UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
SB-2
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
SIGNET
INTERNATIONAL HOLDINGS, INC.
(Exact
Name of Small Business Issuer in its Charter)
DELAWARE
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4833
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16-1732674
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(State
of Incorporation)
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(Primary
Standard
Classification
Code)
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(IRS
Employer ID No.)
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205
Worth Avenue, Suite 316
Palm
Beach, Florida 33480
(561)
832-2000
(Address
and Telephone Number of Registrant’s Principal
Executive
Offices and Principal Place of Business)
Ernest
W. Letiziano, Chief Executive Officer
205
Worth Avenue, Suite 316
Palm
Beach, Florida 33480
(561)
832-2000
(Name,
Address and Telephone Number of Agent for Service)
Copies
of
communications to:
GREGG
E. JACLIN, ESQ.
ANSLOW
& JACLIN, LLP
195
ROUTE 9, SUITE 204
MANALAPAN,
NEW JERSEY 07726
TELEPHONE
NO.: (732) 409-1212
FACSIMILE
NO.: (732) 577-1188
Approximate
date of commencement of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If
this
Form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act of 1933, please check the following box and
list
the Securities Act Registration Statement number of the earlier effective
registration statement for the same offering.
o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
If
this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box.
o
CALCULATION
OF REGISTRATION FEE
Title
of Each Class Of securities to be
Registered
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Common
Stock of par value,
$.001
per share
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479,700
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$2.10
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$1,007,370.00
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$30.93
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(1)
The
shares of our Common Stock being registered hereunder are being registered
for
resale by the selling securityholders named in the prospectus. In accordance
with Rule 415, the number of shares being registered pursuant to the Investment
Agreement with Dutchess Private Equities Fund, Ltd. is 479,700 representing
approximately 1/3 of our 1,599,000 non-affiliate outstanding common shares
issued and outstanding as of November 26, 2007.
(2)
Estimated solely for the purpose of computing the amount of the registration
fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the closing
price of $2.10 on the OTC Bulletin Board on November 14, 2007.
PRELIMINARY
PROSPECTUS SUBJECT TO COMPLETION DATED November 26, 2007
The
registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
securities act of 1933 or until the registration statement shall become
effective on such date as the commission, acting pursuant to said section 8(a),
may determine.
PROSPECTUS
SIGNET
INTERNATIONAL HOLDINGS, INC.
479,700
SHARES
COMMON
STOCK
This
prospectus relates to the resale of up to 479,700 shares of our Common Stock,
par value $0.001 per share (“Common Stock”) issuable to Dutchess Private
Equities Fund, Ltd. (“Dutchess” or the “Selling Securityholder”). The
Selling Securityholders may sell their common stock from time to time at
prevailing market prices.
Our
Common Stock is registered under Section 12(g) of the Securities Exchange Act
of
1934, as amended, and is quoted on the over-the-counter market and prices are
reported on the OTC Bulletin Board under the symbol “SIGN.” On November 14,
2007, the closing price as reported was $2.10.
THE
PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE TO RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE
HEADING “RISK FACTORS” BEGINNING ON PAGE 4.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
information in this prospectus is not complete and may be changed. The
shareholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer
to
buy these securities in any state where the offer or sale is not
permitted.
Signet
International Holdings, Inc. does not have international
operations.
The
Date of This Prospectus Is: November 26, 2007
TABLE
OF CONTENTS
SUMMARY
INFORMATION
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1
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RISK
FACTORS
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4
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USE
OF PROCEEDS
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9
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SELLING
SECURITY HOLDERS
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9
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PLAN
OF DISTRIBUTION
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11
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LEGAL
PROCEEDINGS
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12
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DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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12
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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13
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DESCRIPTION
OF SECURITIES
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14
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INTEREST
OF NAMED EXPERTS AND COUNSEL
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16
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DISCLOSURE
OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
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16
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ORGANIZATION
WITHIN LAST FIVE YEARS
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16
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DESCRIPTION
OF BUSINESS
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16
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MANAGEMENT
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
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21
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DESCRIPTION
OF PROPERTY
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25
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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26
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MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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26
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EXECUTIVE
COMPENSATION
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27
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FINANCIAL
STATEMENTS
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F-1
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SUMMARY
INFORMATION
We
were
incorporated in the State of Delaware under the name 51142 Inc. on February
2,
2005 as a blank check company to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. On July 8,
2005, pursuant to the terms of a Stock Purchase Agreement, Signet Entertainment
Corporation, a Florida corporation, purchased all of our issued and outstanding
common stock for cash consideration of $36,000. Subsequently, we changed our
name to Signet International Holdings, Inc.
On
September 8, 2005, pursuant to a Stock Purchase Agreement and Share Exchange
by
and among us, Signet Entertainment Corporation (“SIG”), and the shareholders of
Signet Entertainment Corporation (“Shareholders”), we acquired all of the then
issued and outstanding preferred and common shares of Signet Entertainment
Corporation for a total of 3,421,000 common shares and 5,000,000 preferred
shares of our stock which was issued to the Signet Entertainment Corporation
shareholders. Pursuant to the agreement, SIG became our wholly owned
subsidiary.
Our
wholly owned subsidiary, SIG was incorporated on October 17, 2003 for the
purpose of launching a Gaming and Entertainment Television Network. We expect
to
cover major Poker and Blackjack tournaments as well as other major high stakes
casino games, although we - nor any of our partners - have not entered any
formal agreements to do so The network will also cover other major sports events
such as horse racing and selected global events which have a sports and
entertainment format we believe will appeal to our viewers including: sports
awards ceremonies; entertainment awards ceremonies; celebrity sports events;
celebrity gaming events; and other interesting and newsworthy events, foreign
and domestic,.
SIG’s
largest source of revenue will come from advertising, specifically from various
resorts and casinos, liquor and tobacco companies and sporting sites in North
and South America, Europe, Asia and Africa. We will cover all of our events
including poker and other casino tournaments via satellite and cable, once
satellite and cable contracts have been executed. SIG will also realize income
from infomercials and sports and entertainment programming that offer subject
matter that are all-encompassing to the network’s format. SIG intends creating
future programming to include “The Television Charity Channel” which will
feature regularly scheduled weekly programming.
In
order
to launch its gaming and entertainment television network, SIG entered into
agreements with Triple Play Media Management, Inc. (“Triple Play”) and Big
Vision, Inc. (“Big Vision”). Pursuant to the agreements, Triple Play will
operate our facilities and provide programming content while Big Vision will
provide the equipment and technology to establish the production
facility.
Triple
Play has developed conceptual content as scripts or treatments. Production
of
this programming in contingent upon the funding we agreed. As such, Triple
Play
is not obligated to deliver this programming to us at any time certain. Triple
Play has not yet made formal arrangements with any other domestic or foreign
production company to uplink or to receive any programming. Further, Triple
Play
has not entered into any agreement with any casino business or entity, or any
agreements to air any tournaments. Our agreement provides that with funding,
Triple Play will organize, develop and operate a fully equipped production
footprint (home base), and direct, produce and edit, gather and cover live
newsworthy events from the Las Vegas area. With the use of modular (TV equipment
truck), and satellite delivery systems, Triple Play will uplink the news reels
and we will broadcasts these to other communities in the USA and abroad.
Likewise, other production companies will be able to uplink their news reels
to
Triple Play.
In
addition, to further the launch of our gaming and entertainment television
network we purchased the exclusive rights to 20 titled half hour screen plays
representing original programming from FreeHawk Productions, Inc. Each title
will be delivered with an additional four ready for airing half hour episodes.
These screen plays will constitute 100 half hour shows to be aired over our
gaming and entertainment network. On August 19, 2006, by mutual agreement,
Signet and Freehawk rescinded this agreement because the agreement called for
the payment of funds and stock which we can not pay until such time as our
shares are trading and we can receive additional financing. Therefore, the
parties mutually agreed that the agreement was premature and therefore the
agreement was rescinded without the payment of any cash or stock to Freehawk
by
us. We intend to enter into a restructured agreement, at such time as we are
a
public company and can raise the necessary capital. At this time, there are
no
discussions to restructure the agreement.
Furthermore,
we intend to acquire Low-Powered Television (LPTV) stations as a means for
distributing our programming to viewers. LPTV stations offer national
advertisers highly defined audiences. The LPTV service was established by the
Federal Communications Commission (FCC) in 1982 and was primarily intended
to
provide opportunities for locally oriented television service in small
communities within larger urban areas. LPTV stations transmit on one of the
standard VHF or UHF television channels. The distance at which a station can
be
viewed depends on a variety of factors such as: antenna height, transmitter
power, transmitting antenna and the nature of the terrain. Generally LPTV
stations span approximately 20 miles from their tower in all directions. We
plan
on targeting LPTV stations that are sanctioned by the Federal Communication
Commission with current and clear license to operate and feature: Class A
rating, high-distribution (high number of TV households), favorable market
location, up-to-date equipment, tower delivery systems, and studio properties.
We have not entered into any negotiations or agreements, preliminary or
otherwise, to purchase such stations.
We
are a
developmental-stage company and have not yet commenced operations. We will
require additional funds to implement our business plan. There is no assurance
that the Company will be able to obtain additional funding through the sales
of
additional equity securities or that such funding, if available, will be
obtained on terms favorable to or affordable by the Company.
No
revenues have been generated to date. We expect limited revenues with our
initial LPTV acquisitions increasing as we raise additional funds and acquired
more stations. Therefore we will continue to operate on a reduced budget until
such time as further funding becomes available. However, there can be no
guarantee that we will ever generate any revenues. Please note that the only
business acquisitions will be solely of LPTV stations or other broadcast
properties and that we will not enter into any agreement that will result in
a
change of control.
Because
we have no viable operations we are dependent upon significant shareholders
to
provide sufficient working capital to maintain the integrity of the corporate
entity, our independent auditor has expressed substantial doubt about the
company’s ability to continue as a going concern.
Signet
International Holdings, Inc. does not have international
operations.
THE
OFFERING
COMMON
SHARES OUTSTANDING PRIOR TO OFFERING
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Common
Stock, $0.001 par value
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Common
Stock Offered by Selling Securityholders
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We
will not receive any proceeds from the sale by the Selling Securityholders
of shares in this offering, except upon drawdowns made pursuant
to the
equity line. See “Item 4. Use of Proceeds.” However, we will receive
proceeds from the exercise of the warrants which will be used to
working
capital.
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An
investment in our common stock involves a high degree of risk and
could
result in a loss of your entire investment.
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Currently,
our executive offices are located at 205 Worth Avenue, Suite
316
Palm
Beach, Florida 33480, and our telephone number
is (561) 832-2000.
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TRANSACTION
SUMMARY
TRANSACTION
WITH DUTCHESS PRIVATE EQUITIES FUND, LTD
On
November 5, 2007, we entered into an Investment Agreement (“Original Agreement”)
with Dutchess Private Equities Fund, Ltd. (the
“Investor”). Pursuant to this Agreement, the Investor
shall commit to purchase up to $10,000,000 of our common stock over the course
of thirty-six (36) months. The amount that we shall be entitled to request
from
each purchase (“Puts”) shall be equal to, at our election, either (i) up to
$250,000 or (ii) 200% of the average daily volume (U.S. market only) of the
common stock for the three (3) trading days prior to the applicable put notice
date, multiplied by the average of the three (3) daily closing bid prices
immediately preceding the put date.
The
put
date shall be the date that the Investor receives a put notice of a draw down
by
us. The purchase price shall be set at ninety-four percent (93%) of the lowest
closing bid price of the common stock during the pricing period. The pricing
period shall be the five (5) consecutive trading days immediately after the
put
notice date. There are put restrictions applied on days between the put date
and
the closing date, which would be seven days following the put notice, with
respect to that particular Put. During this time, we shall not be entitled
to
deliver another put notice. Although cash received from each Put will
increase our liquidity, the sale of our common stock to the Investor in
accordance with the Agreement may have a dilutive impact on our shareholders.
As
a result, our net income per share could decrease in future periods and the
market price of our common stock could decline.
In
connection with the Agreement, we entered into a Registration Rights Agreement
with the Investor (“Registration Agreement”). Pursuant to the Registration
Agreement, we are obligated to file a registration statement with the Securities
and Exchange Commission covering the shares of common stock underlying the
Agreement within thirty (15) days after the November 5, 2007 execution of
the
Original Agreement. In addition, we are obligated to use all commercially
reasonable efforts to have the registration statement declared effective
by the
SEC within ninety (90) days after the November 5, 2007 execution of the Original
Agreement. The Agreement does not impose any penalties on us for failure
to meet
either the 15 day or 90 day obligations; however, we shall endeavor to meet
both
such deadlines.
We
agreed
to pay the Investor $15,000 in cash for preparation of the Agreement and the
Registration Agreement.
SUMMARY
INFORMATION AND RISK FACTORS
The
following summary financial data should be read in conjunction with
“Management’s Discussion and Analysis and Plan of Operation” and the Financial
Statements and Notes thereto, included elsewhere in this prospectus. The
statement of operations and balance sheet data from December 31, 2006 and
December 31, 2005 are derived from our December 31, 2006 audited financial
statements. The statement of operations and balance sheet data for the three
months ended September 30, 2007 were derived from our unaudited financial
statements for the period ended September 30, 2007.
Summary
Financial Data
You
should read the following summary financial data together with our financial
statements and related notes appearing at the end of this prospectus and the
‘‘Management’s Discussion and Analysis’’ and ‘‘Risk Factors’’ sections included
elsewhere in this prospectus.
The
summary financial data set forth below for the nine months ending September
30,
2007 and September 30, 2006 are derived from, and are qualified by reference
to,
our unaudited financial statements included elsewhere in this
prospectus.
The
summary financial data set forth below for the year ending December 31, 2006
are
derived from, and are qualified by reference to, our financial statements that
have been audited by S. W. Hatfield, CPA, our independent registered public
accounting firm, and are included elsewhere in this prospectus.
Historical
results are not necessarily indicative of future results.
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For
the nine months
ended
September 30
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For
the year
ended
December 31
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2007
(unaudited)
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2006
(unaudited)
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2006
(audited)
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2005
(audited)
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$
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-
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$
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-
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$
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-
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$
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-
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(218,105
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)
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(488,198
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)
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(521,252
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)
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(231,767
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)
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(0.05
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)
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(0.12
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)
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(0.13
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)
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(0.07
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)
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As
of September 30
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As
of December 31
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BALANCE
SHEET DATA
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2007
(unaudited)
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2006
(unaudited)
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2006
(audited)
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2005
(audited)
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Total
Current Assets
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73,417
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170,947
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153,847
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401,370
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Total
Current Liabilities
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Working
Capital (Deficiency)
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(376,006
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)
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(144,187
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)
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(177,201
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)
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129,011
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Stockholders’
Equity (Deficiency)
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Where
You Can Find Us
Our
corporate offices are located at 205 Worth Avenue, Suite 316, Palm Beach,
Florida 33480. Our telephone number is (561) 832-2000.
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. Please note that throughout this prospectus, the words “we”,
“our” or “us” refer to us and not to the selling stockholders.
Risks
Relating to our Business
We
have a limited operating history that you can use to evaluate us, and the
likelihood of our success must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered by a small
developing company.
We
were
incorporated in Delaware on February 2, 2005 as a blank check company to engage
in any lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions. Our wholly owned subsidiary, SIG was incorporated
on
October 17, 2003 for the purpose of launching a Gaming and Entertainment
Television Network. We have no significant assets or financial resources. The
likelihood of our success must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered by a small
developing company starting a new business enterprise and the highly competitive
environment in which we will operate. Since we have a limited operating history,
we cannot assure you that our business will be profitable or that we will ever
generate sufficient revenues to meet our expenses and support our anticipated
activities.
We
have a history of operating losses and there can be no assurances we will be
profitable in the future.
We
have a
history of operating losses, expect to continue to incur losses, and may not
be
profitable in the near future. We had net losses of $923,935 since our
inception. We intend to continue to fund operations through additional debt
and
equity financing arrangements that may not be sufficient to fund our capital
expenditures, working capital, and other cash requirements for the year ending
December 31, 2006.
The
successful outcome of future financing activities cannot be determined at this
time and there are no assurances that if achieved, we will have sufficient
funds
to execute our intended business plan or generate positive operational
results.
Our
auditor has expressed substantial doubt as to our ability to continue as a
going
concern
Based
on
our financial history since inception, our auditor has expressed substantial
doubt as to our ability to continue as a going concern. We are a development
stage company that has not generated any revenue to date. We have incurred
net
losses of $1, 142, 000. If we cannot generate sufficient revenues from our
operations, we may not be able to implement our business plan and may be forced
to cease our business activities.
We
may require additional funds to achieve our current business strategy and our
inability to obtain additional financing will inhibit our ability to expand
our
business operations.
We
may
need to raise additional funds through public or private debt or sale of equity
to achieve our current business strategy. The financing we need may not be
available when needed. Even if this financing is available, it may be on terms
that we deem unacceptable or are materially adverse to your interests with
respect to dilution of book value, dividend preferences, liquidation
preferences, or other terms. Our inability to obtain financing will inhibit
our
ability to implement our development strategy, and as a result, could require
us
to diminish or suspend our development strategy..
If
we are unable to hire and retain key personnel, then we may not be able to
implement our business plan.
We
believe that our growth and our future success will depend in large part upon
our ability to continue to retain our Chief Executive Officer and to attract
and
retain other highly skilled senior management, finance and marketing personnel.
The competition for qualified personnel is intense. We cannot assure you that
we
will be able to hire and retain qualified personnel. Failure to hire and retain
such personnel could require us to diminish or suspend our development
strategy.
Our
industry is subject to regulation by the FCC and therefore we must comply with
its rules and regulations in connection with the acquisition and operation
of
our stations. Failure to comply with these rules could result in the loss of
licenses we may acquire in the future and/or disapproval of our proposed
acquisitions.
The
broadcasting industry is subject to regulation by the FCC pursuant to the
Communications Act of 1934, as amended (the “Communications Act”). Approval by
the FCC is required for the issuance, renewal and assignment of station
operating licenses and the transfer of control of station licensees. Although
the Company does not currently hold an FCC license, in the event that it
acquires or is granted an FCC license in the future, the Company’s business will
be dependent upon its continuing to hold television broadcast licenses from
the
FCC, which licenses are issued for maximum terms of eight years. While in the
vast majority of cases such licenses are renewed by the FCC, there can be no
assurance that we will be able to renew the licenses it acquires or is granted
at their expiration dates. If such licenses were not renewed or acquisitions
approved, we may lose revenue that we otherwise could have earned.
Although
we do not currently own any broadcast properties, our business plan contemplates
that we may acquire such properties through acquisition of LPTV stations. Based
on same, Federal regulation of the broadcasting industry will limit our
operating flexibility, which may affect our ability to generate revenue or
reduce our costs in the event we acquire such broadcast properties. In addition,
Congress and the FCC currently have under consideration, and may in the future
adopt, new laws, regulations and policies regarding a wide variety of matters
(including technological changes) that could, directly or indirectly, materially
and adversely affect our ability to acquire broadcast properties and the
operation and ownership of such broadcast properties. New federal legislation
may limit our ability to conduct our business in ways that we believe would
be
advantageous and may thereby negatively affect our operating results and
strategic decisions.
The
entertainment industry, and particularly the television industry, is a highly
competitive commerce and if we cannot compete effectively or adapt to changes
in
our industry, we may be unable to execute our business
plan.
The
entertainment industry, and particularly the television industry, is a highly
competitive commerce. Currently this industry is undergoing an aggressive period
of mergers and acquisitions. Once our presence is recognized, we will experience
potential competitors who have greater financial, marketing, programming and
broadcasting resources than we do.
The
markets in which we have targeted to acquire are also in a constant state of
change arising from, among other things, technological improvements and economic
and regulatory developments. Technological innovation and the resulting
proliferation of television entertainment, such as cable television, wireless
cable, satellite-to-home distribution services, pay-per-view and home video
and
entertainment systems, have fractionalized television viewing audiences and
have
subjected free over-the-air television broadcast stations to increased
competition. We may not be able to compete effectively or adjust our business
plans to meet changing market conditions. We are unable to predict what form
of
competition will develop in the future, the extent of the competition or its
possible effects on our businesses.
The
loss of Ernest W. Letiziano, our sole officer and director, could adversely
affect our ability to remain competitive.
We
believe that the success of our business strategy and our ability to operate
profitably depends on the continued employment of our Ernest W. Letiziano,
our
sole officer and director. If Mr. Letiziano becomes unable or unwilling to
continue in his present positions, our business and financial results could
be
materially adversely affected. At the present time, Mr. Letiziano devotes
approximately 40 hours per week to the business affairs of the company. The
loss
of his services may prevent us from implementing our business plan. In the
event
that we cannot implement our business plan, we may not ever generate revenue
and
may be forced to cease our operations.
Our
existing large stockholders have significant control over us and may prevent
you
from causing a change in the course of our operations and may affect the market
price of our common stock.
Ernest
W.
Letiziano, Hope Hillabrand, Richard Grad, and Tom Donaldson beneficially own
approximately 60% of our common stock. Accordingly, for as long as
Mr. Letiziano, Ms. Hillabrand, Mr. Grad, and Mr. Donaldson
continue to own more than 50% of our common stock, they will be able to elect
our entire board of directors, control all matters that require a stockholder
vote (such as mergers, acquisitions and other business combinations) and
exercise a significant amount of influence over our management and operations.
Therefore, regardless of the number of our common shares sold, your ability
to
cause a change in the course of our operations is eliminated. As such, the
value
attributable to the right to vote is limited. This concentration of ownership
could result in a reduction in value to the common shares you own because of
the
ineffective voting power, and could have the effect of preventing us from
undergoing a change of control in the future.
It
is possible that we may have potential legal liability under the federal
securities laws for the public disclosure of exhibits 99.1 and 99.2 to Form
SB-2
filed June 2, 2006; and if it is so determined, we may be subject to civil
penalties and other sanctions.
It
is
possible that we may have potential legal liability under the federal securities
laws for the public disclosure of exhibits 99.1 and 99.2 to Form SB-2 filed
June
2, 2006, as the information disclosed in such exhibits may not be consistent
with the type of projection information allowed under Item 10 of Regulation
S-B
of the Securities and Exchange Commission. If it is determined that the
information in exhibits 99.1 and 99.2 is the type of information generally
not
permitted to be made publicly available, then we may be subject to a claim
of
rescission by shareholders relying upon such information under the Securities
Exchange Act as well as remedial sanctions. Such sanctions could include the
payment of disgorgement, prejudgment interest and civil penalties. We may also
be subject to prejudgment interest on such amount as well as civil penalties
in
amount that would have to be determined by the court.
We
are
not aware of any pending claims for sanctions against us based upon such
possibly impermissible disclosures. Nevertheless, it is possible that it could
be determined that such information was impermissibly disclosed and that we
are
subject to sanctions and possible civil penalties. This claim, if successful,
would significantly exceed our cash reserves and require us to borrow funds
and
would materially and adversely affect our results of operations and financial
condition. Therefore, these claims would have a significant impact on us and
could force us to consider bankruptcy or a similar alternative.
Risks
Relating to this Offering
EXISTING
STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION FROM THE SALE OF OUR COMMON
STOCK PURSUANT TO THE INVESTMENT AGREEMENT.
