SEEN ON SCREEN TV INC. - FORM 10-Q

Attached files

file	filename
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 906 CERTIFICATION - CHIEF EXECUTIVE AND CHIEF 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 JANUARY 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: 32,264,000 as of January 31, 2011.

PART I B FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

SEEN ON SCREEN TV INC.

(An Exploration Stage Company)

Notes to Financial Statements

January 31, 2011

(unaudited)

INDEX

Balance Sheets	F-1

Statements of Operations	F-2

Statement of Stockholders Equity	F-3

Statements of Cash Flows	F-4

Notes to the Financial Statements	F-5 – F-8

-2-

Seen on Screen TV, Inc.

Balance Sheet

January 31 2011 and 2010

				1/31/2011		1/31/2010
Assets
Current Assets
	Cash and Cash Equivalents		$	(106,205)	$	(18,179)
	Accounts Receivable			-		-
	Inventory			570,582		581,318
	Security Deposits			2,045		2,045
Total Current Assets			$	474,495	$	565,184

Fixed Assets
	Equipment			2,029		2,029
	Accumulated depreciation			-
		Total fixed assets		2,029		2,029


Total Assets			$	476,524	$	567,213

Liabilities and Shareholders Equity
Current Liabilities
	Accounts Payable and accrued liabilities		$	350,761	$	253,788
	Deferred Gain on Sales of Equipment
	Advances from Stockholders			680,205		595,212
		Total Liabilities	$	1,030,966	$	849,000

Preferred stock, authorized: 5,000,000 shares: par value $.001, no preferred shares outstanding

Common stock, $.001 par value; authorized 195,000,000 shares; 32,264,273 issued and outstanding at January 31, 2011				32,264		29,384

Additional paid in capital				33,256,931		33,038,540
Net Income				(153,601)		22,643
Accumulated deficit				(33,690,036)		(33,372,354)
Total Shareholder’s Equity				(554,442)		(281,787)

Total Liabilities and Shareholders Equity			$	476,524	$	567,213

The accompanying notes are an integral part of these statements.

F-1

-3-

Seen on Screen TV, Inc.

Income Statement

For the quarters ended January 31, 2011 and 2010

				Quarter ended		Quarter ended
				January 31, 2011		January 31, 2010

Income
	Sales		$	295,983	$	565,573
	Cost of Goods Sold			125,880		156,490
	Gross Profit (loss)		$	170,103	$	409,083

Expenses
	General and Administrative			323,343		382,538
Other Income

		Net Loss	$	(153,240)	$	26,545
	Interest expense			361		3,900
Net Income (loss)			$	(153,601)	$	22,645

Weighted Average Common Stock Outstanding				30,949,560		25,385,250


Net Loss per Common Share				(0.0050)		(0.0050)

The accompanying notes are an integral part of these statements.

F-2

-4-

Seen on Screen TV, Inc.

Statement of Stockholders Equity

For the quarter ended January 31, 2011

	Preferred Stock		Common Stock		Additional	Accumulated	Total
	Shares	$	Stock Shrs	Stock $	Paid in Capital	Deficit	$
	5,000,000	0

Balance - October 31, 2009			26,884,130	26,884	32,916,040	(33,372,354)	(429,430)

Stock Sold for Cash			3,758,000	3,758	209,242		213,000

Net Income						(317,682)	(317,682)

Balance October 31, 2010			30,642,130	30,642	33,125,282	(33,690,036)	(534,112)

Stock sold for cash			1,007,143	1,007	70,764
Stock reclassed from subscriptions			615,000	615	60,885


Net Income						(153,601)

Balance - January 31, 2011			32,264,273	32,264	33,256,931	(33,843,637)	(534,112)

The accompanying notes are an integral part of these statements.

