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EX-31.1 - SARBANES-OXLEY 302 CERTIFICATION - PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICER. - SEEN ON SCREEN TV INC.exh31-1.htm
EX-32.1 - SARBANES-OXLEY 302 CERTIFICATION - PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICER. - SEEN ON SCREEN TV INC.exh32-1.htm

 
 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]
QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED July 31, 2011
 
 
OR
 
 
 
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number   000-21812

SEEN ON SCREEN TV INC.
(Exact name of registrant as specified in its charter)

NEVADA
(State or other jurisdiction of incorporation or organization)

4017 Colby Avenue
Everett, Washington   98201
(Address of principal executive offices, including zip code.)

425-367-4668
(Registrant’s telephone number, including area code)

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

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

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

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 32,682,000 as of July 31, 2011.



 
 

 
 

 

PART I B FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS





SEEN ON SCREEN TV INC.
(An Exploration Stage Company)
Notes to Financial Statements


July 31, 2011
(unaudited)



INDEX




Balance Sheets
F-1
   
Statements of Operations
F-2
   
Statements of Cash Flows
F-3
   
Notes to the Financial Statements
F-4 – F-9






 
-2-

 


SEEN ON SCREEN TV, INC.
Balance Sheet
 
         
   
July 31,
   
October 31,
   
2011
   
2010
 
 
unaudited
   
audited
ASSETS
         
Current assets:
         
Cash
$
25,768
 
$
(54,358)
Accounts receivable
 
-
   
-
Accounts receivable, related party
       
-
Inventory
 
563,866
   
596,525
Security deposit
 
2,045
   
2,045
Total current assets
 
591,679
   
544,212
 
         
Furniture and equipment
 
4,234
   
2,029
 
         
Total assets
$
595,913
 
$
546,241
 
         
 
         
LIABILITIES
         
Current liabilities:
         
Accounts payable and accrued taxes
$
99,486
 
$
57,386
           
Total current liabilities
 
99,486
   
57,386
 
         
Long term liabilities:
         
Accrued rent payable
 
68,753
   
48,773
Accrued compensation
 
988,000
   
700,000
Officer and shareholder payable
 
268,183
   
274,194
 
         
 
         
Total long term liabilities
 
1,324,936
   
1,022,967
 
         
Total liabilities
 
1,424,422
   
1,080,353
 
         
 
         
STOCKHOLDERS’ DEFICIT
         
Common stock, $0.001 par value, 195,000,000 authorized,
32,682,000 and 30,642,000 shares issued and outstanding
 
32,682
   
30,642
Preferred stock, authorized: 5,000,000 shares, par value $0.001,
no preferred shares outstanding
         
Capital in excess of par value
 
33,299,733
   
33,125,282
Deficit accumulated during the development stage
 
(34,160,924)
   
(33,690,036)
Total stockholders’ equity
 
(828,509)
   
(534,112)
Total liabilities and stockholders’ deficit
$
595,913
 
$
546,241

The accompanying notes are an integral part of these statements.
F-1

 
-3-

 


SEEN ON SCREEN TV, INC.
Statement of Operations
 
                     
 
                     
   
Three months
   
Three months
   
Nine months
   
Nine months
   
Ended
   
Ended
   
Ended
   
Ended
   
July 31,
   
July 31,
   
July 31,
   
July 31,
   
2011
   
2010
   
2011
   
2010
   
unaudited
   
unaudited
   
unaudited
   
unaudited
 
                     
Sales
$
24,934
 
$
170,258
 
$
170,835
 
$
951,084
 
                     
Cost of Sales
 
9,958
   
43,870
   
59,374
   
266,810
 
                     
Gross Profit
 
14,976
   
126,388
   
111,461
   
684,274
 
                     
General and administrative expenses:
                     
Wages and salaries
 
29,988
   
187,998
   
41,790
   
575,205
Taxes
 
1,388
   
11,915
   
3,483
   
35,913
Advertising and marketing
 
-
   
-
   
3,398
   
15,518
Legal and professional
 
241
   
-
   
5,913
   
11,791
Travel and entertainment
 
1,281
   
1,396
   
-
   
11,233
Rent
 
18,307
   
45,777
   
102,742
   
253,901
Other office and miscellaneous
 
(2,561)
   