The
sale
of our common stock to Dutchess Private Equities Fund, Ltd. in
accordance with the Investment Agreement may have a dilutive impact on our
shareholders. As a result, our net income per share could decrease in
future periods and the market price of our common stock could decline. In
addition, the lower our stock price is at the time we exercise our put option,
the more shares of our common stock we will have to issue to Dutchess Private
Equities Fund, Ltd. in order to drawdown on the Equity Line. If our stock price
decreases, then our existing shareholders would experience greater
dilution.
The
perceived risk of dilution may cause our stockholders to sell their shares,
which would contribute to a decline in the price of our common stock. Moreover,
the perceived risk of dilution and the resulting downward pressure on our stock
price could encourage investors to engage in short sales of our common stock.
By
increasing the number of shares offered for sale, material amounts of short
selling could further contribute to progressive price declines in our common
stock.
DUTCHESS
PRIVATE EQUITIES FUND, LTD WILL PAY LESS THAT THE THEN-PREVAILING MARKET PRICE
OF OUR COMMON STOCK WHICH COULD CAUSE THE PRICE OF OUR COMMON STOCK TO
DECLINE.
Our
common stock to be issued under the Investment
Agreement will be purchased at a six percent (7%) discount
to the lowest closing bid price during the five trading
days immediately following our notice to Dutchess Private Equities Fund, Ltd.
of
our election to exercise our "put" right. Dutchess Private Equities Fund,
Ltd. has a financial incentive to sell our shares immediately upon
receiving the shares to realize the profit between the
discounted price and the market price. If Dutchess Private Equities Fund,
Ltd. sells our shares, the price of our common stock may decrease. If our
stock price decreases, Dutchess Private Equities Fund, Ltd. may have a
further incentive to sell such shares. Accordingly, the discounted
sales price in the Investment Agreement may cause the price of our
common stock to decline.
EXISTING
STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION FROM THE SALE OF OUR COMMON
STOCK PURSUANT TO THE INVESTMENT AGREEMENT.
The
sale
of our common stock to Dutchess Private Equities Fund, Ltd. in accordance with
the Investment Agreement may have a dilutive impact on our shareholders. As
a
result, our net income per share could decrease in future periods and the market
price of our common stock could decline. In addition, the lower our stock price
is at the time we exercise our put option, the more shares of our common stock
we will have to issue to Dutchess Private Equities Fund, Ltd. in order to
drawdown on the Equity Line. If our stock price decreases, then our existing
shareholders would experience greater dilution. At a stock price of $0.25 or
less, we would have to issue approximately 40 million shares in order to
drawdown on the full Equity Line. Accordingly, we may be required to
file one or more registration statements to cover all shares under the Equity
Line.
The
perceived risk of dilution may cause our stockholders to sell their shares,
which would contribute to a decline in the price of our common stock. Moreover,
the perceived risk of dilution and the resulting downward pressure on our stock
price could encourage investors to engage in short sales of our common stock.
By
increasing the number of shares offered for sale, material amounts of short
selling could further contribute to progressive price declines in our common
stock.
WE
ARE REGISTERING 479,700 SHARES OF COMMON STOCK TO BE ISSUED UNDER THE EQUITY
LINE OF CREDIT. THE SALE OF SUCH SHARES COULD DEPRESS THE MARKET PRICE OF
OUR COMMON STOCK.
We
are
registering 479,700 shares of common stock under the registration statement
of
which this prospectus forms a part for issuance pursuant to the Equity Line
of
Credit. The sale of these shares into the public market by Dutchess could
depress the market price of our common stock. As of November 26, 2007,
there were 4,504,962 shares of common stock issued and 4,102,000 shares of
our
common stock and outstanding.
THERE
MAY NOT BE SUFFICIENT TRADING VOLUME IN OUR COMMON STOCK TO PERMIT US TO
GENERATE ADEQUATE FUNDS FROM THE EXERCISE OF OUR PUT.
The
Investment Agreement provides that the dollar value that we will be permitted
to
put to Dutchess will be our choice of either: (A) 200% of the average daily
volume in the US market of the common stock for the ten trading days prior
to
the notice of our put, multiplied by the average of the three daily closing
bid
prices immediately preceding the date of the put, or (B) $250,000.
Based on the formula in the Investment Agreement, however, it is
possible that we would only be permitted to exercise a put for $250,000, as
there may not be sufficient trading volume in our common stock to permit us
to
draw down more than $250,000 per each put. Being unable to draw down
on the full $10,000,000 financing which may not provide adequate funding for
our
planned operations.
NONE
OF THE COMPANY'S OFFICERS, DIRECTORS, INSIDERS, AFFILIATES OR OTHER RELATED
PARTIES MAY SELL ANY SHARES OF COMMON STOCK FOR FIVE TRADING DAYS AFTER A PUT
NOTICE IS DELIVERED AND THEREFORE ADDITIONAL CAPITAL RAISING ACTIVITIES WILL
BE
LIMITED.
None
of
our officers, directors, insiders, affiliates or other related parties may
sell
any shares of common stock for five trading days after a put notice is
delivered. Based on this restriction, our additional capital raising
activities will be limited.
AFTER
THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT, WE HAVE AGREED TO MAKE LATE
PAYMENTS TO THE INVESTOR FOR LATE ISSUANCE OF SECURITIES AFTER THE SEVEN DAYS
FOLLOWING DELIVERY OF A PUT NOTICE. WE MUST MAKE ANY PAYMENTS
INCURRED IN IMMEDIATELY AVAILABLE FUNDS UPON DEMAND BY THE INVESTOR. NOTHING
HEREIN SHALL LIMIT THE INVESTOR’S RIGHT TO PURSUE ACTUAL DAMAGES FOR OUR
POTENTIAL FAILURE TO ISSUE AND DELIVER THE SECURITIES TO THE INVESTOR, EXCEPT
THAT SUCH LATE PAYMENTS SHALL OFFSET ANY SUCH ACTUAL DAMAGES INCURRED BY THE
INVESTOR.
After
the
effective date of the registration statement, we have agreed to make late
payments to the investor for late issuance of securities after the seven days
following delivery of a put notice. As such, if we are late in the
issuance of securities in accordance with the put notice, we will be subject
to late payments. The following sets forth the exact amount of
the late payment based upon the number of days late and the value of the common
stock.
LATE
PAYMENT FOR EACH
NO.
OF DAYS LATE
|
$10,000
WORTH OF COMMON STOCK
|
1
|
$100
|
2
|
$200
|
3
|
$300
|
4
|
$400
|
5
|
$500
|
6
|
$600
|
7
|
$700
|
8
|
$800
|
9
|
$900
|
10
|
$1,000
|
Over
10
|
$1,000
+ $200 for each
|
|
Business
Day late beyond 10 days
|
IF
THE COMPANY FAILS TO DELIVER ANY PORTION OF THE SHARES OF THE PUT TO THE
INVESTOR AND THE INVESTOR’S PURCHASES, IN AN OPEN MARKET TRANSACTION OR
OTHERWISE, SHARES OF COMMON STOCK NECESSARY TO MAKE DELIVERY OF SHARES WHICH
WOULD HAVE BEEN DELIVERED IF THE FULL AMOUNT OF THE SHARES TO BE DELIVERED
TO
THE INVESTOR BY THE COMPANY, THEN WE MUST PAY TO THE INVESTOR, IN ADDITION
TO ANY OTHER AMOUNTS DUE TO INVESTOR PURSUANT TO THE PUT AND A OPEN MARKET
ADJUSTMENT AMOUNT.
If
the
company fails to deliver any portion of the shares of the put to the investor
and the investor’s purchases, in an open market transaction or otherwise, shares
of common stock necessary to make delivery of shares which would have been
delivered if the full amount of the shares to be delivered to the investor
by
the company, then we must pay to the investor, in addition to any other amounts
due to investor pursuant to the put and a open market adjustment
amount. The "open market adjustment amount" is the amount equal to
the excess, if any, of (x) the investor total purchase price (including
brokerage commissions, if any) for the open market share purchase minus (y)
the
net proceeds (after brokerage commissions, if any) received by the investor
from
the sale of the put shares due. We must pay the open market
adjustment amount to the investor in immediately available funds within five
(5)
business days of written demand by the investor. By way of
illustration and not in limitation of the foregoing, if the investor purchases
shares of common stock having a total purchase price (including brokerage
commissions) of $11,000 to cover an open market purchase with respect to shares
of common stock it sold for net proceeds of $10,000, the open market purchase
adjustment amount which we will be required to pay to the investor will be
$1,000.
OUR
STOCK IS THINLY TRADED, AS A RESULT YOU MAY BE UNABLE TO SELL AT OR NEAR ASK
PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR SHARES.
The
shares of our common stock are thinly-traded on the OTC Bulletin Board, meaning
that the number of persons interested in purchasing our common shares at or
near
ask prices at any given time may be relatively small or non-existent. This
situation is attributable to a number of factors, including the fact that we
are
a small company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate
or
influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven, early stage company such as ours or purchase or recommend the purchase
of our shares until such time as we became more seasoned and
viable.
As
a
consequence, there may be periods of several days or more when trading activity
in our shares is minimal or non-existent, as compared to a seasoned issuer
which
has a large and steady volume of trading activity that will generally support
continuous sales without an adverse effect on share price. We cannot give you
any assurance that a broader or more active public trading market for our common
shares will develop or be sustained, or that current trading levels will be
sustained. Due to these conditions, we can give investors no assurance that
they
will be able to sell their shares at or near ask prices or at all if you need
money or otherwise desire to liquidate their shares.
OUR
STOCK PRICE MAY DECREASE DUE TO OUR MARKET CAP BASED ON THE FUTURE ISSUANCES
OF
ADDITIONAL SHARES OF COMMON OR PREFERRED STOCK.
Our
Articles of Incorporation authorize the issuance of one hundred million
(100,000,000) shares of common stock. As of November 26, 2007, we had 4,504,962
shares of common stock issued and 4,102,000 shares of common stock outstanding.
As such, our Board of Directors has the power, without shareholder approval,
to
issue up to 95,848,000 shares of common stock. The issuance of such shares
will
dilute the shares held by the current shareholders. In addition, our articles
of
incorporation also provide that we are authorized to issue up to 50,000,000
shares of blank check preferred stock with a par value of $.001 per share.
“Blank Check” means that the rights and preferences of the preferred shares have
not been determined. As of the date of this prospectus, there are 5,000,000
shares of preferred stock issued and outstanding.
Our
Board
of Directors has the authority, without further action by the shareholders,
to
issue from time to time the preferred stock and with such relative rights,
privileges, preferences and restrictions that the Board may determine. Any
issuance of preferred stock will dilute the voting power or other rights of
the
holders of common stock. If preferred shares are issued it may impact our
decision to issue dividends since this may increase the number of dividends
that
we would be issuing. In addition, it is possible that the Board of Directors
may
determine that the preferred shares will have rights and preferences, including
dividend rights, over the common stockholders.
USE
OF PROCEEDS
The
selling stockholders are selling shares of common stock covered by this
prospectus for their own account. We will not receive any of the proceeds from
the resale of these shares. We have agreed to bear the expenses relating to
the
registration of the shares for the selling security holders. However, whenever
Dutchess sells shares issued under the equity line we will have received
proceeds when we originally put such shares to the Investor. The proceeds
received from any “Puts” tendered to Dutchess under the Equity Line of Credit
will be used for payment of general corporate and operating
expenses.
SELLING
SECURITY HOLDERS
We
agreed
to register for resale shares of common stock by the selling securityholders
listed below. The selling securityholders may from time to time offer and sell
any or all of their shares that are registered under this prospectus. The
selling securityholders, and any participating broker-dealers are “underwriters”
within the meaning of the Securities Act of 1933, as amended. All expenses
incurred with respect to the registration of the common stock will be borne
by
us, but we will not be obligated to pay any underwriting fees, discounts,
commissions or other expenses incurred by the selling securityholders in
connection with the sales of such shares.
The
following table sets forth information with respect to the maximum number of
shares of common stock beneficially owned by each of the selling securityholders
named below and as adjusted to give effect to the sales of the shares offered
hereby. The shares beneficially owned have been determined in accordance with
rules promulgated by the SEC, and the information is not necessarily indicative
of beneficial ownership for any other purpose. The information in the table
below is current as of the date of this prospectus. All information contained
in
the table below is based upon information provided to us by the selling
securityholders and we have not independently verified this information. The
selling securityholders are not making any representation that any shares
covered by the prospectus will be offered for sale. The selling securityholders
may from time to time offer and sell pursuant to this prospectus any or all
of
the common stock being registered.
Except
as
indicated below, the selling securityholders have never held any position or
office with us, nor are any of the selling securityholders associates or
affiliates of any of our officers or directors. Except as indicated below,
no
selling stockholder is the beneficial owner of any additional shares of common
stock or other equity securities issued by us or any securities convertible
into, or exercisable or exchangeable for, our equity securities. No selling
stockholder is a registered broker-dealer or an affiliate of a
broker-dealer.
For
purposes of this table, beneficial ownership is determined in accordance with
SEC rules, and includes voting power and investment power with respect to shares
and shares owned pursuant to warrants exercisable within 60 days. The "Number
of
Shares Beneficially Owned After the Offering” column assumes the sale of all
shares offered.
As
explained below under “Plan of Distribution,” we have agreed with the selling
securityholders to bear certain expenses (other than broker discounts and
commissions, if any) in connection with the registration statement, which
includes this prospectus.
Name
|
|
Number
of Shares Beneficially
Owned
Prior to Offering
(1)
|
|
Number
of Shares Offered
|
|
Number
of Shares Beneficially Owned After the Offering
|
|
Dutchess
Private Equities Fund, Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
actual number of shares of common stock offered in this prospectus,
and
included in the registration statement of which this prospectus is
a part,
includes such additional number of shares of common stock as may
be issued
or issuable upon draws under the Dutchess Equity
Line.
|
TRANSACTION
WITH DUTCHESS
PRIVATE EQUITIES FUND, LP
On
November 5, 2007, we entered into an Investment Agreement (the “Original
Agreement”) with Dutchess Private Equities Fund, Ltd. (the
“Investor”). Pursuant to this Agreement, the Investor shall commit to
purchase up to $10,000,000 of our common stock over the course of thirty-six
(36) months. The amount that we shall be entitled to request from each purchase
(“Puts”) shall be equal to, at our election, either (i) up to $250,000 or (ii)
200% of the average daily volume (U.S. market only) of the common stock for
the
three (3) trading days prior to the applicable put notice date, multiplied
by
the average of the three (3) daily closing bid prices immediately preceding
the
put date. The put date shall be the date that the Investor receives a put notice
of a draw down by us. The purchase price shall be set at ninety-three percent
(93%) of the lowest closing bid price of the common stock during the pricing
period. The pricing period shall be the five (5) consecutive trading days
immediately after the put notice date. There are put restrictions applied on
days between the put date and the closing date (as defined in the Investment
Agreement as no more than seven trading days following the put date) with
respect to that particular Put. During this time, we shall not be
entitled to deliver another put notice.
We
understand that a delay in the issuance of Securities beyond the Closing Date
could result in economic damage to the Investor. After the Effective Date,
as
compensation to the Investor for such loss, we have agreed to make late payments
in cash to the Investor for late issuance of Securities (delivery of Securities
after the applicable Closing Date) in accordance with the following schedule
(where "No. of Days Late" is defined as the number of trading days beyond the
Closing Date, with the Amounts being cumulative.):
LATE
PAYMENT FOR EACH NO.
OF
DAYS LATE
|
$10,000
WORTH OF
COMMON STOCK
|
|
|
1
|
$100
|
2
|
$200
|
3
|
$300
|
4
|
$400
|
5
|
$500
|
6
|
$600
|
7
|
$700
|
8
|
$800
|
9
|
$900
|
10
|
$1,000
|
Over 10
|
$1,000 + $200 for each
Business Day late beyond 10 days
|
We
shall
make any payments incurred under this Section in immediately available funds
upon demand by the Investor. Nothing herein shall limit the Investor's right
to
pursue actual damages for our failure to issue and deliver the Securities to
the
Investor, except that such late payments shall offset any such actual damages
incurred by the Investor, and any Open Market Adjustment Amount, as discussed
below.
If,
by
the third business day after seven day period following the delivery of a put
notice, we fail to deliver any portion of the shares of the Put to the Investor
(the "Put Shares Due") and the Investor purchases, in an open market transaction
or otherwise, shares of Common Stock necessary to make delivery of shares which
would have been delivered if the full amount of the shares to be delivered
to
the Investor by us. (the "Open Market Share Purchase") , then we shall pay
to
the Investor in cash, in addition to any other amounts due to Investor pursuant
to the Put, and not in lieu thereof, the Open Market Adjustment Amount (as
defined below).
The
"Open
Market Adjustment Amount" is the amount equal to the excess, if any, of (x)
the
Investor's total purchase price (including brokerage commissions, if any) for
the Open Market Share Purchase minus (y) the net proceeds (after brokerage
commissions, if any) received by the Investor from the sale of the Put Shares
Due. We shall pay the Open Market Adjustment Amount to the Investor
in immediately available funds within five (5) business days of written demand
by the Investor. By way of illustration and not in limitation of the
foregoing, if the Investor purchases shares of Common Stock having a total
purchase price (including brokerage commissions) of $11,000 to cover an Open
Market Purchase with respect to shares of Common Stock it sold for net proceeds
of $10,000, the Open Market Purchase Adjustment Amount which we will be required
to pay to the Investor will be $1,000.
In
connection with the Agreement, we entered into a Registration Rights Agreement
with Dutchess (“Registration Agreement”). Pursuant to the Registration
Agreement, we are obligated to file a registration statement with the Securities
and Exchange Commission covering the shares of common stock underlying the
Agreement within thirty (15) days after the November 5, 2007 execution of the
Original Agreement.
We
agreed
to pay the Investor $15,000 in cash for preparation of the Agreement and the
Registration Agreement.
In
addition, we are obligated to use all commercially reasonable efforts to have
the registration statement declared effective by the SEC within ninety (90)
days
after the closing date. The Agreement does not impose any penalties on us for
failure to meet either the 15 day or 90 day obligations, however, we shall
endeavor to meet both such deadlines.
PLAN
OF DISTRIBUTION
The
selling securityholders and any of their respective pledges, donees, assignees
and other successors-in-interest may, from time to time, sell any or all of
their shares of common stock on any stock exchange, market or trading facility
on which the shares are traded or in private transactions. These sales may
be at
fixed or negotiated prices. The selling securityholder may use any one or more
of the following methods when selling shares:
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as
agent, but may position and resell a portion of the block as principal
to
facilitate the transaction
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
·
|
privately
negotiated transactions;
|
·
|
broker-dealers
may agree with the selling securityholder to sell a specified number
of
such shares at a stipulated price per share;
|
·
|
through
the writing of options on the shares;
|
·
|
a
combination of any such methods of sale; and
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling securityholders or any of their respective pledgees, donees, transferees
or other successors in interest, may also sell the shares directly to market
makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Such broker-dealers may receive compensation
in
the form of discounts, concessions or commissions from the selling
securityholder and/or the purchasers of shares for whom such broker-dealers
may
act as agents or to whom they sell as principal or both, which compensation
as
to a particular broker-dealer might be in excess of customary commissions.
Market makers and block purchasers purchasing the shares will do so for their
own account and at their own risk. It is possible that a selling stockholder
will attempt to sell shares of common stock in block transactions to market
makers or other purchasers at a price per share which may be below the then
market price. The selling securityholders cannot assure that all or any of
the
shares offered in this prospectus will be issued to, or sold by, the selling
securityholders. The selling securityholders and any brokers, dealers or agents,
upon effecting the sale of any of the shares offered in this prospectus, are
"underwriters" as that term is defined under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, or the rules and
regulations under such acts. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased
by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.
Discounts,
concessions, commissions and similar selling expenses, if any, attributable
to
the sale of shares will be borne by a selling stockholder. The selling
securityholder may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act of 1933.
The
selling securityholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if
they
default in the performance of their secured obligations, the pledgee or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or any other applicable provision of the Securities Act of 1933
amending the list of selling securityholders to include the pledgee, transferee
or other successors in interest as selling securityholders under this
prospectus.
The
selling securityholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list
of
selling securityholders to include the pledgee, transferee or other successors
in interest as selling securityholders under this prospectus.
We
are
required to pay all fees and expenses incident to the registration of the shares
of common stock. We have agreed to indemnify the selling securityholders against
certain losses, claims, damages and liabilities, including liabilities under
the
Securities Act of 1933.
The
selling securityholders acquired the securities offered hereby in the ordinary
course of business and have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed
sale
of shares of common stock by any selling stockholder.
If
we are
notified by any selling stockholder that any material arrangement has been
entered into with a broker-dealer for the sale of shares of common stock, if
required, we will file a supplement to this
prospectus.
If
the selling securityholders use this prospectus for any sale of the shares
of
common stock, they will be subject to the prospectus delivery requirements
of
the Securities Act of 1933.
The
anti-manipulation rules of Regulation M under the Securities Exchange Act of
1934 may apply to sales of our common stock and activities of the selling
securityholders.
LEGAL
PROCEEDINGS
There
are
no legal proceedings pending or threatened legal actions against
us.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The
sole
director and executive officer of the Company is:
Name
|
Age
|
Position
|
Date
Appointed
|
Ernest
W. Letiziano
|
62
|
President,
Chief Executive Officer,
Chief
Financial Officer and Director
|
July
8, 2005
|
Set
forth
below is a brief description of the background and business experience of our
sole executive officer and director for the past five years,
Mr. Letiziano. Mr. Letiziano devotes 100% of his time to the
Company.
ERNEST
W. LETIZIANO
was appointed as the Company’s President, Chief Executive
Officer, Chief Financial officer and sole director as of July 8, 2005.
Mr. Letiziano, age 62, has 40 years of experience in finance, business and
sports and entertainment. After serving his internship with Haskins & Sells,
CPA’s, Mr. Letiziano sat for his CPA Certificate in Pennsylvania. In 1964
he also received his Registered Municipal Accountant’s Certificate to practice
in New York, New Jersey and Pennsylvania. He was employed with Haskins and
Sells
from 1962-1969. Letiziano attended Pennsylvania State University,
where he majored in accounting and economics. From 1970-1972, he co-owned an
accounting practice in Reading, PA. From 1992 to April 2002, Mr. Letiziano
has been self-employed as an international monetarist facilitating financial
transactions for his clients. Mr. Letiziano has not been involved in any
other business since forming Signet International. He was last active as an
international monetarist prior to 2003. From 1988 to 1993, Mr. Letiziano
was CEO of Ringside International Broadcasting Corporation, (NASDAQ
symbol:
RIBC). The company was sold in 1993 to a Houston based company.
Mr. Letiziano co-owned Classic Motor Car Company, an
automobile-manufacturer 1973-1976. From 1977 to 1982 he was Vice President
of
First Florida Utilities, Inc., a five-state utility public company (NASDAQ
symbol
SFFL). In 1982, Mr. Letiziano founded, Ringside Events,
Inc., a promotional boxing enterprise. He has held commission licenses in 13
states and Great Britain and has promoted and produced over 150 major events
worldwide.
Term
of Office
Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the board.
The
officer and director listed above will remain in office until the next annual
meeting of our stockholders, and until their successors have been duly elected
and qualified. There are no agreements with respect to the election of our
director. We have not compensated our director for service on our Board of
Directors, any committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any committee of our
Board of Directors. Officers are appointed annually by our Board of Directors
and each Executive Officer serves at the discretion of our Board of Directors.
We do not have any standing committees. Our Board of Directors may in the future
determine to pay Directors’ fees and reimburse Directors for expenses related to
their activities.
