common stock potentially issuable upon the exercise of options and warrants. Potential common stock amounts of approximately 488,667 for the year ended December 31, 2010, respectively, have been excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

Accounts payable and accrued expenses in the amount of $137,314 at December 31, 2010, have been reclassified to accounts payable and accrued expenses - related parties to conform with current year's presentation.

F-10

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAJOR CUSTOMERS:

During the year ended December 31, 2011 and 2010 one customer accounted for 100% of total revenue.


5. PREPAID EXPENSES AND OTHER CURRENT ASSETS:	Prepaid expenses and other current assets consist of the following:
	December 31,	2011	2010
	Taxes Receivable – Canadian GST	$4,585	$2,755
6. ACCOUNTS PAYABLE AND	Accounts payable and accrued expenses consist of the following:
ACCRUED	December 31,	2011	2010
EXPENSES	Accounts payable	$ 36,548	$ 47,231
	Accrued professional fees	18,900	15,000
	Accrued payroll and related tax withholdings	8,702	24,835
		$ 64,150	$ 87,066
	Accounts payable and accrued expenses - related parties consist of accounts payable. During the period ended December 31, 2011 as the result of settlement of accounts payable for less than amounts recorded and in 2010 as the result of dissolving subsidiaries, we wrote off accounts payable obligations, which were not guaranteed by the parent of $84,600 and $135,794 and recorded a gain of $84,600 and $135,794, respectively.


7. NOTES PAYABLE -	On December 1, 2011 the Company received cash in consideration for issuing notes payable of $520,947 from related parties and $58,400 from other individuals. The notes payable have a stated interest of 6% and are due November 30, 2012. Interest is accrued and record in accounts payable and accrued expenses. In connection with the issuance of the notes payable, the Company agreed to issue 800,000 shares of the Company's common stock. The issuance of the common stock (valued at $117,948) has been treated as debt discount and is being amortized over the life of the note using the interest method. Notes payable consist of the following:
	December 31, 2011	Non Related Parties	Related Parties s
	Notes payable	$ 58,400	$ 520,947
	Less unamortized debt interest	10,812	97,303
		$ 47,588	$ 423,644

F-11

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




8. STOCK- HOLDERS' EQUITY:	The shareholders approved on December 30, 2011 a resolution to an alteration of the share capital of the Company by way of a reverse stock split by consolidating all of the currently authorized share capital of 500,000,000 common shares without par value, of which 191,596,371 common shares were issued and outstanding, on a one new for fifteen old basis, resulting in an authorized share capital of 33,333,333 common shares without par value, of which 12,772,568 common shares will be issued and outstanding.
	The shareholders approved on December 30, 2011 a resolution to the reverse stock split, to approve a subsequent alteration of the share capital of the Company by increasing the authorized capital of the Company from 33,333,333 common shares without par value to 500,000,000 common shares without par value, of which 12,772,568 common shares will be issued and outstanding . Shares subscribed are the value of the common stock assigned to the 800,000 shares issued in connection with notes payable. The 800,000 shares were issued in January 2012.

F-12

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

STOCK OPTIONS AND STOCK WARRANTS:

The Company has a stock option plan under which options to purchase shares of common stock may be granted to certain officers, directors and service providers.

In February 2007, the Company adopted a new Stock Option Plan (the “2005 Plan”). The 2005 Plan authorizes the issuance of up to 1,158,333 of the Company's common shares (adjusted for reverse stock split), subject to adjustment under certain circumstances. The Company is listed on the TSX Venture Exchange (" TSX ") and is subject to a limitation on the number of options a company may have. The 2005 Plan provides for the issuance of both incentive stock options and nonqualified options as those terms are defined in the Internal Revenue Code of 1986 , as amended (the " Code "). The Company's previous option plan terminated in 2011, when all granted stock options were exercised, expired or canceled. In December 2011, the Company adopted a new Stock Option Plan (the “2011 Plan”). The 2011 Plan authorizes the issuance of up to 1,250,000 of the Company's common shares, subject to adjustment under certain circumstances. The Company is listed on the TSX Venture Exchange (" TSX ") and is subject to a limitation on the number of options a company may have. The 2011 Plan provides for the issuance of both incentive stock options and nonqualified options as those terms are defined in the Internal Revenue Code of 1986 , as amended (the " Code ").


