ITEM 1. BUSINESS.
Background
Seen on Screen TV Inc. (“Company” “we” or “us”), formerly Franklin Lake Resources Inc., was an exploration stage mining company with no ore reserves or mining operations. Our activities to date have been, and our current activities are, limited to searching for material from which we may be able to extract precious minerals and designing a process for profitable extraction. There is no assurance that commercially viable mineral deposits exist on our property, and further exploration will be required before a final evaluation as to the economic and legal feasibility of our plans can be made. Franklin Lake 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, we moved our executive and administrative offices to South San Francisco, California, effectively ending our business connections in Canada. 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 Franklin Lake Resources Inc. 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 trading symbol, FKLR. The Company is now a retail store company.
Exploration Stage Company
We are a company in the “exploration stage”, as the term is defined in the SEC’s Industry Guide No. 7 (Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations). Industry Guide 7 defines exploration stage companies to include “all issuers engaged in the search for mineral deposits (reserves) which are not in either the development stage or the production stage. Development stage companies are those engaged in preparing for extraction of mineral reserves that have been proved to be commercially mineable. Production stage companies are those engaged in the actual exploitation of commercial reserves. As of the date of this report, we have not established that minerals exist on our property of a type and in a quantity and concentration that would warrant commercial mining. There can be no assurance that commercially viable mineral deposits will be found to exist on our properties, or that we will be able to design a commercially viable process to extract the precious metals.
As an exploration stage company, we are not in a position to fund our cash requirements through our current operations. Further, we believe that, in general, junior resource companies such as SEEN ON SCREEN have a difficult time raising capital. (See Finances, immediately below)
Finances
Recently, we have been able to raise a limited amount of capital through exercise of warrants of our equity stock. Of all the money raised in the past two years, however, approximately 88 percent has come from the personal resources of Father Gregory Ofiesh, former CEO and a director. We have no assurance that Father Ofiesh will be able or willing to continue to make additional investments in the Company. If he cannot or does not do so, and if we are unable to obtain funds from another investor, the Company may not be able to continue in business and the stockholders may lose the value of their common stock in the Company.
During our fiscal year ended October 31, 2008, we issued a total of 1,170,232 shares of our common stock (735,232) by the exercise of warrants), all for cash @ $.10 per share and (435,000) for services @ $.10 per share.
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Staffing
As of October 31, 2008, besides its four executive officers (only one of which works full time), the Company employed one part-time employee, who works at our Amargosa facility. We believe our relationship with our employees is good.
Regulation and Licensing
As a publicly held corporation, we are required to file reports with the SEC in addition to other federal and state agencies. Principal among these are the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K; all such reports were filed as required for the period covered by this report.
Our exploration activities are subject to various laws and regulations governing prospecting, labor standards, occupational safety and health, waste disposal, protection and reclamation of the environment, protection of endangered and protected species, toxic substances and other matters. In the future, we may be subject to clean up liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and other federal and state rules that establish cleanup liability for the release of hazardous substances. Further, amendments to current laws and regulations governing operations and activities of companies involved in mineral exploration are actively considered from time to time and could have a material adverse impact on us.
We do not believe we qualify as a solid waste generator under the Resource Conservation and Recovery Act (“RARA” --formerly the Hazardous Waste Disposal Act), due to the small quantities of corrosive materials we handle. (We dispose of the corresponding small amounts of waste we currently create in our laboratory by delivery to a company permitted by the U.S. EPA and the State of Nevada to treat and dispose of hazardous wastes.) However, if we are able to begin mining operations, we may incur material costs in disposing of the waste thereby generated.
The state of Nevada imposes regulations on mining companies and other producers of hazardous waste and environmental pollutants. We are advised by our environmental management consultants that our current level of operations does not invoke any state compliance issues beyond the need to submit plans of our test facility and proposed operations to the State Division of Environmental Protection for review. We do not expect to incur a material expense in complying with state requirements, unless or until we advance to the development or production stage.
We have obtained the necessary permits or exemptions for exploration work performed to date, and will continue to seek such permits in the future wherever required. To date, we have not experienced any material adverse economic effects as a result of complying with applicable laws relating to the protection of the environment, but there can be no assurance that it will not suffer such adverse effects in the future. If and when we are able to commence production, such issues will become more complex and costly to deal with.
Environmental and other laws and regulations change periodically. We cannot determine the impact of future changes in such laws and regulations on our operations or future financial position. We believe the Company is currently in substantial compliance with all applicable environmental laws and regulations. If we are not in compliance with any such law or regulation, we may be subject to fines, clean-up orders, restrictions on operations, or other penalties.
Competition
The business of mineral exploration is highly competitive and tends to be dominated by a limited number of major mining companies. Although we do not compete directly against any particular firms for sales or market share, many of the human and physical resources we may require - such as engineering and other technical professionals, skilled equipment operators, and managers, as well as extractive and metallurgical processes and equipment -- are also sought by companies with substantially greater financial means than we possess, which places us at a competitive disadvantage in obtaining such resources. Accordingly, we cannot be certain that we will be able to obtain the human and physical resources we may need from time to time or to obtain them at an affordable cost.