Our
officer and director has not filed any bankruptcy petition, been convicted
of or
been the subject of any criminal proceedings or the subject of any order,
judgment or decree involving the violation of any state or federal securities
laws within the past five (5) years.
Audit
Committee
We
do not
have a standing audit committee of the Board of Directors. Management has
determined not to establish an audit committee at present because of our limited
resources and limited operating activities do not warrant the formation of
an
audit committee or the expense of doing so. We do not have a financial expert
serving on the Board of Directors or employed as an officer based on
management’s belief that the cost of obtaining the services of a person who
meets the criteria for a financial expert under Item 401(e) of Regulation S-B
is
beyond its limited financial resources and the financial skills of such an
expert are simply not required or necessary for us to maintain effective
internal controls and procedures for financial reporting in light of the limited
scope and simplicity of accounting issues raised in its financial statements
at
this stage of its development.
Involvement
in Certain Legal Proceedings
No
director, nominee for director, or executive officer of the Company has appeared
as a party in any legal proceeding material to an evaluation of his ability
or
integrity during the past five years.
Promoters
Scott
Raleigh was our sole officer and director prior to the change in control and
is
deemed to be the sole promoter. Mr. Raleigh currently has no involvement with
the Company.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the number and percentage of shares of our common
stock owned as of November 26, 2007 by all persons (i) known to us who own
more
than 5% of the outstanding number of such shares, (ii) by all of our directors,
and (iii) by our sole officer and director as a group. Unless otherwise
indicated, each of the stockholders has sole voting and investment power with
respect to the shares beneficially owned.
Security
Ownership of Certain Beneficial Owners
Title
of Class
|
Name
and Address of Beneficial Owner
|
Amount
and Nature
of
Beneficial Ownership
|
Percentage
of Class (1)
|
|
|
|
|
Common
Stock
|
Letiziano,
Ernest W (2)
|
1,000,000
(6)
|
24.38%
|
|
|
|
|
Common
Stock
|
Donaldson,
Thomas (3)
|
601,000
|
14.65%
|
|
|
|
|
Common
Stock
|
Hillabrand,
Hope E (4)
|
501,000
|
12.21%
|
|
|
|
|
Common
Stock
|
Grad,
Richard (5)
|
401,000
|
9.78%
|
|
|
|
|
Preferred
Stock
|
Letiziano,
Ernest W (2)
|
2,500,000
|
50%
|
|
|
|
|
Preferred
Stock
|
Donaldson,
Thomas (3)
|
1,000,000
|
20%
|
|
|
|
|
Preferred
Stock
|
Hillabrand,
Hope E (4)
|
1,500,000
|
30%
|
(1)
|
Based
on 4,102,000 shares of our common stock outstanding.
|
(2)
|
The
address for Mr. Letiziano is 205 Worth Avenue, Suite 316, Palm Beach,
Florida 33480.
|
(3)
|
The
address for Mr. Donaldson is 9588 San Vittore St. Lake Worth,
FL 33467
|
(4)
|
The
address for Ms. Hillabrand is PO Box 3191 Stuart,
FL 34995
|
(5)
|
The
address for Mr. Grad is 8845 Karen Lee La Peoria, AZ
85382
|
(6)
|
Of
these 1,000,000 shares, Mr. Letiziano owns 900,000 shares directly.
The remaining 100,000 shares are held by Signet Entertainment Corp,
our
wholly owned subsidiary. Because Mr. Letiziano is our sole officer
and director, he has investment control over these 100,000 shares
of our
common stock held by Signet Entertainment Corp.
|
(7)
|
None
of the individuals listed in this table qualify as a beneficial owner
under Securities Act Release No. 33-4819. Mr. Letiziano,
Mr. Donaldson, Ms. Hillabrand, and Mr. Grad do not have any
spouses or minor children that hold shares in the
Company.
|
Security
Ownership of Management
Title
of Class
|
Name
and address of Beneficial Owner (1)
|
Amount
and Nature
of
Beneficial Ownership
|
Percentage
of Class
|
|
|
|
|
Common
Stock
|
Letiziano,
Ernest W.
|
1,000,000
(2)
|
24.38%
(3)
|
Preferred
Stock
|
Letiziano,
Ernest W
|
2,500,000
|
50%
(4)
|
(1)
|
The
address for each of the individuals listed in this table is 205 Worth
Avenue, Suite 316, Palm Beach, Florida 33480.
|
|
|
(2)
|
Of
these 1,000,000 shares, Mr. Letiziano owns 900,000 shares directly.
The remaining 100,000 shares are held by Signet Entertainment Corp,
our
wholly owned subsidiary. Because Mr. Letiziano is our sole officer
and director, he has investment control over these 100,000 shares
of our
common stock held by Signet Entertainment Corp.
|
(3)
|
Based
on 4,102,000 shares of our common stock outstanding.
|
(4)
|
Based
on 5,000,000 shares of our preferred stock
outstanding.
|
Changes
in Control
There
are
no arrangements which may result in a change in control of us.
DESCRIPTION
OF SECURITIES
General
Our
authorized capital stock consists of 100,000,000 shares of common stock at
a par
value of $.001 per share and 50,000,000 shares of preferred stock at a par
value
of $.001 per share. As of November 26, 2007, 4,152,000 shares of common stock
were issued and 4,102,000 shares of common stock were outstanding. On March
31,
2006, the Company repurchased 50,000 shares of common stock from the estate
of a
deceased shareholder which purchased said shares pursuant to the aforementioned
Regulation D Rule 506 offering completed in May 2006 for $50,000 cash. In
addition, 5,000,000 shares of preferred stock were issued and
outstanding.
Common
Stock
Holders
of our common stock are entitled to one vote for each share on all matters
submitted to a stockholder vote. Holders of common stock do not have cumulative
voting rights. Therefore, holders of a majority of the shares of common stock
voting for the election of directors can elect all of the directors. Holders
of
our common stock representing a majority of the voting power of our capital
stock issued and outstanding and entitled to vote, represented in person or
by
proxy, are necessary to constitute a quorum at any meeting of our
stockholders.
A
vote by
the holders of a majority of our outstanding shares is required to effectuate
certain fundamental corporate changes such as liquidation, merger or an
amendment to our Articles of Incorporation.
Holders
of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of liquidation, dissolution or winding up, each outstanding share entitles
its holder to participate pro rata in all assets that remain after payment
of
liabilities and after providing for each class of stock, if any, having
preference over the common stock. Holders of our common stock have no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
Preferred
Stock
Holders
of shares of preferred stock are entitled to one vote for each share on all
matters to be voted on by the stockholders. Holders of preferred stock do not
have cumulative voting rights. Holders of preferred stock are entitled to share
ratably in dividends, if any, as may be declared from time to time by the Board
of Directors in its discretion from funds legally available therefore. In the
event of a liquidation, dissolution or winding up of the Company, the holders
of
preferred stock are entitled to share pro rata all assets remaining after
payment in full of all liabilities. All of the outstanding shares of preferred
stock are fully paid and non-assessable. Holders of preferred stock have no
preemptive rights to purchase our preferred stock. There are no conversion
or
redemption rights or sinking fund provisions with respect to the preferred
stock.
Our
Board
of Directors has the authority, without further action by the shareholders,
to
issue from time to time the preferred stock in one or more series for such
consideration and with such relative rights, privileges, preferences and
restrictions that the Board may determine. The preferences, powers, rights
and
restrictions of different series of preferred stock may differ with respect
to
dividend rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions and purchase funds and
other matters. The issuance of preferred stock could adversely affect the voting
power or other rights of the holders of common stock.
Warrants
There
are
no outstanding warrants to purchase our securities.
Options
There
are
no options to purchase our securities outstanding. We may in the future
establish an incentive stock option plan for our directors, employees and
consultants.
Anti-Takeover
Effect of
Delaware
Law, Certain Charter and By-Law
Provisions
Our
certificate of incorporation and bylaws contain provisions that could have
the
effect of discouraging potential acquisition proposals or tender offers or
delaying or preventing a change of control of our company. These provisions
have
the following effects:
-
|
they
provide that special meetings of stockholders may be called only
by a
resolution adopted by a majority of our board of
directors;
|
|
|
-
|
they
provide that only business brought before an annual meeting by our
board
of directors or by a stockholder who complies with the procedures
set
forth in the bylaws may be transacted at an annual meeting of
stockholders;
|
|
|
-
|
they
provide for advance notice of specified stockholder actions, such
as the
nomination of directors and stockholder proposals;
|
|
|
-
|
they
do not include a provision for cumulative voting in the election
of
directors. Under cumulative voting, a minority stockholder holding
a
sufficient number of shares may be able to ensure the election of
one or
more directors. The absence of cumulative voting may have the effect
of
limiting the ability of minority stockholders to effect changes in
our
board of directors and, as a result, may have the effect of deterring
a
hostile takeover or delaying or preventing changes in control or
management of our company; and
|
|
|
-
|
they
allow us to issue, without stockholder approval, up to 50,000,000
shares
of preferred stock that could adversely affect the rights and powers
of
the holders of our common stock. In some circumstances, this issuance
could have the effect of decreasing the market price of our common
stock,
as well.
|
We
are subject to the provisions of
Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits
a publicly held
Delaware
corporation from engaging in a
‘‘business combination’’ with an ‘‘interested stockholder’’ for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. For purposes of Section 203, a ‘‘business combination’’
includes a merger, asset sale or other transaction resulting in a financial
benefit to the interested stockholder, and an ‘‘interested stockholder’’ is a
person who, together with affiliates and associates, owns, or within three
years
prior did own, 15% or more of the voting stock of a
corporation.
INTEREST
OF NAMED EXPERTS AND COUNSEL
No
expert
or counsel named in this prospectus as having prepared or certified any part
of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the common stock was employed on a contingency basis, or had,
or
is to receive, in connection with the offering, a substantial interest, direct
or indirect, in the registrant or any of its parents or subsidiaries. Nor was
any such person connected with the registrant or any of its parents or
subsidiaries as a promoter, managing or principal underwriter, voting trustee,
director, officer, or employee. Anslow & Jaclin, LLP, our independent legal
counsel, has provided an opinion on the validity of our common stock. Anslow
& Jaclin, LLP has been our legal counsel since inception.
The
financial statements included in this prospectus and the registration statement
have been audited S. W. Hatfield, CPA certified public accountants, to the
extent and for the periods set forth in their report appearing elsewhere herein
and in the registration statement, and are included in reliance upon such report
given upon the authority of said firm as experts in auditing and
accounting.
DISCLOSURE
OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our
directors and officers are indemnified as provided by the Delaware Statutes
and
our Bylaws. We have been advised that in the opinion of the Securities and
Exchange Commission indemnification for liabilities arising under the Securities
Act is against public policy as expressed in the Securities Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless
in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by
the
court’s decision.
ORGANIZATION
WITHIN LAST FIVE YEARS
We
were
incorporated in the State of Delaware under the name 51142 Inc. on February
2,
2005. On July 8, 2005, pursuant to the terms of a Stock Purchase Agreement,
Signet Entertainment Corporation, a Florida corporation purchased all of our
issued and outstanding common stock for cash consideration of $36,000.
Subsequently, we changed our name to Signet International Holdings,
Inc.
On
September 8, 2005, pursuant to a Stock Purchase Agreement and Share Exchange
by
and among us, Signet Entertainment Corporation, and the shareholders of Signet
Entertainment Corporation (“Shareholders”), we acquired all of the then issued
and outstanding preferred and common shares of Signet Entertainment Corporation
for a total of 3,421,000 common shares and 5,000,000 preferred shares of our
stock which was issued to the Signet Entertainment Corporation shareholders.
Pursuant to the agreement Signet Entertainment Corporation became our wholly
owned subsidiary.
DESCRIPTION
OF BUSINESS
Business
Development
We
were
incorporated in the State of Delaware under the name 51142 Inc. on February
2,
2005 as a blank check company to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. On July 8,
2005, pursuant to the terms of a Stock Purchase Agreement, Signet Entertainment
Corporation, a Florida corporation, purchased all of our issued and outstanding
common stock for cash consideration of $36,000. Subsequently, we changed our
name to Signet International Holdings, Inc.
On
September 8, 2005, pursuant to a Stock Purchase Agreement and Share Exchange
by
and among us, Signet Entertainment Corporation, and the shareholders of Signet
Entertainment Corporation (“Shareholders”), we acquired all of the then issued
and outstanding preferred and common shares of Signet Entertainment Corporation
for a total of 3,421,000 common shares and 5,000,000 preferred shares of our
stock which was issued to the Signet Entertainment Corporation shareholders.
Pursuant to the agreement Signet Entertainment Corporation became our wholly
owned subsidiary.
Business
of Issuer
Our
wholly owned subsidiary, Signet Entertainment Corporation (“SIG”), was
incorporated on October 17, 2003 for the purpose of launching a “gaming and
entertainment” television network. We will purchase, lease, and employ the
apparatus, equipment, and personnel necessary to establish the network. The
network will cover major Poker and Blackjack tournaments as well as other major
high stakes casino games.
The
network will also cover via satellite and cable other sports events such as
horse racing and selected global events which have a sports and entertainment
format. SIG’s largest source of revenue will come from advertising, specifically
from various resorts and casinos, and sporting sites in North and South America,
Europe, Asia and Africa. SIG will realize income from infomercials and sports
and entertainment programming that offer subject matter that are
all-encompassing to the network’s format. Signet International Holdings, Inc.
does not have international operations.
It
is our
opinion that we are not a blank check company as defined in Rule 419 under
the
Securities Act of 1933 (as amended) since we have conducted operating activities
and have taken affirmative steps in the operation of our business. Our primary
business plan is that of a television broadcasting company. Part of our business
plan includes the acquisition of other LPTV stations, however, any such
acquisition would be contemplated only so far as such acquisition would further
our business plan to launch a television broadcasting company. Please note
that
the only business acquisitions will be solely of LPTV stations or other
broadcast properties and that we will not enter into any agreement that will
result in a change of control. We will not enter into any acquisition that
requires Mr. Letiziano, our sole officer and director, to give up voting
control of our stock or requires his resignation as our officer or director.
In
the event we acquire other entities in the future, Mr. Letiziano will
maintain his ownership interest as well as his positions with us as full-time
Chief Executive Officer and majority stockholder.
General
In
order
to implement its purpose of launching a gaming and entertainment television
network, SIG entered into agreements with Triple Play Media Management, Inc.
(“Triple Play”) and Big Vision, Inc. (“Big Vision”). Pursuant to the agreements,
Triple Play will operate our facilities and provide programming content. Triple
Play will produce television shows (programs) in the gaming and entertainment
genre. Triple Play will also negotiate with rights-holders of old re-run
television shows and provide these shows for additional programming. Big Vision
will provide the equipment and technology to establish the
facility.
Pursuant
to our Management Agreement with Triple Play, Triple Play has agreed to manage
and operate our facility in exchange for financial and administrative support
of
its ready-to-launch, new television network, “The Gaming & Entertainment
Network.” In essence, we will provide the facilities, while Triple Play will
provide the management of such facilities as well as programming content. We
will pay Triple Play a management fee of 12% each year, provided we realize
a
minimum pre-tax net profit of 25%. In addition, we will provide an allowance
for
costs related to licensing, permits, and other fees related to broadcasting
equal to one-half percent of total gross revenues. In exchange, we will receive
87.5% of Triple Play’s gross revenues less operating expenses.
Our
Management Agreement with Big Vision provides for the use by us of Big Vision’s
equipment and property for the staging of our facility. In exchange for use
of
the facilities, we will pay a service fee to Big Vision on a “most favored
nation” basis for the first year of our operations. “Most favored nation” basis
is a term used in the TV Production Industry to indicate that the rates charged
by producers (in this case Big Vision) will be below fair-market rates, or
at
“wholesale” costs. In essence, in our first year, we will pay Big Vision a fee
equal to its costs in providing the equipment and facilities. After the initial
year, we will pay Big Vision industry standard rates plus an additional
15%.
In
addition, to further the launch of our gaming and entertainment television
network we purchased the exclusive rights to 20 titled half hour screen plays
representing original programming from FreeHawk Productions, Inc. The Company's
agreement with FreeHawk dated April 13, 2006 provides for the purchase by Signet
of the exclusive rights to 20 half-hour TV screen plays each with an additional
13 episodes. FreeHawk was to receive $450,000 in cash and 550,000 shares of
Signet common stock over a minimum of 36 months payments to be made subject
to
delivery of the screen plays as scheduled by Signet. On August 19, 2006, by
mutual agreement, Signet and FreeHawk rescinded this agreement because the
agreement called for the payment of funds and stock which we can not pay until
such time as our shares are trading and we can receive additional financing.
Therefore, the parties mutually agreed that the agreement was premature and
therefore the agreement was rescinded without the payment of any cash or stock
to FreeHawk by us. We intend to enter into a restructured agreement, at such
time as we are a public company and can raise the necessary capital. At this
time, there are no discussions to restructure the agreement.
Furthermore,
we intend to acquire Low-Powered Television (LPTV) stations as a means for
distributing our programming to viewers. Currently, we do not own any LPTV
stations or other broadcast properties, nor do we own or have control over
an
FCC licenses to operate any LPTV stations. We believe that LPTV affords an
opportunity for entry into television broadcasting and has permitted fuller
use
of the broadcast spectrum. LPTV stations offer national advertisers highly
defined audiences;. As advertisers search for ways to reach targeted demographic
groups, we believe LPTV stations will become an increasingly important part
of
their advertising strategy. We plan on targeting LPTV stations that are
sanctioned by the Federal Communication Commission with current and clear
license to operate and feature: Class A rating, high-distribution (high number
of TV households), favorable market location, up-to-date equipment, tower
delivery systems, and studio properties.
Programming
Triple
Play Management Agreement
On
October 23, 2003, Signet Entertainment entered into a Management Agreement
with
Triple Play Media Management (Triple Play) of Peoria, Arizona. Triple
Play is engaged to be the management company to manage and operate any acquired
Signet facility (facilities) on a permanent basis for Signet for a period
of ten
years (the initial period) with an automatic extension of an additional ten
years unless the dissenting party gives proper notice.
The
working capital commitment is based on mutually agreed budgets and is projected
to amount approximately $15 million, inclusive of management
fees. This advance of management fees would be drawn down by Triple
Play over approximately the first 12 months of its operations which would
begin
once Signet has access to the secondary offering funding. This
advance will be recovered by Signet from Triple Play’s future cash
flows. In return, Signet will receive 87.5 % of Triple Play’s monthly
gross revenues less Triple Play’s monthly operating expenses.
For
the services,
Triple Play shall render to Signet, Signet shall pay management fees to Triple
Play based upon Triple Play’s gross revenues, as follows: a) 12% of
Triple Play’s gross revenues, provided that Triple Play realizes a minimum pre
tax net profit of 25%, plus b) Ѕ% (one half percent) of Triple Play’s gross
revenues for Triple Play’s costs of licenses and permits for international air
waves and feeds dutie
s and
taxes,
satellite transmission links, down links, including earth
stations.
Other
Programming
In
addition to the programs produced by Triple Play, we intend to produce our
own
original programming and air infomercials during off-peak hours.
On
April
13, 2006 we purchased the exclusive rights to 20 titled half hour screen plays
representing original programming. This contract was later rescinded on August
19, 2006 by mutual agreement of the parties.
Big
Vision, Inc.Big Vision Management Contract
On
July
22, 2005, Signet Entertainment entered into a Management Agreement with Big
Vision Studios, a Nevada Limited Liability Company (Big Vision) located in
both Las Vegas, Nevada and Burbank, California whereby Big Vision will be
the
exclusive supplier of High Definition Equipment and Studio rental for
Signet.
This
agreement is for a period of one (1) year, commencing with the submission
by
Signet’s of evidence of the total capital funds required for the establishment
of Signet’s Network including providing funds for the budgeted operations of the
business for the term of this agreement plus extensions to Big Vision, with
an
automatic extension of an additional five years unless the dissenting party
gives proper notice. Signet has agreed to pay a reduced fee to Big
Vision, at a discount negotiated off of Big Vision’s published standard rate
card, for the first year of Signer’s operations. After the initial
year, Signet has agreed to pay Big Vision based on Big Vision’s published
standard rate card at that point in time plus an additional 15% in
consideration of Big Vision’s concession in rates for the first
year
.
The
combination of contracting with Triple Play and Big Vision will provide us
the
unique opportunity to at once inaugurate not only the infomercial scheduled
segments but also the on-going programming operations.
Distribution
We
plan
to distribute our programming via in-home satellite services, digital cable
companies, and LPTV stations. Although we have not entered into any formal
agreements with any such companies, we received a non-binding pricing proposal
from a satellite delivery system.
Low
Power Television Stations.
We
intend
to acquire Low-Powered Television (LPTV) stations as another means for
distributing our programming to viewers. We intend acquiring LPTV stations
initially on a stock swap basis. With additional funding from a secondary
offering we will begin offering cash instead of or in addition to stock, for
some of the stations we purchase. We believe that LPTV affords an opportunity
for entry into television broadcasting and has permitted fuller use of the
broadcast spectrum. LPTV stations transmit on one of the standard VHF or UHF
television channels. The distance at which a station can be viewed depends
on a
variety of factors such as antenna height, transmitter powers, transmitting
antenna and the nature of the terrain. Generally LPTV stations span
approximately 20 miles from their tower in all directions.
The
LPTV
services were established by the Federal Communications Commission (FCC) in
1992. It was primarily intended to provide opportunities for locally oriented
television service in small communities within larger urban areas.
We
have
taken preliminary steps in the acquisition process. These steps include:
learning more about the LPTV industry, researching the fit of a number of
opportunities with the Signet business plan, retaining counsel, developing
and
getting approvals for a suitable stock swap agreement and ascertaining the
value
of potential LPTV stations for sale. However, we have not entered into any
negotiations with any specific LPTV stations.
Digital
Terrestrial Broadcasting Network
We
believe that digital television is becoming an integral television broadcasting
distribution channel. Digital television can deliver a large amount of
information at low cost to a high number of viewers. Digital television can
also
deliver more programs than traditional analog television over any transmission
mediums.
Through
our management agreement with Triple Play, we intend to operate a 36 MHz C-band
North American and Eutelsat DTH digital platform information
system.
Hi-Definition
Television
We
have
received a confidential, non-binding proposal from a major satellite provider
for a long term lease without change in costs for the next twelve months. The
proposal offers features that we could make available as a new delivery system.
Although we anticipate that this system will enable us to deliver HDTV (High
Definition Television) to our viewers throughout the world, we have not entered
into a definitive agreement or commitment to retain these services. Therefore
we
do not have viewers throughout the world at this stage. Please note that there
is no guarantee that we will be able to enter into a definitive agreement and
no
guarantee that we will be able to offer HDTV.
Intellectual
Properties
On
April
13, 2006 we purchased the exclusive rights to 20 titled half hour screen plays
representing original programming from FreeHawk Productions, Inc. On August
19,
2006, by mutual agreement, Signet and FreeHawk rescinded this agreement as
set
forth herein.
Employees
We
currently have one employee, our sole officer Ernest W. Letiziano.
Mr. Letiziano is Chief Executive Officer and in that role
Mr. Letiziano will implement the business plan. This will involve all the
Duties normally ascribed to a Chief Executive Officer for the day-to-day
management of the business, including but not limited to: secure and manage
revenues, manage costs and cash, safe-guard assets, ensure proper reporting
and
compliance with reporting bodies, ensure that the stockholder’s interests are
protected, manage risk and escalate issues as appropriate to the Board, conduct
regular reviews of the business with the Board, and contribute, faithfully
and
diligently, to the strategic development of the business.