	A summary of the status of the Company's options and changes during the years is presented below:


Year ended December 31	2011		2010
	Number of Shares	Weighted Average Exercise Price	Number of Shares	Weighted Average Exercise Price
Outstanding at beginning of year	26,666	$1.50	93,333	$1.50
Granted	-0-	$N/A	-0-	$N/A
Exercised	-0-	$N/A	-0-	$N/A
Cancelled/expired	26,666	$1.50	66,667	$1.50
Outstanding at end of year	-0-	$ N/A	26,666	$1.50
Options exercisable at year end	-0-	$ N/A	26,666	$1.50
Weighted average fair value of options exercisable during the year		$1.50		$1.50

The aggregate intrinsic value at December 31, 2011was $-0-.

There is no future unrecognized compensation since all of the options granted are immediately exercisable and fully vested. No options are outstanding as of December 31, 2011.

F-13

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


	Warrants to purchase shares of common stock are as follows:


Year ended December 31,	2011	2010
	Number of Warrants	Range of Exercise Price	Number of Warrants	Range of Exercise Price

Outstanding at beginning of year	462,000	$1.380	1,066,667	$0.675-$1.380
Issued	-0-	N/A	-0-	N/A
Exercised	-0-	N/A	204,667	$0.675
Expired	462,000	$1.380	400,000	$1.335
Outstanding at end of year	-0-	$N/A	462,000	$1.380


	Warrants issued in 2009 have a contractual life of two years from the date of issuance.

10.

INCOME TAXES:

As of December 31, 2011the Company had deferred tax assets resulting primarily from net operating loss carry forwards of approximately $29,250,000, which are available to offset future taxable income, if any, through 2031. As utilization of the net operating loss carryforwards is not assured, a 100% valuation allowance has been provided.

The components of the net deferred tax assets are as follows:


December 31,	2011	2010
Net operating loss carryforwards	$ 9,945,000	$ 9,890,000
Valuation allowance	(9,945,000)	(9,890,00)
Net deferred tax assets	$ - 0 -	$ - 0 -


	The reconciliation of the effective income tax rate to the federal statutory rate are as follows:


Year ended December 31,	2011	2010
Federal statutory tax rate	34%	34%
Valuation allowance on net operating carryforwards	(34)	(34)
Effective income tax rate	- 0 - %	- 0 - %

F-14

OCULUS VISIONTECH INC. AND SUBSIDIARIES

(FORMERLY USA VIDEO INTERACTIVE CORP)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.

RELATED

PARTIES:

The Company for the years ended December 31, 2011 and 2010 reimbursed a related party $35,340 and $19,044, respectively. The Company paid a related party $75,000 and $32,700 for research and development for the years ended December 31, 2011 and 2010, respectively

12.

QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

The following table summarizes selected quarterly data for the years ended December 31, 2011 and 2010:


	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Full Year
2011:
Revenue	$ 9,000	$ 9,000	$ 9,000	$ 9,000	$ 36,000
Expenses	(38,167)	(116,686)	(33,826)	(8,933)	(197,612)
Net Gain(Loss)	(29,167)	(107,686)	(24,826)	67	(161,612)

Net gain(loss) per common share
Basic and Diluted	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.00)	$ (0.01)
2010:
Revenue	$ 9,000	$ 12,000	$ 9,070	$ 9,000	$ 39,070
Expenses	(105,113)	(63,723)	46,537	(5,946)	(128,245)
Net Gain(Loss)	( 96,113)	(51,723)	55,607	3,054	(89,175)

Net gain(loss) per common share
Basic and Diluted	$ (0.01)	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.01)

13.