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Other
We have entered into a letter of intent to acquire all the assets of Seen on Screen TV (“SSTV”) solely in exchange for its stock. Antoine Jarjour, the sole owner of SSTV, will become chief executive of the company and will own approximately 2/3 thirds of its common stock. Existing FLKR stockholders will retain the remaining 1/3. SSTV is a retailer that owns and operates a small chain of stores in Washington and a wholesaler that sells products to stores using that name but owned by others. On October 6, 2008 we entered into an asset purchase agreement with Antoine Jarjour and Roula Jarjour, husband and wife, wherein we agreed to purchase certain assets from Mr. and Mrs. Jarjour in exchange for 17,000,000 post reverse split shares of common stock. On November 13, 2008, we amended our articles of incorporation and changed our name from Franklin Lake Resources Inc. to Seen on Screen TV Inc. We also amended our articles of incorporation to increase our authorized capital to 200,000,000 shares comprised of 195,000,000 shares of common and 5,000,000 shares of preferred stock, each with a par value of $0.001 per share. On November 19, 2008, we amended the foregoing agreement to revise the list of assets to be acquired by us. On January 10, 2010, we rescinded the asset purchase agreement we entered on October 6, 2008 as amended on November 19, 2008 with Antoine Jarjour and Roula Jarjour, husband and wife. Mr. and Mrs. Jarjour returned the 17,000,000 shares of common stock they received as consideration for the transaction. The transaction was rescinded as a result an inability to obtain an unqualified audit opinion after the conclusion of the transaction. We intend to review the entire relationship with Mr. and Mrs. Jajour in order to determine if there is an alternative way to proceed with a continuing business relationship with Mr. and Mrs. Jarjour.
ITEM 1A.
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 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
ITEM 2. PROPERTIES.
We hold interests in three properties, referred to as the Franklin Lake site, the Amargosa Facility (formerly known as the Farm), and the South San Francisco office.
Franklin Lake Site
Franklin Lake is a dry lake in Inyo County, California. The lake bed, called the “playa,” and the surrounding area is the ground on which the Company is conducting its exploration efforts. Most of the land in the area, and all of the land on which our current claims are located, is owned by the U.S. Government and managed by the Bureau of Land Management (“BLM”). In our annual report for Fiscal Year Ended October 31, 2000, we reported ownership of 408 placer claims, covering approximately 8,000 acres. The claims entitle us, subject to restrictions (including a requirement that we apply to various federal and state authorities for permission to undertake most of the specific activities that will be necessary for us to accomplish our purposes), to explore for precious metals and other minerals, and to extract them if we determine it would be feasible to do so. During the following year, we abandoned the 408 claims and, in association with seven other persons, immediately restaked substantially the area as covered by the 408 claims as 58 placer association claims. A claim is established by filing a document describing the land covered by the claim with the BLM and recording it with the county in which the land is located. Such filing and recording do not protect us against any other claim to the same land that may have been filed earlier or otherwise assure us that the claim is valid. We did not have a title search on the 408 claims and we have not had a title search on the placer association claims, nor have we obtained a legal opinion on the validity of our specific placer association claims.
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The Franklin Lake property lies in the Amargosa Valley in the eastern portion of the Death Valley Quadrangle, near the border with Nevada. Access is from State Highway 127 via approximately three miles of unpaved road, and we believe the road to be adequate for the foreseeable future. The playa consists of alternating layers of sand, gravels and clays deposited by run-off from the mineralized Bare and Yucca Mountains and the Western California Furnace Creek Mountains, trapped by the natural damming effect of Eagle Mountain in the southeast.
Currently, the property is dry, generally flat, and in its natural state. There has been no significant activity on the property other than test drilling and surface sampling. Power, when needed, is supplied by portable generators. There is no equipment or infrastructure on the property.
Historical Drilling and Assaying Activities
During the period from 1991 to 1997, several test drillings and assays conducted on the Franklin Lake sediments suggested that they contained anomalously high levels of precious metals. The tests, however, were not performed using a chain-of-custody or other method to ensure reliability.
On July 9, 1998, Alfred H. Knight North America Ltd., of Spartanburg, SC, issued a Certificate of Assay showing the results of tests of ten samples, each of which showed gold of less than 1 part per million.
On September 1, 1998, Sanguinetti Engineering Ltd., of Vancouver, BC, issued a Summary Report on the 1998 Auger Drilling Program at the Franklin Lake Property, Inyo County, California. In the Summary, it states (in part):
“Gold and silver values have been reported in sediments of the playa and brines in underlying aquifers. Previous analytical methods which have produced significant values have been from non-certified laboratories or by using non-standard, proprietary methods or “black box” technology. To date, there has been no documented gold or silver production from the property. Assay and analytical results by standard repeatable methods have been negative or inconclusive.”
The summary further states:
“Naxos [FKLR’s predecessor] first acquired an interest in 1989. Prior to that time, the area had been held by different individuals and companies which reported varying amounts of gold, silver and platinum group metals in both brines and sediments. The results of their testing, with values exceeding 1 ounce per ton of both gold and silver, were most encouraging, however, analytical methods used to produce these high values were always non-standard. Between 1989 and 1998 Naxos carried out numerous exploration programs and funded considerable research in trying to determine if gold and silver were present and could be economically extracted from materials at Franklin Lake.”
And, the summary concludes: “No further work or expenditures are recommended for the Franklin Lake property.”