Competition
With
the
growing availability of on demand, self-programming and search features, along
with increased competition from converging industry players in
telecommunications and the Internet, the television industry is facing
unparalleled complexity that will alter traditional TV business models. The
entertainment industry is therefore, extremely competitive.
The
competition comes from both companies within the industry and those who are
engaged in other forms of entertainment media that create alternative forms
of
leisure entertainment. The increasing gap between the major networks and the
smaller ones allows market space for smaller companies, such as Signet, to
develop.
Currently
the over the air networks may be identified by size according to the number
of
TV households they attract. The basic category or groupings of the major
networks and several of the lesser but better known networks are as
follows:
1
|
Major
networks such as ABC, CBS, NBC, FOX
|
2
|
Major
cable networks such as: ESPN, USA, Bravo, Fox Sports Net, UPN, PAX,
The
Travel Channel, The Tube
|
3
|
Smaller
cable networks: Food Channel, Spike TV, HGTV, Golf
Channel
|
4
|
Smaller
Cable/Satellite networks such as: CGTV Network (Canada), Variety
Sports
Network, Tvg Horse Racing. Such networks reach between one and eight
million TV households.
|
Our
key
competitive strategy is diversification in business risk and delivery systems.
We plan to be providers of television content creation, packaging, programming
and distribution; not only to our “owned and operated” LPTV stations, but via
other distributions systems such as cable and satellite. Additionally, we plan
to have our own “sports and entertainment network” to offer to stations and
cable systems.
We
will
develop and implement strategies that will not only serve this diverse audience
but will achieve significant cost savings from the traditional supply chain
in
order to fund new delivery channels, whether it be cable, broadcast TV, full
power or low power, the Internet or satellite.
The
entertainment industry, and particularly the television industry, is a highly
competitive commerce. Currently this industry is undergoing an aggressive period
of mergers and acquisitions. Once our presence is recognized, we will experience
potential competitors who have greater financial, marketing, programming and
broadcasting resources than we do.
The
markets in which we have targeted to acquire are also in a constant state of
change arising from, among other things, technological improvements and economic
and regulatory developments. Technological innovation and the resulting
proliferation of television entertainment, such as cable television, wireless
cable, satellite-to-home distribution services, pay-per-view and home video
and
entertainment systems, have fractionalized television viewing audiences and
have
subjected free over-the-air television broadcast stations to increased
competition. We may not be able to compete effectively or adjust our business
plans to meet changing market conditions. We are unable to predict what form
of
competition will develop in the future, the extent of the competition or its
possible effects on our businesses.
Government
Regulation
The
broadcasting industry is subject to regulation by the FCC pursuant to the
Communications Act of 1934, as amended (the “Communications Act”). Approval by
the FCC is required for the issuance, renewal and assignment of station
operating licenses and the transfer of control of station licensees. Although
the Company does not currently hold an FCC license, in the event that it
acquires or is granted an FCC license in the future, the Company’s business will
be dependent upon its continuing to hold television broadcast licenses from
the
FCC, which license are issued for maximum terms of eight years. While in the
vast majority of cases such licenses are renewed by the FCC, there can be no
assurance that the Company will be able to renew licenses it acquires or is
grant at their expiration dates. If such licenses were not renewed or
acquisitions approved, we may lose revenue that we otherwise could have
earned.
Although
we do not currently own any broadcast properties, our business plan contemplates
that we may acquire such properties through acquisition of LPTV stations. Based
on same, Federal regulation of the broadcasting industry will limit our
operating flexibility, which may affect our ability to generate revenue or
reduce our costs in the event we acquire such broadcast properties. In addition,
Congress and the FCC currently have under consideration, and may in the future
adopt, new laws, regulations and policies regarding a wide variety of matters
(including technological changes) that could, directly or indirectly, materially
and adversely affect our ability to acquire broadcast properties and the
operation and ownership of such broadcast properties. New federal legislation
may limit our ability to conduct our business in ways that we believe would
be
advantageous and may thereby negatively affect our operating results and
strategic decisions.
We
have
not applied for any FCC licenses. However, application will be made immediately
subsequent to execution of an agreement which results in the acquisition of
a
license, LPTV station or other broadcast property. Although the waiting period
for approval of such licenses can take between 60-90 days such period will
have
no effect on our business since we intend to assume responsibility only upon
license approval.
MANAGEMENT
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Caution
Regarding Forward-Looking Information
Certain
statements contained in this quarterly filing, including, without limitation,
statements containing the words “believes”, “anticipates”, “expects” and words
of similar import, constitute forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that
may cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
Such
factors include, among others, the following: international, national and local
general economic and market conditions: demographic changes; the ability of
the
Company to sustain, manage or forecast its growth; the ability of the Company
to
successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous
filings.
Given
these uncertainties, readers of this registration statement on Form SB-2 and
investors are cautioned not to place undue reliance on such forward-looking
statements.
Plan
of Operations
In
March
2007, upon the approval of our equity securities for trading on the Over the
Counter Bulletin Board, we began implementation of that part of our business
plan relating to the acquisition of LPTV stations by offering Sale & Share
Exchange Contracts with the LPTV Stations. Although we have had no
revenues generated to date, we expect to realize revenues from operations of
the
LPTV stations once agreements are finalized and executed and we take control
of
an LPTV station. Our intention is to not relinquish control of the
Company to any of the acquired LPTV stations resulting from any future
acquisition agreement. In addition, since the acquisition of the LPTV
stations will be based upon issuing our stock in exchange for the LPTV station’s
stock, we will incur no cash expenditures other than incidental expenses such
as
telephone, travel and general and administrative expenses. The
anticipated expenses that we will incur related to any LPTV acquisition have
been budgeted for as a component of our monthly expenses in the total amount
of
$10,500.00 per month as set forth below. The funds provided for the
monthly expenses, including the expenses for acquisition of the LPTV stations,
came from the issuance of shares raised by us in our private placement which
commenced in September 2005, which was completed in January 2006, and subsequent
individual private placements of our common stock. Our cash flow
requirements of $10,500.00 per month are anticipated to be accommodated
adequately by our September 30, 2007 cash balance of approximately
$73,000. The first nine months of Calendar 2007 have required the use
of approximately $100,000, inclusive of unanticipated legal fees of
approximately $15,000 in the third quarter of 2007. We believe that
we are on target for our current and previously disclosed
projections. We anticipate that our cash requirements will remain
fairly consistent until such time that we complete an acquisition or
acquisitions of operating broadcast properties. We do not anticipate
significant expenses for the negotiating and finalizing of the agreements since
we will undertake the due diligence ourselves and do not have to incur travel
expenses to visit the stations. In addition, we have already
anticipated these expenses as part of monthly budget.
It
is the
intent of management and significant stockholders, if necessary, to provide
sufficient working capital necessary to support and preserve the integrity
of
the corporate entity. Although we have verbal assurances from Mr.
Letiziano that he will provide such interim working capital, there is no legal
obligation for either management or significant stockholders to provide
additional future funding. We may raise additional funds through
additional public offerings of equity, securities convertible into equity or
debt, private offerings of securities.
Concurrent
with our anticipation of acquiring LPTV stations for stock during
2007, we intend to seek additional equity or debt financing. To date,
we have been able to raise funds in four funding rounds through both debt and
equity offerings.
We
anticipate that the funds we secure from our next round of financing will enable
us to acquire our initial LPTV stations, some with a cash consideration, and
provide additional working capital to enable us to possibly acquire some
stations making losses, purchase programming and initiate Triple Play Media
operations. Cash costs for this phase of our plan will include:
$25,000 related to the funding round plus up to $30 million to support the
acquisitions of more LPTV stations, plus up to $15 million to support Triple
Play. This phase of our plan will continue throughout 2007 and into
2008. Currently, we have no specific plans to raise additional
financing and we do not have any specific source(s) of such potential
financing. However, since our shares were approved for trading, we
have begun negotiations with several potential funding sources to assist with
the acquisitions of the stations. To date, we have no agreements or
understandings in place for this funding.
We
waited
until our Registration Statement on Form SB-2 was declared effective to commence
negotiating in earnest with at least one LPTV station. In previous
periods, we began to identify target LPTV station(s). We continue to
use the online site,
www.LPTV.com
, to identify stations that are for
sale. We have, to date, identified various station(s) that we plan to
approach in order to initiate acquisition negotiations. Our selection
criteria is principally focused on station(s) that are currently available
for
sale, have a potential audience of at least 550,000 TV households, are rated
Class A, and are located, in our opinion, in a growing market. As
stated above, we have identified several stations or groups of stations under
common control; however, we have not entered into any substantive agreements
and
continue to participate in either preliminary contacts or ongoing negotiations
to facilitate the acquisition(s) of LPTV stations and implement our business
plan. Based upon our review of the marketplace, we believe that we
will be able to take the following steps to effectuate the acquisition of LPTV
stations in the time periods set forth below. However, the time
periods set forth below are only based upon our estimates and may or may not
be
completed as anticipated due to the variances in the time it takes to complete
the necessary negotiations and/or consummating business transactions in the
current business climate in the United States and the ultimate willingness
of
the sellers to consummate the transaction(s).
|
1.
|
Building
upon our activities
which started in the 4
th
quarter
of 2006, we continue the
targeting and acquisition process of reviewing those markets of dominant
influence (the ratings of TV households in each market.). We
expect the expenses for our review of the markets to be limited to
the
time spent by Mr. Letiziano, our sole officer and director. We
anticipate that any additional expenses will be under $1,000 can
be paid
from our current cash in
hand.
|
|
2.
|
During
2007, we have continued to
identify and contact the selected LPTV stations that are currently
operating at a profit and in good standing with the FCC. We
expect the expenses for same to be to be limited to the time spent
by Mr.
Letiziano, our sole officer and director. We anticipate that
any additional expenses will be under $1,000 and will be paid from
our
current cash in hand.
|
|
3.
|
After
identification of
appropriate stations, we have initiated contact with some the LPTV
station
owners and their legal counsel and have initiated negotiations to
sign
non-circumvention agreements and Letters of Intent. Upon the
execution of a letter of intent, we will perform due diligence which
will
include the review of financial statements, customer base, survey
of
equipment and the review of compliance with FCC regulations researched
through public records. Since our arrangements will be based
upon a share exchange contract, we will not incur any cash expenses
other
than those incidental expenses already budgeted in our monthly expenses.
We will not need to travel to undertake our due diligence and intend
to
have the due diligence completed and reviewed by Mr.
Letiziano. Based upon same we do not expect the expenses for
the due diligence and negotiations to be more than $1,000 and will
be paid
from our current cash in
hand.
|
|
4.
|
At
the present time, we are
continuing to negotiate, towards finalization, an agreement to purchase
at
least one LPTV station and file though FCC counsel applications for
approval from the FCC to operate the target LPTV station(s) by the
end of
Calendar 2007. The FCC approval period takes from 60-90
days. We expect the expenses, which shall include legal fees
and application fees to be less than $5,000 and will be paid from
our
current cash on hand.
|
|
5.
|
Once
the FCC has granted
approval, we will then become the registered owner of the LPTV station
and
will be responsible for the daily expenses associated with operating
the
business. The operating expenses for these stations will be
paid from the revenues which we anticipate will be generated from
the
operation of the respective LPTV station. At this time, we are
unsure of the expenses for operating the stations since we have not
commenced our due diligence on any specific station. However,
in the event that the stations do not generate self-supporting revenues,
we anticipate paying the operating expenses from either available
cash on
hand, new shareholder loans or future offerings of equity or debt
securities to cover such operating costs until the station generates
sufficient revenues.
|
|
6.
|
After
our first acquisition, we
will continue to identify and negotiate with additional LPTV
stations. The funds to operate the LPTV stations will be
derived from revenues generated by the respective LPTV station(s)
or from
cash on hand. In the event that the stations do not generate
the anticipates revenues, at this time, we anticipate paying such
operating expenses from our current cash on hand or will rely on
shareholder loans to cover such costs until the station generates
sufficient revenues or until we can obtain additional debt or equity
financing. The fees and expenses for the due diligence,
negotiations and expenses for the additional stations will be the
same as
set above and will be paid from current cash on hand, revenues or
stockholder loans.
|
To
date,
we continue to primarily identify target stations by searching the
Internet. The name and call letters of these stations are posted on
various web sites. Our intention is to finance payment of these
stations by issuing the sellers common stock as well cash payments to be
negotiated. We can not be certain that any of the stations will agree
to a purchase and/or share exchange arrangement. Since our research
and contacts will be made through our office, we do not expect to incur any
additional expenses other than the normal general and administrative expenses
presently being paid.
We
believe we can satisfy our cash requirements for our operations over the next
six months with our current cash reserves. We anticipate that our
operational and general and administrative expenses will approximate $126,000
on
an annual basis, based on the acquisition of one LPTV
station. Management currently anticipates that we will be able to
cover these expenses with our current remaining cash reserves of approximately
$73,000 as of September 30, 2007. The components that went into our
determination of required on going expenses include the following monthly
estimated cash requirements:
Accounting
fees,
|
|
$
|
2,000
|
|
Legal
fees
|
|
|
3,500
|
|
General
and administrative expenses
|
|
|
2,500
|
|
Travel
and station survey expenses
|
|
|
1,500
|
|
Other
miscellaneous
|
|
|
1,000
|
|
|
|
|
|
|
Total
|
|
$
|
10,500
|
|
As
set
forth above, this monthly outlay does not include any operating costs for any
potential LPTV acquisition. We are unable to anticipate with any
reasonable predictability the amount and nature of these expenses as we have
not
commenced our due diligence on any specific station. However, in the
event that any acquired station does not generate self-supporting revenues,
we
will have to pay these operating expenses from our current cash on hand or
will
rely on shareholder loans to cover such costs until the station generates
sufficient revenues or until we can obtain additional debt or equity
financing. The fees and expenses for the due diligence, negotiations
and expenses for the additional stations will be paid from current cash on
hand,
revenues or stockholder loans.
There
will be no costs associated with the Big Vision contract/agreement until
services have been provided by Big Vision at which time we will be generating
revenues to cover these costs. Until such time we receive additional
financing and proceed with our business plan, we have no other contractually
obligated expenses. We cannot assure investors that we will be able
to raise sufficient capital. In the absence of additional funding, we
may not be able to purchase some of the stations we have
identified. Even without significant new funding later this year or
early 2008, we still anticipate being able to acquire some profitable LPTV
stations for stock and consolidate both their revenues and
earnings.
The
foregoing represents our best estimate of our cash needs based on current
planning and business conditions. The exact allocation, purposes and
timing of any monies raised in subsequent funding rounds may vary significantly
depending upon the exact amount of funds raised and status of the implementation
of our business plan when these funds are raised.
Apart
from building the board of directors and employees of LPTV stations we acquire
as subsidiaries, we do not expect any significant changes in the number of
employees.
Results
of Operations
Period
ended September 30, 2007 compared to September 30, 2006
We
had no
revenue for either of the respective nine or three month periods ended September
30, 2007 and 2006, respectively.
General
and administrative expenses for the nine months ended September 30, 2007
and
2006 were approximately $218,000 and $484,000, respectively. These costs
relate
principally to the maintenance of our corporate offices and the implementation
of our business plan.
For
the
nine and three months ended September 30, 2007 and 2006, we accrued compensation
to our chief executive officer, Ernie Letiziano of $52,500 ($17,500 for each
respective three month period). Effective January 1, 2007, we engaged
the services of and commenced the accrual of executive compensation of $17,500
per quarter to Thomas Donaldson for his role in implementing the Company’s
business plan for future growth and/or acquisitions in the broadcast
marketplace.
Our
net
loss for the nine months ended September 30, 2007 and 2006, respectively
was
approximately $(218,000) and $(488,000). Our earnings per share for
the respective quarters ended September 30, 2007 and 2006 was approximately
$(0.05) and $(0.12) based on the respective weighted-average shares issued
and
outstanding at the end of each quarter.
The
Company does not expect to generate any meaningful revenue or incur operating
expenses for purposes other than fulfilling the obligations of a reporting
company under The Securities Exchange Act of 1934 unless and until such time
that the Company’s operating subsidiary begins meaningful
operations.
At
September 30, 2007 and 2006, respectively, the Company had working capital
of
approximately $(55,000) and $56,000, exclusive of accrued officer
compensation. Both Mr. Letiziano and Mr. Donaldson have both agreed
to defer payment of their accrued compensation until such time that we have
adequate cash flows to service these obligations without undue hardship to
our
operations and expansion plans.
It
is the
intent of management and significant stockholders, if necessary, to provide
sufficient working capital necessary to support and preserve the integrity
of
the corporate entity. However, there is no legal obligation for
either management or significant stockholders to provide additional future
funding. Should this pledge fail to provide financing, the Company
has not identified any alternative sources. Consequently, there is
substantial doubt about the Company's ability to continue as a going
concern.
The
Company's need for capital may change dramatically as a result of any business
acquisition or combination transaction. There can be no assurance
that the Company will identify any such business, product, technology or company
suitable for acquisition in the future. Further, there can be no assurance
that
the Company would be successful in consummating any acquisition on favorable
terms or that it will be able to profitably manage the business, product,
technology or company it acquires.
Fiscal
Years Ended December 31, 2006 and 2005
We
had no
revenue for either of the respective fiscal year periods ended December 31,
2006
and 2005, respectively.
General
and administrative expenses for the fiscal year ended December 31, 2006 and
2005
were $517,000 and $227,000, respectively. Net loss for the fiscal year ended
December 31, 2006 and 2005, respectively, was approximately $(521,000) and
$(232,000). Earnings per share for the respective fiscal year ended December
31,
2006 and 2005 was approximately $(0.13) and $(0.07) on the weighted-average
shares issued and outstanding.
We
do not
expect to generate any meaningful revenue or incur operating expenses for
purposes other than fulfilling the obligations of a reporting company under
the
Securities Exchange Act of 1934 unless and until such time that our operating
subsidiary begins meaningful operations.
At
December 31, 2006 and 2005, respectively, the Company had working capital
of
approximately $39,000 and $277,000, respectively. These amounts exclude accrued
officers compensation of approximately $216,000 and $148,000, respectively,
which are classified as current liabilities. However, our sole officer and
director has orally agreed to defer payment of this compensation until such
time
as we have sufficient cash flows to service this liability without undue
stress
on our cash position.
Capital
Resources and Liquidity
As
of
December 31, 2006, we had approximately $154,000 in cash. Our general and
administrative expenses presently average $2,500 per
month.
It
is the
intent of management and significant stockholders, if necessary, to provide
sufficient working capital necessary to support and preserve the integrity
of
the corporate entity. However, there is no legal obligation for either
management or significant stockholders to provide additional future funding.
Should this pledge fail to provide financing, we have not identified any
alternative sources.
As
set
forth in the notes to the financial statements, our independent auditors have
expressed substantial doubt about our ability to continue as a going concern
because we have no viable operations or significant assets and we are dependent
upon significant shareholders to provide sufficient working capital to maintain
the integrity of the corporate entity,
Our
need
for capital may change dramatically as a result of an acquisition(s) of an
LPTV
station or other broadcast property in connection with the implementation of
our
business plan. There can be no assurance that we will identify any such LPTV
stations or broadcast properties suitable for acquisition in the future.
Further, there can be no assurance that we would be successful in consummating
any acquisition on favorable terms or that we will be able to profitably manage
the LPTV station or broadcast property we acquire. At the current time, we
have not had any discussions or negotiations with any potential acquisition
candidates and likewise have not entered into any agreements, preliminary or
otherwise. We advise you to read the sections entitled “Description of Business”
and “Management’s Discussion and Plan of Operations” for further information
regarding our intent to acquire LPTV stations and other broadcast
properties.
The
Company is still in the process of developing and implementing its business
plan
and raising additional capital. As such, the Company is considered to be a
development stage company. Management believes that actions presently being
taken to obtain additional funding and implement its business plan provide
the
opportunity for us to continue as a going concern.
It
is
possible that we may have potential legal liability under the federal securities
laws for the public disclosure of exhibits 99.1 and 99.2 to Form SB-2 filed
June
2, 2006, as the information disclosed in such exhibits may not be consistent
with the type of projection information allowed under Item 10 of Regulation
S-B
of the Securities and Exchange Commission. If it is determined that the
information in exhibits 99.1 and 99.2 is the type of information generally
not
permitted to be made publicly available, then we may be subject to a claim
of
rescission by shareholders relying upon such information under the Securities
Exchange Act as well as remedial sanctions. Such sanctions could include the
payment of disgorgement, prejudgment interest and civil penalties. We may also
be subject to prejudgment interest on such amount as well as civil penalties
in
amount that would have to be determined by the court.
We
are
not aware of any pending claims for sanctions against us based upon such
possibly impermissible disclosures. Nevertheless, it is possible that it could
be determined that such information was impermissibly disclosed and that we
are
subject to sanctions and possible civil penalties. This claim, if successful,
would significantly exceed our cash reserves and require us to borrow funds
and
would materially and adversely affect our results of operations and financial
condition. Therefore, these claims would have a significant impact on us and
could force us to consider bankruptcy or a similar alternative.
Off-Balance
Sheet Arrangements
None.
DESCRIPTION
OF PROPERTY
We
currently operate our business from our corporate headquarters located at 205
Worth Avenue, Suite 316 Palm Beach, FL 33480. We lease such space on a
month-to-month basis. Monthly rent payments for base rent are approximately
$927.51 per month. There are no additional rent payments for common area
maintenance.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On
February 2, 2005, we issued 100,000 shares to Scott Raleigh for services
rendered as our founder. Such shares were issued in reliance on an exemption
from registration under Section 4(2) of the Securities Act of 1933. These shares
of our common stock qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance shares by us did not involve a public offering.
On July 8, 2005, Scott Raleigh transferred the 100,000 shares to Signet
Entertainment Corporation pursuant to a stock purchase agreement and pursuant
to
an exemption from registration under Section 4(2) of the Securities Act of
1933.
Our current President, Director, and Executive Officer, Ernie Letiziano is
the
Director and Chief Executive Officer of Signet Entertainment Corporation. Scott
Raleigh was our sole officer and director prior to the change in control and
is
deemed to be the sole promoter. Mr. Raleigh currently has no involvement with
the Company.
Pursuant
to a Stock Purchase Agreement and Share Exchange between us and Signet
Entertainment Corporation dated September 8, 2005, we obtained all of the shares
of Signet Entertainment Corporation in exchange for 3,421,000 restricted shares
of our common stock 5,000,000 shares of our preferred stock. Pursuant to the
transaction, Ernest Letiziano, our current President, Director, and Executive
Officer, received 900,000 restricted shares of our common stock and 2,500,000
shares of our preferred stock. Such shares were issued in reliance on an
exemption from registration under Section 4(2) of the Securities Act of
1933.
Pursuant
to a Management Contract between our wholly owned subsidiary, Signet
Entertainment Corporation, and Triple Play Media, Inc. dated October 23, 2003,
Triple Play agreed to manage and operate our facility in exchange for financial
and administrative support of its ready-to-launch, new television network,
“The
Gaming & Entertainment Network.” Richard Grad, who holds 401,000 shares of
our common stock, which represents more than 10% of our common shares issued
and
outstanding, is the Chief Executive Officer of Triple Play. Pursuant to the
Management Agreement, we will also pay to Mr. Grad a signing bonus of
$50,000. We will also pay the following compensation each year during the entire
term of the Management Agreement, including extensions thereto and Mr. Grad
shall be entitled to receive: a guaranteed $200,000 (Two Hundred Thousand),
per
year payable to Richard Grad. This amount will be payable at the beginning
of
each month at the rate of twelve equal installments; Allowance of $1,500 for
moving and relocating expenses; and personal life, health dental, vision and
accident insurance. In addition, Mr. Grad received 400,000 of his 401,000
shares pursuant to this transaction.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No
Public Market for Common Stock
There
is
presently no public market for our common stock. We anticipate applying for
trading of our common stock on the over the counter bulletin board upon the
effectiveness of the registration statement of which this prospectus forms
apart. However, we can provide no assurance that our shares will be traded
on
the bulletin board or, if traded, that a public market will
materialize.
