UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2010
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION FROM _______ TO ________.
COMMISSION FILE NUMBER 000-52861
BELLTOWER ENTERTAINMENT CORP.
_________________________________________________________________
(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA 47-0926548
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11684 VENTURA BOULEVARD, SUITE 684
STUDIO CITY, CA 91604
________________________________________ __________
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (877) 355-1388
N/A
____________________________________________________
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
________________________________________________________________________________
Non-accelerated filer Smaller
Large accelerated (Do not check if a smaller reporting
filer Accelerated filer reporting company) company
[ ] [ ] [ ] [X]
________________________________________________________________________________
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, for the period covered by this report and as at the latest practicable
date:
At January 31, 2010, there were outstanding 42,091,424 shares of the
Registrant's Common Stock, $.0001 par value and as of the date hereof, there are
outstanding 47,646,924 shares of the Registrant's Common Stock, $.0001 par
value.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:
Yes [ ] No [X]
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BELLTOWER ENTERTAINMENT CORP.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
JANUARY 31, 2010
Page
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets (unaudited) F-1
Condensed Consolidated Statements of Operations (unaudited) F-2
Condensed Consolidated Statements of Cash Flows (unaudited) F-3
Notes to Condensed Consolidated Financial Statements (unaudited) F-4
3
BELLTOWER ENTERTAINMENT CORP.
(FORMERLY BRITTON INTERNATIONAL, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
January 31, April 30,
________________ ______________
2010 2009
________________ ______________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 10,360 $ 9,724
__________ ___________
Total Current Assets 10,360 9,724
Fixed Assets, net 7,799 7,586
Deposit 100,000 -
Film costs 158,985 46,618
Goodwill 164,884 164,884
Intangible assets 30,000 30,000
__________ ___________
Total Assets $ 472,027 $ 258,811
========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 95,373 $ 32,767
Due to related parties 296,816 325,042
Accrued liabilities 38,880 110,577
Notes payable 41,000 -
Accrued interest 9,246 6,857
__________ ___________
Total Current Liabilities 481,316 475,244
__________ ___________
STOCKHOLDERS' EQUITY (DEFICIT)
Common shares, 50,000,000 shares with par value $0.0001
authorized, and 42,091,424 issued and outstanding as of
January 31, 2010 and 37,231,424 as of April 30, 2009 1,087 602
Additional paid in capital 762,608 277,094
Retained deficit (772,984) (494,130)
__________ ___________
Total Stockholders' Equity (Deficit) (9,288) (216,433)
__________ ___________
Total Liabilities and Stockholders' Equity (Deficit) $ 472,027 $ 258,811
========== ===========
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-1
BELLTOWER ENTERTAINMENT CORP.
(FORMERLY BRITTON INTERNATIONAL, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three month periods ended Nine month periods ended
January 31, January 31,
_____________________________________ _____________________________________
2010 2009 2010 2009
________________ ________________ ________________ ________________
Revenue $ - $ - $ - $ -
____________ ____________ ____________ ____________
General, selling and
administrative expenses 145,544 42,618 276,465 164,239
____________ ____________ ____________ ____________
Net loss from operations (145,544) (42,618) (276,465) (164,239)
____________ ____________ ____________ ____________
Nonoperating income (expense)
Interest income - - - 3
Interest expense (796) (797) (2,389) (2,377)
Other income (expense) net - - - (21)
____________ ____________ ____________ ____________
Total nonoperating income (expenses) (796) (797) (2,389) (2,395)
____________ ____________ ____________ ____________
Loss before provision for income tax (146,340) (43,415) (278,854) (166,635)
Provision for income tax - - - -
____________ ____________ ____________ ____________
Net loss $ (146,340) $ (43,415) $ (278,854) $ (166,635)
============ ============ ============ ============
Net loss per share:
Basic and Diluted $ (0.0035) $ (0.0006) $ (0.0072) $ (0.0024)
============ ============ ============ ============
Weighted average number of shares outstanding:
Basic and Diluted 42,091,424 74,462,847 38,955,215 70,562,792
============ ============ ============ ============
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-2
BELLTOWER ENTERTAINMENT CORP.