Exploration Difficulty and Change of Strategy
When new management took office early in the year 2000, it was generally aware of the company’s inability to meet its current obligations and its failure to find precious metals, but it was not aware of the poor reports it had received from engineering and assay firms. Recognizing the need for immediate action on both fronts, and in an attempt to gain the maximum benefit at the lowest cost, the new management decided to:
·
conduct all future exploration and sampling on the site internally;
·
limit the use of outside laboratories;
·
minimize the use of outside consultants; and
·
make a new determination of the areas of the property to explore and the sampling to be done,
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Despite concentrated effort, we have been unsuccessful in achieving satisfactory assays on the silica material from our Franklin Lake property.
During the fiscal years ended October 31, 2004, and October 31, 2005, we reduced testing on the Franklin Lake silica material. In 2004, we discussed a strategic alliance agreement with MR3 Systems, Inc., a company which claimed expertise in the extraction, separation, recovery, and purification of precious and base metals from various solutions. Although it had a limited record of commercial success in the field, it had personnel with relevant training and experience and it had recently entered into a contract with an agency of the U.S. Government which, we believed, added substantially to its credibility. On November 30, 2004, we entered into a more limited metals extraction agreement under which MR3 Systems would construct a turn-key processing system in our existing facility at Amargosa Valley, Nevada. Subsequent to the end of the fiscal year, we sent a notice to MR3 that we were terminating the agreement effective immediately for its failure to meet its obligations. As of January 31, 2008, we had not received any notice from MR3 that it disagrees with any of the facts or conclusions stated in our notice.
During 2005, we also began to look into the possibility of using our facility as a toll station that is doing contract processing of material for other mining and exploration companies. We have been making incremental improvements to the equipment and the facility for several years and we believe we can provide this service effectively. In 2005, we obtained one contract for this service and received $4,585 for our work, but we have not done any similar business since then (nor have we made an effort to solicit such business), and we cannot predict whether we will be able to find a market for the service and to do it profitably.
The Amargosa Facility
The Amargosa facility, formerly referred to as the Farm, is located in Amargosa Valley, Nevada (approximately 7.5 miles from Franklin Lake) and is owned by Father Gregory Ofiesh, former CEO and a director. The portion used by the company covers 8 acres surrounded by a cyclone fence. It contains a warehouse type building, two operations buildings (including laboratory and pilot plant equipment), a garage, an office, and two mobile homes used as living quarters for persons working at the site. Until April 1, 2002, Father Ofiesh had allowed the Company limited use, primarily for storage, without charge. In the spring of 2002, in view of the expiration of the lease of our primary laboratory and pilot plant at Death Valley Junction and the acquisition of plant equipment from Xenolix, we determined that our equipment should be combined into one facility, and further determined that the Amargosa Facility would be an excellent location. (See “Item 12 - Certain Relationships and Related Transactions” below.)
We moved the equipment from the company’s previous facility at Death Valley Junction and the equipment acquired from Xenolix Technologies (located in Winslow, Arizona) to the facility and assembled it, along with the equipment already there, into a single processing facility. We believe that the plant we have assembled will allow us to process several tons of material a day.
During 2006, we sold all the equipment at the facility to Father Ofiesh. This was done in consideration of his continuing to provide capital to the company, and specifically for the payment of $50,000, as the purchase price. As part of that transaction, Father Ofiesh agreed to lease the equipment back to the company for $1.00 per month, through the end of the lease on the property, March 31, 2008. Father Ofiesh has offered to extend the lease for six months upon the same terms and conditions as are in the current lease.
Water Rights
In Nevada, a property owner does not have an unlimited right to draw water from a well on his property. To draw water for commercial use generally requires a property owner to purchase additional rights from other property owners. Uncertain of its future needs, but wanting to protect itself and to be sure it had adequate water for whatever future operations it might have, on May19, 2006, the Company entered into contract to purchase 10 acre feet of water, that is, the right to draw 10 acre feet of water annually from a well on the Company’s property, at a price of $2,500 per acre foot, a total of $25,000.The contract provided for a down payment of $6,250 (25 percent of the total price) upon signing and payment of the balance of $18,750 on an unspecified date after January 2, 2007.
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After the end of the fiscal year, the Company determined that it would not need all 10 acre feet of water for at least the first few years of its operations, and, at its request, the seller agreed to revise the purchase contract. The parties did so by an amendment dated December 27, 2006, under which the Company would purchase only 2 acre feet of water, but at a price of $3,125 per acre foot, a total purchase price of $6,250. This amount was exactly equal to the amount paid as a down payment, and so no further payment was due. At the same time, the Company was relieved of its obligation to pay $18,750 in January. A quitclaim for the water rights was recorded in the office of the Recorder of Nye County, Nevada, on January 11, 2007. As a result of this transaction, the Company had an asset, water rights, for which it had paid $6,250, without any related liability.
South San Francisco Office
We use space in a building owned by our President for our executive and administrative offices in South San Francisco, California, and (see “Item 12 - Certain Relationships and Related Transactions below.)
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of our security holders during the most recent quarter.
PART II
ITEM 5.
ITEM 5.
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our stock is currently quoted on the Pink Sheets As of October 31, 2008, we had 20,960,325 shares of common stock outstanding. There were 857 record owners and approximately 2,650 beneficial owners of our common shares.
The following tables set forth the high and low bid prices of our common stock for each of the periods indicated:
Dividend Policy
Holders of our common stock are entitled to receive such dividends as our board of directors may declare from time to time from any surplus that we may have. However, we have not paid any cash dividends since our inception, and it is highly unlikely that we will pay cash dividends on the common stock in the foreseeable future.