17,847
   
4,588
   
68,867
Total operating expenses
 
48,644
   
264,933
   
161,914
   
972,428
(Loss) from operations
 
(33,668)
   
(138,545)
   
(50,453)
   
(288,154)
 
                     
Other income (expense):
                     
Interest income
                   
296
Interest (expense)
 
(241)
   
(1,948)
   
(917)
   
(8,965)
Income/(Loss) before income tax and extraordinary
items
 
(33,909)
   
(140,493)
   
(51,370)
   
(296,823)
Provision/(credit) for taxes on income
 
-
   
-
   
-
   
-
 
                     
Net loss before extraordinary items
 
(33,909)
   
(140,493)
   
(51,370)
   
(296,823)
Net loss on discontinued operations, net of tax
 
(105,964)
   
(1,411)
   
(419,519)
   
(5,011)
Net Income/(loss)
$
(139,873)
 
$
(141,904)
 
$
(470,889)
 
$
(301,834)
 
                     
 
                     
Basic earnings/(loss) per common share
$
(0.00)
 
$
(0.00)
 
$
(0.01)
 
$
(0.01)
 
                     
Weighted average number of shares outstanding
 
32,682,000
   
30,642,000
   
32,682,000
   
30,642,000












The accompanying notes are an integral part of these statements.
F-2

 
-4-

 


SEEN ON SCREEN TV, INC.
Statement of Cash Flows
 
         
 
         
   
Nine months
   
Nine months
   
Ended
   
Ended
   
July 31,
   
July 31,
   
2011
   
2010
 
 
unaudited
   
unaudited
Cash flows from operating activities:
         
Net income (loss) From Continuing Operations
$
(51,370)
 
$
(296,823)
 
         
Loss on discontinued operations
 
(419,519)
   
(5,011)
Adjustments to reconcile net (loss) to cash provided (used) by
developmental stage activities:
         
Change in current assets and liabilities:
         
Accounts receivable
 
-
   
-
Inventory
 
32,659
   
(94,410)
Other current assets
 
-
   
-
Accounts payable and accrued expenses
 
42,100
   
15,330
Net cash flows from operating activities
 
(396,130)
   
(380,914)
 
         
Cash flows from investing activities:
         
Purchase of fixed assets
 
2,205
     
Net cash flows from investing activities
 
2,205
   
-
 
         
Cash flows from financing activities:
         
Checks in excess of deposits
 
-
   
(20,345)
Proceeds from sale of common stock
 
172,081
   
272,903
Related party transaction
 
301,970
   
123,037
Net cash flows from financing activities
 
474,051
   
375,595
Net cash flows
 
80,126
   
(5,319)
 
         
Cash and equivalents, beginning of period
 
(54,358)
   
9,784
Cash and equivalents, end of period
$
25,768
 
$
4,465
 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS FOR:
         
Interest
$
-
 
$
-
Income taxes
$
-
 
$
-









The accompanying notes are an integral part of these statements.
F-3

 
-5-

 

SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 2011

Note 1 - Summary of Significant Accounting Policies

General Organization and Business

The Company was originally incorporated as “Naxos Resources Ltd.” (“Naxos” in British Columbia under the Canada Business Corporation act on May 23, 1986, with its principal place of business in Vancouver, BC.  In 2000, The Company moved its executive and administrative offices to San Francisco, CA, USA, effectively ending its business connections with Canada.

On October 15, 2001, the shareholders approved the domiciliation of the Company to the United States.  On October 29, 2001, Articles of Incorporation and Articles of Domestication were filed with the Secretary of State of Nevada and Naxos was “continued” as a Nevada Corporation under the name of Franklin Lake Resources, Inc.  On January 3, 2002, Industry Canada Issued a Certificate of Discontinuance, formally ending the Company’s legal ties to Canada.  On January 9, 2002, the name change to Franklin Lake Resources, Inc. became effective for trading purposes.

The Company was in the business of exploring for precious metals, developing processes for extracting them from the earth and if warranted, developing sites for possible exploration.  As of November 2008, the Company has refocused it operations and now operates as a retail store under the name On Screen TV, Inc.  The Company trades under the symbol SONT.

Basis of presentation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of and for the period ending October 31, 2010 and July 31, 2011.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of October 31, 2010 and July 31, 2011.