F-3

-5-

Seen on Screen TV Inc

Statement of Cash Flows

For the quarters ending January 31, 2011 and 2010

			1/31/2011		1/31/2010
			$		$
Cash Flows From Operating Activities
Net Loss			(153,601)		22,643
Adjustments to reconcile net loss to net cash used in operating activities:
	Amortization / depreciation		-		-
	Gain (loss) on sale of plant equipment				-
	Increase in Security Deposits		-
	Increases in Shareholders advances		(53,071)		(142,452)

Changes in operating assets and liabilities:
	Increase in fixed assets
	Increase in inventory		25,943		(111,891)
	Increase in accrued salaries and rent				102,000
	Increase in accounts payable and accrued liabilities		58,118		8,827

Net Cash Used in Operating Activities			(122,611)		(120,873)

Cash Flows used by Investing Activities
	Purchase of plant and equipment		-		-
	Sale of plant equipment		-		-
	Sale of water rights		-		-

Total Cash Flows Provided by (used) in Investing Activities			-		-

Cash Flows from Financing Activities
	Common Stock issued for unit of SOS Inc		-
	Common Stock issued for exercise of warrants				-
	Common Stock issued for cash		70,764		125,000
	Advances (repayments) from officers/directors/affiliates		-		-

Cash Flows Provided by Financing Activities			70,764		125,000

Net Increase (Decrease) in Cash			(51,847)		4,127

Cash at beginning of period			(54,358)		(22,306)

Cash at end of period		$	(106,205)	$	(18,179)

The accompanying notes are an integral part of these statements.

F-4

-6-

Seen on Screen TV, Inc.

Notes to the Financial Statements

For the quarter ended January 31, 2011

1. HISTORY

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

On October 15, 2001, the shareholders approved the redomiciliation 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. At the same time, a reverse split of the Company’s shares on the basis of one new share for each ten shares held also became effective and the Company received a new symbol, FKLR.

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 development. As of November, 2008 has changed to a retail store operation under the name Seen On Screen TV, Inc. SONT

2. BASIS OF PRESENTATION

These financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed.

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Accounting Methods

The Company recognizes income and expense based on the accrual method of accounting.

(b) 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 amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-5

-7-

Seen on Screen TV, Inc.

Notes to the Financial Statements

For the quarter ended January 31, 2011

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company has not adopted a policy regarding the payment of dividends and does not anticipate payments of dividends in the future.

(d) Basic and Dilutive Net Income (Loss) Per Share

Basic net income (loss) per share amounts is computed based on the weighted average number of shares outstanding in accordance with SFAS 128 “Earnings per Share.” Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes anti-dilutive and then only the basic per share amounts are shown in the report.

(e) Comprehensive Income

The Company adopted SFAS 130, “Reporting Comprehensive Income,” which requires inclusion of foreign currency translation adjustments, reported separately in its Statement of Stockholders’ Equity, in other comprehensive income. Such amounts are immaterial and have not been reported separately. The Company had no other forms of comprehensive income since inception.

(f) Stock Based Compensation

On November 1, 2006 the Company adopted SFAS 123, Share-Based Payments (SFAS 123R), which requires the measurement and recognition of compensation expense for all share-based awards made to employees and directors based on estimated fair values. In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin 107 (SAB 107) relating to SFAS 123(R) regarding the adoption of the provisions of SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R) using the modified prospective transition method, which requires the application of the accounting standards beginning in fiscal years ended after December 15, 2005.

(g) Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized when it is more likely than not, that such tax benefit will not be realized. On October 31, 2008, the Company had net operating losses to be carried forward in the amounts of approximately $32,896,871. The tax benefit of approximately $4,934,531 at October 31, 2008 has been fully offset by a valuation reserve because the use of the future benefit is doubtful since the Company has not generated taxable income since inception. The net operating loss expires starting 2008 through 2027.

F-6

-8-

Seen on Screen TV, Inc.

Notes to the Financial Statements

For the quarter ended January 31, 2011

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Due to the uncertainty regarding the Company’s future profitability, the future tax benefits of its losses have been fully reserved and no net tax benefit has been recorded in these financial statements.

(h) Fair Value of Financial Instruments

The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, tax credit recoverable, reclamation bond, accounts payable and accrued liabilities, amount due to a director and loan payable.

(i) Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements will have a material effect on its financial statements.

(j) Revenue Recognition

Revenue will be recognized on the sale and delivery of a product or the completion of a service provided.