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Recent Sales of Unregistered Securities
The following securities were sold by officers of the Company without the use of an underwriter. In effecting the sales, we relied on the exemption authority provided by Section 4(2) of the Securities Act of 1933, as amended, relating to sales not involving any public offering. We believe that all such sales were made by our former president and our director, Fr. Ofiesh, in private, negotiated transactions without any advertising, public announcements or general solicitation. The purchasers of the shares represented themselves in writing to be, and the company believes them to be, members of one or more of the following classes:
The shares are subject to the resale provisions of Rule 144 and may not be sold or transferred without registration except in accordance with Rule 144. Certificates representing the securities bear a legend to that effect. The shares were offered and sold by our former CEO and a director, Fr. Gregory Ofiesh, who in doing so relied on exemptions from the broker-dealer registration requirements of the Exchange Act provided under Rule 3a4-1.
Father Ofiesh:
a.
Is not subject to a section 3(a)(39) disqualification;
b.
Is not compensated directly or indirectly on the basis of transactions; and
c.
Is not an associated person of any broker or dealer.
In each instance, Fr. Ofiesh’s handling of the stock transactions was strictly incidental to his primary duties as former CEO and a director, and has not involved participation in more than a single offering in any 12-month period.
(1)
Issued for services
(2)
Pursuant to exercise of a warrant
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
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.
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ITEM 7.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
The following discussion and analysis should be read in conjunction with our audited financial statements for the fiscal year ended October 31, 2008.
Introduction
The Company is an exploratory stage mining company, that is, we have claims on land owned by the United States Government, but we have not proven that they contain precious metals having commercial value. Both internally and using independent laboratories, we have conducted numerous tests on the silica which has been the raw material on which our efforts have focused, but we have not been able to devise a process that will achieve our objectives. In our Report for the fiscal year ended October 31, 2005, we stated: “In our Report for fiscal year ended October 31, 2004, we said that if we were not successful by the end of the fiscal year ending October 31, 2005, it is likely that we would abandon our efforts with respect to this property. Whether we would do that or not, we may explore other alternatives, including filing claims on other property, entering into contracts with other businesses whose resources may be helpful to us, or using the Amargosa facility to do processing for third parties. Regardless which situation develops, as stated elsewhere in this Report, there can be no assurance that we will be successful and that we will be able to continue in business.” [quotation marks added above to define the quote from 2005 -- following paragraph added in 2006]
We were not successful by the end of the fiscal year ended October 31, 2005, nor have we been since then, nor have we pursued seriously any of the other options just described. In general, those alternatives seemed too expensive in view of our limited financial resources and/or too difficult in view or our limited personnel. Instead, we decided to continue our existing efforts. In this regard, although we have not yet been successful nor do we have any assurance that we ever will be, we were encouraged by informal comments to our officers and directors by Richard Kunter (a director and vice president - research and development). We have recently sent samples, larger than we have previously sent, to three independent laboratories for analysis. The results of these tests will probably play a major role in determining our future plans.
Results of Operations for Fiscal Year Ended October 31, 2008
With respect to the Company’s short term liquidity, our “Current Ratio” (current assets divided by current liabilities) as of October 31, 2008 was .40, compared with 1.4 as of October 31, 2007. The current ratio is a commonly used measure of a company’s liquidity. Our management believes, however, that with a company still in the exploratory stage, the ratio may not be as significant as with an ongoing business either in comparing the Company with others in the industry or comparing one period with another. In analyzing our liquidity, we look at actual dollars; we compare our cash on hand and other short-term assets with our bills payable and other short-term obligations. Since our only source of funds has been from the periodic sale of securities, when we determine that our short-term assets will not meet our current and anticipated obligations for a sufficient period of time, we must attempt to raise additional capital. If we are not able to raise adequate capital and to do so in a timely manner, we may not be able to continue in business.
In terms of our long-term liquidity, we expect to continue to depend almost exclusively on equity financing until such time, if ever, as we are able to produce and sell precious metals in a quantity that will provide the needed funds.
At October 31, 2008, we had working capital in the amount of $(100,826), compared with $(206,775) at October 31, 2007.
During fiscal year 2008, the Company incurred mineral exploration costs of $132,737 (including depreciation and amortization of $2,604) on our Franklin Lake properties. During fiscal year 2007, we incurred such costs of $104,364 (including depreciation and amortization of $235). We cannot predict our exploration costs over the next twelve months, because of the uncertainty over our future activities.
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During neither the fiscal year ended October 31, 2008, nor the prior year, did the Company have any revenue from operations. In 2005, it had revenue from operations of $4,585, all from operating the Amargosa facility as a toll station, processing material for other parties (See Plan of Operation for Fiscal Years 2006 - 2007.) This was the first year since the company’s inception that it had any revenue from operations.
The operating loss for fiscal year 2008 was $206,341 or $0.03 per share, compared to an operating loss of $351,043, or $0.05 per share, for the year 2007. The weighted average number of shares in the per-share calculations was 828,664 in fiscal year 2008, and 7,177,231 for 2007.
As of October 31, 2008, the Company’s cash balance was $41,114, compared to $33,688 on October 31, 2007.
To date, largely because we have engaged only in exploration and not in production, we have not suffered any losses or incurred any liabilities related to environmental issues. If and when we are able to begin production, which is highly uncertain, we will make an evaluation to determine whether cash reserves should be established or other steps taken to minimize possible adverse consequences due to environmental matters. Such evaluation will consider, among other factors, the land or other sources from which the raw materials are taken and the land upon which the processing is done, the nature of any chemicals used in the processing, and the nature, extent, and means of disposition of the residue from the processing.