SUBSEQUENT EVENT:

In January 2012, the Company issued 800,000 shares of common stock pursuant to the notes payable issued on December 1, 2011.

The Company’s management has evaluated subsequent events through April 10, 2012, the date the financial statements were issued, and determined that there are no other items that require disclosure.

F-15

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None

Item 9A

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this report.

In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

No system of controls can prevent errors and fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur. Controls can also be circumvented by individual acts of some people, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with its policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Subject to the limitations above, management believes that the consolidated financial statements and other financial information contained in this report, fairly present in all material respects our financial condition, results of operations, and cash flows for the periods presented.

Based on the evaluation of the effectiveness of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were not effective as a result of the weaknesses in the design of our internal control over financial reporting.

Based upon their evaluation of our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer have concluded that our internal controls over financial reporting are ineffective. The material weaknesses in our internal controls related to a lack of segregation of duties due to inadequate staffing within our accounting department and upper management, the assignment of authority and responsibility, lack of consistent policies and procedures, inadequate monitoring controls and inadequate disclosure controls.

There were no changes in our internal controls that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to our company.

In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result in proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support our company if personnel turn over issues within the department occur.

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit our company to provide only management's report in this annual report.

Item 9B.

Other Information

Not applicable

PART III

Item 10.

Directors and Executive Officers of the Registrant.

The following table sets forth the name, age, position, and period of service in his present position of each director and executive officer of USA Video:


Name	Age	Position	Period of Service
Anton J. Drescher ⁽¹⁾	55	Director, Chief Financial Officer and Corporate Secretary	Since 1994
Maurice Loverso ⁽¹⁾	50	Director	Since 2003
Rowland Perkins	57	Director, President and Chief Executive Officer	Since 2005
Tom Perovic	58	Director	Since 2011
Ron Wages ⁽¹⁾	48	Director	Since 2011

(1)

Member of the Audit Committee

Anton Drescher, Maurice Loverso, Rowland Perkins,Tom Perovic and Ron Wages were elected as directors of Oculus VisionTech, Inc. at the shareholders meeting held on December 30, 2011.

Executive Officers and Directors of the Company:

Anton J. Drescher - Chief Financial Officer, Secretary and Director

Mr. Drescher has been Chief Financial Officer of Oculus since December 1994. During the past 5 years, Mr. Drescher has provided administrative and consulting services in his capacity as President and a Director of Harbour Pacific Capital Corp. since 1998 and Westpoint Management Consultants Ltd. of Vancouver, British Columbia, Canada since 1978. Mr. Drescher also currently serves as a director and/or officer of the following public companies: International Tower Hill Mines Ltd. (ITH – TSX) since October 1991, Dorato Resources Inc. (DRI – TSX.V) since December 1998; Ravencrest Resources Inc. (RVT – CNSX) since April 2007, Trevali Resources Corp.(TV – TSX) since 2008 and Corvus Gold, Inc. (KOR – TSX) since August 2010. Mr. Drescher obtained a Diploma in Financial Management from the British Columbia Institute of Technology in June 1974. He also obtained his Certified Management Accountant's designation in October 1981.

Maurice Loverso – Director

Mr. Loverso has been an independent director of Oculus since May 2003. He has been President of 3336298 Canada Inc. since 1996, providing financial consultation services to small capital public and private companies and has been a director of Group Intercapital Inc. since 1996, assisting a small cap venture capital firm with financial advice.

Rowland Perkins – President, Chief Executive Officer and Director

Mr. Perkins was appointed as an independent director of Oculus as of January 10, 2005. He has been President and a director of eBackup Inc., of Calgary, Alberta, since 2001. He was previously Alberta Regional Manager of Securitinet Storage Solutions from 1999 to 2001. Mr. Perkins has served as a director of Corvus Gold, Inc. (KOR – TSX) since August 2010 and as a director of Strikepoint Gold Inc. (SKP – TSX.V) since September 2011.

