8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 8, 2007

On2 Technologies, Inc.

(Exact name of Registrant as specified in its charter)

Delaware

(State of incorporation or organization)

1-15117

(Commission File Number)

84-1280679

(IRS Employer Identification No.)

21 Corporate Drive, Suite 103, Clifton Park, NY 12065

(518) 348-0099

(Address, including zip code, and telephone number, including area code, of

Registrant's principal executive offices)

Not applicable

(Former name, former address and former fiscal year, if applicable)

Item 2.02. Results of Operations and Financial Condition

On November 8, 2007, On2 Technologies, Inc. issued a press release announcing its financial results for the fiscal quarter ended September 20, 2007. A copy of the press release is furnished as Exhibit 99.1 to this report.

The information in this report shall not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

99.1. Press release of On2 Technologies, Inc., dated November 8, 2007.

SIGNATURE

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

Date: November 8, 2007	On2 Technologies, Inc. By: /s/ Bill Joll
	Name: Bill Joll
	Title: President and CEO

On2 Technologies, Inc.

Current Report On Form 8-K

Dated November 8, 2007

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated November 8, 2007

EX-99.1

On2 Technologies Announces Q3 2007 Financial Results

Company reports 51% year-over-year increase in revenue to $2.6M

TARRYTOWN, NY (November 8, 2007) - On2 Technologies, Inc. (AMEX:  ONT), a leader in video compression software and solutions, today announced its third quarter 2007 financial results.

Revenue year over year increased 51% to $2,566,000 for the three months ended September 30, 2007 compared with $1,703,000 for the three months ended September 30, 2006. Revenue also increased quarter over quarter for the three months ended September 30, 2007 from revenue of $2,554,000 for the three months ended June 30, 2007.

Operating expenses increased by 13% quarter over quarter to $3,052,000 compared to operating expenses of $2,699,000 for the three months ended June 30, 2007 and increased 33% year over year for the three months ended September 30, 2007, compared with $2,290,000 for the three months ended September 30, 2006. On2 attributed the 13% increase in operating expenses to expenses associated with the proxy and the annual meeting relating to the acquisition of Hantro, the Finland-based provider of video technologies for mobile handset and chip vendors. The year-over-year increase is largely attributable to increased investment in Sales and Marketing and R&D that accompanies the growth of the business.

The company’s net loss decreased by 87% quarter over quarter to $(368,000) compared to $(2.8M) for the three months ending June 30,2007. Net loss also decreased by 40% year over year compared with $(608,000) for the three months ending September 30, 2006.  Net loss per common share was $0.00 for the three months ending September 30, 2007, compared with $(0.01) for the three months ended September 30, 2006, and $(0.03) for the three months ended June 30, 2007. Net loss per common share was $(0.04) for the nine months ended September 30, 2007 and 2006 and $(0.03) for the six months ended June 30, 2007.

On2’s cash and cash equivalents increased 94% to $9,634,000 at September 30, 2007, compared with $4,961,000 atDecember 31, 2006.

In addition, On2 separately announced that Hantro, which On2 acquired earlier this month, had announced a 23% increase in U.S. GAAP revenue of $3,818,000 for the three months ended September 30, 2007, compared to $3,111,000 for the three months ended June 30, 2007. Hantro posted an operating profit of $25,000, compared with an operating loss of ($148,000) for the three months ended June 30, 2007. In addition, Hantro’s quarter-over-quarter net loss decreased by 92% and was ($41,000) for the three months ended September 30, 2007, compared with a net loss of ($519,000) for the three months ended June 30, 2007. On2’s acquisition of Hantro was not completed until after the close of Q3 2007.

"The results for Q3 demonstrate that we continue to have positive business momentum and all metrics appear to be trending in the right direction; our revenues have increased while our net losses have decreased markedly.” said Bill Joll, On2’s president and CEO. “We are now firmly positioned to fully integrate Hantro and continue the business momentum across multiple fronts. We will continue to take advantage of our VP6 and VP7 technologies along with the customer footprint that Hantro gives us, which will allow us to meet the growing demands of the mobile and device markets.”

On2 will host a live webcast and conference call to review its third quarter 2007 financial results.

Event Date: 11/08/2007

Event Time: 5:00 PM Eastern

Event Title: Third Quarter 2007 Results Conference Call

To access the live webcast, visit:

http://www.vcall.com/IC/CEPage.asp?ID=122968

Webcast Replay Available Until: 11/08/2008

Live Participant Dial In (Toll Free): 877-407-0778

Replay Number (Toll Free): 1-877-660-6853

Replay Passcodes (both required for playback):

Account #: 286

Conference ID #: 261462

Teleconference Replay Available Until: 11/09/2007 11:59 PM

About On2 Technologies, Inc.

On2 Technologies (Amex: ONT) ensures a compelling video experience for any video application anywhere. From low bit rate to high definition (HD), On2 provides optimized video compression technology enabling innovative solutions for application developers, content and service providers, chip vendors, device manufacturers, digital signage companies and beyond.