Since our inception, we have funded our activities by issuing stock. Although we will continue periodically to seek external sources of funds, there can be no assurance that we will be able to raise sufficient capital to fund our operations. In the past two years, the company has raised a little over $292,558 through the issuance of new shares; 100 percent of that amount came directly from Father Ofiesh (see Finances, above). If we do raise equity capital, depending on the number of shares issued and the issue price of the shares, current shareholders’ interests may be diluted.
The Company’s consolidated financial statements were prepared on a going concern basis, which assumes that the Company 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.
Plan of Operation for Fiscal Year 2008-2009
During the fiscal year ended October 31, 2008, the Company substantially completed its Amargosa facility and it is now ready to operate as a pilot plant to process material from the playa. It should also, possibly with minor modifications, be able to process other material for third parties.
As last year, we are continuing to search for another party or parties which will have financial resources or other assets, technology, and personnel complementary to ours, with which we can joint venture in order to increase our chances of being able to find and extract precious metals from the playa. During 2008, we were not successful in this effort and, because of financial, technical, and other difficulties, and there is no assurance that we will be successful in 2009.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
We are a smaller reporting company as defined in Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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ITEM 8.
ITEM 8. FINANCIAL STATEMENTS.
SEEN ON SCREEN TV, INC.
(Formerly Franklin Lake Resources, Inc.)
(An Exploration Stage Company)
October 31, 2008
INDEX
Report of Independent Auditors
Balance Sheets
Statements of Operations
Statements of Cash Flows
Statement of Stockholders’ Equity (Deficit)
-
Notes to the Financial Statements
-
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Seen on Screen TV, Inc. (formerly Franklin Lake Resources, Inc.
(An Exploration Stage Company)
We have audited the accompanying balance sheets of Seen on Screen TV, Inc. (formerly Franklin Lake Resources, Inc.) (An Exploration Stage Company) as of October 31, 2008 and 2007, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended October 31, 2008. Seen on Screen’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of the Company for the period from the date of inception on May 23, 1986 to October 31, 2008 were unaudited.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Seen on Screen TV, Inc. as of October 31, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the two-year period ended October 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 10 to the financial statements, the Company has incurred losses since inception and has not yet been successful in establishing profitable operations, raising substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 10. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
MADSEN & ASSOCIATES CPA’S, INC.
Madsen & Associates CPA’s, Inc.
Salt Lake City, Utah
August 30, 2011
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SEEN ON SCREEN TV INC.
(formerly, FRANKLIN LAKE RESOURCES, INC.)
(An Exploration Stage Company)
BALANCE SHEETS
(Expressed in U.S. dollars)
The accompanying notes are an integral part of these financial statements
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SEEN ON SCREEN TV INC.
(formerly, FRANKLIN LAKE RESOURCES, INC.)
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
The accompanying notes are an integral part of these financial statements
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SEEN ON SCREEN TV INC.
(formerly, FRANKLIN LAKE RESOURCES, INC.)
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
The accompanying notes are an integral part of these financial statements
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SEEN ON SCREEN TV INC.
(formerly FRANKLIN LAKE RESOURCES, INC.)
(An Exploration Stage Company)
Statement of Stockholders’ Equity (Deficit)
For the years ended December 31, 2008 and 2007
(Unaudited for the period from date of inspection on May 23, 1986 to October 31, 2002)
The accompanying notes are an integral part of these financial statements
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SEEN ON SCREEN TV INC.
(formerly FRANKLIN LAKE RESOURCES, INC.)
(An Exploration Stage Company)
Statement of Stockholders’ Equity (Deficit)
For the years ended December 31, 2008 and 2007
(Unaudited for the period from date of inspection on May 23, 1986 to October 31, 2002)
The accompanying notes are an integral part of these financial statements
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SEEN ON SCREEN TV INC.
(formerly FRANKLIN LAKE RESOURCES, INC.)
(An Exploration Stage Company)
Statement of Stockholders’ Equity (Deficit)
For the years ended December 31, 2008 and 2007
(Unaudited for the period from date of inspection on May 23, 1986 to October 31, 2002)
The accompanying notes are an integral part of these financial statements
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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 is in the business of exploring for precious metals, developing processes for extracting them from the earth, and, if warranted, developing sites for possible development. The Company’s principal property consists of 58 placer association claims, covering approximately 8,000 acres, at Franklin Lake, near Death Valley Junction, California, on land owned by the United States Government and managed by the Bureau of Land Management.
The Company is an exploration stage company.
2. BASIS OF PRESENTATION
The financial statements have been prepared in accordance with the requirements for unaudited interim periods and consequently do not include all disclosures required to be in conformity with accounting principles generally accepted in the United States of America.
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.
(c) Dividend Policy
The Company has not adopted a policy regarding the payment of dividends and does not anticipate payments of dividends in the future.
(d) Mineral Properties and Equipment
The Company has expensed the costs of acquiring and exploring its properties during the periods in which they were incurred, and will continue to do so until it is able to determine that commercially recoverable ore reserves are present on the properties. If it determines that such reserves exist, it will capitalize further costs.
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Reclamation bonds for which the Company has posted refundable cash deposits cover the restoration and rehabilitation of the Company’s BLM properties. The Company does not believe that it has significant environmental, rehabilitation or restoration expenses for the exploration operations it has conducted to date. The Company believes that its cash deposits could be refunded without significant additional expenditures to restore its exploration properties.