(FORMERLY BRITTON INTERNATIONAL, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine month periods
ended January 31,
_____________________________
2010 2009
_________ _________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(278,854) $(166,635)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,754 5,328
Shares issued for services 50,000 -
Related party interest accrued - -
(Increase)/decrease in current assets:
Film costs (112,367) (20,215)
Prepaid expenses - 496
Deposits (100,000) (3,200)
Increase/(decrease) in current liabilities:
Accounts payable 62,605 24,878
Accrued expenses 5,690 17,662
_________ _________
Total Adjustments (91,317) 24,949
_________ _________
NET CASH USED IN OPERATING ACTIVITIES (370,171) (141,685)
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired during acquisition - (432)
Purchase of fixed assets (2,967) (16,902)
Purchase of intangible assets - (15,000)
_________ _________
NET CASH USED IN INVESTING ACTIVITIES (2,967) (32,334)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 51,000 25,000
Proceeds from issuance of common stock 322,000 20,658
Proceeds from related party loans 73,884 127,780
Payments on related party loans (73,110) -
_________ _________
NET CASH PROVIDED BY INVESTING ACTIVITIES 373,774 173,438
_________ _________
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 636 (580)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,724 910
_________ _________
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,360 $ 330
========= =========
SUPPLEMENTAL DISCLOSURES:
Non-cash financing and investing activities:
Conversion of payable to related party to common stock $ 39,000 $ -
========= =========
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-3
BELLTOWER ENTERTAINMENT CORP.
(FORMERLY BRITTON INTERNATIONAL, INC.)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - NATURE OF OPERATIONS
Belltower Entertainment Corp. ("Belltower", "We", or the "Company") was
incorporated in the State of Nevada on August 1, 2003. We were established as an
online retailer of jewelry, watches and jewelry related products. Our jewelry
business was discontinued on October 2, 2007.
On September 5, 2008, the Company acquired all of the issued and outstanding
stock of Calico Entertainment Group, Inc. in exchange for 1,725,000 (reverse
split adjusted) newly issued shares of Belltower. Upon completion of the
transaction the shareholders of Calico owned approximately 5% of the issued and
outstanding shares of Belltower.
On April 28, 2008 a corporation was formed under the laws of the State of Nevada
called Belltower Entertainment Corp. and on September 15, 2008, Britton
International Inc. acquired one hundred shares of its common stock for cash. As
such, Belltower Entertainment Corp. became a wholly-owned subsidiary of Britton.
On September 24, 2008, Belltower was merged with and into Britton. As a result
of the merger, the corporate name of Britton was changed to "Belltower
Entertainment Corp."
Our fiscal year end is April 30th.
On September 15, 2008 a corporation was formed under the laws of the Sate of
Nevada named 3A Productions Corp. and on September 15, 2008, Belltower
Entertainment Corp. acquired one hundred shares of its common stock (100% of the
issued and outstanding shares on that date). As such, 3A Productions Corp.
became a wholly-owned subsidiary of Belltower Entertainment Corp.
On September 19, 2008 a corporation was formed under the laws of the Sate of
California named Y2K Productions, Inc. and on September 19, 2008, Belltower
Entertainment Corp. acquired one hundred shares of its common stock (100% of the
issued and outstanding shares on that date). As such, Y2K Productions Inc.
became a wholly-owned subsidiary of Belltower Entertainment Corp.
On August 19, 2009 a Limited Liability Company (LLC) was formed under the laws
of the State of Nevada and named 19th Hole Productions, LLC. Belltower
Entertainment Corp. is the sole member of the LLC and as such is a wholly owned
subsidiary.
Belltower Entertainment Corp., through its wholly owned subsidiaries, Calico
Entertainment Group, Y2K Productions, Inc., 3A Productions Corp. and 19th Hole
Productions, LLC is a producer and distributor of feature length motion
pictures.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in
understanding Belltower Entertainment Corp.'s financial statements. The
financial statements and notes are representations of the Company's management,
who are responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles in the United
States of America and have been consistently applied in the preparation of the
financial statements.
The financial statements reflect the following significant accounting policies:
REVENUE RECOGNITION
Revenues are recognized in accordance with AICPA Statement of Position (SOP)
00-2, "Accounting by Producers or Distributors of Films" (codified in FASB ASC
Topic 926). Under SOP 00-2 (codified in FASB ASC Topic 926), revenue from the
sale or licensing of a film should be recognized only when all five of the
following conditions are met:
1. Persuasive evidence of a sale or licensing arrangement with a customer
exists.