Through continual innovation, On2 satisfies the toughest quality, bandwidth, and power requirements for video. The company's proprietary (TrueMotion® VP6™, VP7™) and standards based (MPEG-2, MPEG-4, H.263, H.264, VC-1) codecs dominate the video market, with more than 1 billion deployments on desktops worldwide and more than 200+ million in mobile; they are also proven in silicon with over 25 semiconductor manufacturers globally.

Established in 1992 and headquartered in Tarrytown, New York, On2 has offices and partners in Finland, Germany, UK, Japan, China, Taiwan and Korea. Customers include Nokia, Samsung, Sony, Freescale, AMS, Atmel, Adobe/Macromedia, AOL, Sony, Skype, Facebook, VideoEgg, Brightcove, Move Networks and XM Satellite Radio.

For more information please visit www.on2.com.

All trademarks mentioned in this document are the property of their respective owners. This release contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements relating to future recurring revenue streams.  These forward-looking statements are subject to the safe harbor provisions of the aforementioned Sections and the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve potential risks and uncertainties including those described in our filings with the SEC, and that the actual results or developments may differ materially from those in the forward-looking statements as a result of various factors. Potential risks and uncertainties include, but are not limited to, general economic conditions, competition in the compression technology industry, the company's history of operating losses and the ability to obtain additional operating funds. We have based these forward-looking statements on information currently available and disclaim any intention or obligation to update or revise any forward-looking statement.

Investor Contact:

On2 Technologies, Inc:

Matt Frost

On2 Technologies

914 468 0510

invest@on2.com

On2 Technologies, Inc.
Condensed Consolidated Balance Sheets
	September 30,		December 31,
	2007		2006
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	9,634,000	$	4,961,000
Marketable securities				154,000
Accounts receivable, net		2,780,000		1,335,000
Prepaid expenses and other current assets		237,000		231,000
Total current assets		12,651,000		6,681,000
Acquired software, net		317,000		467,000
Other acquired intangibles, net		73,000		108,000
Goodwill		244,000		244,000
Property and equipment, net		352,000		157,000
Deferred acquisition costs		1,727,000
Deferred financiang costs		62,000
Other assets		104,000		230,000
Total assets	$	15,530,000	$	7,887,000
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	1,596,000	$	648,000
Deferred revenue		796,000		708,000
Term-loan payable		96,000		33,000
Current portion of capital lease obligations		22,000		24,000
Total current liabilities		2,510,000		1,413,000
Capital lease obligations, net of current portion		18,000		29,000
Warrant derivative liability				2,329,000
Total liabilities		2,528,000		3,771,000
Commitments and contingencies
Series D redeemable convertible preferred stock				3,083,000
Stockholders’ equity		13,002,000		1,033,000
Total liabilities and stockholders’ equity	$	15,530,000	$	7,887,000

On2 Technologies, Inc.
Consolidated Statements of Operations
	Three months ended September 30,						Nine months ended September 30,
	2007			2006			2007			2006
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenue	$	2,566,000		$	1,703,000		$	7,935,000		$	4,455,000
Operating expenses
Cost of revenues (1)		603,000			529,000			1,415,000			1,817,000
Research and development (2)		445,000			261,000			1,500,000			700,000
Sales and marketing (2)		676,000			263,000			1,886,000			623,000
General and administrative (2)		1,146,000			843,000			3,085,000			3,383,000
Equity based compensation:
Research and development		46,000			30,000			66,000			82,000
Sales and marketing		34,000			61,000			88,000			119,000
General and administrative		102,000			303,000			330,000			1,014,000
Total operating expenses		3,052,000			2,290,000			8,370,000			7,738,000
Loss from operations		(486,000	)		(587,000	)		(435,000	)		(3,283,000	)
Interest and other income (expense), net		121,000			(10,000	)		(3,464,000	)		(36,000	)
Loss before provision for income taxes		(365,000	)		(597,000	)		(3,899,000	)		(3,319,000	)
Provision for income taxes		3,000			11,000			10,000			17,000
Net loss		(368,000	)		(608,000	)		(3,909,000	)		(3,336,000	)
Convertible preferred stock deemed dividend					68,000						68,000
Convertible preferred stock 8% dividend		7,000			74,000			78,000			220,000
Net loss attributable to common stockholders	$	(375,000	)	$	(750,000	)	$	(3,987,000	)	$	(3,624,000	)
Basic and diluted net loss per common share	$	(0.00	)	$	(0.01	)	$	(0.04	)	$	(0.04	)
Weighted average basic and diluted
common shares outstanding		116,353,000			97,436,000			110,615,000			96,838,000
(1)   Includes equity-based compensation of $48,000 and $63,000 for the three and nine months ended September 30, 2007, respectively
and $45,000 and $154,000 for the three and nine months ended September 30, 2006, respectively.
(2)   Excludes equity-based compensation, which is presented separately