(k) Statement of Cash Flows

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

(l) Financial and Concentration Risk

The Company does not have any concentration or related financial credit risk.

4. COMMON STOCK

The trading volume of the Company’s shares is low and the price per share is highly volatile based upon relatively small amounts of trading activity. The price of shares in sales by the Company for cash and the values of shares issued in other transactions are determined by private negotiations between the parties involved.

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 the Financial Statements

For the quarter ended January 31, 2011

5. RELATED PARTY TRANSACTIONS AND OPERATING LEASES

During the periods covered by this report the Company rented office space in Everett, Washington from a company owned by stockholders Roula and Antoine Jarjour at $2,000 per month. There is no formal lease at this time.

6. GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has incurred losses since its inception and has not yet been successful in establishing profitable operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Continuance of the Company as a going concern is dependent upon obtaining additional working capital through additional sales of the Company’s common stock. There is no assurance that the Company will be successful in raising this additional capital or achieving profitable operations. The Company is reorganizing the location and operating procedures for its stores to improve its profit margins.

The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties.

7. EXECUTIVE COMPENSATION

The Company does not have any formal plans or standard arrangements to compensate its directors for their services as directors, other than the occasional granting of stock options. No options have been awarded during the past three years and no options were outstanding at the end of the fiscal year.

The following table sets forth a summary of compensation received by each of our officers and directors who received compensation from the Company during the three months covered by this report.

Antoine Jarjour	$	45,000
Roula Jarjour		36,000
George Jarjour		15,000

F-8

-10-

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 one retail store in the state of Washington; three retail stores in the state of Florida; and, one retail store in State of California.

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 January 31, 2011 and 2010 the Company had gross profits of $170,103 and $409,083, respectively. This result’s from the fact that the Company had reduced its operating stores from 10 stores as of January 2010 to 5 as of January 2011.

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 $59,195 from $382,538 for the period ended January 31, 2010 to $323,343 for the period ended January 31, 2011. The decrease Operating Costs and Expenses was due to closing stores gradually during the last quarter of 2010.

Net Loss from Operations

Our operating net loss for the period ended January 31, 2011 was $153,250 compared to the gain of $26,545 for the period ended January 31, 2010. The $179,758 difference was due to the reduction in the number of operating stores.

Interest Expense

Interest expense and related financing fees for the period ended January 31, 2011 was $361 compared to $3,900 for the period ended January 31, 2010, a decrease of $3,540. The decrease in interest expense and related financing fees was due to the reduction in the liabilities due to closing some stores.

Net Loss

During the period ended January 31, 2011 and 2010 the Company incurred net losses of $153,601 and net gain of $22,645 respectively. The $179,785 difference was primarily due to decrease in the number of stores operating.

Liquidity and Capital Resources

As of January 31, 2011, we had a working capital deficit of $33,690,036, as compared to a working capital deficit of $33,372,354 as of January 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.

-11-

Operating Activities

Cash used in operations of $122,611 during the period ended January 31, 2011 was primarily a result of our $153,601 net loss reconciled with our net non-cash expenses relating to stock-based compensation expense, accrued interest, and depreciation and amortization expense. Cash used in operations of $120,873 during the period ended January 31, 2010 was primarily a result of our $22,643 net gain reconciled with our net non-cash expenses relating to operating activities.

Investing Activities

During the period ended January 31, 2011 and 2010, we had no investing activities.

Financing Activities

During the period ended January 31, 2011, we received $70,764 from the sale of restricted shares of common stock.

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 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.

-12-

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.

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.

-13-

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 were no changes in our internal control over financial reporting during the quarter ended January 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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.

-14-

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 20th day of November, 2012.

	SEEN ON SCREEN TV INC.

	BY:	ANTOINE JARJOUR
		Antoine Jarjour
		President, Principal Executive Officer, Treasurer, Principal Financial Officer, and Principal Accounting Officer

-15-

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.

-16-

SEEN ON SCREEN TV INC. - FORM 10-Q - November 21, 2012

Attached files

SEEN ON SCREEN TV INC. Reports