2. The film is complete and has been delivered or is available for immediate and
unconditional delivery (in accordance with the terms of the arrangement).
3. The license period has begun and the customer can begin its exploitation,
exhibition, or sale.
4. The fee is fixed or determinable.
5. Collection of the fee is reasonably assured.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles 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 period. Actual results could differ from those estimates.
LOSS PER SHARE
Loss per share is computed in accordance with SFAS No. 128, "Earnings per
Share"(codified in FASB ASC Topic 260). Basic loss per share is calculated by
dividing the net loss available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted loss per share is
computed by dividing net loss by the weighted average shares outstanding
assuming all dilutive potential common shares were issued. There were no
dilutive potential common shares at balance sheet date. The Company has incurred
a net loss and has no potentially dilutive common shares, therefore; basic and
diluted loss per share is the same. Additionally, for the purposes of
calculating diluted loss per share, there were no adjustments to net loss.
FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, Disclosures about fair value of financial instruments, (codified
in FASB ASC Financial Instruments, Topic 825) requires that the Company disclose
estimated fair values of financial instruments. The carrying amounts reported in
the statements of financial position for current assets and current liabilities
qualifying as financial instruments are a reasonable estimate of fair value.
F-5
STATEMENT OF CASH FLOWS
In accordance with SFAS No. 95, "Statement of Cash Flows" (codified in FASB ASC
Topic 230), cash flows from the Company's operations is based upon the local
currencies. As a result, amounts related to assets and liabilities reported on
the statement of cash flows will not necessarily agree with changes in the
corresponding balances on the balance sheet.
COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income" (codified in FASB ASC Topic 220). SFAS 130
(codified in FASB ASC Topic 220) requires that the components and total amounts
of comprehensive income be displayed in the financial statements beginning in
1998. Comprehensive income includes net income and all changes in equity during
a period that arises from non-owner sources, such as foreign currency items and
unrealized gains and losses on certain investments in equity securities.
Comprehensive loss for the periods shown equals the net loss for the period plus
the effect of foreign currency translation.
INCOME TAXES
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," (codified in
FASB ASC Topic 740), which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that were
included in the financial statements or tax returns. Under this method, deferred
income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts at each period end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized.
The Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, (codified in FASB ASC Topic 740) on January 1,
2007. As a result of the implementation of FIN 48, the Company made a
comprehensive review of its portfolio of tax positions in accordance with
recognition standards established by FIN 48. As a result of the implementation
of FIN 48, the Company recognized no material adjustments to liabilities or
stockholders' equity. When tax returns are filed, it is highly certain that some
positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken
or the amount of the position that would be ultimately sustained. The benefit of
a tax position is recognized in the financial statements in the period during
which, based on all available evidence, management believes it is more likely
than not that the position will be sustained upon examination, including the
resolution of appeals or litigation processes, if any. Tax positions taken are
not offset or aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of
tax benefit that is more than 50 percent likely of being realized upon
settlement with the applicable taxing authority. The portion of the benefits
associated with tax positions taken that exceeds the amount measured as
described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheets along with any associated interest and penalties
that would be payable to the taxing authorities upon examination. Interest
associated with unrecognized tax benefits are classified as interest expense and
penalties are classified in selling, general and administrative expenses in the
statements of income. The adoption of FIN 48 did not have a material impact on
the Company's financial statements.
START-UP COSTS
The Company has adopted Statement of Position No. 98-5 ("SOP 98-5"), "Reporting
the Costs of Start-Up Activities" (codified in FASB ASC Topic 720). SOP 98-5
(codified in FASB ASC Topic 720) requires that all non-governmental entities
expense the cost of start-up activities, including organizational costs as those
costs are incurred.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, cash equivalents include all highly
liquid debt instruments with original maturities of three months or less which
are not securing any corporate obligations.
F-7
INTANGIBLE ASSETS
The Company has the following intangible assets as of January 31, 2010 and April
30, 2009:
January 31, 2010 April 30, 2009
________________ ______________
Goodwill $164,884 $164,884
Film revenue interest 20,000 20,000
Logo design 10,000 10,000
________ ________
Total $194,884 $194,884
======== ========
See Footnote 5 for further details.
