NOTES TO FINANCIAL STATEMENTS
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. On October 15, 2001, the shareholders approved the domiciliation of the Company to the United States. 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 its operations and now operates as a retail store under the name Seen On Screen TV, Inc. and purchases products from companies advertising on TV. The Company trades under the symbol SONT.
In February 2015, the Company closed its retail store and now operates primarily though internet sales and wholesale sales.
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 for the periods ended July 31, 2016 and October 31, 2015 and for the nine months ended July 31, 2016 and 2015.
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 July 31, 2016 and 2015. The Company has been and continues to be in overdraft situations.
Inventory
Inventory is recorded at the lower of cost or market value and is computed on a first-in first-out basis. Management determined that the net realizable value of inventory as of July 31, 2016 is zero.
Revenue Recognition
Revenue from the sale of goods is recognized when the following conditions are satisfied:
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The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
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The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
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The amount of revenue can be measured reliably;
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It is probable that the economic benefits associated with the transaction will flow to the entity; and
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The costs incurred or to be incurred in respect of the transaction can be measured reliably.
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SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
Fair value of financial instruments and derivative financial instruments
The Company's financial instruments include cash, 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 July 31, 2016 and October 31, 2015. 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.
Management has evaluated the tax positions taken on the Company's tax returns and concluded that the Company has taken no uncertain tax positions that require adjustment to the financial statements. The Company's income tax filings are subject to audit by various taxing authorities. The Company's tax returns are generally open to audit for the previous three years.
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.
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 nine months ended July 31, 2016 and 2015 were $20,509 and $1,068, respectively.
Recently Issued Accounting Pronouncements:
For the periods ended July 31, 2016 and October 31, 2015, 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. Working capital deficit amounted to $366,913 and $597,975 as of July 31, 2016 and October 31, 2015 respectively. As of July 31, 2016, the Company had an accumulated deficit of $39,027,716 and unpaid payroll tax liabilities of $169,819. The net loss for the nine months ended July 31, 2016 was $348,596. 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.
SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
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 - Related Party Transactions
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 are unsecured, non-interest bearing, and have no specific terms of repayment.
For the year ended October 31, 2015, the Company has decreased the balance of accrued rent by $8,950, increased accrued compensation by $338,554, increased officer and shareholder payable by $27,844 and decreased receivables from related entity by $7,696 since the year ended October 31, 2014.
For the period ended July 31, 2016, the Company has increased accrued compensation by $71,712, increased officer and shareholder payable by $286,061 since the year ended October 31, 2015.
Note 4 – Contingent Liabilities
In July 2013, the employee filed a claim with the State of California for unpaid wages. The State of California has placed a judgment against the Company for $37,574. The Company has presently recorded the amount they believe is owed to this former employee and is disputing the amount with State of California. During the year ended October 31, 2015 the State of California has increased the balance by $6,543 for additional interest and penalties. The balance of this note at July 31, 2016 was $48,960.
Note 5 - Common Stock
The beginning balance of the shares outstanding at November 1, 2013 was 47,076,523.
On January 10, 2014, the Company received $101,714 cash in exchange for 2,034,280 shares of common stock. The price per share was $0.05.
On January 10, 2014, the Company issued 7,700,000 shares of stock for services performed. The Company recognized a stock based compensation expense of $385,000. The price per share was $0.05.
On January 31, 2014, the Company received $12,250 cash in exchange for 245,005 share of common stock. The price per share was $0.05.
On April 30, 2014, the Company received $74,250 in exchange for 1,485,000 shares of common stock. The price per share was $0.05.
On October 13, 2014, the Company issued 1,562,500 share of stock. The Company has not received these funds and recorded this transaction as a stock subscription. The Company expects full payment once the S-1 is filed.
SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
The number of common stock shares outstanding at April 30, 2015 was 60,103,308.
The number of common stock shares outstanding at July 31, 2015 was 60,103,308.
On August 2015, the Company issued 27,500,000 shares for services to related party valued at $825,000. The Company also issued 7,372,650 shares to cancel debt valued at $221,179.50.
On September 2015, the Company issued 1,500,000 shares for
FMW Media Works Corp.
This issuance has increased the stock subscription receivable from $93,750 on October 31, 2014 to $173,750 on October 31, 2015.
On September 22, 2015, the Company
completed a stock dividend of 3 additional shares of common stock for each 1 (4.1) share of common stock outstanding. The number of outstanding shares after the stock dividend is 385,903,832 shares. The par value is $0.001 per share and unchanged.
As of August 27, 2015, the Company filed a certificate of amendment increasing the company's authorized common shares from 195,000,000 to 1,000,000,000 common shares.
The Company issued 2,325,581 shares for Premier Venture Partners, LLC pursuant to Conversion dated November 4, 2015 of the Notes payable. The conversion price was $0.00215.
In January 2016, the Company has entered into agreement with
Tony Reynolds to provide advisory services to the Company as a consultant. Also, the Company entered into an agreement with A Kick-In Crowd for the exclusive license to Buster's Backyard Bar-B-Q. The Company issued 8.3 million shares for Tony Reynolds and 15 million
shares for A Kick-in Crowd.
The Company issued 4 million shares to VoiceFlix for social marketing and 6 million shares to StockVest for marketing.
On March 27, 2016, the Company has entered into agreement with Scott Anthony Management, LLC referred to as "SAM", for the purpose of the commercial exploitation of "Golden Fit Watch". The Company issued 14,166,667 shares for SAM.
As of April 30, 2016, the Company issued 3,400,000 shares of common stock to Katherine Manfredi, 4,000,000 shares of common stock to Charles Carafoli, and 700,000 shares of common stock to Dennis B Furtado, pursuant to subscription agreement.
The Company issued 1,666,667 shares for Premier Venture Partners, LLC pursuant to Conversion dated May 19, 2016 of the Notes payable. The conversion price was $0.003.
Note 6 – Stock Option Plan
On July 31, 2014, the Company initiated a stock option plan for its employees, directors and officers. The plan has allocated 15,000,000 shares that can be granted up to 10 years. The option price will be determined by the Board of Directors but will not be less than the fair market value of stock on that specific date. The grant period will not exceed 10 years. Since inception, the Company has not issued any stock options.
Note 7 – Payroll Liabilities
As of July 31, 2016, the Company had incurred significant unpaid payroll liabilities. The Company has unpaid federal and state payroll taxes of $169,819. The Company is currently working with the State and Federal Government in setting up payment plans. The balance of these liabilities was $156,470 on October 31, 2015. As of October 31, 2015, the Company has signed an installment agreement with Department of Treasury - Internal Revenue Service and Department of Labor and Industry, to repay the amount owed.
Between May 1, 2016 and July 31, 2016, the Company had wage advance of $6,327. This amount was adjusted to wage expense in the fiscal year 2016.
SEEN ON SCREEN TV, INC.
NOTES TO FINANCIAL STATEMENTS
Note 8 – Subsequent Events
The Company has evaluated all events and transactions that occurred after July 31, 2016 up through the date these financial statements were available for issuance. Except as noted below, it has been determined that there is nothing further to report.
On August 1, 2016, the Company has entered into an agreement with The Eversull Group, Inc. (TEG) to provide advisory services as a consultant that will include an investor relations and shareholder relations strategy.