Tom Perovic – Director

Mr. Perovic has over 30 years of experience in high technology management, from research and development to high-level and top development and executive positions in businesses including automotive (vision based real time driver assistance applications), electronics (embedded hardware, imaging/video processing based products), software (real time, streaming content - movie watermarking products for the entertainment industry, machine vision 2D signal processing algorithms, IP based video communications), PCB production/development equipment, professional video (TV broadcasting), Internet imaging, security video surveillance, contract manufacturing, material handling/logistics and production/distribution. He has been General Manager of Magna International Inc. since 2006, where he is responsible for restructuring since a takeover, P/L, development strategy, operational team building and leadership.

Ron Wages – Director

Mr. Wages is an innovative and results-driven corporate professional with an impressive 20 year record of success in delivering record profit growth in multiple markets worldwide. He is the founder and has been Chief Executive Officer of Vagues Solid State Lighting, a manufacturer of LED based lighting, since January 2009 As Chief Executive Officer, he developed the business strategy and full business plan including sales goals, market research, expense budgets and P&L plan. Previously, he was President and General Manager of MEMScAP Inc./JDS Uniphase, a public company in the semiconductors industry. He managed the day-to-day operations for sales, marketing, manufacturing, legal and finance. Mr. Wages has a B.S. in Electrical Engineering from the University of Maryland College Park and an MBA (Honours) from the University of Houston Executive MBA Program.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 , as amended (" Section 16 "), requires that reports of beneficial ownership of capital stock and changes in such ownership be filed with the SEC by Section 16 " reporting persons ," including directors, certain officers, and holders of more than 10% of the outstanding common shares. We are required to disclose in this Annual Report on Form 10-K each reporting person whom we know to have failed to file any required reports under Section 16 on a timely basis during the fiscal year ended December 31, 2011.

To our knowledge, based solely on a review of copies of Forms 3, 4 and 5 furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2009, our officers, directors and 10% shareholders complied with all Section 16(a) filing requirements applicable to them, with the exception of Edwin Molina, who filed a Form 4 late on a number of occasions.

Code of Ethics

We have adopted a Code of Ethics and Corporate Disclosure Policy that apply to the directors, officers and employees and Corporate Governance Guidelines that applies to our directors and officers. A copy of the Code of Ethics, Corporate Disclosure Policy and Corporate Governance Guidelines are posted on our website at http://www.usvo.com . These documents are also available in print to any shareholder who requests a copy by sending a written request to our corporate secretary at #507, 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6.

Audit Committee

The Audit Committee assists our Board of Directors in its oversight of the quality and integrity of the accounting, audit and reporting practices of the Company. The Audit Committee’s role includes discussing with management

our processes to manage business and financial risk and for compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee is responsible for the appointment, replacement, compensation and oversight of the independent auditor engaged to prepare or issue audit reports on our financial statements. The Audit Committee relies on the expertise and knowledge of management and the independent auditor in carrying out its oversight responsibilities.

The Audit Committee of the Board of Directors consists of Maurice Loverso and Rowland Perkins. Rowland Perkins serves as Chairman. The Board of Directors had determined that each Audit Committee member has sufficient knowledge in financial and accounting matters to serve on the Committee and that each member is an “ audit committee financial expert ” as defined by SEC rules.

Item 11.

Executive Compensation.

The following table sets forth compensation awarded to, earned by or paid to Oculus's Chief Executive Officer (CEO), and to other persons serving as executive officers as of December 31, 2011, whose salary and bonus for such year exceeded $100,000 (collectively, the " Named Executive Officers ") for the last three completed fiscal years.