Property and Equipment

The Company values its investment in property and equipment at cost less accumulated depreciation.  Depreciation is computed primarily by the straight line method over the estimated useful lives of the assets ranging from three to five years.
F-4

 
-6-

 

SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 2011

Inventory

Inventory is recorded at lower of cost or market; cost is computed on a first-in first-out basis.  The inventory consists of imported goods.

Accounts receivable

Trade receivables are carried at original invoice amount.  Accounts receivable are written off to bad debt expense using the direct write-off method.  Receivables past due for more than 120 days are considered delinquent.  Management determines uncollectible accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions and by using historical experience applied to an aging of accounts.  Recoveries of trade receivables previously written off are recorded when received.

Fair value of financial instruments and derivative financial instruments

The Company’s financial instruments include cash, accounts receivable, accounts payable, and notes payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at October 31, 2010 and July 31, 2011. The Company did not engage in any transaction involving derivative instruments.

Federal income taxes

The Company accounts for its income taxes in accordance with Income Taxes Topic of the FASB ASC 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

Net Loss Per Share of Common Stock

Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive.

Internal Website Development Costs

Under ASC350-50, Website Development Costs, costs and expenses incurred during the planning and operating stages of the Company’s website are expensed as incurred.  Under ASC 350-50, costs incurred in the website application and infrastructure development stages are capitalized by the Company and amortized to expense over the website’s estimated useful life or period of benefit.


F-5

 
-7-

 

SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 2011

Impairment of Long-Lived Assets

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date.  The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.

Deferred Offering Costs

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed.  At the time of the completion of the offering, the costs are charged against the capital raised.  Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.

Deferred Acquisition Costs

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed.  At the time of the completion of the offering, the costs are charged against the capital raised.  Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.

Common Stock Registration Expenses

The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions.  As such, subsequent registration costs and expenses are reflected in the accompanying financial statements as general and administrative expenses, and are expensed as incurred.

Advertising:

The Company expenses all costs of advertising as incurred.  The advertising costs included in general and administrative expenses for the year ended October 31, 2010 and July 31, 2011 were $15,518 and $9,220, respectively

Recently Issued Accounting Pronouncements:

As of and for the years ended October 31, 2010 and July 31, 2011, the Company does not expect any of the recently issued accounting pronouncements to have a material impact on its financial condition or results of operations.

 
Note 2 - Uncertainty, going concern

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern. As of July 31, 2011, the Company had an accumulated deficit of $34,160,926. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
F-6

 
-8-

 

SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 2011

In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is contemplating conducting an offering of its debt or equity securities to obtain additional operating capital. The Company is dependent upon its ability, and will continue to attempt, to secure equity and/or debt financing. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.


Note 3 - Reclassification

The financial statements have been reclassified to show the discontinued operations for the period ending July 31, 2010.  The Company has adjusted sales, cost of sales and general and administrative expenses to show the net loss on the discontinued operation.  The net loss for the period ending July 31, 2010 was $5,011.


Note 4 - Related Party Loans

The Company has multiple related party transactions.  These related party transactions include accrued rent, accrued compensation and officer and shareholder payable.  These accounts are provided for working capital purposes, and is unsecured, non-interest bearing, and have no specific terms of prepayment.

For the year ended October 31, 2010, the Company has increased the balance of accrued rent by $8,000, increased accrued compensation by $400,000 and decreased officer and shareholder payable by $156,787.

The balance of these related party transactions for the year ended October 31, 2010 was $886,877.

For the nine months ended July 31, 2011, the Company has increased the balance of accrued rent by $19,890, increased accrued compensation by $288,000 and decreased officer and shareholder payable by $6,011.

The balance of these related party transactions on July 31, 2011 was $1,324,936.


Note 5 - Common Stock

On March 19, 2009, the Company filed Articles of Amendment to consolidate the issued and outstanding common shares of the Company at a 2-for-5 reverse split.  As a result, the issued and outstanding shares decreased from 20,960,325 to 8,384,130 shares of common stock.  All share amounts have been retroactively adjusted for all periods presented.





F-7

 
-9-

 

SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 2011

Note 6 - Income Taxes

We follow Accounting Standards Codification regarding Accounting for Income Taxes. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carryforward has been recognized, as it is not deemed likely to be realized.