The Company had posted the reclamation bond in the amount of $58,919 to cover the costs of remediation on the company’s BLM properties. The company had estimated in prior periods that the future remediation costs would be $39,052 and reduced the amount of the bond from $58,919 to $19,819. In October of 2008, the Company received the proceeds of $58,919 from the bond and was not subject to any remediation costs.
(e) 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 General Accepting Accounting Principles. 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.
(f) Comprehensive Income
The Company includes 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.
(g) Stock Based Compensation
Stock compensation expense recognized during the period is based on the value of share-based awards that are vested during the period. Stock compensation expense during the period also includes compensation expense for share-based awards that vested in a prior period but that had not been recognized as compensation expense in the prior period financial statements.
(h) 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 $32,875,418. 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.
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.
(i) 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.
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3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) 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.
(k) Revenue Recognition
Revenue will be recognized on the sale and delivery of a product or the completion of a service provided.
(l) 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.
(m) 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.
During the twelve months period ended of October 31, 2008, the Company has the following share transactions.
1.
The Company issued 735,232 shares of common stock pursuant to the exercise of share purchase warrants for cash in the amount of $.25 per share. These shares were issued to an officer /shareholder of the company.
2.
The Company issued 435,000 shares of common stock at a price of $0.25 per share to the same officer/shareholder for service rendered to the Company
3.
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 to the beginning of the reporting periods presented.
5. RELATED PARTY TRANSACTIONS AND OPERATING LEASES
During the periods covered by this report, the Company received management services, office space (including supplies and customary office services), and the use of land and buildings for its testing and production facility from its president. All such items are payable only in shares of Company stock, not in cash and, pursuant to agreement; they are valued at a total of $7,250 per month for a total of $87,000 for the year ended of October 31, 2008 and 2007.
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5. RELATED PARTY TRANSACTIONS AND OPERATING LEASES (continued)
The Company also leases most of the equipment in the Amargosa facility from its president for $1.00 per month. He purchased the equipment from the Company during year end October 31, 2006 total price of $50,000, with an agreement to lease it back to the Company for $1.00 per month through March 31, 2008. The items of equipment covered by this transaction includes all the equipment at the facility as of July 31, 2006, except the large Lyden dryer; nor does it include equipment, having a book value of approximately $4,700, acquired since that date.
6. STOCK OPTIONS & WARRANTS
The Company granted stock options to two employees as consideration for their past services and as an incentive for future services. All options were vested immediately and are exercisable at a price equal to the fair market value on the date of the grant. At October 31, 2007, there were 1,769,230 options outstanding, all expiring on March 4, 2009, and that number remained unchanged at October 31, 2008.
The Company has granted warrants to investors, including its president, as an incentive to purchase its shares and also to its president as consideration for management services and for rent and related services. At October 31, 2007, it had 2,700,000 warrants outstanding. As at January 31, 2007, each of such expiration dates was extended for one year, that is, to the respective corresponding date in 2008. At October 31, 2008, the warrants were all expired.
Share purchase warrants transactions were as follows:
The Company makes a determination of the estimated fair value of share-based awards using the Black-Scholes option-pricing model. The Black-Scholes model is affected by the Company’s stock price as well as by assumptions regarding certain complex and subjective variables. These variables include, but are not limited to; the Company’s expected stock price volatility over the term of the awards and the actual and projected employee stock option exercise behaviors.
Utilizing the Black Scholes option-pricing model, the share based compensation expense for the year ended October 31, 2008 and 2007; the amount was $ nil and $91,770, respectively.
7. METALS EXTRACTION AGREEMENT
On November 30, 2004, the Company entered into a Metals Extraction Agreement with MR3 Systems, Inc. (MR3) whereby both parties agreed to jointly expand and operate a facility at the “Amargosa” site to process source material from Franklin Lake Playa in order to extract precious metals for sale to refiners and other third parties. As part of the agreement MR3 was to obtain financing to construct and operate the facility. MR3 had represented to the Company that it had developed the technology necessary for such extraction.
In November 2005, the Company made a determination that MR3 had not met its obligations under the agreement, and it sent a letter to MR3 in which it terminated the agreement. On November 21, 2005 management sent a letter to MR3 in which the Company terminated the agreement. As of October 31, 2008, MR3 has not given the Company any notice that it disagrees with any of the facts or conclusions in the letter or that it disputed the termination.
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8. PURCHASE OF WATER RIGHTS (RESTATED)
In May of 2006, the Company purchased water rights in Nevada to assist in the operations of test plant facility. These rights allow the Company to draw 2.5 acre feet of water annually from a well located on the property. The Company paid $6,250 for these water rights and has determined that the water rights should be treated as an intangible asset and subject to impairment testing by management. As of October 31, 2008, the Company tested these water rights for impairment and determined that no impairment was necessary.
9. RESTATEMENT
The Company’s financial statements for the three months ended January 31, 2008 have been restated to correct errors in reporting related to the gain on sale of plant equipment, cumulative effect of correction of error, and cumulative to-date statement of operations and cash flows statement amounts. These errors were originally reported in the January 31, 2008 interim financial statements, as filed on April 21, 2008, and are explained further below.
The gain on sale of equipment was originally reported as $2,850 and has been corrected to $3,390. This changed the related net income from $62,286 to $61,746, and did not have a material impact on earnings per share.