Long Term Compensation

Summary Compensation

Annual Compensation

Awards

Payouts

Name and Principal

Position

Year

Salary

Bonus

Other

Annual

Compen-

sation

Restricted

Stock

Award(s)

Securities

Underlying

Options/SARs (#)

LTIP

Payouts

All Other Compen-sation

Drescher, Anton

CFO

2011

2010

2009

-0-

(1) 9,000

(1) 72,000

-0-

(2) 48 ,600

-0-

- 0-

-0-

Loverso,

Maurice

Director

2011

2010

2009

-0-

Perkins,

Rowland

CEO

2011

2010

2009

-0-

-0 -

-0-

Pervic,

Tom

Director

2011

2010

2009

-0-

-0 -

-0-

Wages

Ron

Director

2011

2010

2009

-0-

-0 -

-0-

(1)

Represents consulting fees paid to Mr. Drescher through Harbour Pacific Capital Corp., a consulting firm wholly-owned by him, for his services as an executive officer of the Company.

(2)

In October 2009, Mr. Drescher purchased 2,000,000 units (each comprised of one common share and one warrant to acquire one common share at $0.045 per share until October 29, 2010 and $0.092 until October 29, 2011) at $0.0275 per unit. This compensation resulted from the differential between the fair value and the purchase price of the common stock and the differential between the fair value of the underlying common stock and the exercise price of the warrants..

No stock options were granted to the Named Executive Officers during the years ended December 31, 2011 and 2010.

The following table sets forth certain information concerning exercises of stock options by the Named Executive

Officers during the year ended December 31, 2011 and stock options held at year end.


Aggregated Option / SAR Exercises in Last Fiscal Year and FY-End Option / SAR Values
			Number of Securities Underlying Unexercised Options / SARs at Fiscal year End (#)	Value of Unexercised In-the-Money Options / SARs at Fiscal Year End ($)
Name	Shares Acquired on Exercise (#)	Value Realized ($)	Exercisable/ Unexercisable	Exercisable/ Unexercisable
Drescher, Anton	-0-	-0-	0 / 0	N/A	/ $0
Loverso, Maurice	-0-	-0-	0 / 0	N/A	/ $0
Perkins, Rowland	-0-	-0-	0 / 0	N/A	/ $0
Pervic, Tom	-0-	-0-	0 / 0	N/A	/ $0
Wages, Ron	-0-	-0-	0 / 0	N/A	/ $0

(1)

On December 31, 2011, the average of the high and low bid prices of the common shares on the OTC BB was $0.11 and $0.10, respectively.

Compensation of Directors

Directors receive no compensation for their service as such.

Employment Contracts

We do not have an employment contract with Mr. Perkins and the other Named Executive Officer. We have no obligation to provide any compensation to Mr. Perkins or any other Named Executive Officer in the event of his resignation, retirement or termination, or a change in control of our company, or a change in any Named Executive Officers' responsibilities following a change in control.

We may in the future create retirement, pension, profit sharing and medical reimbursement plans covering our Executive Officers and Directors.

Item 12.

Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth as of April 10 ^th , 2011, the number of our outstanding common shares beneficially owned by (i) each person known to us to beneficially own more than 5% of our outstanding common shares, (ii) each director, (iii) each Named Executive Officer, and (iv) all officers and directors as a group.


Name	Shares Owned	Percentage of Class
Anton J. Drescher	1,261,459	9.30%
Maurice Loverso	-0-	0.00%
Rowland Perkins	-0-	0.00%
Tom Perovic	95,000	0.69%
Ron Wages	-0-	0.00%
All Executive Officers and Directors as a Group (four persons)	1,356,459	9.99%

Item 13.

Certain Relationships and Related Transactions.

In 2011, we reimbursed for expenses of $35,340 to Harbour Pacific Capital Corp., a company controlled by Anton J. Drescher and we paid 4C, Inc. $75,000 for research and development, a company owned by Tom Pervic spouce.

As of December 31, 2011, we have accounts payable to related parties of $486,930.

Item 14.