Rule
144
As
of
January 31, 2007, there are no shares of our common stock which are currently
available for resale to the public and in accordance with the volume and trading
limitations of Rule 144 of the Act. After September 8, 2006, the 3,421,000
shares issued by us pursuant to the share exchange with Signet Entertainment
Corp. will become available for resale to the public and in accordance with
the
volume and trading limitations of Rule 144 of the Act. After May 2006, the
331,000 shares held by the shareholders who purchased their shares in the
Regulation D, Rule 506 offering by us will become available for resale to the
public and in accordance with the volume and trading limitations of Rule 144
of
the Act. In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of a company’s common stock for at least one year is
entitled to sell within any three month period a number of shares that does
not
exceed 1% of the number of shares of the company’s common stock then outstanding
which, in our case, would equal 41,020 shares as of the date of this
prospectus.
Sales
under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company. Under Rule 144(k), a person who is not one of the company’s affiliates
at any time during the three months preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years, is entitled to
sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
Stock
Option Grants
As
of
January 31, 2007, we have not granted any stock options.
Registration
Rights
We
have
not granted registration rights to the selling shareholders or to any other
persons
Holders
of Our Common Stock
As
of the date of this prospectus, we had approximately 69 registered
shareholders.
Dividends
Since
inception we have not paid any dividends on our common stock. We currently
do
not anticipate paying any cash dividends in the foreseeable future on our common
stock, when issued pursuant to this offering. Although we intend to retain
our
earnings, if any, to finance the exploration and growth of our business, our
Board of Directors will have the discretion to declare and pay dividends in
the
future.
Payment
of dividends in the future will depend upon our earnings, capital requirements,
and other factors, which our Board of Directors may deem relevant.
Securities
Authorized for Issuance under Equity Compensation
Plans
The
following table sets forth all compensation plans previously approved and not
previously approved by security holders with respect to compensation plans
as of
December 31, 2006:
EQUITY
COMPENSATION PLAN INFORMATION
|
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
Plan
category
|
(a)
|
(b)
|
(c)
|
Equity
compensation plans approved by security holders
|
None
|
|
|
Equity
compensation plans not approved by security holders
|
None
|
|
|
Total
|
None
|
|
|
EXECUTIVE
COMPENSATION
Compensation
of Executive Officers
Summary
Compensation Table
The
following summary compensation table sets forth all compensation paid by us
during the fiscal years ended December 31, 2006, 2005 and 2004 in all capacities
for the accounts of the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO).
Summary
Compensation Table
EXECUTIVE
COMPENSATION
Compensation
of Executive Officers
The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officers paid by us during the fiscal
years ended December 31, 2006 and 2005 in all capacities for the accounts of
our
executives, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO):
SUMMARY
COMPENSATION TABLE
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive Plan Compensation ($)
|
|
Non-Qualified
Deferred Compensation Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ernest
W. Letiziano,
(1)
President,
Chief Executive Officer and Director
|
|
|
2006
|
|
$
|
70,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
$
|
70,000
|
|
|
|
|
2005
|
|
$
|
70,000
|
|
|
0
|
|
|
$10,000(2)
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
$
|
80,000
|
|
|
|
|
2004
|
|
$
|
70,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
$
|
70,000
|
|
(1)
Mr. Letiziano has agreed to defer his salary for this period and therefore
we have accrued such salary as salary payable. Such deferred salary will be
paid
when the Company is able to do so. Mr. Letiziano’s salary is determined by the
Board of Directors of which Mr. Letiziano is the sole member. In determining
his
salary, consideration was given to (i) the financial resources of the Company;
(ii) the number of hours each week Mr. Letiziano devotes to the Company; (iii)
the salaries of executive officers of other companies in the similar industries;
and (iv) the salaries of executive officers of other companies in the
developmental stage. There is no formal or informal understanding regarding
Mr.
Letiziano’s salary which will be determined in the future based upon the factors
set forth above and based upon our revenues.
(2)
On
July 19, 2005, Signet Entertainment Corporation, our wholly owned subsidiary,
issued 1,000,000 shares of preferred stock to Mr. Letiziano for services
related to the organization and structuring of Signet Entertainment Corporation
and its proposed business plan prior to the merger with us. This transaction
was
valued at approximately $10,000, which approximates the value of the services
provided. Such preferred shares were exchanged for equivalent shares of our
preferred stock pursuant to the Share Exchange between us and Signet
Entertainment Corporation.
Option
Grants Table.
There were no individual grants of stock options to
purchase our common stock made to the executive officer named in the Summary
Compensation Table during fiscal years ended December 31, 2005 and December
31,
2006.
Aggregated
Option Exercises and Fiscal Year-End Option Value Table.
There were no
stock options exercised during fiscals year ending December 31, 2005 and
December 31, 2006, by the executive officer named in the Summary Compensation
Table.
Long-Term
Incentive Plan (“LTIP”) Awards Table.
There were no awards made to a
named executive officer in the last completed fiscal year under any
LTIP.
Compensation
of Directors
Directors
are permitted to receive fixed fees and other compensation for their services
as
directors. The Board of Directors has the authority to fix the compensation
of
directors. No amounts have been paid to, or accrued to, directors in such
capacity.
Employment
Agreements
We
do not
have any employment agreements in place with our sole officer and
director.
FINANCIAL
STATEMENTS
The
required financial statements begin on page F-1 of this document
Signet
International Holdings, Inc.
(a
development stage company)
Contents
|
Page
|
|
|
Report
of Independent Registered Certified Public Accounting
Firm
|
F-2
|
|
|
Annual
Consolidated Financial Statements
|
|
|
|
Consolidated
Balance
Sheets
|
|
as
of December 31, 2006 and
2005
|
F-3
|
|
|
Consolidated
Statements of
Operations and Comprehensive Loss
|
|
for
the years ended
December 31, 2006 and 2005 and
|
|
for
the period from October
17, 2003 (date of inception) through December 31, 2006
|
F-4
|
|
|
Consolidated
Statement of
Changes in Shareholders’ Equity
|
|
for
the period from October
17, 2003 (date of inception) through December 31, 2006
|
F-5/F-6
|
|
|
Consolidated
Statements of
Cash Flows
|
|
for
the years ended
December 31, 2006 and 2005 and
|
|
for
the period from October
17, 2003 (date of inception) through December 31, 2006
|
F-7
|
|
|
Notes
to Consolidated
Financial Statements
|
F-8
|
|
|
Interim
Consolidated Financial Statements
|
F-16
|
|
|
Consolidated
Balance
Sheets
|
|
as
of September 30,
2007 and 2006
|
F-17
|
|
|
Consolidated
Statements of
Operations and Comprehensive Loss
|
|
for
the nine and three
months ended September 30, 2007 and 2006 and
|
|
for
the period from October
17, 2003 (date of inception) through September 30,
2007
|
F-18
|
|
|
Consolidated
Statements of
Cash Flows
|
|
for
the nine months
ended September 30, 2007 and 2006 and
|
|
for
the period from October
17, 2003 (date of inception) through September 30,
2007
|
F-19
|
|
|
Notes
to Consolidated
Financial Statements
|
F-20
|
Letterhead
of S. W. Hatfield, CPA
Report
of Independent Registered Certified Public Accounting
Firm
Board
of
Directors and Stockholders
Signet
International Holdings, Inc.
We
have
audited the accompanying consolidated balance sheets of Signet International
Holdings, Inc. (a Delaware corporation and a development stage company)
and
Subsidiary (a Florida corporation) as of December 31, 2006 and 2005 and
the
related consolidated statements of operations and comprehensive loss,
consolidated changes in shareholders' deficit and consolidated statements
of
cash flows for each of the years ended December 31, 2006 and 2005 and
for the
period from October 17, 2003 (date of inception) through December 31,
2006,
respectively. These consolidated financial statements are the responsibility
of
the Company's management. Our responsibility is to express an opinion
on these
consolidated financial statements based on our audits.
We
conducted our audit 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 audit provides
a
reasonable basis for our opinion.
In
our
opinion, the consolidated financial statements referred to above present
fairly,
in all material respects, the consolidated financial position of Signet
International Holdings, Inc. and Subsidiary as of December 31, 2006 and
2005 and
the results of its consolidated operations and its consolidated cash
flows each
of the years ended December 31, 2006 and 2005 and for the period from
October 17, 2003 (date of inception) through December 31, 2006, respectively,
in
conformity with generally accepted 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 C to the financial
statements, the Company has no viable operations or significant assets
and is
dependent upon significant shareholders to provide sufficient working
capital to
maintain the integrity of the corporate entity. These circumstances create
substantial doubt about the Company's ability to continue as a going
concern and
are discussed in Note C. The financial statements do not contain any
adjustments
that might result from the outcome of these uncertainties.
/s/
S.
W. Hatfield, CPA
S.
W.
HATFIELD, CPA
Dallas,
Texas
March
16,
2007
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Consolidated
Balance Sheets
December
31, 2006 and 2005
|
|
December
31,
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
ASSETS
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash in bank
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
|
|
$
|
401,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
Note
payable
|
|
$
|
-
|
|
$
|
|
|
Accounts
payable - trade
|
|
|
26,543
|
|
|
-
|
|
Other
accrued liabilities
|
|
|
|
|
|
|
|
Accrued
officer compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity (Deficit)
|
|
|
|
|
|
|
|
Preferred stock - $0.001 par value
|
|
|
|
|
|
|
|
50,000,000 shares authorized
|
|
|
|
|
|
|
|
5,000,000 shares designated,
|
|
|
|
|
|
|
|
issued and outstanding, respectively
|
|
|
5,000
|
|
|
5,000
|
|
Common stock - $0.001 par value.
|
|
|
|
|
|
|
|
100,000,000 shares authorized.
|
|
|
|
|
|
|
|
4,102,000 and 3,887,000 shares
|
|
|
|
|
|
|
|
issued and outstanding, respectively
|
|
|
4,102
|
|
|
3,887
|
|
Additional paid-in capital
|
|
|
737,592
|
|
|
522,807
|
|
Deficit accumulated during the development stage
|
|
|
(923,895
|
)
|
|
(402,683
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders’ Equity (Deficit)
|
|
|
(177,201
|
)
|
|
(129,011
|
)
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity
|
|
$
|
153,887
|
|
$
|
401,370
|
|
The
accompanying notes are an integral part of these financial
statements.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Consolidated
Statements of Operations and Comprehensive Loss
Years
ended December 31, 2006 and 2005 and
Period
from October 17, 2003 (date of inception) through December 31, 2006
|
|
Year
ended
December
31,
|
|
Year
ended
December
31,
|
|
Period
from
October
17, 2003
(date
of inception)
through
December
31,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Organizational and formation expenses
|
|
|
-
|
|
|
|
|
|
89,801
|
|
Officer compensation
|
|
|
70,000
|
|
|
70,000
|
|
|
221,670
|
|
Other salaries
|
|
|
35,375
|
|
|
10,750
|
|
|
70,625
|
|
Other general and administrative expenses
|
|
|
411,441
|
|
|
97,462
|
|
|
532,839
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
516,816
|
|
|
227,203
|
|
|
914,935
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
|
)
|
|
|
)
|
|
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(4,436
|
)
|
|
(4,564
|
)
|
|
(9,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before provision for income taxes
|
|
|
(521,252
|
)
|
|
(231,767
|
)
|
|
(923,935
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
|
)
|
|
|
)
|
|
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
Comprehensive Income
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss
|
|
$
|
|
)
|
$
|
|
)
|
$
|
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share of common stock
|
|
|
|
|
|
|
|
|
|
|
outstanding
computed on net loss -
|
|
|
|
|
|
|
|
|
|
|
basic
and fully diluted
|
|
$
|
(0.13
|
)
|
$
|
(0.07
|
)
|
$
|
(0.25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares
|
|
|
|
|
|
|
|
|
|
|
outstanding
- basic
and fully diluted
|
|
|
3,992,863
|
|
|
3,546,907
|
|
|
3,654,526
|
|
The
accompanying notes are an integral part of these financial
statements.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Consolidated
Statement of Changes in Shareholders’ Equity (Deficit)
Period
from October 17, 2003 (date of inception) through December 31, 2006
|
|
Preferred
Stock
|
|
Common
Stock
|
|
Additional
paid-in
|
|
Deficit
Accumulated
during
the
development
|
|
Stock
subscription
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
capital
|
|
stage
|
|
receivable
|
|
Total
|
|
Stock
issued at formation of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signet
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings,
Inc.
|
|
|
-
|
|
$
|
-
|
|
|
100,000
|
|
$
|
100
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
100
|
|
Effect
of reverse merger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
transaction
with
Signet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entertainment
Corporation
|
|
|
4,000,000
|
|
|
4,000
|
|
|
3,294,000
|
|
|
3,294
|
|
|
33,416
|
|
|
-
|
|
|
-
|
|
|
40,710
|
|
Capital
contributed to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
support operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,444
|
|
|
-
|
|
|
-
|
|
|
3,444
|
|
Net
loss for the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(59,424
|
)
|
|
-
|
|
|
(59,424
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2003
|
|
|
4,000,000
|
|
|
4,000
|
|
|
3,394,000
|
|
|
3,394
|
|
|
36,860
|
|
|
(59,424
|
)
|
|
-
|
|
|
(15,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock sold pursuant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to a private placement
|
|
|
-
|
|
|
-
|
|
|
70,000
|
|
|
70
|
|
|
34,930
|
|
|
-
|
|
|
(35,000
|
)
|
|
-
|
|
Capital contributed to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
support operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
20,492
|
|
|
-
|
|
|
-
|
|
|
20,492
|
|
Net loss for the year
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(111,492
|
)
|
|
-
|
|
|
(111,492
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2004
|
|
|
4,000,000
|
|
|
4,000
|
|
|
3,464,000
|
|
|
3,464
|
|
|
92,282
|
|
|
(170,916
|
)
|
|
(35,000
|
)
|
|
(106,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for services
|
|
|
1,000,000
|
|
|
1,000
|
|
|
-
|
|
|
-
|
|
|
8,519
|
|
|
-
|
|
|
-
|
|
|
9,519
|
|
Common stock sold pursuant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to an August 2005 private
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
placement
|
|
|
-
|
|
|
-
|
|
|
57,000
|
|
|
57
|
|
|
513
|
|
|
-
|
|
|
-
|
|
|
570
|
|
Adjustment for stock sold at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
less than “fair value”
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
56,430
|
|
|
-
|
|
|
-
|
|
|
56,430
|
|
Common stock sold pursuant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to a September 2005 private
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
placement
|
|
|
-
|
|
|
-
|
|
|
366,000
|
|
|
366
|
|
|
365,634
|
|
|
-
|
|
|
-
|
|
|
366,000
|
|
Cost of obtaining capital
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(10,446
|
)
|
|
-
|
|
|
-
|
|
|
(10,446
|
)
|
Collections on stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subscription receivable
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
35,000
|
|
|
35,000
|
|
Capital contributed to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
support operations
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9,875
|
|
|
-
|
|
|
-
|
|
|
9,875
|
|
Net loss for the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(231,767
|
)
|
|
-
|
|
|
(231,767
|
)
|
Balance
at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2005
|
|
|
5,000,000
|
|
$
|
5,000
|
|
|
3,887,000
|
|
$
|
3,887
|
|
$
|
522,807
|
|
$
|
(402,683
|
)
|
|
|
|
$
|
$129,011
|
|
-Continued-
The
accompanying notes are an integral part of these financial
statements.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Consolidated
Statement of Changes in Shareholders’ Equity (Deficit)
Period
from October 17, 2003 (date of inception) through December 31, 2006
|
|
Preferred
Stock
|
|
Common
Stock
|
|
Additional
paid-in
|
|
Deficit
Accumulated
during
the
development
|
|
Stock
subscription
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
capital
|
|
stage
|
|
receivable
|
|
Total
|
Common
stock sold pursuant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to a September 2005 private
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
placement memorandum
|
|
|
-
|
|
|
-
|
|
|
15,000
|
|
|
15
|
|
|
14,985
|
|
|
-
|
|
|
-
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
-
|
|
|
-
|
|
|
(50,000
|
)
|
|
(50
|
)
|
|
(49,950
|
)
|
|
-
|
|
|
-
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
consulting services
|
|
|
-
|
|
|
-
|
|
|
250,000
|
|
|
250
|
|
|
249,750
|
|
|
-
|
|
|
-
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(521,252
|
)
|
|
-
|
|
|
(521,252
|
)
|
Balance
at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006
|
|
|
5,000,000
|
|
$
|
5,000
|
|
|
4,102,000
|
|
$
|
4,102
|
|
$
|
737,592
|
|
$
|
(923,935
|
)
|
|
-
|
|
$
|
(177,241
|
)
|
The
accompanying notes are an integral part of these financial
statements.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Consolidated
Statements of Cash Flows
Years
ended December 31, 2006 and 2005 and
Period
from October 17, 2003 (date of inception) through December 31, 2006
|
|
Year
ended
December
31,
|
|
Year
ended
December
31,
|
|
Period
from
October
17, 2003
(date
of inception)
through
December
31,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(521,252
|
)
|
$
|
(231,767
|
)
|
|
(923,935
|
)
|
Adjustments to reconcile net loss
|
|
|
|
|
|
|
|
|
|
|
to net cash provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Organizational
expenses paid
|
|
|
|
|
|
|
|
|
|
|
with issuance of common stock
|
|
|
-
|
|
|
|
|
|
50,810
|
|
Expenses
paid with issuance of common stock
|
|
|
250,000
|
|
|
56,430
|
|
|
306,430
|
|
Increase
(Decrease) in
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable - trade
|
|
|
26,543
|
|
|
-
|
|
|
26,543
|
|
Accrued
liabilities
|
|
|
54,436
|
|
|
9,439
|
|
|
88,375
|
|
Accrued
officers compensation
|
|
|
67,750
|
|
|
66,750
|
|
|
216,170
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(122,523
|
)
|
|
(89,629
|
)
|
|
(235,607
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from note payable
|
|
|
-
|
|
|
|
|
|
90,000
|
|
Repayment
of note payable
|
|
|
(90,000
|
)
|
|
-
|
|
|
(90,000
|
)
|
Proceeds from sale of common stock
|
|
|
15,000
|
|
|
401,570
|
|
|
416,089
|
|
Cash paid to acquire capital
|
|
|
-
|
|
|
(10,447
|
)
|
|
(10,447
|
)
|
Purchase
of treasury stock
|
|
|
(50,000
|
)
|
|
-
|
|
|
(50,000
|
)
|
Capital contributed to support operations
|
|
|
-
|
|
|
9,876
|
|
|
33,812
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash (used in) financing activities
|
|
|
(125,000
|
)
|
|
490,999
|
|
|
389,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease) in Cash
|
|
|
(247,523
|
)
|
|
401,370
|
|
|
153,847
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at beginning of period
|
|
|
401,370
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
at end of period
|
|
$
|
153,847
|
|
$
|
401,370
|
|
$
|
153,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of
|
|
|
|
|
|
|
|
|
|
|
Interest
and
Income Taxes Paid
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
for the year
|
|
$
|
9,000
|
|
$
|
-
|
|
$
|
9,000
|
|
Income
taxes paid for the year
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Notes
to Consolidated Financial Statements
December
31, 2006 and 2005
Note
A - Organization and Description of Business
Signet
International Holdings, Inc. was incorporated on February 2, 2005 in
accordance
with the Laws of the State of Delaware as 51142, Inc.
On
September 8, 2005, pursuant to a Stock Purchase Agreement and Share
Exchange
(Agreement) by and among Signet International Holdings, Inc. (Signet);
Signet
Entertainment Corporation (SIG) and the shareholders of SIG (Shareholders)
(collectively SIG and the SIG shareholders shall be known as the “SIG Group”),
Signet acquired 100.0% of the then issued and outstanding preferred
and common
stock of SIG for a total of 3,421,000 common shares and 5,000,000 preferred
shares of Signet’s stock issued to the SIG Group. Pursuant to the agreement, SIG
became a wholly owned subsidiary of Signet.
Signet
Entertainment Corporation was incorporated on October 17, 2003 in accordance
with the Laws of the State of Florida. SIG was formed to establish
a television
network “The Gaming and Entertainment Network”.
The
Company is considered in the development stage and, as such, has generated
no
significant operating revenues and has incurred cumulative operating
losses of
approximately $924,000.
Note
B -
Preparation of Financial Statements
The
acquisition of Signet Entertainment Corporation by Signet International
Holdings, Inc. effected a change in control of Signet International
Holdings,
Inc. and is accounted for as a “reverse acquisition” whereby Signet
Entertainment Corporation is the accounting acquirer for financial
statement
purposes. Accordingly, for all periods subsequent to the “reverse merger”
transaction, the financial statements of the Signet International Holdings,
Inc.
will reflect the historical financial statements of Signet Entertainment
Corporation from it’s inception and the operations of Signet International
Holdings, Inc. subsequent to the September 8, 2005 transaction
date.
The
Company follows the accrual basis of accounting in accordance with
accounting
principles generally accepted in the United States of America and has
a year-end
of December 31.
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Management
further acknowledges that it is solely responsible for adopting sound
accounting
practices, establishing and maintaining a system of internal accounting
control
and preventing and detecting fraud. The Company’s system of internal accounting
control is designed to assure, among other items, that 1) recorded
transactions
are valid; 2) valid transactions are recorded; and 3) transactions
are recorded
in the proper period in a timely manner to produce financial statements
which
present fairly the financial condition, results of operations and cash
flows of
the Company for the respective periods being presented.
The
accompanying consolidated financial statements contain the accounts
of Signet
International Holdings, Inc. and its wholly-owned subsidiary, Signet
Entertainment Corporation. All significant intercompany transactions
have been
eliminated. The consolidated entities are collectively referred to
as
“Company”.
Note
C - Going Concern Uncertainty
The
Company is still in the process of developing and implementing it’s business
plan and raising additional capital. As such, the Company is considered
to be a
development stage company.
The
Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations
as well as
provide sufficient resources to retire existing liabilities and obligations
on a
timely basis.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Notes
to Consolidated Financial Statements
December
31, 2006 and 2005
Note
C - Going Concern Uncertainty - Continued
The
Company anticipates that future sales of equity securities to fully implement
it’s business plan or to raise working capital to support and preserve the
integrity of the corporate entity may be necessary. There is no assurance
that
the Company will be able to obtain additional funding through the sales
of
additional equity securities or, that such funding, if available, will
be
obtained on terms favorable to or affordable by the Company.
If
no
additional capital is received to successfully implement the Company’s business
plan, the Company will be forced to rely on existing cash in the bank
and upon
additional funds which may or may not be loaned by management and/or
significant
stockholders to preserve the integrity of the corporate entity at this
time. In
the event, the Company is unable to acquire sufficient capital, the Company’s
ongoing operations would be negatively impacted.
It
is the
intent of management and significant stockholders to provide sufficient
working
capital necessary to support and preserve the integrity of the corporate
entity.
