Item
1 - Description of Business
Formation and
History
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.
Plan of
Operation
The
Company’s current long-range business plan is oriented towards the building of a
new broadcast media group comprised of television stations and complimentary
syndication and production companies serving mid to large sized U.S.
markets. Upon the completion of our fund-raising efforts to
adequately capitalize our business plan we intend to grow into one of the most
significant and diversified television broadcasting companies in the country
today. Our business plan focuses on three
complimentary segments: ownership and operations of various television stations,
ownership of a programming and syndication company and the ownership and
operation of a television production company.
Currently,
we only have a single wholly-owned subsidiary, Signet Entertainment Corporation
(“SIG”), which 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 Media
Management, Inc.
Triple
Play’s programming niche is “gaming.” Presently, there are no
channels formatted exclusively for the gaming customer whose interest
is focused on the vast variety of gaming activities, domestically as well as
internationally, including “sports and entertainment.” This type of
network is unique to the television industry.
The
Gaming & Entertainment Network will cover major poker and blackjack
tournaments and high stakes major table games, especially those from Hong Kong,
South America and the Outback of Australia. The activities in the Las
Vegas, Reno and Laughlin, Nevada areas, and various Florida venues
alone, host high stakes tournaments on a daily basis. Triple Play will produce
domestic and international feeds covering thoroughbred and quarter-horse racing;
coverage of fluctuation and trends within sports books from selected
locations around the world; scheduled hourly updating of betting lines on
sporting events; and a remote coverage of all betting sports, to
delivering our personal insight and commentary, live from the sites of
origination. Handicapping shows will feature the “how-to” of betting, who’s
betting, and why.
Along
with, and part of, the gaming and sports coverage, Triple Play will offer shows
exploring the insights of the hotel and casino business; offer
original formatted airing of special events taking place in the hotels and
casinos around the world, including profiles of the shows and headliners, their
acts and silhouetting behind the scenes action. Triple Play will feature a newly
developed format called “Dialing for Dollars, Satellite Pay Per View
Bingo.”
Our
agreement with Triple Play provides that we will pay management fees in the
amount of 12% provided that we realize a minimum pre tax net profit
of 25%. We also will provide an allowance for costs of licenses and
permits for international airwaves and feeds, duties and taxes, satellite
transmission links, down links, including earth stations in the amount of 0.05%
(one-half of one percent) of the total gross revenues. In addition,
as further consideration for Richard Grad’s agreement for Triple Play’s
exclusive services, we paid Mr. Grad a signing bonus of $50,000 upon
funding of the our offering. We are also obligated to pay the
following compensation each year during the entire term of the agreement,
including extensions thereto: guaranteed payment of $200,000 per year payable to
Richard Grad. This amount will be payable at the beginning of each
month at the rate of twelve equal installments. We will
also provide Mr. Grad with an allowance of $1,500 for moving and relocating
expenses. In addition, we will provide Mr. Grad with personal life,
health dental, vision and accident insurance. Mr. Grad owns
approximately 401,000 shares (or 10%) of our common
stock.
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.
In
addition to the exclusive contract with Triple Play whose primary purpose is
creating original programming, distribution and international sales and
satellite delivery systems, we executed a long-term contract on July 22, 2005
with Big Vision, Inc. whose primary purpose is television production,
transmitting and ground crew pick up. Big Vision is a Las Vegas,
Nevada based video production company offers all TV production amenities
required of any variety of television programming. Big Vision also
owns a 12,000 square feet facility in Burbank, CA serving clients
nationwide and abroad.
Big
Vision is best known for its production mobile facilities which will be used to
support Triple Play. Big Visions’ services range from original video
production to providing the technical management, professional crewing and
equipment for major broadcast series and events. It has recently
added a sophisticated sound delivery system and a complete line of High
Definition delivery techniques with new cameras, recorders, and
monitors.
We expect
a lot of our live programming will be originating from Las Vegas. Big
Vision will assure continuous local programming from Las Vegas, with
on site editing facilities and distribution capabilities. Our access
to Big Vision’s studio and portable television equipment enables us
to deliver the news-worthy Las Vegas events soon after their
occurrence. The affiliation assures uninterrupted local programming
coverage by Big Vision and at the same time gives Triple Play the flexibility to
initiate its broadcast and programming schedules in the European,
Asian, North and South American markets.
Our
agreement with Big Vision provides for the payment of 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. After
the initial year, we will pay Big Vision service fees at the industry standard
rates plus an additional 15% in consideration for Big Vision’s
concession in rates during the first year. We agree to
continue paying the industry rates plus 15% for as long as this agreement is in
place. It is understood that all fees will be paid as they become due
and payable according to Big Vision’s requirements.
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.
Broadcast and 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. 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 open account payable. 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 open account payable. 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.
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:
•
|
Major
networks such as ABC, CBS, NBC, FOX
|
•
|
Major
cable networks such as: ESPN, USA, Bravo, Fox Sports Net, UPN, PAX, The
Travel Channel, The Tube
|
•
|
Smaller
cable networks: Food Channel, Spike TV, HGTV, Golf
Channel
|
•
|
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 distribution 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.