FILM COSTS
Film costs include all direct costs incurred in the physical production of a
film, such as the costs of story and scenario (film rights to books, stage
plays, or original screenplays); compensation of cast, directors, producers, and
extras; costs of set construction, operations, and wardrobe; costs of sound
synchronization; costs of rental facilities on location; and postproduction
costs (music, special effects, and editing). They can also include allocations
of production overhead and capitalized interest costs. Film costs are
capitalized until the production is completed. The costs are then amortized
according to the individual-film-forecast method, as further described in
Footnote 5.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Belltower and its
wholly owned subsidiaries Calico Entertainment Group, Inc., 3A Productions Corp.,
19th Hole Productions, LLC and Y2K Productions, Inc. All material intercompany
accounts, transactions and profits have been eliminated in consolidation.
RISKS AND UNCERTAINTIES
The Company is subject to substantial business risks and uncertainties inherent
in starting a new business. There is no assurance that the Company will be able
to generate sufficient revenues or obtain sufficient funds necessary for
launching a new business venture.
RECLASSIFICATION
Certain prior year accounts have been reclassified to conform to the current
year's presentation.
DEVELOPMENT STAGE ENTERPRISE
The Company through its acquisition of Calico Entertainment Group, Inc., 3A
Productions Corp., 19th Hole Productions, LLC and Y2K Productions, Inc. is
no longer considered a development stage company as it was during the year
ended April 30, 2008. The Company is now engaged in the business of development
and production of feature films.
F-8
NOTE 3 - GOING CONCERN
Generally accepted accounting principles in the United States of America
contemplate the continuation of the Company as a going concern. However, the
Company has accumulated operation losses since its inception and currently has
limited business operations, which raises substantial doubt about the Company's
ability to continue as a going concern. The continuation of the Company is
dependent on further financial support of investors and management. Once the
Company has established a new business unit, the Company intends to attempt to
acquire additional operating capital through equity offerings to the public to
fund its business plan but there is no assurance that equity or debt offerings
will be successful in raising sufficient funds to assure the eventual
profitability of the Company.
NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS
On July 1, 2009, the Company adopted Accounting Standards Update ("ASU") No.
2009-01, "Topic 105 - Generally Accepted Accounting Principles - amendments
based on Statement of Financial Accounting Standards No. 168 , "The FASB
Accounting Standards Codification(TM) and the Hierarchy of Generally Accepted
Accounting Principles" ("ASU No. 2009-01"). ASU No. 2009-01 re-defines
authoritative GAAP for nongovernmental entities to be only comprised of the FASB
Accounting Standards Codification(TM) ("Codification") and, for SEC registrants,
guidance issued by the SEC. The Codification is a reorganization and compilation
of all then-existing authoritative GAAP for nongovernmental entities, except for
guidance issued by the SEC. The Codification is amended to effect non-SEC
changes to authoritative GAAP. Adoption of ASU No. 2009-01 only changed the
referencing convention of GAAP in Notes to the Financial Statements.
In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation
No. 46(R)" ("SFAS 167"), codified as FASB ASC Topic 810-10, which modifies how a
company determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. SFAS 167
clarifies that the determination of whether a company is required to consolidate
an entity is based on, among other things, an entity's purpose and design and a
company's ability to direct the activities of the entity that most significantly
impact the entity's economic performance. SFAS 167 requires an ongoing
reassessment of whether a company is the primary beneficiary of a variable
interest entity. SFAS 167 also requires additional disclosures about a company's
involvement in variable interest entities and any significant changes in risk
exposure due to that involvement. SFAS 167 is effective for fiscal years
beginning after November 15, 2009. The Company does not believe the adoption of
SFAS 167 will have an impact on its financial condition, results of operations
or cash flows.
In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of
Financial Assets -- an amendment of FASB Statement No. 140" ("SFAS 166"),
codified as FASB Topic ASC 860, which requires entities to provide more
information regarding sales of securitized financial assets and similar
transactions, particularly if the entity has continuing exposure to the risks
related to transferred financial assets. SFAS 166 eliminates the concept of a
"qualifying special-purpose entity," changes the requirements for derecognizing
financial assets and requires additional disclosures. SFAS 166 is effective for
fiscal years beginning after November 15, 2009. The Company does not believe the
adoption of SFAS 166 will have an impact on its financial condition, results of
operations or cash flows.