However, no formal commitments or arrangements to advance or loan funds
to the
Company or repay any such advances or loans exist. There is no legal
obligation
for either management or significant stockholders to provide additional
future
funding.
While
the
Company is of the opinion that good faith estimates of the Company’s ability to
secure additional capital in the future to reach our goals have been
made, there
is no guarantee that the Company will receive sufficient funding to sustain
operations or implement any future business plan steps.
Note
D - Summary of Significant Accounting Policies
1.
Cash
and cash equivalents
For
Statement of Cash Flows purposes, the Company considers all cash on hand
and in
banks, certificates of deposit and other highly-liquid investments with
maturities of three months or less, when purchased, to be cash and cash
equivalents.
The
Company has adopted the provisions of AICPA Statement of Position 98-5,
“Reporting on the Costs of Start-Up Activities” whereby all organizational and
initial costs incurred with the incorporation and initial capitalization
of the
Company were charged to operations as incurred.
3.
|
Research
and development expenses
|
Research
and development expenses are charged to operations as incurred.
The
Company does not utilize direct solicitation advertising. All other advertising
and marketing expenses are charged to operations as incurred.
The
Company uses the asset and liability method of accounting for income
taxes. At
December 31, 2006 and 2005, respectively, the deferred tax asset and
deferred tax liability accounts, as recorded when material to the financial
statements, are entirely the result of temporary differences. Temporary
differences represent differences in the recognition of assets and liabilities
for tax and financial reporting purposes, primarily accumulated depreciation
and
amortization, allowance for doubtful accounts and vacation
accruals.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Notes
to Consolidated Financial Statements
December
31, 2006 and 2005
Note
D - Summary of Significant Accounting Policies - Continued
5.
|
Income
Taxes
-
continued
|
As
of
December 31, 2006 and 2005, the deferred tax asset related to the Company’s net
operating loss carryforward is fully reserved. Due to the provisions
of Internal
Revenue Code Section 338, the Company may have no net operating loss
carryforwards available to offset financial statement or tax return taxable
income in future periods as a result of a change in control involving
50
percentage points or more of the issued and outstanding securities of
the
Company.
6.
|
Earnings
(loss) per share
|
Basic
earnings (loss) per share is computed by dividing the net income (loss)
available to common shareholders by the weighted-average number of common
shares
outstanding during the respective period presented in our accompanying
financial
statements.
Fully
diluted earnings (loss) per share is computed similar to basic income
(loss) per
share except that the denominator is increased to include the number
of common
stock equivalents (primarily outstanding options and warrants).
Common
stock equivalents represent the dilutive effect of the assumed exercise
of the
outstanding stock options and warrants, using the treasury stock method,
at
either the beginning of the respective period presented or the date of
issuance,
whichever is later, and only if the common stock equivalents are considered
dilutive based upon the Company’s net income (loss) position at the calculation
date.
At
December 31, 2006 and 2005, and subsequent thereto, the Company’s issued and
outstanding preferred stock is considered anti-dilutive due to the Company’s net
operating loss position.
Note
E - Fair Value of Financial Instruments
The
carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term
nature of
these items and/or the current interest rates payable in relation to
current
market conditions.
Interest
rate risk is the risk that the Company’s earnings are subject to fluctuations in
interest rates on either investments or on debt and is fully dependent
upon the
volatility of these rates. The Company does not use derivative instruments
to
moderate its exposure to interest rate risk, if any.
Financial
risk is the risk that the Company’s earnings are subject to fluctuations in
interest rates or foreign exchange rates and are fully dependent upon
the
volatility of these rates. The company does not use derivative instruments
to
moderate its exposure to financial risk, if any.
Note
F - Note Payable
Note
payable consists of the following at December 31, 2006 and 2005,
respectively:
|
|
December
31.
|
|
December
31.
|
|
|
|
2006
|
|
2005
|
|
$90,000
note payable to an individual. Interest at 10.0%.
|
|
|
|
|
|
Principal
and
accrued interest due at maturity on
|
|
|
|
|
|
July
1,
2006. Collateralized by controlling interest
|
|
|
|
|
|
in
the
common stock of Signet International Holdings,
|
|
|
|
|
|
Inc.
(formerly
51142, Inc.). Note fully funded in July 2005
|
|
|
|
|
|
and
paid in full in May 2006
|
|
$
|
-
|
|
$
|
|
|
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Notes
to Consolidated Financial Statements
December
31, 2006 and 2005
Note
G - Income Taxes
The
components of income tax (benefit) expense each of the years ended
December 31,
2006 and 2005 and for the period from October 17, 2003 (date of inception)
through December 31, 2006, are as follows:
|
|
Year
ended
|
|
Year
ended
|
|
Period
from
October
17, 2003
(date
of inception)
through
|
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
Federal:
|
|
|
|
|
|
|
|
Current
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Deferred
|
|
|
-
|
|
|
-
|
|
|
-
|
|
State:
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Deferred
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
Total
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
As
of
December 31, 2006, the Company has a net operating loss carryforward
of
approximately $441,000 for Federal and State income tax purposes..
The amount
and availability of any future net operating loss carryforwards may
be subject
to limitations set forth by the Internal Revenue Code. Factors such
as the
number of shares ultimately issued within a three year look-back
period; whether
there is a deemed more than 50 percent change in control; the applicable
long-term tax exempt bond rate; continuity of historical business;
and
subsequent income of the Company all enter into the annual computation
of
allowable annual utilization of the carryforwards.
The
Company's income tax expense (benefit) for each of the years ended
December 31,
2006 and 2005 and for the period from October 17, 2003 (date of inception)
through December 31, 2006, respectively, differed from the statutory
federal
rate of 34 percent as follows:
|
|
Year
ended
|
|
Year
ended
|
|
Period
from
October
17, 2003
(date
of inception)
through
|
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
|
|
|
|
|
|
|
|
Statutory
rate applied to income before income taxes
|
|
$
|
(177,000
|
)
|
$
|
(78,800
|
)
|
$
|
(137,000
|
)
|
Increase
(decrease) in income taxes resulting from:
|
|
|
|
|
|
|
|
|
|
|
State income taxes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Non-deductible officers compensation
|
|
|
23,000
|
|
|
23,800
|
|
|
74,600
|
|
Non-deductible
consulting fees related to issuance
|
|
|
|
|
|
|
|
|
|
|
of
common stock at less than “fair value”
|
|
|
42,500
|
|
|
-
|
|
|
61,700
|
|
Other, including reserve for deferred tax
|
|
|
|
|
|
|
|
|
|
|
asset and application of net operating loss carryforward
|
|
|
111,500
|
|
|
55,000
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Notes
to Consolidated Financial Statements
December
31, 2006 and 2005
Note
G - Income Taxes - Continued
Temporary
differences, consisting primarily of the prospective usage of net operating
loss
carryforwards give rise to deferred tax assets and liabilities as of
December
31, 2006 and 2005, respectively:
|
|
December
31,
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
Deferred
tax assets
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
150,000
|
|
$
|
67,000
|
|
Officer compensation deductible when paid
|
|
|
74,600
|
|
|
50,500
|
|
Less valuation allowance
|
|
|
(224,600
|
)
|
|
(117,500
|
)
|
|
|
|
|
|
|
|
|
Net Deferred Tax Asset
|
|
$
|
-
|
|
$
|
-
|
|
Note
H - Preferred Stock
On
March
14, 2007, the Company formally designated a series of Super Preferred
Stock of
the Company’s 50,000,000 authorized shares of the capital preferred stock of the
Corporation. The designated Series A Convertible Super Preferred Stock
(the
"Series A Super Preferred Stock"), to consist of 5,000,00 shares, par
value
$.001 per share, which shall have the following preferences, powers,
designations and other special rights:
Voting:
|
Holders
of the Series A Super Preferred Stock shall have ten votes
per share held
on all matters submitted to the shareholders of the Company
for a vote
thereon. Each holder of these shares shall have the option
to appoint two
additional members to the Board of Directors. Each share
shall be
convertible into ten (10) shares of common stock.
|
|
|
Dividends:
|
The
holders of Series A Super Preferred Stock shall be entitled
to receive
dividends or distributions on a pro rata basis with the holders
of common
stock when and if declared by the Board of Directors of the
Company.
Dividends shall not be cumulative. No dividends or distributions
shall be
declared or paid or set apart for payment on the Common Stock
in any
calendar year unless dividends or distributions on the Series
A Preferred
Stock for such calendar year are likewise declared and paid
or set apart
for payment. No declared and unpaid dividends shall bear
or accrue
interest.
|
|
|
Liquidation
|
|
Preference
|
Upon
the liquidation, dissolution and winding up of the Company,
whether
voluntary or involuntary, the holders of the Series A Super
Preferred
Stock then outstanding shall be entitled to, on a pro-rata
basis with the
holders of common stock, distributions of the assets of the
Corporation,
whether from capital or from earnings available for distribution
to its
stockholders.
|
The
Board
of Directors has the authority, without further action by the shareholders,
to
issue, from time to time, preferred stock in one or more series for such
consideration and with such relative rights, privileges, preferences
and
restrictions that the Board may determine. The preferences, powers, rights
and
restrictions of different series of preferred stock may differ with respect
to
dividend rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions and purchase funds
and
other matters. The issuance of preferred stock could adversely affect
the voting
power or other rights of the holders of common stock.
On
October 20, 2003, in conjunction with the formation and incorporation
of Signet
Entertainment Corporation, SIG issued 4,000,000 shares of preferred stock
to the
incorporating persons. This transaction was valued at approximately $40,000,
which approximates the value of the services provided.
On
July
19, 2005, the Company issued 1,000,000 shares of preferred stock to an
existing
shareholder and Company officer for services related to the organization
and
structuring of the Company and it’s proposed business plan. This transaction was
valued at approximately $10,000, which approximates the value of the
services
provided.
Concurrent
with the reverse merger transaction, these shareholders exchanged their
Signet
Entertainment Corporation preferred stock for equivalent shares of Signet
International Holdings, Inc. Series A Super Preferred stock, as described
above.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Notes
to Consolidated Financial Statements
December
31, 2006 and 2005
Note
I - Common Stock Transactions
On
October 17, 2003 and November 1, 2003, in connection with the incorporation
and
formation of the Company, an aggregate of approximately 3,294,000 shares
of
restricted, unregistered shares of common stock and were issued to various
founding individuals. This combined preferred stock and common stock
issuances
were collectively valued at approximately $40,810, which approximated
the fair
value of the time provided by the individuals and the related out-of-pocket
expenses.
On
June
16, 2004 and December 3, 2004, the Company sold, in three separate transactions
to three unrelated individuals, an aggregate 70,000 shares of restricted,
unregistered common stock for $35,000 cash. These shares were sold pursuant
to
an exemption from registration under Section 4(2) of the Securities Act
of 1933,
as amended, and no underwriter was used any of the three
transactions.
Between
July 20, 2005 and August 26, 2005, Signet Entertainment Corporation sold
an
aggregate 57,000 shares of common stock to existing and new shareholders
at a
price of $0.01 per share for gross proceeds of approximately $570. As
this
selling price was substantially below the “fair value” of comparable
transactions, the Company recognized a charge to operations for consulting
expense equivalent to the difference between the established “fair value” of
$1.00 per share (as determined by the pricing in the September 2005 Private
Placement Memorandum) and the selling price of $0.01 per share.
On
September 9, 2005, the Company commenced the sale of common stock pursuant
to a
Private Placement Memorandum in a self-underwritten offering. This Memorandum
is
offering for sale to persons who qualify as accredited investors and
to a
limited number of sophisticated investors, on a best efforts basis, up
to
2,000,000 of our common shares at $1.00 per share, for anticipated gross
proceeds of $2,000,000. The common shares will be offered through the
Company’s
officers and directors on a best-efforts basis. The minimum investment
is
$1,000, however, the Company might, at it’s sole discretion, accept
subscriptions for lesser amounts. Funds received from all subscribers
will be
released to the Company upon acceptance of the subscriptions by the Company’s
management. Through December 31, 2006, the Company has sold an aggregate
381,000 shares for gross proceeds of $381,000 under this
Memorandum.
On
March
31, 2006, the Company repurchased 50,000 shares of common stock from
the estate
of a deceased shareholder which purchased said shares for $50,000 cash
pursuant
to the aforementioned September 2005 Private Placement Memorandum for
$50,000
cash. In June 2006, the Company’s Board of Directors cancelled these shares and
returned them to unissued status.
On
June
22, 2006, the Company issued 250,000 shares of unregistered, restricted
common
stock, valued at $0.50 per share or $125,000, in payment of consulting
fees. As
the agreed-upon value of the services provided was less than the “fair value” of
comparable transactions, the Company has recognized an additional charge
to
Consulting Fees equivalent to the difference between the established
“fair
value” of $1.00 per share (as determined by the pricing in the September 2005
Private Placement Memorandum) and the agreed-upon value of $0.50 per
share in
the corresponding line item in the Company’s Statement of
Operations.
Note
J - Commitments
Leased
office space
The
Company operates from leased office facilities at 205 Worth Avenue, Suite
316
Palm Beach, FL 33480 under an operating lease. The lease agreement was
originally expired to expire in July 2009 and has been subsequently amended
to a
month-to-month basis. The lease requires monthly payments of approximately
$928.
The Company is not responsible for any additional charges for common
area
maintenance.
The
Company also reimburses two non-executive personnel for the use of their
personal home offices, which are not exclusive to the Company’s business, at
approximately $250 per month. These agreements are on a month-to-month
basis.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Notes
to Consolidated Financial Statements
December
31, 2006 and 2005
Note
J - Commitments - Continued
Leased
office space - continued
For
the
respective years ended December 31, 2006 and 2005, the Company paid an
aggregate
of $34,755 and $16,738 for rent under these agreements.
Triple
Play Management Agreement
On
October 23, 2003, Signet Entertainment entered into a Management Agreement
with
Triple Play Media Management (Triple Play) of Peoria, Arizona. Triple
Play is
engaged to be the management company to manage and operate any acquired
Signet
facility (facilities) on a permanent basis for Signet for a period of
ten years
(the initial period) with an automatic extension of an additional ten
years
unless the dissenting party gives proper notice.
To
facilitate this Management Agreement, Signet will endeavor to raise capital
contributions through a Private Placement Offering, Regulation 506 and
/or a
Public Offering and show evidence of the total capital funds required
for the
establishment of the Network including providing funds for the budgeted
operations of the business for the term of this agreement plus extensions.
Signet will also provide a minimum of 17,500 square feet of permanent
structure
(connector facility), fully equipped to accommodate full- service television
studios, sound stages and various production equipment within completely
air-conditioned and heated work places and mobile modular production
unit (s)
fully equipped and a Eutelsat satellite Hot Bird and delivery system.
Triple
Play will, in turn, perform the following actions: a) acquire and maintain
various licenses; b) compliance with local ordinances and state laws;
c)
maintain complete books of account, which shall comply with requirements
of any
governmental agency including all Federal Communications commission (FCC)
regulations; d),provide an annual budget to Signet, addressing all operating
activities, including a reserve for repairs, refurbishment, and replacements
to
maintain the premises and equipment in good condition; e) make no expenditures
other than those items provided in an annual budget; f) maintain books
and
records to be made available to Signet representatives; g) have complete
creative control and authority to determine all matters concerning decor,
design, arrangement, format and all production presentations including
creative
design, absolute control and discretion with respect to the operation
of the
premises; and h) be responsible for all necessary and proper insurances
safeguarding against all reasonably foreseeable risks on a replacement
cost
basis of coverage to both parties , the business and its assets.
Upon
Signet’s raising the necessary required funding through a secondary offering,
Signet will begin funding the working capital requirements of Triple
Play for a
share of Triple Play’s profit. The working capital commitment is based on
mutually agreed budgets and is projected to amount approximately $15
million,
inclusive of management fees. This advance of management fees would be
drawn
down by Triple Play over approximately the first 12 months of its operations
which would begin once Signet has access to the secondary offering funding.
This
advance will be recovered by Signet from Triple Play’s future cash flows. In
return, Signet will receive 87.5 % of Triple Play’s monthly gross revenues less
Triple Play’s monthly operating expenses.
For
the
services, Triple Play shall render to Signet, Signet shall pay management
fees
to Triple Play based upon Triple Play’s gross revenues, as follows: a) 12% of
Triple Play’s gross revenues, provided that Triple Play realizes a minimum pre
tax net profit of 25%, plus b) ½% (one half percent) of Triple Play’s gross
revenues for Triple Play’s costs of licenses and permits for international air
waves and feeds duties and taxes, satellite transmission links, down
links,
including earth stations. The fees in a) and b), noted above, shall become
due
from Signet within 90 days after the close of each calendar year based
on a
determination by independently prepared Certified Public Accountants’ reports.
These reports will account for advances Signet has made.
Triple
Play’s Chief Executive Officer, Richard Grad, one of Signet’s founding
shareholders, will be paid by Signet, a signing bonus of $50,000 upon
the
funding of a future Signet offering. Signet will also pay to Mr. Grad
the
following annual compensation during the entire term of this agreement,
including extensions thereto: 1) a guaranteed annual salary of $200,000.(Two
Hundred Thousand), per year payable at the beginning of each month at
the rate
of twelve equal installments and will be subsequently deducted from each
annual
management fee settlement noted above; 2) an allowance of $1,500 for
moving and
relocation expenses and 3) ordinary and reasonable employee benefits
related to
health insurance. It is specifically noted that Mr. Grad will function
solely as
an independent contractor representing Triple Play and will not be construed
as
a Signet employee.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage company)
Notes
to Consolidated Financial Statements
December
31, 2006 and 2005
Note
J - Commitments - Continued
Big
Vision Management Contract
On
July
22, 2005, Signet Entertainment entered into a Management Agreement with
Big
Vision Studios, a Nevada Limited Liability Company (Big Vision) located
in both
Las Vegas, Nevada and Burbank, California whereby Big Vision will be
the
exclusive supplier of High Definition Equipment and Studio rental for
Signet.
This agreement is for a period of one (1) year, commencing with the submission
by Signet’s of evidence of the total capital funds required for the
establishment of Signet’s Network including providing funds for the budgeted
operations of the business for the term of this agreement plus extensions
to Big
Vision, with an automatic extension of an additional five years unless
the
dissenting parry gives proper notice. Signet has agreed to pay a reduced
fee to
Big Vision, at a discount negotiated off of Big Vision’s published standard rate
card, for the first year of Signer’s operations. After the initial year, Signet
has agreed to pay Big Vision based on Big Vision’s published standard rate card
at that point in time plus an additional 15% in consideration of Big
Vision’s
concession in rates for the first year. Signet has agreed to continue
paying
pursuant to Big Vision’s published standard rate card plus 15% for as long as
this agreement is in place. All fees will be paid as they become due
and payable
according to Big Vision’s requirements.
Broadcast
Property Acquisition
On
April
13, 2006, Signet executed a Letter of Agreement to Purchase with Freehawk
Productions, Inc. of Royal Palm Beach, Florida whereby Signet would acquire
20
original one-half hour screenplays and four (4) additional episodes per
screenplay for a total of 100 separate broadcast properties to be delivered
over
a 36-month period from April 13, 2006. The agreed-upon purchase price
for the
total 20 one half-hour ready-to-air shows and the accompanying supplemental
80
one half- hour ready-to-air episodes is $3,000,000.00. This price includes
all
of the rights, title and privileges related to the ownership of said
broadcast
properties. On August 19, 2006, by mutual agreement, Signet and Freehawk
rescinded this Agreement and intend to enter into a restructured agreement
in a
future period.
(Remainder
of this page left blank intentionally)
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
September
30, 2007 and 2006
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Consolidated
Balance Sheets
September
30, 2007 and 2006
(Unaudited)
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2007
|
|
|
2006
|
|
ASSETS
|
|
Current
Assets
|
|
|
|
|
|
|
Cash
in
bank
|
|
$
|
73,417
|
|
|
$
|
170,947
|
|
Total
Current Assets
|
|
|
73,417
|
|
|
|
170,947
|
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
|
|
Broadcast
and
intellectual properties,
|
|
|
|
|
|
|
|
|
net of accumulated amortization of $-0-
|
|
|
4,007,249
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
4,080,666
|
|
|
$
|
170,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable - trade
|
|
$
|
7,378
|
|
|
$
|
12,877
|
|
Other
accrued liabilities
|
|
|
120,875
|
|
|
|
102,337
|
|
Accrued
officer compensation
|
|
|
321,170
|
|
|
|
199,920
|
|
Total
Current Liabilities
|
|
|
449,423
|
|
|
|
315,134
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Liabilities
|
|
|
|
|
|
|
|
|
Contracts
payable on broadcast properties
|
|
|
|
|
|
|
|
|
and intellectual properties
|
|
|
75,000
|
|
|
|
-
|
|
Total
Liabilities
|
|
|
524,423
|
|
|
|
315,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity (Deficit)
|
|
|
|
|
|
|
|
|
Preferred
stock
- $0.001 par value
|
|
|
|
|
|
|
|
|
50,000,000
shares authorized
|
|
|
|
|
|
|
|
|
5,000,000
issued and outstanding, respectively
|
|
|
5,000
|
|
|
|
5,000
|
|
Common
stock - $0.001 par value
|
|
|
|
|
|
|
|
|
100,000,000
shares authorized.
|
|
|
|
|
|
|
|
|
4,504,962
and
4,102,000 shares
|
|
|
|
|
|
|
|
|
issued and outstanding, respectively
|
|
|
4,505
|
|
|
|
4,102
|
|
Additional
paid-in capital
|
|
|
4,688,738
|
|
|
|
737,592
|
|
Deficit
accumulated during the development stage
|
|
|
(1,142,000
|
)
|
|
|
(890,881
|
)
|
|
|
|
|
|
|
|
|
|
Total
Shareholders’ Equity (Deficit)
|
|
|
3,556,243
|
|
|
|
(144,187
|
)
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders’ Equity
|
|
$
|
4,080,666
|
|
|
$
|
170,947
|
|
|
|
|
|
|
|
|
|
|
The
financial information presented herein has been prepared by
management
without
audit by independent certified public accountants.
The
accompanying notes are an integral part of these financial
statements.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Consolidated
Statements of Operations and Comprehensive Loss
Nine
and
Three months ended September 30, 2007 and 2006 and
Period
from October 17, 2003 (date of inception) through September 30,
2007
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
17, 2003
|
|
|
|
Nine
months
|
|
|
Nine
months
|
|
|
Three
months
|
|
|
Three
months
|
|
|
(date
of inception)
|
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
through
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
September
30,
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organizational
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and formation expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
89,801
|
|
Officer
compensation
|
|
|
105,000
|
|
|
|
52,500
|
|
|
|
35,000
|
|
|
|
17,500
|
|
|
|
326,670
|
|
Other
salaries
|
|
|
24,250
|
|
|
|
26,375
|
|
|
|
7,000
|
|
|
|
9,502
|
|
|
|
94,875
|
|
Other
general and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative expenses
|
|
|
88,855
|
|
|
|
404,887
|
|
|
|
26,018
|
|
|
|
36,751
|
|
|
|
621,654
|
|
Total
Expenses
|
|
|
218,105
|
|
|
|
483,762
|
|
|
|
68,018
|
|
|
|
63,753
|
|
|
|
1,133,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from Operations
|
|
|
(218,105
|
)
|
|
|
(483,762
|
)
|
|
|
(68,018
|
)
|
|
|
(63,753
|
)
|
|
|
(1,133,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
-
|
|
|
|
(4,436
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Income Taxes
|
|
|
(218,105
|
)
|
|
|
(488,198
|
)
|
|
|
(68,018
|
)
|
|
|
(63,753
|
)
|
|
|
(1,142,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
(218,105
|
)
|
|
|
(488,198
|
)
|
|
|
(68,018
|
)
|
|
|
(63,753
|
)
|
|
|
(1,142,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Comprehensive Income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss
|
|
$
|
(218,105
|
)
|
|
$
|
(488,198
|
)
|
|
$
|
(68,018
|
)
|
|
$
|
(63,753
|
)
|
|
$
|
(1,142,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per weighted-average share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
common stock outstanding,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
computed
on Net
Loss -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic
and fully diluted
|
|
$
|
(0.05
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
|
4,328,363
|
|
|
|
3,956,084
|
|
|
|
4,496,810
|
|
|
|
4,102,000
|
|
|
|
3,781,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
financial information presented herein has been prepared by
management
without
audit by independent certified public accountants.