The provision for refundable Federal income tax consists of the following:

   
2009
 
2010
Refundable Federal income tax attributable to:
       
Current operations
$
(155,680)
$
(108,012)
Less, Nondeductible expenses
 
-0-
 
-0-
 
-Less, Change in valuation allowance
 
155,680
 
108,012
Net refundable amount
 
-0-
 
-0-

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

   
2009
 
2010
Deferred tax asset attributable to:
       
 
Net operating loss carryover
$
155,680
$
263,692
Less, Valuation allowance
 
(155,680)
 
(263,692)
 
Net deferred tax asset
 
-
 
-

At October 31, 2010, an unused net operating loss carryover approximating $775,565 is available to offset future taxable income; it expires beginning in 2034.

Reconciliation between the statutory rate and the effective tax rate is as follows at October 31, 2009 and 2010:

Federal statutory tax rate
(35.0)%
Permanent difference and other
35.0%
Effective tax rate
0.0%


Note 7 – Discontinued Operations

During the period ending July 31, 2011 and 2010, the Company terminated operations of five out of their seven stores.  On July 31, 2010, the Company discontinued operations of their Factoria Store.  On July 31, 2011, the Company maintained their stores in Supermall and the Dulphin Mall, Florida.  The Company recorded a discontinuation loss of $419,519 for the nine months ending July 31, 2011 and $5,011 for the period ending July 31, 2010.



F-8

 
-10-

 

SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 2011

SEEN ON SCREEN TV, INC.
(An Exploration Stage Company)
Statement of Operations
 
                       
       
Open Stores
         
Open Stores
   
   
Three months
 
Three months
 
Discontinued
 
Nine months
 
Nine Months
 
Discontinued
   
Ended
 
Ended
 
Operation
 
Ended
 
Ended
 
Operation
   
July 31,
 
July 31,
 
July 31,
 
July 31,
 
July 31,
 
July 31,
   
2011
 
2011
 
2011
 
2011
 
2011
 
2011
   
unaudited
 
unaudited
 
unaudited
 
unaudited
 
unaudited
 
unaudited
 
                       
Sales
$
103,591
$
24,934
$
78,657
$
489,490
$
170,835
$
318,655
 
                       
Cost of Sales
 
41,371
 
9,958
 
31,413
 
189,730
 
59,374
 
130,356
 
                       
Gross Profit
 
62,220
 
14,976
 
47,244
 
299,760
 
111,461
 
188,299
 
                       
General and administrative
expenses:
                       
Wages and salaries
 
124,585
 
29,988
 
94,597
 
437,937
 
41,790
 
396,147
Taxes
 
5,767
 
1,388
 
4,379
 
9,453
 
3,483
 
5,970
Advertising and marketing
 
-
 
-
 
-
 
9,220
 
3,398
 
5,822
Legal and professional
 
1,000
 
241
 
759
 
16,045
 
5,913
 
10,132
Computer and internet
     
-
 
-
     
-
 
-
Travel and entertainment
 
5,323
 
1,281
 
4,042
 
17,379
 
-
 
17,379
Product development costs
     
-
 
-
     
-
 
-
Bank charges
     
-
 
-
     
-
 
-
Rent
 
76,056
 
18,307
 
57,749
 
229,285
 
102,742
 
126,543
Depreciation and amortization
     
-
 
-
     
-
 
-
Other office and
miscellaneous
 
(10,956)
 
(2,637)
 
(8,319)
 
50,413
 
4,588
 
45,825
Total operating expenses
 
201,775
 
48,567
 
153,208
 
769,732
 
161,914
 
607,818
(Loss) from operations
 
(139,555)
 
(33,591)
 
(105,964)
 
(469,972)
 
(50,453)
 
(419,519)
 
                       
Other income (expense):
                       
Interest income
                       
Interest (expense)
 
(318)
 
(77)
 
(241)
 
(917)
 
(917)
 
-
Income/(Loss) before taxes
 
(139,873)
 
(33,667)
 
(106,206)
 
(470,889)
 
(51,370)
 
(419,519)
 
                       
Provision/(credit) for taxes on
income
 
-
 
-
 
-
 
-
 
-
 
-
Net Income/(loss)
$
(139,873)
$
(33,667)
$
(106,206)
$
(470,889)
$
(51,370)
$
(419,519)


Note 8 – Subsequent Events

The Company is in negotiations with the officers and shareholders to convert their notes payable for common stock.  No formal agreement has been completed.





