Attached files
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
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QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED July 31, 2011
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OR
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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
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[ ]
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Accelerated Filer
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[ ]
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Non-accelerated Filer
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[ ]
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Smaller Reporting Company
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[X]
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(Do not check if a smaller reporting company)
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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.
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FINANCIAL STATEMENTS
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SEEN ON SCREEN TV INC.
(An Exploration Stage Company)
Notes to Financial Statements
July 31, 2011
(unaudited)
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INDEX
Balance Sheets
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F-1
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Statements of Operations
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F-2
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Statements of Cash Flows
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F-3
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Notes to the Financial Statements
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F-4 – F-9
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-2-
SEEN ON SCREEN TV, INC.
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|||||
Balance Sheet
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|||||
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|||||
July 31,
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October 31,
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||||
2011
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2010
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||||
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unaudited
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audited
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|||
ASSETS
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|||||
Current assets:
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|||||
Cash
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$
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25,768
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$
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(54,358)
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Accounts receivable
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-
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-
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|||
Accounts receivable, related party
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-
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||||
Inventory
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563,866
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596,525
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|||
Security deposit
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2,045
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2,045
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|||
Total current assets
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591,679
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544,212
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|||
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|||||
Furniture and equipment
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4,234
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2,029
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|||||
Total assets
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$
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595,913
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$
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546,241
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|||||
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|||||
LIABILITIES
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|||||
Current liabilities:
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|||||
Accounts payable and accrued taxes
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$
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99,486
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$
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57,386
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Total current liabilities
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99,486
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57,386
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|||
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|||||
Long term liabilities:
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|||||
Accrued rent payable
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68,753
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48,773
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Accrued compensation
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988,000
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700,000
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Officer and shareholder payable
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268,183
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274,194
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|||||
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|||||
Total long term liabilities
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1,324,936
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1,022,967
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|||||
Total liabilities
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1,424,422
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1,080,353
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|||||
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STOCKHOLDERS’ DEFICIT
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|||||
Common stock, $0.001 par value, 195,000,000 authorized,
32,682,000 and 30,642,000 shares issued and outstanding
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32,682
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30,642
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Preferred stock, authorized: 5,000,000 shares, par value $0.001,
no preferred shares outstanding
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|||||
Capital in excess of par value
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33,299,733
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33,125,282
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Deficit accumulated during the development stage
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(34,160,924)
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(33,690,036)
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Total stockholders’ equity
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(828,509)
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(534,112)
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|||
Total liabilities and stockholders’ deficit
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$
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595,913
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$
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546,241
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The accompanying notes are an integral part of these statements.
F-1
-3-
SEEN ON SCREEN TV, INC.
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|||||||||||
Statement of Operations
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|||||||||||
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|||||||||||
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Three months
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Three months
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Nine months
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Nine months
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||||||||
Ended
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Ended
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Ended
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Ended
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||||||||
July 31,
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July 31,
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July 31,
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July 31,
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||||||||
2011
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2010
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2011
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2010
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||||||||
unaudited
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unaudited
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unaudited
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unaudited
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||||||||
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|||||||||||
Sales
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$
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24,934
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$
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170,258
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$
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170,835
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$
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951,084
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|||||||||||
Cost of Sales
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9,958
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43,870
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59,374
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266,810
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|||||||
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|||||||||||
Gross Profit
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14,976
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126,388
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111,461
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684,274
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General and administrative expenses:
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Wages and salaries
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29,988
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187,998
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41,790
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575,205
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Taxes
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1,388
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11,915
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3,483
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35,913
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|||||||
Advertising and marketing
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-
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-
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3,398
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15,518
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|||||||
Legal and professional
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241
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-
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5,913
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11,791
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|||||||
Travel and entertainment
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1,281
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1,396
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-
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11,233
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|||||||
Rent
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18,307
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45,777
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102,742
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253,901
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|||||||
Other office and miscellaneous
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(2,561)
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17,847
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4,588
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68,867
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|||||||
Total operating expenses
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48,644
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264,933
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161,914
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972,428
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(Loss) from operations
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(33,668)
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(138,545)
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(50,453)
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(288,154)
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Other income (expense):
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Interest income
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296
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Interest (expense)
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(241)
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(1,948)
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(917)
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(8,965)
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|||||||
Income/(Loss) before income tax and extraordinary
items
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(33,909)
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(140,493)
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(51,370)
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(296,823)
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Provision/(credit) for taxes on income
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-
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-
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-
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-
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|||||||
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|||||||||||
Net loss before extraordinary items
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(33,909)
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(140,493)
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(51,370)
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(296,823)
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Net loss on discontinued operations, net of tax
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(105,964)
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(1,411)
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(419,519)
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(5,011)
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Net Income/(loss)
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$
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(139,873)
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$
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(141,904)
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$
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(470,889)
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$
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(301,834)
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|||||||||||
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|||||||||||
Basic earnings/(loss) per common share
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$
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(0.00)
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$
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(0.00)
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$
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(0.01)
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$
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(0.01)
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|||
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|||||||||||
Weighted average number of shares outstanding
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32,682,000
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30,642,000
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32,682,000
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30,642,000
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The accompanying notes are an integral part of these statements.
F-2
-4-
SEEN ON SCREEN TV, INC.
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|||||
Statement of Cash Flows
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|||||
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|||||
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|||||
Nine months
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Nine months
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||||
Ended
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Ended
|
||||
July 31,
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July 31,
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||||
2011
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2010
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||||
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unaudited
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unaudited
|
|||
Cash flows from operating activities:
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|||||
Net income (loss) From Continuing Operations
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$
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(51,370)
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$
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(296,823)
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|||||
Loss on discontinued operations
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(419,519)
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(5,011)
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Adjustments to reconcile net (loss) to cash provided (used) by
developmental stage activities:
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|||||
Change in current assets and liabilities:
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|||||
Accounts receivable
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-
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-
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|||
Inventory
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32,659
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(94,410)
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|||
Other current assets
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-
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-
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Accounts payable and accrued expenses
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42,100
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15,330
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Net cash flows from operating activities
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(396,130)
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(380,914)
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|||||
Cash flows from investing activities:
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|||||
Purchase of fixed assets
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2,205
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Net cash flows from investing activities
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2,205
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-
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|||||
Cash flows from financing activities:
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|||||
Checks in excess of deposits
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-
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(20,345)
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Proceeds from sale of common stock
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172,081
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272,903
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Related party transaction
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301,970
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123,037
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Net cash flows from financing activities
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474,051
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375,595
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Net cash flows
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80,126
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(5,319)
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|||
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|||||
Cash and equivalents, beginning of period
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(54,358)
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9,784
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Cash and equivalents, end of period
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$
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25,768
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$
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4,465
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|||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS FOR:
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|||||
Interest
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$
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-
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$
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-
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Income taxes
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$
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-
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$
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-
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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.
-12-
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
-13-
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.
-14-
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.
-15-
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.
|
-16-
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
|
-17-
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.
|
-18-