The
accompanying notes are an integral part of these financial
statements.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Consolidated
Statements of Cash Flows
Nine
months ended September 30, 2007 and 2006 and
Period
from October 17, 2003 (date of inception) through September 30,
2007
(Unaudited)
|
|
Nine months
ended
September 30,
2007
|
|
|
Nine months
ended
September 30,
2006
|
|
|
Period
from
October
17,
2003
(date
of inception)
through
September 30,
2007
|
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(
218,105
|
)
|
|
$
|
(
488,198
|
)
|
|
$
|
(
1,142,000
|
)
|
Adjustments
to reconcile net income to net cash
provided
by operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Organizational
expenses paid with issuance
of common and preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
50,810
|
|
Expenses
paid with common stock
|
|
|
-
|
|
|
|
250,000
|
|
|
|
306,430
|
|
Increase
(Decrease) in
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable - trade
|
|
|
(
19,165
|
)
|
|
|
|
|
|
|
|
|
Accrued
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
officers compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(
99,730
|
)
|
|
|
(
105,423
|
)
|
|
|
(
335,337
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
proceeds from note payable
|
|
|
-
|
|
|
|
-
|
|
|
|
90,000
|
|
Cash
paid to retire note payable
|
|
|
-
|
|
|
|
(90,000
|
)
|
|
|
(90,000
|
)
|
Cash
proceeds from sale of common stock
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
Purchase
of treasury stock
|
|
|
-
|
|
|
|
(50,000
|
)
|
|
|
(50,000
|
)
|
Cash
paid to acquire capital
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,447
|
)
|
Capital
contributed to support operations
|
|
|
-
|
|
|
|
-
|
|
|
|
33,812
|
|
Net
cash provided by financing activities
|
|
|
|
|
|
|
(125,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease) in Cash and Cash Equivalents
|
|
|
(
80,430
|
)
|
|
|
(
230,423
|
)
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
|
|
|
|
401,370
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures of Interest and Income Taxes Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid during the period
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
9,000
|
|
Income
taxes paid (refunded)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures of Non-Cash Investing and Financing
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of broadcast and intellectual properties with
long-term
contracts payable and common stock
|
|
$
|
4,007,249
|
|
|
$
|
-
|
|
|
$
|
4,007,249
|
|
The
financial information presented herein has been prepared by
management
without
audit by independent certified public accountants.
The
accompanying notes are an integral part of these financial
statements.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements
September
30, 2007 and 2006
Note
A - Organization and Description of Business
Signet
International Holdings, Inc. was incorporated on February 2, 2005 in accordance
with the Laws of the State of Delaware as 51142, Inc.
On
September 8, 2005, pursuant to a Stock Purchase Agreement and Share Exchange
(Agreement) by and among Signet International Holdings, Inc. (Signet);
Signet
Entertainment Corporation (SIG) and the shareholders of SIG (Shareholders)
(collectively SIG and the SIG shareholders shall be known as the “SIG Group”),
Signet acquired 100.0% of the then issued and outstanding preferred and
common
stock of SIG for a total of 3,421,000 common shares and 5,000,000 preferred
shares of Signet’s stock issued to the SIG Group. Pursuant to the
agreement, SIG became a wholly owned subsidiary of Signet.
Signet
Entertainment Corporation was incorporated on October 17, 2003 in accordance
with the Laws of the State of Florida. SIG was formed to establish a
television network “The Gaming and Entertainment Network”.
The
Company is considered in the development stage and, as such, has generated
no
significant operating revenues and has incurred cumulative operating losses
of
approximately $1,142,000.
Note
B - Preparation of Financial Statements
The
acquisition of Signet Entertainment Corporation by Signet International
Holdings, Inc. effected a change in control of Signet International Holdings,
Inc. and is accounted for as a “reverse acquisition” whereby Signet
Entertainment Corporation is the accounting acquirer for financial statement
purposes. Accordingly, for all periods subsequent to the “reverse
merger” transaction, the financial statements of the Signet International
Holdings, Inc. will reflect the historical financial statements of Signet
Entertainment Corporation from it’s inception and the operations of Signet
International Holdings, Inc. subsequent to the September 8, 2005 transaction
date.
The
Company follows the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America and has a
year-end
of December 31.
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Management
further acknowledges that it is solely responsible for adopting sound accounting
practices, establishing and maintaining a system of internal accounting
control
and preventing and detecting fraud. The Company’s system of internal
accounting control is designed to assure, among other items, that 1) recorded
transactions are valid; 2) valid transactions are recorded; and 3) transactions
are recorded in the proper period in a timely manner to produce financial
statements which present fairly the financial condition, results of operations
and cash flows of the Company for the respective periods being
presented.
During
interim periods, the Company follows the accounting policies set forth
in its
annual audited financial statements filed with the U. S. Securities and
Exchange
Commission on its Annual Report on Form 10-KSB for the year ended December
31,
2006. The information presented within these interim financial
statements may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein.
In
the
opinion of management, the accompanying interim financial statements, prepared
in accordance with the U. S. Securities and Exchange Commission’s instructions
for Form 10-QSB, are unaudited and contain all material adjustments, consisting
only of normal recurring adjustments necessary to present fairly the financial
condition, results of operations and cash flows of the Company for the
respective interim periods presented. The current period results of
operations are not necessarily indicative of results which ultimately will
be
reported for the full fiscal year ending December 31, 2007.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements - Continued
September
30, 2007 and 2006
Note
B - Preparation of Financial Statements - Continued
The
accompanying consolidated financial statements contain the accounts of
Signet
International Holdings, Inc. and its wholly-owned subsidiary, Signet
Entertainment Corporation. All significant intercompany transactions
have been eliminated. The consolidated entities are collectively
referred to as “Company”.
Note
C - Going Concern Uncertainty
The
Company remains in the process of implementing it’s business plan, which will
require the raising of additional capital. As such, the Company is
considered to be a development stage company.
The
Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as
well as
provide sufficient resources to retire existing liabilities and obligations
on a
timely basis.
The
Company anticipates that future sales of equity securities to fully implement
it’s business plan or to raise working capital to support and preserve the
integrity of the corporate entity may be necessary. There is no
assurance that the Company will be able to obtain additional funding through
the
sales of additional equity securities or, that such funding, if available,
will
be obtained on terms favorable to or affordable by the Company.
If
no
additional capital is received to successfully implement the Company’s business
plan, the Company will be forced to rely on existing cash in the bank and
upon
additional funds which may or may not be loaned by management and/or significant
stockholders to preserve the integrity of the corporate entity at this
time. In the event, the Company is unable to acquire sufficient
capital, the Company’s ongoing operations would be negatively
impacted.
It
is the
intent of management and significant stockholders to provide sufficient
working
capital necessary to support and preserve the integrity of the corporate
entity. However, no formal commitments or arrangements to advance or
loan funds to the Company or repay any such advances or loans
exist. There is no legal obligation for either management or
significant stockholders to provide additional future funding.
While
the
Company is of the opinion that good faith estimates of the Company’s ability to
secure additional capital in the future to reach our goals have been made,
there
is no guarantee that the Company will receive sufficient funding to sustain
operations or implement any future business plan steps.
Note
D - Summary of Significant Accounting Policies
1.
|
Cash
and cash equivalents
|
For
Statement of Cash Flows purposes, the Company considers all cash on hand
and in
banks, certificates of deposit and other highly-liquid investments with
maturities of three months or less, when purchased, to be cash and cash
equivalents.
The
Company has adopted the provisions of AICPA Statement of Position 98-5,
“Reporting on the Costs of Start-Up Activities” whereby all organizational and
initial costs incurred with the incorporation and initial capitalization
of the
Company were charged to operations as incurred.
3.
|
Research
and development expenses
|
Research
and development expenses are charged to operations as
incurred.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements - Continued
September
30, 2007 and 2006
Note
D - Summary of Significant Accounting Policies - Continued
The
Company does not utilize direct solicitation advertising. All other
advertising and marketing expenses are charged to operations as
incurred.
The
Company uses the asset and liability method of accounting for income
taxes. At September 30, 2007 and 2006, respectively, the deferred tax
asset and deferred tax liability accounts, as recorded when material
to the
financial statements, are entirely the result of temporary
differences. Temporary differences represent differences in the
recognition of assets and liabilities for tax and financial reporting
purposes,
primarily accumulated depreciation and amortization, allowance for
doubtful
accounts and vacation accruals.
As
of
September 30, 2007 and 2006, the deferred tax asset related to the
Company’s net
operating loss carryforward is fully reserved. Due to the provisions
of Internal Revenue Code Section 338, the Company may have no net
operating loss
carryforwards available to offset financial statement or tax return
taxable
income in future periods as a result of a change in control involving
50
percentage points or more of the issued and outstanding securities
of the
Company.
6.
|
Earnings
(loss) per share
|
Basic
earnings (loss) per share is computed by dividing the net income
(loss)
available to common shareholders by the weighted-average number of
common shares
outstanding during the respective period presented in our accompanying
financial
statements.
Fully
diluted earnings (loss) per share is computed similar to basic income
(loss) per
share except that the denominator is increased to include the number
of common
stock equivalents (primarily outstanding options and warrants).
Common
stock equivalents represent the dilutive effect of the assumed exercise
of the
outstanding stock options and warrants, using the treasury stock
method, at
either the beginning of the respective period presented or the date
of issuance,
whichever is later, and only if the common stock equivalents are
considered
dilutive based upon the Company’s net income (loss) position at the calculation
date.
At
September 30, 2007 and 2006, and subsequent thereto, the Company’s issued and
outstanding preferred stock is considered anti-dilutive due to the
Company’s net
operating loss position.
Note
E - Fair Value of Financial Instruments
The
carrying amount of cash, accounts receivable, accounts payable and
notes
payable, as applicable, approximates fair value due to the short
term nature of
these items and/or the current interest rates payable in relation
to current
market conditions.
Interest
rate risk is the risk that the Company’s earnings are subject to fluctuations in
interest rates on either investments or on debt and is fully dependent
upon the
volatility of these rates. The Company does not use derivative
instruments to moderate its exposure to interest rate risk, if any.
Financial
risk is the risk that the Company’s earnings are subject to fluctuations in
interest rates or foreign exchange rates and are fully dependent
upon the
volatility of these rates. The company does not use derivative
instruments to moderate its exposure to financial risk, if
any.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements - Continued
September
30, 2007 and 2006
Note
F - Broadcast and Intellectual Properties
Contract
Payables
On
April
20, 2007, the Company entered into a new purchase agreement with
Freehawk for
100% of the rights to 21 television series to be produced by Freehawk
exclusively for Signet. The total consideration paid by the Company
for these rights was 270,000 shares of restricted, unregistered
common stock and
a $50,000 promissory note. Based on an independent third-party
appraisal, the Company valued this transaction at approximately
$2,870,625. The common stock was issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933,
as amended, and
no underwriter was used in this transaction.
On
May
22, 2007, the Company acquired the exclusive television rights
to “Tales From
The moe.Republic”, by John E. Derhak. This full-length novel is in
the process of being published and is currently being sold in an
abridged,
autographed limited edition through the website
www.moerepublic.org. Total consideration paid by the Company for
these rights was 113,662 shares of restricted, unregistered common
stock and a
$25,000 promissory note. Based on an independent third-party
appraisal, the Company valued this transaction at approximately
$1,136,600. The common stock was issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933,
as amended, and
no underwriter was used in this transaction.
Note
G - Income Taxes
The
components of income tax (benefit) expense each of the nine month
periods ended
September 30, 2007 and 2006 and for the period from October 17,
2003 (date of
inception) through September 30, 2007, are as follows:
|
|
Nine Months
ended
|
|
Nine Months
ended
|
|
Period
from
October
17, 2003
(date
of inception)
through
|
|
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
|
|
|
|
|
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|
|
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As
of
September 30, 2007, the Company has a net operating loss carryforward
of
approximately $639,000 for Federal and State income tax
purposes.. The amount and availability of any future net operating
loss carryforwards may be subject to limitations set forth by
the Internal
Revenue Code. Factors such as the number of shares ultimately
issued within a
three year look-back period; whether there is a deemed more than
50 percent
change in control; the applicable long-term tax exempt bond rate;
continuity of
historical business; and subsequent income of the Company all
enter into the
annual computation of allowable annual utilization of the
carryforwards.
(Remainder
of this page left blank intentionally)
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements - Continued
September
30, 2007 and 2006
Note
G - Income Taxes - Continued
The
Company's income tax expense (benefit) for each of the nine
month periods ended
September 30, 2007 and 2006 and for the period from October
17, 2003 (date of
inception) through September 30, 2007, respectively, differed
from the statutory
federal rate of 34 percent as follows:
|
|
Nine Months
ended
|
|
Nine Months
ended
|
|
Period
from
October
17, 2003
(date
of inception)
through
|
|
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
|
|
|
|
|
|
|
|
Statutory
rate applied to income before income taxes
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in income taxes resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of deductions for accrued compensation
|
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|
|
|
|
|
|
|
|
|
Non-deductible consulting fees related to issuance
|
|
|
|
|
|
|
|
|
|
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of common stock at less than “fair value”
|
|
|
|
|
|
|
|
|
|
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Other, including reserve for deferred tax
|
|
|
|
|
|
|
|
|
|
|
asset and application of net operating loss
carryforward
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
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|
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|
Temporary
differences, consisting primarily of the prospective usage
of net operating loss
carryforwards and statutory deferrals of accrued compensation
give rise to
deferred tax assets and liabilities as of September 30,
2007 and 2006,
respectively:
|
|
September 30,
2007
|
|
|
September 30,
2006
|
|
Deferred
tax assets
|
|
|
|
|
|
|
Net
operating loss carryforwards
|
|
$
|
217,000
|
|
|
$
|
119,000
|
|
Timing
of deductions for accrued compensation
|
|
|
143,000
|
|
|
|
69,000
|
|
Less
valuation allowance
|
|
|
(360,000
|
)
|
|
|
(188,000
|
)
|
Net
Deferred Tax Asset
|
|
$
|
-
|
|
|
$
|
-
|
|
|
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|
|
|
Note
H - Preferred Stock
On
March
14, 2007, the Company formally designated a series of Super
Preferred Stock of
the Company’s 50,000,000 authorized shares of the capital preferred
stock of the
Corporation. The designated Series A Convertible Super Preferred
Stock (the "Series A Super Preferred Stock"), to consist
of 5,000,00 shares, par
value $.001 per share, which shall have the following preferences,
powers,
designations and other special rights:
|
Voting:Holders
of the Series A Super Preferred Stock shall have
ten votes per share held
on all matters submitted to the shareholders
of the Company for a vote
thereon. Each holder of these shares shall have the option
to
appoint two additional members to the Board of
Directors. Each
share shall be convertible into ten (10) shares
of common
stock.
|
Dividends:
|
The
holders of Series A Super Preferred Stock shall
be entitled to receive
dividends or distributions on a pro rata basis
with the holders of common
stock when and if declared by the Board of Directors
of the
Company. Dividends shall not be cumulative. No
dividends or distributions shall be declared
or paid or set apart for
payment on the Common Stock in any calendar year
unless dividends or
distributions on the Series A Preferred Stock
for such calendar year are
likewise declared and paid or set apart for payment. No
declared and unpaid dividends shall bear or accrue
interest.
|
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements - Continued
September
30, 2007 and 2006
Note
H - Preferred Stock - Continued
Liquidation
Preference
|
Upon
the liquidation, dissolution and winding up of
the Company, whether
voluntary or involuntary, the holders of the Series
A Super Preferred
Stock then outstanding shall be entitled to, on
a pro-rata basis with the
holders of common stock, distributions of the assets
of the Corporation,
whether from capital or from earnings available
for distribution to its
stockholders.
|
The
Board
of Directors has the authority, without further action by
the shareholders, to
issue, from time to time, preferred stock in one or more
series for such
consideration and with such relative rights, privileges,
preferences and
restrictions that the Board may determine. The preferences,
powers, rights and
restrictions of different series of preferred stock may differ
with respect to
dividend rates, amounts payable on liquidation, voting rights,
conversion
rights, redemption provisions, sinking fund provisions and
purchase funds and
other matters. The issuance of preferred stock could adversely
affect the voting
power or other rights of the holders of common stock.
On
October 20, 2003, in conjunction with the formation and incorporation
of Signet
Entertainment Corporation, SIG issued 4,000,000 shares of
preferred stock to the
incorporating persons. This transaction was valued at
approximately $40,000, which approximates the value of the
services
provided.
On
July
19, 2005, the Company issued 1,000,000 shares of preferred
stock to an existing
shareholder and Company officer for services related to the
organization and
structuring of the Company and it’s proposed business plan. This
transaction was valued at approximately $10,000, which approximates
the value of
the services provided.
Concurrent
with the reverse merger transaction, these shareholders exchanged
their Signet
Entertainment Corporation preferred stock for equivalent
shares of Signet
International Holdings, Inc. Series A Super Preferred stock,
as described
above.
Note
I - Common Stock Transactions
On
October 17, 2003 and November 1, 2003, in connection with
the incorporation and
formation of the Company, an aggregate of approximately 3,294,000
shares of
restricted, unregistered shares of common stock and were
issued to various
founding individuals. This combined preferred stock and common stock
issuances were collectively valued at approximately $40,810,
which approximated
the fair value of the time provided by the individuals and
the related
out-of-pocket expenses.
On
June
16, 2004 and December 3, 2004, the Company sold, in three
separate transactions
to three unrelated individuals, an aggregate 70,000 shares
of restricted,
unregistered common stock for $35,000 cash. These shares were sold
pursuant to an exemption from registration under Section
4(2) of the Securities
Act of 1933, as amended, and no underwriter was used any
of the three
transactions.
Between
July 20, 2005 and August 26, 2005, Signet Entertainment Corporation
sold an
aggregate 57,000 shares of common stock to existing and new
shareholders at a
price of $0.01 per share for gross proceeds of approximately
$570. As
this selling price was substantially below the “fair value” of comparable
transactions, the Company recognized a charge to operations
for consulting
expense equivalent to the difference between the established
“fair value” of
$1.00 per share (as determined by the pricing in the September
2005 Private
Placement Memorandum) and the selling price of $0.01 per
share.
On
September 9, 2005, the Company commenced the sale of common
stock pursuant to a
Private Placement Memorandum in a self-underwritten offering. This
Memorandum is offering for sale to persons who qualify as
accredited investors
and to a limited number of sophisticated investors, on a
best efforts basis, up
to 2,000,000 of our common shares at $1.00 per share, for
anticipated gross
proceeds of $2,000,000. The common shares will be offered through the
Company’s officers and directors on a best-efforts basis. The minimum
investment is $1,000, however, the Company might, at it’s sole discretion,
accept subscriptions for lesser amounts. Funds received from all
subscribers will be released to the Company upon acceptance
of the subscriptions
by the Company’s management. Through December 31, 2006, the Company
has sold an aggregate 381,000 shares for gross proceeds of
$381,000 under this
Memorandum.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements - Continued
September
30, 2007 and 2006
Note
I - Common Stock Transactions - Continued
On
March
31, 2006, the Company repurchased 50,000 shares of common
stock from the estate
of a deceased shareholder which purchased said shares
for $50,000 cash pursuant
to the aforementioned September 2005 Private Placement
Memorandum for $50,000
cash. In June 2006, the Company’s Board of Directors cancelled these
shares and returned them to unissued status.
On
June
22, 2006, the Company issued 250,000 shares of unregistered,
restricted common
stock, valued at $0.50 per share or $125,000, in payment of
consulting fees. As the agreed-upon value of the services
provided was less than the “fair value” of comparable transactions, the Company
has recognized an additional charge to Consulting Fees
equivalent to the
difference between the established “fair value” of $1.00 per share (as
determined by the pricing in the September 2005 Private
Placement Memorandum)
and the agreed-upon value of $0.50 per share in the corresponding
line item in
the Company’s Statement of Operations.
On
April
16, 2007, the Company issued 270,000 shares of unregistered,
restricted common
stock for the acquisition of certain broadcast and other
production
rights. These shares were sold pursuant to an exemption from
registration under Section 4(2) of the Securities Act
of 1933, as amended, and
no underwriter was used in this transaction.
On
May 2,
2007, the Company sold, in a private transaction, 6,800
shares of unregistered,
restricted common stock at a price of $1.00 per share
for cash. These
shares were sold pursuant to an exemption from registration
under Section 4(2)
of the Securities Act of 1933, as amended, and no underwriter
was used in this
transaction.
On
May
22, 2007, the Company issued 113,662 shares of unregistered,
restricted common
stock for the acquisition of intellectual properties
related to literary
works. These shares were sold pursuant to an exemption from
registration under Section 4(2) of the Securities Act
of 1933, as amended, and
no underwriter was used in this transaction.
On
August
30, 2007, the Company sold, in a private transaction,
12,500 shares of
unregistered, restricted common stock at a price of $1.00
per share for
cash. These shares were sold pursuant to an exemption from
registration under Section 4(2) of the Securities Act
of 1933, as amended, and
no underwriter was used in this transaction.
Note
J - Commitments
Leased
office space
The
Company operates from leased office facilities at 205
Worth Avenue, Suite 316
Palm Beach, FL 33480 under an operating lease. The lease agreement
was originally expired to expire in July 2009 and has
been subsequently amended
to a month-to-month basis. The lease requires monthly payments of
approximately $928. The Company is not responsible for any additional
charges for common area maintenance.
The
Company also reimburses two non-executive personnel and
one executive officer
for the use of their personal home offices, which are
not exclusive to the
Company’s business, at approximately $250 per month. These agreements
are on a month-to-month basis.
For
the
respective years ended December 31, 2006 and 2005, the
Company paid an aggregate
of $34,755 and $16,738 for rent under these agreements.
Triple
Play Management Agreement
On
October 23, 2003, Signet Entertainment entered into a
Management Agreement with
Triple Play Media Management (Triple Play) of Peoria,
Arizona. Triple
Play is engaged to be the management company to manage
and operate any acquired
Signet facility (facilities) on a permanent basis for
Signet for a period of ten
years (the initial period) with an automatic extension
of an additional ten
years unless the dissenting party gives proper
notice.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements - Continued
September
30, 2007 and 2006
Note
J - Commitments - Continued
Triple
Play Management Agreement
- continued
To
facilitate this Management Agreement, Signet will endeavor
to raise capital
contributions through a Private Placement Offering, Regulation
506 and /or a
Public Offering and show evidence of the total capital funds
required for the
establishment of the Network including providing funds for
the budgeted
operations of the business for the term of this agreement plus
extensions.