F-9

 
-11-

 

ITEM 2.           MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Overview

We were formed for the purpose of selling products in our retail stores located throughout the United States. We have our retail store in the state of Washington; in the state of Florida; and, in State of California.

We are also working on the ecommerce website to start wholesaling all over the country.

Our financial statements were prepared on a going concern basis, which assumes that we will be able to realize assets and discharge liabilities in the normal course of business. The ability to continue as a going concern is dependent on the Company’s ability to generate profitable operations in the future, to maintain adequate financing, and to achieve a positive cash flow. There is no assurance it will be able to meet any or all of such goals.

Results of Operations

Gross Profit

For the period ended July 31, 2011 and July 31, 2010 we had gross profits of $111,461and $684,274, respectively. This result’s from the fact that we had reduced the number of operating stores from ten stores as of July 2010 to two stores as of July 2011, one located in Auburn Washington, and another in Florida State.

Total Expenses

Our total cost and expenses which consist of payroll and related benefits, consulting expenses, marketing, general and administrative expenses, depreciation and amortization, and research and development expenses decreased by $810,514 from $972,428 for the period ended July 31, 2010 to $161,914 for the period ended July 31, 2011. The decrease in Costs and Expenses was due to closing stores.

Net Loss from Operations

Our operating net loss for the period ended July 31, 2011 was $50,453 compared to the loss of $288,154 for the period ended July 31, 2010. The $237,701 difference was due to the reduction in the number of operating stores.

Interest Expense

Interest expense and related financing fees for the period ended July 31, 2011 was $917 compared to $8,965 for the period ended July 31, 2010, a decrease of $8,048.  The decrease in interest expense and related financing fees was due to the reduction in the liabilities due to closing some stores.

Net Loss on Discontinued operations

During 2011 the company has closed many stores with total net loss on the discontinued operations of $419,516 on July 31, 2011. While on July 31, 2010 the total net loss on the discontinued operations was $ 5,011.

Net Loss

During the period ended July 31, 2011 and July 31, 2010 we incurred net losses of $470,889 and net loss of $301,834 respectively. The $169,055 difference was due to decrease in the General and administrative expenses.

 
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Liquidity and Capital Resources

As of July 31, 2011, we had a working capital deficit of $34,160,924, as compared to a working capital deficit of $33,690,036 as of July 31, 2010. In the past we have relied on sales of our equity to raise funds for our working capital requirements, as well as loans from our majority stockholder. We will need to raise additional capital in order to implement our business plan and will seek to sell additional equity and/or debt to accomplish this objective. There can be no assurance that we will be able to raise funds sufficient to carry out our business plan, or that if funds are available to us that they will be on acceptable terms.

Operating Activities

Cash used in operations of $396,130 during the period ended July 31, 2011 was primarily a result of our $470,889 net loss ($51,370 from Continuing Operating and $419,519 from discontinued operation)  reconciled with our net non-cash expenses relating Inventory, accrued interest, and Accounts payable and other accrued expenses. Cash used in operations of $380,914  during the period ended July 31, 2010 was primarily a result of our $301,834 net loss  ($296,823 from Continuing Operation and $5,011 from discontinued operation) reconciled with our net non-cash expenses relating to Inventory, accrued interest, and Accounts payable and other accrued operation expenses.

Investing Activities

During the period ended July 31, 2011 we had a $2,205 invested in fixed assets, whereas in July 31, 2010, we had no investing activities.

Financing Activities

During the period ended July 31, 2011, we had $474,051 in financing activities while in July 31, 2010 we had $375,595.

Seasonality Results

We do not expect to experience any seasonality in our operating results.

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements or financing activities with special purpose entities.

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and in accordance with the SEC’s accounting rules under Regulation S-X. All material inter-company accounts and transactions have been eliminated in consolidation.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. To prepare these financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates also affect our reported revenues and expenses. On an ongoing basis, management evaluates its estimates and judgment, including those related to revenue recognition, accrued expenses, financing operations and contingencies and litigation. Management bases its estimates and

 
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judgment on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements are set forth in Note 1 to our audited financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board (FASB) guidance regarding disclosures about fair value of financial instruments, approximate the carrying amounts presented in the accompanying consolidated balance sheets.