An error in reporting was identified related to the October 31, 2006 financial statements, subsequent to the filing of the January 31, 2008 interim financial statements. This error related to the presentation of the cumulative effect of correction of error as displayed in the balance sheet and statement of stockholders’ equity. Related amounts should have been posted to the additional paid-in capital account. Accordingly, we have removed the cumulative effect of correction of error from the January 31, 2008 financial statements and recorded the balance of $345,825 to additional paid-in capital.
Cumulative to-date information on the statement of operations and cash flows statement was incorrectly reported in the January 31, 2008 financial statements, as filed on April 31, 2008, due to administrative error. The table below shows the originally reported amounts along with the related adjustments.
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10. 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 accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties.
11. SUBSEQUENT EVENTS
a)
On March 19, 2009, Franklin Lake Resources Inc. (“FKLR”) underwent a corporate name change to “Seen on Screen TV” (“SONT”).
b)
On March 19, 2009, the Company amended the number of authorized shares and the par value as follows:
i)
5,000,000 shares of preferred, $0.001 par value per share
ii)
195,000,000 shares of common stock, $0.001 par value per share.
c)
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. 2 for 5 reverse split, there will be approximately 8,384,130 shares of common stock outstanding.
d)
On October 6, 2008 the Company entered into an asset purchase agreement with Antoine Jarjour and Roula Jarjour, husband and wife, to acquire all assets of seen on Screen, LLC for the issuance of 17,000,000 shares of the company. On January 10, 2010 the Company rescinded this agreement.
e)
On April 6, 2010 the Company entered into stock purchase agreement and plan of reorganization with Antoine Jarjour and Roula Jarjour, husband and wife, wherein the company agree to acquire all of the ownership units of Seen on Screen TV, LLC in exchange for 17,000,000 restricted shares of common stock. The effective date of the Agreement was November 1, 2008.
f)
In Conjunction with the acquisition of Seen on Screen TV, Inc. the Company has changed its fiscal year end to December 31.
g)
(i)
In the year end December 31, 2009, the company issued 4,000,000 restricted shares for a gross proceed of $200,000.
(ii)
In the year end December 31, 2010, the company issued 17,000,000 restricted shares to the shareholders of the unit of Seen on Screen TV, LLC. Further the Company issued 615,000 restricted shares for gross proceed of $61,500.
(iii)
During the first quarter of 2011, the Company issued 2,272,279 restricted shares for the gross proceed of $159,000.
(iv)
During the third quarter of 2011, the Company issued 1,425,000 restricted shares for gross proceed of $57,000.
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ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of disclosure controls and procedures” in Rule 13a-15(e). The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company’s desired disclosure control objectives. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company’s certifying officer has concluded that the Company’s disclosure controls and procedures are not effective in reaching that level of assurance.
As of the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles.
As of the date of this report, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the criteria established by COSO management concluded that the Company’s internal control over financial reporting was not effective as a result of the identification of the material weaknesses described below.
A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Specifically, management identified the following control deficiencies. (1) The Company has not properly delegated duties to any individual to be responsible for financial reporting.
Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles.
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Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal controls that occurred during the reported period covered by this report that has materially effected, or is reasonably to effect, the Company’s internal controls over financial reporting.
Remediation Plan
Addition of staff
We have identified that additional staff will be required to properly segment the accounting duties of the Company. However, we do not currently have resources to fulfill this part of our plan and will be addressing this matter once sufficient resources are available.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Note: The full board, with the exception of Father Ofiesh, who is our former President and CEO, act as the audit committee, the compensation committee, and the governance committee.
ANTOINE “TONY” JARJOUR, has been our CEO and Chairman since November 2008. He served as the President, Principal Executive Officer, Treasurer, Principal Financial Officer and Acting Principal Accounting Officer at Seen On Screen TV, Inc. He served as a director of Seen On Screen TV, Inc. prior to Reverse Merger with Seen On Screen TV, LLC since October 2008. Since 2008, Mr. Jarjour is the Officer for the GNS Group, Inc. GNS Group, Inc. is a WA corporation He earned a B.A. Degree in Business Administration in 1977 and a Masters in Business Administration in 1982.
ROULA JARJOUR has been our Vice President and a member of the Board of Directors since November 2008. Ms. Jarjour has been Secretary of The GNS Group Inc. since July 2006. Since 2000, Ms. Jarjour has been the General Manager of several retail stores in the Seattle area. She has been a Director of The GNS Group Inc. since July 2006. She serves as a Director of Seen On Screen TV, LLC. Ms. Jarjour served as a Director of Seen On Screen TV, Inc. Ms. Jarjour holds a Bachelor of Arts degree in literature.
GEORGE JARJOUR has been our Chief Operating Officer for Seen on Screen TV, Inc. since November 2008. He has been working for almost 8 years as sales associate at the stores. He graduated for the University of Washington in 2010.
CHARLES CARRAFOLI has been a Director since February 2008. From September 1988 to October 2005, he was the President for So St Back Store Inc. From June 1988 to October 2005, he was the President for Mayflower Service Center Inc. From June 2004 to October 2005, he was President for Stevens the Florist Inc.
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FATHER GREGORY OFIESH, has been a director since 2001. From 2001 to 2008, he was our president, chief executive officer, and acting chief financial officer. After 42 years as an Orthodox priest, Father Ofiesh retired as Pastor of St. Nicholas Orthodox Church, San Francisco, California, on January 1, 2001. Prior to his retirement, he was dean of the San Francisco Bay Area Orthodox Clergy, and now serves as dean emeritus of that group. On average, Fr. Ofiesh devotes about 20 hours per week to our affairs.