Principle Accountant Fees and Services

Audit and Non-Audit Fees

The following table presents fees for the professional audit services rendered by KWCO, P.C. for the audit of our annual financial statements for the years ended December 31, 2011 and 2010 and fees billed for other services rendered by John A. Braden, P.C during those periods

John A. Braden P.C.


Year ended December 31	2011	2010
Audit fees	$ -0-	$ 9,000
Audit-related fees	-0-	-0-
Tax fees	-0-	-0-
All other fees	-0-	-0-
Total	$ -0-	$9,000

KWCO, P.C.


Year ended December 31	2011	2010
Audit fees	$ 24,000	$-9,000
Audit-related fees	-0-	-0-
Tax fees	-0-	-0-
All other fees	-0-	-0-
Total	$ 24,000	$9,000

The Audit Committee reviews all audit and non-audit related fees at least annually. The Audit Committee pre-approved all audit and non-audit related services in fiscal 2011 and 2010.

PART IV

Item 15.

Exhibits, Financial Statements to Shareholders and Reports on Form 8-K.

(a)(1)

Financial Statements Independent Auditors' Reports Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Operations Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements

(a)(2)

All schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto included in this Report.

(b)

Reports on Form 8-K

During the last quarter of the fiscal year covered by this Report, we did not file any reports on Form 8K.

(c)

Exhibits

3.1

Articles of Amendment (Wyoming) filed January 26, 2012.

3.2

Articles of Continuance (Wyoming) filed February 16, 1995 (incorporated by reference from Exhibit 3.1 to the registrant's Form 10).

3.3

Articles of Amendment (Alberta) filed January 3, 1995 (incorporated by reference from Exhibit 3.2 to the registrant's Form 10).

3.4

Articles of Amendment (Alberta) filed June 28, 1993 (incorporated by reference from Exhibit 3.3 to the registrant's Form 10).

3.5

Articles of Amendment (Alberta) filed April 6, 1992 (incorporated by reference from Exhibit 3.3 to the registrant's Form 10).

3.6

Articles of Amendment (Alberta) filed September 1, 1989 (incorporated by reference from Exhibit 3.5 to the registrant's Form 10).

3.7

Articles of Incorporation (Alberta) filed April 18, 1986 (incorporated by reference from Exhibit 3.6 to the registrant's Form 10).

3.8

Bylaws (incorporated by reference from Exhibit 3.7 to the registrant's Form 10).

4.3

Share Option Plan (incorporated by reference from Exhibit 4.3 to the registrant's Form 10).

10.4

Alliance Partner Agreement dated November 11, 1999, between Exodus Communications, Inc. and registrant (incorporated by reference from Exhibit 10.4 to the registrant's Form 10).

21.

Subsidiaries of the Registrant:

Name

State of Incorporation

Status

USA Video (California) Corporation

Nevada

Dissolved

USA Video Corporation

Texas

Dissolved

Old Lyme Video Productions Inc.

Wyoming

Dissolved

USA Video Technology Corporation

Wyoming

Dissolved

USVO, Inc.

Connecticut

Active

31.1

Certification of the Chief Executive Officer Pursuant To Rule 13a-14 Or 15d-14 of the Securities Exchange Act Of 1934 ,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Financial Officer Pursuant To Rule 13a-14 Or 15d-14 of the Securities Exchange Act of 1934 ,as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

OCULUS VISIONTECH, INC.

By: /s/ Rowland Perkins

Date: April 10, 2012

Rowland Perkins

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934 , this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Rowland Perkins

Chief Executive Officer, Director

April 10, 2012

-----------------------

Rowland Perkins

/s/ Anton J. Drescher

Chief Financial Officer, (principal

April 10, 2012

-----------------------

financial officer and principal

Anton J. Drescher

accounting officer), Director

/s/ Maurice Loverso

Director

April 10, 2012

-----------------------

Maurice Loverso

/s/ Tom Perovic

Director

April 10, 2012

-----------------------

Tom Perovic

/s/ Ron Wages

Director

April 10, 2012

-----------------------

Ron Wages

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