Inventory

Inventories consist of merchandise that is ready for sale to end-user customers. Inventories are recorded at the lower of average cost or market. In-bound freight-related costs from our vendors are included as part of the net cost of merchandise inventories. Other costs associated with acquiring, storing and transporting merchandise inventories are expensed as incurred. Our inventories are acquired and carried for retail sale and, accordingly, the carrying value is susceptible to, among other things, market trends and conditions and overall customer demand. We use our best estimates of all available information to establish reasonable inventory quantities. However, these conditions may cause our inventories to become obsolete and/or excessive. We review our inventories periodically for indications that reserves are necessary to reduce the carrying values to the lower of cost or market values. For all periods presented, the Company determined that no reserves were necessary.

Property and Equipment

Computer equipment, computer software and furniture and fixtures are stated at cost and depreciated on a straight-line basis over an estimated useful life of five years. Upon disposal, assets and related accumulated depreciation are removed from the accounts and the related gain or loss is included in results from operations.

Impairment of Long-Lived Assets and Other Intangible Assets

We evaluate the recoverability of long-lived assets with finite lives in accordance with ASC 350. Intangible assets, including purchased technology and other intangible assets, are carried at cost less accumulated amortization. Finite-lived intangible assets are being amortized on a straight-line basis over their estimated useful lives of five to ten years. ASC 350 requires recognition of impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value amount of an asset may not be recoverable. An impairment charge is recognized in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. A significant impairment of finite-lived intangible assets could have a material adverse effect on our financial position and results of operations. For all periods presented, we determined that no impairment charges were incurred.



 
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Revenue Recognition

Overview

We recognize revenue when persuasive evidence of an arrangement exists, we have delivered the product or performed the service, the fee is fixed or determinable and collection is reasonably assured. If any of these criteria are not met, we defer recognizing the revenue until such time as all criteria are met. Determination of whether or not these criteria have been met may require us to make judgments, assumptions and estimates based upon current information and historical experience.

The Company markets its products direct to customers and has developed retail pricing for all revenue generating products. In addition the Company may mark-down prices on an individual case basis to increase demand on our products, and increase our sales to boost up the market.

Advertising and Marketing Costs

The company expenses advertising and marketing costs as they are incurred.

Computation of (Loss) Per Share

Basic earnings (loss) per share is calculated by dividing the earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing the earnings (loss) by the weighted average number of common shares and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of incremental common shares issuable upon exercise of stock options, warrants and shares issuable upon the conversion of convertible notes. The dilutive effect of the convertible notes is calculated under the if-converted method. The dilutive effect of outstanding shares is reflected in diluted earnings per share by application of the treasury stock method. This method includes consideration of the amounts to be paid by the employees, the amount of excess tax benefits that would be recognized in equity if the instruments were exercised and the amount of unrecognized stock-based compensation related to future services.


ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 4.           CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are effective.

There was no change in our internal control over financial reporting during the quarter ended July 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



 
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PART II. OTHER INFORMATION

ITEM 1A.        RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 6.           EXHIBITS.

The following documents are included herein:

Exhibit No.
Document Description
 
 
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
 
 
101.INS
XBRL Instance Document.
 
 
101.SCH
XBRL Taxonomy Extension – Schema.
 
 
101.CAL
XBRL Taxonomy Extension – Calculations.
 
 
101.DEF
XBRL Taxonomy Extension – Definitions.
 
 
101.LAB
XBRL Taxonomy Extension – Labels.
 
 
101.PRE
XBRL Taxonomy Extension – Presentation.










 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 12th day of September, 2013.

 
SEEN ON SCREEN TV INC.
 
   
 
BY:
ANTOINE JARJOUR
   
Antoine Jarjour
   
President, Principal Executive Officer,
Treasurer, Principal Financial Officer, and
Principal Accounting Officer

















 
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EXHIBIT INDEX

Exhibit No.
Document Description
 
 
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
 
 
101.INS
XBRL Instance Document.
 
 
101.SCH
XBRL Taxonomy Extension – Schema.
 
 
101.CAL
XBRL Taxonomy Extension – Calculations.
 
 
101.DEF
XBRL Taxonomy Extension – Definitions.
 
 
101.LAB
XBRL Taxonomy Extension – Labels.
 
 
101.PRE
XBRL Taxonomy Extension – Presentation.













 
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