To the Company’s knowledge, it is not owned or controlled, directly or indirectly, by another corporation or any foreign government.
Involvement in Certain Legal Proceedings
Other than as described in this section, to our knowledge, during the past five years, no present or former director or executive officer of our company: (1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer within two years before the time of such filing; (2) was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) engaging in any type of business practice; (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodity laws; (4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment in subsequently reversed, suspended or vacate; (6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
Audit Committee and Charter
We have a separately-designated audit committee of the board. Audit committee functions are performed by our board of directors. None of our directors are deemed independent. All directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of the audit committee charter is filed as Exhibit 99.1 to this report.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is filed as Exhibit 14.1 to this report.
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Disclosure Committee and Charter
We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports. A copy of the disclosure committee charter is filed as Exhibit 99.2 to this report.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, or written representations that no other reports were required, and to the best of our knowledge, we believe that all of our officers, directors, and owners of 10% or more of our common stock filed all required Forms 3, 4, and 5.
ITEM 11.
ITEM 11. 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 our three most recent fiscal years.
Summary Compensation Table
*
The payments to Father Gregory Ofiesh are called management fees, but they are not payable in cash; they are payable only in shares of Company stock.
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No funds were set aside or accrued by the Company during fiscal year 2008 or 2007 to provide pension, retirement or similar benefits for directors or executive officers.
The following table sets forth compensation paid to our directors during the fiscal year ended October 31, 2008.
Director Compensation
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth, as of October 31, 2008, the beneficial ownership of the common stock: (i) by each stockholder known by the Company to beneficially own more than 5% of the common stock (ii) by each director of the Company; (iii) by the Company’s chief executive officer; and (iv) by all executive officers and directors of the Company as a group. Except as otherwise indicated below, each named beneficial owner has sole voting and investment power with respect to the shares of common stock listed.
*
Assuming exercise of all outstanding warrants and options
(1)
Fr. Ofiesh is a director; ownership includes 2,408,080 shares for full consideration given and 1,161,920 shares for which he has warrants to purchase. Shares adjusted for 2:5 split.
There are currently no arrangements known to the Company the operation of which may at a subsequent date result in a change of control of the Company. We know of no voting trusts or similar agreements between or among any of the above individuals.
The tables below provide information, as of January 1, 2004, as to the number of outstanding shares of common stock subject to stock options and warrants held by directors and officers of the Company.
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ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Lease of the Amargosa Facility
Father Ofiesh purchased this property, (formerly referred to as the Farm) in 2000, and until March 31, 2002, He allowed the Company to use it, primarily for storage, without charge. In early 2002, during our negotiations to purchase equipment from Xenolix Technologies, Inc., the lease on our Death Valley Junction was due to expire and so we elected to consolidate our sampling and testing operations at a single site. On April 1, 2002, we entered into an agreement to lease the Farm property from Father Ofiesh, on the following principal terms:
1.
the rent is $1,250 per month, provided that this amount is to be payable only in shares of common stock of the Company and not in cash;
2.
the term is for three years, with an option to renew for an additional three years; the option has been exercised and the lease now expires on March 31, 2008 (see Extension below).
3.
equipment and other personal property on the premises on April 1, 2002, except items or material placed there by the Company for storage, is and remains the property of Father Ofiesh;
4.
equipment and other property brought onto the premises by the Company, whether or not attached to a building or the land, is and remains the property of the Company;
5.
The Company is responsible for all property taxes during the lease period;
6.
The Company is required to indemnify and insure the owner against liability to him arising out of its operations; and
7.
at the termination of the lease, the Company must return the premises in their original condition.
The board of directors determined that the proposed lease arrangement with Father Ofiesh was favorable to the Company, particularly with respect to the payment of rent with stock instead of cash, and unanimously approved the transaction, with Father Ofiesh abstaining from the vote.
Extension -- In January 2008, Father Ofiesh offered to extend the lease for six months, until September 30, 2008, upon the same terms and conditions as in the current lease (see Description of Property, above).
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Office Space
The Company’s executive and administrative offices are located in a building owned by Father Ofiesh at 172 Starlite Street, South San Francisco, California. Fr. Ofiesh provided the office space free of charge until February 1, 2001, when we began paying a monthly rental fee. Our current arrangement with Fr. Ofiesh is a month-to-month rental at the rate of $2,000 per month, payable not in cash, but only in shares of company stock; the space includes utilities, janitorial service and some clerical assistance. Either party may terminate the agreement on 30 days notice to the other.
The board of directors determined that the proposed lease arrangement with Father Ofiesh was favorable to the Company, particularly with respect to the payment of rent with stock instead of cash, and unanimously approved the transaction, with Father Ofiesh abstaining from the vote.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Our principal accounting firm was Madsen and Associates, CPAs, Inc. For the fiscal year ended October 31, 2008, we paid fees to that firm as shown in the following table:
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibits
The following exhibits are incorporated into this Form 10-K Annual Report:
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities and Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 31st day of August, 2011.
SEEN ON SCREEN TV, INC.
Formerly, Franklin Lake Resources, Inc.
BY:
ANTOINE JARJOUR
Antoine Jarjour
President, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
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EXHIBIT INDEX
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