Signet will also provide a minimum of 17,500 square feet of
permanent structure
(connector facility), fully equipped to accommodate full- service
television
studios, sound stages and various production equipment within
completely
air-conditioned and heated work places and mobile modular production
unit (s)
fully equipped and a Eutelsat satellite Hot Bird and delivery
system. Triple Play will, in turn, perform the following
actions: a) acquire and maintain various licenses; b) compliance with
local ordinances and state laws; c) maintain complete books
of account, which
shall comply with requirements of any governmental agency including
all Federal
Communications commission (FCC) regulations; d),provide an
annual budget to
Signet, addressing all operating activities, including a reserve
for repairs,
refurbishment, and replacements to maintain the premises and
equipment in good
condition; e) make no expenditures other than those items provided
in an annual
budget; f) maintain books and records to be made available
to Signet
representatives; g) have complete creative control and authority
to determine
all matters concerning decor, design, arrangement, format and
all production
presentations including creative design, absolute control and
discretion with
respect to the operation of the premises; and h) be responsible
for all
necessary and proper insurances safeguarding against all reasonably
foreseeable
risks on a replacement cost basis of coverage to both parties
, the business and
its assets.
Upon
Signet’s raising the necessary required funding through a secondary
offering,
Signet will begin funding the working capital requirements
of Triple Play for a
share of Triple Play’s profit. The working capital commitment is
based on mutually agreed budgets and is projected to amount
approximately $15
million, inclusive of management fees. This advance of management
fees would be drawn down by Triple Play over approximately
the first 12 months
of its operations which would begin once Signet has access
to the secondary
offering funding. This advance will be recovered by Signet from
Triple Play’s future cash flows. In return, Signet will receive 87.5
% of Triple Play’s monthly gross revenues less Triple Play’s monthly
operating expenses.
For
the
services, Triple Play shall render to Signet, Signet shall
pay management fees
to Triple Play based upon Triple Play’s gross revenues, as follows: a) 12% of
Triple Play’s gross revenues, provided that Triple Play realizes a minimum
pre
tax net profit of 25%, plus b) ½% (one half percent) of Triple Play’s gross
revenues for Triple Play’s costs of licenses and permits for international air
waves and feeds duties and taxes, satellite transmission links,
down links,
including earth stations. The fees in a) and b), noted above, shall
become due from Signet within 90 days after the close of each
calendar year
based on a determination by independently prepared Certified
Public Accountants’
reports. These reports will account for advances Signet has
made.
Triple
Play’s Chief Executive Officer, Richard Grad, one of Signet’s founding
shareholders, will be paid by Signet, a signing bonus of $50,000
upon the
funding of a future Signet offering. Signet will also pay to Mr. Grad
the following annual compensation during the entire term of
this agreement,
including extensions thereto: 1) a guaranteed annual salary of
$200,000.(Two Hundred Thousand), per year payable at the beginning
of each month
at the rate of twelve equal installments and will be subsequently
deducted from
each annual management fee settlement noted above; 2) an allowance
of $1,500 for
moving and relocation expenses and 3) ordinary and reasonable
employee benefits
related to health insurance. It is specifically noted that Mr. Grad
will function solely as an independent contractor representing
Triple Play and
will not be construed as a Signet employee.
Signet
International Holdings, Inc. and Subsidiary
(a
development stage enterprise)
Notes
to Consolidated Financial Statements - Continued
September
30, 2007 and 2006
Note
J - Commitments - Continued
Big
Vision Management Contract
On
July
22, 2005, Signet Entertainment entered into a Management Agreement
with Big
Vision Studios, a Nevada Limited Liability Company (Big Vision)
located in both Las Vegas, Nevada and Burbank, California whereby
Big Vision
will be the exclusive supplier of High Definition Equipment
and Studio rental
for Signet. This agreement is for a period of one (1) year,
commencing with the submission by Signet’s of evidence of the total capital
funds required for the establishment of Signet’s Network including providing
funds for the budgeted operations of the business for the term
of this agreement
plus extensions to Big Vision, with an automatic extension
of an additional five
years unless the dissenting parry gives proper notice. Signet has
agreed to pay a reduced fee to Big Vision, at a discount negotiated
off of Big
Vision’s published standard rate card, for the first year of Signer’s
operations. After the initial year, Signet has agreed to pay Big
Vision based on Big Vision’s published standard rate card at that
point in time plus an additional 15% in consideration of Big Vision’s
concession in rates for the first year. Signet has agreed to continue
paying pursuant to Big Vision’s published standard rate card plus 15% for as
long as this agreement is in place. All fees will be paid as they
become due and payable according to Big Vision’s requirements.
(Remainder
of this page left blank intentionally)
SIGNET
INTERNATIONAL HOLDINGS, INC.
479,700
SHARES OF COMMON STOCK
PROSPECTUS
YOU
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS
PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER
TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
UNTIL
_____________, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES WHETHER
OR NOT PARTICIPATING IN THIS OFFERING MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE DEALERS OBLIGATION TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
ITEM
24. INDEMNIFICATION
OF DIRECTORS AND OFFICERS
Section
145 of the Business Corporation Law of the State of Delaware provides that
any
corporation shall have the power to indemnify a corporate agent against his
expenses and liabilities in connection with any proceeding involving the
corporate agent by reason of his being or having been a corporate agent if
such
corporate agent acted in good faith and in the best interest of the corporation
and with respect to any criminal proceeding, such corporate agent has no
reasonable cause to believe his conduct was unlawful.
INSOFAR
AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE
COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
Our
certificate of incorporation provides in effect for the elimination of the
liability of directors to the extent permitted by the DGCL.
We
have
agreed to indemnify each of our directors and certain officers against certain
liabilities, including liabilities under the Securities Act of 1933.Insofar
as
indemnification for liabilities arising under the Securities Act of1933 may
be
permitted to our directors, officers and controlling persons pursuant to the
provisions described above, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than our payment of expenses incurred or paid by our
director, officer or controlling person in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
ITEM
25. OTHER EXPENSES
OF ISSUANCE AND DISTRIBUTION
Securities
and Exchange Commission registration
fee
|
|
$
|
30.93
|
|
Transfer
Agent Fees (1)
|
|
$
|
1,600.00
|
|
Accounting
fees and expenses (1)
|
|
$
|
5,500.00
|
|
Legal
fees and expenses (1)
|
|
$
|
15,000.00
|
|
Total(1)
|
|
$
|
22,130.93
|
|
(1)
Estimated
All
amounts are estimates other than the Commission’s registration fee. We are
paying all expenses of the offering listed above. No portion of these expenses
will be borne by the selling shareholders. The selling shareholders, however,
will pay any other expenses incurred in selling their common stock, including
any brokerage commissions or costs of sale.
ITEM
26.
RECENT SALES OF UNREGISTERED
SECURITIES
On
February 2, 2005, we issued 100,000 shares to Scott Raleigh for services
rendered as our founder. Such shares were issued in reliance on an exemption
from registration under Section 4(2) of the Securities Act of 1933. These shares
of our common stock qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance shares by us did not involve a public offering.
The offering was not a “public offering” as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size of the offering,
and
manner of the offering and number of shares offered. In addition, no general
solicitation or advertising was used. We did not undertake an offering in which
we sold a high number of shares to a high number of investors.
In
addition, Scott Raleigh had the necessary investment intent as required by
Section 4(2) since he agreed to and received a share certificate bearing a
legend stating that such shares are restricted pursuant to Rule 144 of the
1933
Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a "public
offering." Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities
Act
of 1933 for this transaction. On July 8, 2005, Scott Raleigh transferred the
100,000 shares to Signet Entertainment Corporation for a cash purchase price
of
$36,000 pursuant to a stock purchase agreement and pursuant to an exemption
from
registration under Section 4(2) of the Securities Act of 1933.
On
September 8, 2005, we issued a total of 3,421,000 common shares to sixty-two
(62) shareholders and 5,000,000 preferred shares to three (3) shareholders
pursuant to the Stock Purchase Agreement and Share Exchange between us and
Signet Entertainment Corporation. Such shares were issued on a one-for-one
basis
and were valued at par value of $0..001 for a total of $5,000. These shares
were
issued in reliance on an exemption from registration under Section 4(2) of
the
Securities Act of 1933. The following sets forth the identity of the class
of
persons to whom we issued shares pursuant to the share exchange and the amount
of shares for each shareholder:
Shareholder
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Common
Shares
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Preferred
Shares
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BARRY
ABRAMS MDPA PROFIT SHARING PLAN
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GUERRICAECHEBARRIA,
CHRISTINE
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MELNICK,
A MICHAEL & ILENE B. JTWROS
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These
shares of our common stock qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance shares by us did not involve a public
offering. No general solicitation or general advertising were used in connection
with this offering. The offering was not a “public offering” as defined in
Section 4(2) due to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of shares offered.
We
did not undertake an offering in which we sold a high number of shares to a
high
number of investors. Each investor completed a questionnaire confirming that
such investor was sophisticated and has such knowledge and experience in
financial and business matters that he/she is capable of evaluating the merits
and risks of the prospective investment or we reasonably believed immediately
prior to making the sale that the purchasers met this description. In addition,
each of these investors were friends or colleagues of Ernie Letiziano, our
sole
officer and director, and therefore Mr. Letiziano was aware that each of these
investors were sophisticated. These shareholders had the necessary investment
intent as required by Section 4(2) since they agreed to and received a share
certificate bearing a legend stating that such shares are restricted pursuant
to
Rule 144 of the 1933 Securities Act. This restriction ensures that these shares
would not be immediately redistributed into the market and therefore not be
part
of a “public offering.” Based on an analysis of the above factors, we have met
the requirements to qualify for exemption under Section 4(2) of the Securities
Act of 1933 for this transaction.
In
September 2005 we commenced a Regulation D, Rule 506 Offering which was
completed on January 2006 in which we issued a total of 381,000 shares of our
common stock in exchange for cash consideration to eight (8) shareholders at
a
price per share of $1.00 for an aggregate offering price of $381,000. The
following sets forth the identity of the persons to whom we sold these shares
and the amount of shares for each shareholder:
Shareholder
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Common
Shares
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BARRY
ABRAMS MDPA PROFIT SHARING PLAN
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100,000
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GOFF
FAMILY HOLDINGS, LP
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50,000
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HENNINGSEN,
ROBERT C. AND KATHLEEN A JTWROS
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54,000
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KILEY,
ROBERT
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10,000
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KILEY,
ROBERT AND SUSAN JTWROS
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65,000
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MADORE,
DANIEL R. AND LAURIE A. JT TEN
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50,000
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MEYERS,
RON
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50,000
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ROWAN,
WILLIAM R. AND JANET LONG TIC
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2,000
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The
Common Stock issued in our Regulation D, Rule 506 Offering was issued in a
transaction not involving a public offering in reliance upon an exemption from
registration provided by Rule 506 of Regulation D of the Securities Act of
1933.In accordance with Section 230.506 (b) (1) of the Securities Act of 1933,
these shares qualified for exemption under the Rule 506 exemption for this
offerings since it met the following requirements set forth in Reg.
ss.230.506:
(A)
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No
general solicitation or advertising was conducted by us in connection
with
the offering of any of the Shares.
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(B)
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Each
investor received a copy of our private placement memorandum and
completed
a questionnaire and confirmed that they were either “accredited” or
“sophisticated” investors as defined in Rule 501 of Regulation D. Of the 8
subscribers, 6 were “accredited investors” and 2 were “sophisticated
investors.” Each investor completed a questionnaire confirming that such
investor was sophisticated and has such knowledge and experience
in
financial and business matters that he/she is capable of evaluating
the
merits and risks of the prospective investment or we reasonably believed
immediately prior to making the sale that the purchasers met this
description.
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(C)
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Our
management was available to answer any questions by prospective
purchasers;
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(D)
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Shares
issued in connection with in this offering were restricted under
Rule 4(2)
and certificates indicating ownership of such shares bore the appropriate
legend.
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All
shares purchased in the Regulation D Rule 506 offering completed in May 2006
were restricted in accordance with Rule 144 of the Securities Act of
1933.
On
March
31, 2006, the Company repurchased 50,000 shares of common stock from the estate
of a deceased shareholder which purchased said shares pursuant to the
aforementioned Regulation D Rule 506 offering completed in May 2006 for $50,000
cash.
On
June
22, 2006, the Company issued 250,000 shares of unregistered, restricted common
stock, valued at $0.50 per share or $125,000, in payment of consulting fees
to
Ruth J. Latini Trust based upon a consulting agreement with Merriam Joan Handy
for services including aiding us in developing a marketing plan, providing
assistance and expertise in an advertising campaign and assisting us with press
releases. These shares of our common stock qualified for exemption under Section
4(2) of the Securities Act of 1933 since the issuance shares by us did not
involve a public offering. No general solicitation or general advertising were
used in connection with this offering. The offering was not a “public offering”
as defined in Section 4(2) due to the insubstantial number of persons involved
in the deal, size of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a high number of
shares to a high number of investors.
In
addition, these shareholders had the necessary investment intent as required
by
Section 4(2) since they agreed to and received a share certificate bearing
a
legend stating that such shares are restricted pursuant to Rule 144 of the
1933
Securities Act. This restriction ensures that these shares would not be
immediately redistributed into the market and therefore not be part of a “public
offering.” Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities
Act
of 1933 for this transaction.
On
August
30, 2007, the Company sold, in a private transaction, 12,500 shares of
unregistered, restricted common stock at a price of $1.00 per share for
cash. These shares were sold pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended,
and
no underwriter was used in this transaction. The net remaining
proceeds of above transactions remain in the Company’s bank accounts as of
September 30, 2007 and are to be used in future periods for working capital
purposes.
ITEM
27.
EXHIBITS.
Method
of Filing
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Exhibit
Number
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Exhibit
Title
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Incorporated
by reference to Exhibit 2.1 to Amendment to Form 8k filed on July
12, 2005
(File No. 000-51185)
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2.1
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Stock
Purchase Agreement dated July 8, 2005 between Scott Raleigh and Signet
Entertainment Corporation.
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Incorporated
by reference to the exhibit filed Amendment to Form 8k filed on March
3,
2006 (File No. 000-51185).
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2.2
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First
Amendment to Stock Purchase Agreement and Share Exchange dated September
8, 2005 between Signet International Holdings, Inc. and Signet
Entertainment Corporation.
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Incorporated
by reference to Exhibit 2.3 to Form SB-2 filed on September 22, 2006
(File
No. 333-134665)
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2.3
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Final
Amendment to Stock Purchase Agreement and Share Exchange dated September
8, 2005 between Signet International Holdings, Inc. and Signet
Entertainment Corporation.
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Incorporated
by reference to
Exhibit 3.1 to Form SB-2 filed on September 22, 2006 (File No.
333-134665)
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3.1
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Restated
Certificate of Incorporation of Signet International Holdings,
Inc.
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Incorporated
by reference to Exhibit 3.2 to Form SB-2 filed on June 2, 2006 (File
No.
333-134665)
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3.2
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By-Laws
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Incorporated
by reference to Exhibit 3.3 to Form SB-2 filed on November 6, 2006
(File
No. 333-134665)
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3.3
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Resolution
regarding pre-incorporation contracts.
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5.1
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Opinion
and Consent of Anslow & Jaclin, LLP
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Incorporated
by reference to Exhibit 10.3 to Amendment No. 2 to Form SB-2 filed
on
September 22, 2006 (File No. 333-134665)
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10.1
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Management
Agreement with Triple Play Media, Inc.
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Incorporated
by reference to Exhibit 10.2 to Form SB-2 filed on June 2, 2006 (File
No.
333-134665)
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10.2
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Management
Agreement with Big Vision, Inc.
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Incorporated
by reference to Exhibit 10.3 to Form SB-2 filed on June 2, 2006 (File
No.
333-134665)
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10.3
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Screenplay
Purchase Agreement with FreeHawk Productions, Inc.
(rescinded)
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Incorporated
by reference to Exhibit 10.3 to Amendment No. 2 to Form SB-2 filed
on
September 22, 2006 (File No. 333-134665)
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10.4
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Mutual
Agreement to Rescind Agreement with FreeHawk Productions,
Inc.
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Incorporated
by reference to Exhibit 10.3 to Amendment No. 2 to Form SB-2 filed
on
September 22, 2006 (File No. 333-134665)
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10.5
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Landlord
Letter
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10.6
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Intentionally
left Blank
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Incorporated
by reference to Exhibit 10.1 to Form 8-K filed on November 6, 2007
(File
No. 000-51185)
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10.7
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Investment
Agreement Dated November 5, 2007, by and between the Company and
Dutchess
Private Equities Fund, Ltd.
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Incorporated
by reference to Exhibit 10.2 to Form 8-K filed on November 6, 2007
(File
No. 000-51185)
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10.8
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Registration
Rights Agreement dated November 5, 2007, by and between the Company
and
Dutchess Private Equities Fund, Ltd.
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Incorporated
by reference to Exhibit 23.1 to Form 8-K filed on November 20, 2005
(File
No. 000-51185).
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16.1
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Letter
from Gately & Associates, LLC
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Incorporated
by reference to Exhibit 21.1 to Form SB-2 filed on June 2, 2006 (File
No.
333-134665)
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21.1
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List
of Subsidiaries
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23.2
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Consent
of S.W. Hatfield, CPA
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ITEM
28.
UNDERTAKINGS.
The
undersigned registrant hereby undertakes:
(a)
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Rule
415 Offering Undertaking:
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The
undersigned registrant hereby undertakes:
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1.
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To
file, during any period in which offers or sales are being made,
a
post-effective amendment to this registration
statement:
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(a)
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To
include any prospectus required by Section 10(a)(3) of the Securities
Act;
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(b)
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To
reflect in the prospectus any facts or events arising after the effective
date of this registration statement, or most recent post-effective
amendment, which, individually or in the aggregate, represent a
fundamental change in the information set forth in this registration
statement; and notwithstanding the foregoing, any increase or decrease
in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
From
the low or high end of the estimated maximum offering range may be
reflected in the form of prospects filed with the Commission pursuant
to
Rule 424(b) if, in the aggregate, the changes in the volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the
effective registration statement; and
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(c)
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To
include any material information with respect to the plan of distribution
not previously disclosed in this registration statement or any material
change to such information in the registration
statement.
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2.
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That,
for the purpose of determining any liability under the Securities
Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein,
and the
offering of such securities at that time shall be deemed to be the
initial
bona fide offering thereof.
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3.
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To
remove from registration by means of a post-effective amendment any
of the
securities being registered hereby which remain unsold at the termination
of the offering.
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4.
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For
determining liability of the undersigned small business issuer under
the
Securities Act to any purchaser in the initial distribution of the
securities, the undersigned small business issuer undertakes that
in a
primary offering of securities of the undersigned small business
issuer
pursuant to this registration statement, regardless of the underwriting
method used to sell the securities to he purchaser, if the securities
are
offered or sold to such purchaser by means of any of the following
communications, the undersigned small business issuer will be a seller
to
the purchaser and will be considered to offer or sell such securities
to
such purchaser:
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(a)
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Any
preliminary prospectus or prospectus of the undersigned small business
issuer relating to the offering required to be filed pursuant to
Rule 424
(Sec. 230. 424);
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(b)
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Any
free writing prospectus relating to the offering prepared by or on
behalf
of the undersigned small business issuer or used or referred to by
the
undersigned small business issuer;
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(c)
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The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned small business
issuer or its securities provided by or on behalf of the undersigned
small
business issuer; and
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(d)
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Any
other communication that is an offer in the offering made by the
undersigned small business issuer to the
purchaser.
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(b)
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Rule
430A under the Securities Act undertaking:
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The
undersigned registrant hereby undertakes:
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1.
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For
determining any liability under the Securities Act, treat the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the small business issuer under Rule 424(b)(1), or (4) or
497(h)
under the Securities Act (Sec. 230. 424(b)(1), (4) or 230. 497(h))
as part
of this registration statement as of the time the Commission declared
it
effective.
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2.
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For
determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a
new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the
initial
bona fide offering of those securities.
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The
undersigned registrant hereby undertakes that, for the purpose of
determining liability under the Securities Act to any
purchaser:
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1.
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If
the small business issuer is relying on Rule 430B (ss. 230. 430B
of this
chapter):
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(i)
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Each
prospectus filed by the undersigned small business issuer pursuant
to Rule
424(b)(3) (ss. 230. 424(b)(3) of this chapter) shall be deemed to
be part
of the registration statement as of the date the filed prospectus
was
deemed part of and included in the registration statement;
and
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(ii)
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Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5),
or
(b)(7) (ss. 230. 424(b)(2), (b)(5), or (b)(7) of this chapter) as
part of
a registration statement in reliance on Rule 430B relating to an
offering
made pursuant to Rule 415(a)(1)(i), (vii), or (x) (ss. 230. 415(a)(1)(i),
(vii), or (x) of this chapter) for the purpose of providing the
information required by section 10(a) of the Securities Act shall
be
deemed to be part of and included in the registration statement as
of the
earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities
in
the offering described in the prospectus. As provided in Rule 430B,
for
liability purposes of the issuer and any person that is at that date
an
underwriter, such date shall be deemed to be a new effective date
of the
registration statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated
by
reference into the registration statement or prospectus that is part
of
the registration statement will, as to a purchaser with a time of
contract
of sale prior to such effective date, supersede or modify any statement
that was made in the registration statement or prospectus that was
part of
the registration statement or made in any such document immediately
prior
to such effective date; or
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2.
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If
the small business issuer is subject to Rule 430C (ss. 230. 430C
of this
chapter), include the following: Each prospectus filed pursuant to
Rule
424(b)(ss. 230. 424(b) of this chapter) as part of a registration
statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance
on Rule
430A (ss. 230. 430A of this chapter), shall be deemed to be part
of and
included in the registration statement as of the date it is first
used
after effectiveness. Provided, however, that no statement made in
a
registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated
by
reference into the registration statement or prospectus that is part
of
the registration statement will, as to a purchaser with a time of
contract
of sale prior to such first use, supersede or modify any statement
that
was made in the registration statement or prospectus that was part
of the
registration statement or made in any such document immediately prior
to
such date of first use.
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Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of
the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities, other than
the
payment by us of expenses incurred or paid by one of our directors, officers,
or
controlling persons in the successful defense of any action, suit or proceeding,
is asserted by one of our directors, officers, or controlling persons in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit
to a
court of appropriate jurisdiction the question whether such indemnification
is
against public policy as expressed in the Securities Act, and we will be
governed by the final adjudication of such issue.
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and authorized this registration statement
to be signed on its behalf by the undersigned, in the City of Palm Beach, State
of Florida on November 29, 2007.
By:
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/s/
Ernest W. Letiziano
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Ernest
W. Letiziano
President,
Chief Executive Officer,
Chief
Financial Officer,
Principal
Accounting Officer,
and
Director
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POWER
OF ATTORNEY
ALL
MEN
BY THESE PRESENT, that each person whose signature appears below constitutes
and
appoints Ernest W. Letiziano, true and lawful attorney-in-fact and agent, with
full power of substitution and re-substitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all pre- or post-effective
amendments to this registration statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
one
of them, or their or his substitutes, may lawfully do or cause to be done by
virtue hereof. In accordance with the requirements of the Securities Act of
1933, this registration statement was signed by the following persons in the
capacities and on the dates stated.
By:
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/s/
Ernest W. Letiziano
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Ernest
W. Letiziano
President,
Chief Executive Officer,
Chief
Financial Officer,
Principal
Accounting Officer,
and
Director
|
Dated:
November 29, 2007