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): MAY 12, 2006


                             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, NEW YORK NY 12065
               (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)


Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)
|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
|_|   Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))
|_|   Pre-commencement communications pursuant to Rule 13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))



<PAGE>



ITEM 8.01 OTHER EVENTS

      On May 12, 2006, the Company  entered into an agreement (the  "Agreement")
with Douglas A.  McIntyre,  the Company's  former  Chairman,  President and CEO,
effective as of May 2, 2006,  under which the parties agreed that the expiration
date of all vested  options (the  "Options") to purchase the common stock of the
Company,  par value $0.01 ("Common  Stock") held by Mr. McIntyre would expire on
September 30, 2006. The Agreement also contains a number of  restrictions on Mr.
McIntyre's  ability to exercise  the  Options  and sell  shares of Common  Stock
received upon such exercise,  including an undertaking  from Mr. McIntyre not to
sell, or cause to be sold, more than a fixed number of shares of Common Stock in
any one-week  period,  including by means of direct sales,  acquisitions  of put
options, or other transactions with the effect of a short transaction.



<PAGE>



                                    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: May 15, 2006                         ON2 TECHNOLOGIES, INC.

                                           By:       /s/ Bill Joll
                                                     ------------------
                                           Name:     Bill Joll
                                           Title:    President and CEO
{"company-data": {"conformed-name": "ON2 TECHNOLOGIES, INC.", "cik": "0001045280", "assigned-sic": "7372", "irs-number": "841280679", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-15117", "film-number": "06841059"}, "business-address": {"street1": "21 CORPORATE DRIVE SUITE 103", "city": "CLIFTON PARK", "state": "NY", "zip": "12065", "phone": "5183480099"}, "mail-address": {"street1": "21 CORPORATE DRIVE SUITE 103", "city": "CLIFTON PARK", "state": "NY", "zip": "12065"}, "former-company": [{"former-conformed-name": "ON2 TECHNOLOGIES INC", "date-changed": "20010615"}, {"former-conformed-name": "ON2COM INC", "date-changed": "19990622"}, {"former-conformed-name": "APPLIED CAPITAL FUNDING INC", "date-changed": "19971002"}]}
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): MAY 12, 2006

                             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, NEW YORK NY 12065
               (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)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)
|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
|_|   Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))
|_|   Pre-commencement communications pursuant to Rule 13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 OTHER EVENTS

      On May 12, 2006, the Company  entered into an agreement (the  "Agreement")
with Douglas A.  McIntyre,  the Company's  former  Chairman,  President and CEO,
effective as of May 2, 2006,  under which the parties agreed that the expiration
date of all vested  options (the  "Options") to purchase the common stock of the
Company,  par value $0.01 ("Common  Stock") held by Mr. McIntyre would expire on
September 30, 2006. The Agreement also contains a number of  restrictions on Mr.
McIntyre's  ability to exercise  the  Options  and sell  shares of Common  Stock
received upon such exercise,  including an undertaking  from Mr. McIntyre not to
sell, or cause to be sold, more than a fixed number of shares of Common Stock in
any one-week  period,  including by means of direct sales,  acquisitions  of put
options, or other transactions with the effect of a short transaction.
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: May 15, 2006                         ON2 TECHNOLOGIES, INC.

                                           By:       /s/ Bill Joll
                                                     ------------------
                                           Name:     Bill Joll
                                           Title:    President and CEO