F-9
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165")
codified in FASB ASC Topic 855-10-05, which provides guidance to establish
general standards of accounting for and disclosures of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. SFAS 165 also requires entities to disclose the date
through which subsequent events were evaluated as well as the rationale for why
that date was selected. SFAS 165 is effective for interim and annual periods
ending after June 15, 2009, and accordingly, the Company adopted this
pronouncement during the second quarter of 2009. SFAS 165 requires that public
entities evaluate subsequent events through the date that the financial
statements are issued. The Company has evaluated subsequent events through
November 9, 2009.
In April 2009, the FASB issued FSP No. SFAS 107-1 and APB 28-1, "Interim
Disclosures about Fair Value of Financial Instruments," which is codified in
FASB ASC Topic 825-10-50. This FSP essentially expands the disclosure about fair
value of financial instruments that were previously required only annually to
also be required for interim period reporting. In addition, the FSP requires
certain additional disclosures regarding the methods and significant assumptions
used to estimate the fair value of financial instruments. These additional
disclosures are required beginning with the quarter ending June 30, 2009. The
Company does not believe the adoption of FSP No. SFAS 107-1 and APB 28-1 will
have an impact on its financial condition, results of operations or cash flows.
In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, "Recognition and
Presentation of Other-Than-Temporary Impairments," which is codified in FASB ASC
Topic 320-10. This FSP modifies the requirements for recognizing
other-than-temporarily impaired debt securities and changes the existing
impairment model for such securities. The FSP also requires additional
disclosures for both annual and interim periods with respect to both debt and
equity securities. Under the FSP, impairment of debt securities will be
considered other-than-temporary if an entity (1) intends to sell the security,
(2) more likely than not will be required to sell the security before recovering
its cost, or (3) does not expect to recover the security's entire amortized cost
basis (even if the entity does not intend to sell). The FSP further indicates
that, depending on which of the above factor(s) causes the impairment to be
considered other-than-temporary, (1) the entire shortfall of the security's fair
value versus its amortized cost basis or (2) only the credit loss portion would
be recognized in earnings while the remaining shortfall (if any) would be
recorded in other comprehensive income. FSP 115-2 requires entities to initially
apply the provisions of the standard to previously other-than-temporarily
impaired debt securities existing as of the date of initial adoption by making a
cumulative-effect adjustment to the opening balance of retained earnings in the
period of adoption. The cumulative-effect adjustment potentially reclassifies
the noncredit portion of a previously other-than-temporarily impaired debt
security held as of the date of initial adoption from retained earnings to
accumulate other comprehensive income. The Company adopted FSP No. SFAS 115-2
and SFAS 124-2 beginning April 1, 2009. This FSP had no material impact on the
Company's financial position, results of operations or cash flows.
In April 2009, the Financial Accounting Standards Board ("FASB") issued FSP No.
SFAS 157-4, "Determining Fair Value When the Volume and Level of Activity for
the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly" ("FSP No. SFAS 157-4"). FSP No. SFAS 157-4, which is
codified in FASB ASC Topics 820-10-35-51 and 820-10-50-2, provides additional
guidance for estimating fair value and emphasizes that even if there has been a
significant decrease in the volume and level of activity for the asset or
liability and regardless of the valuation technique(s) used, the objective of a
fair value measurement remains the same. The Company adopted FSP No. SFAS 157-4
beginning April 1, 2009. This FSP had no material impact on the Company's
financial position, results of operations or cash flows.
NOTE 5 - INTANGIBLE ASSETS
The Company applies the criteria specified in SFAS No. 141, "Business
Combinations" (codified in FASB ASC Topic 805) to determine whether an
intangible asset should be recognized separately from goodwill. Intangible
assets acquired through business acquisitions are recognized as assets separate
from goodwill if they satisfy either the "contractual-legal" or "separability"
criterion. Per SFAS 142 (codified in FASB ASC Topic 350), intangible assets with
definite lives are amortized over their estimated useful life and reviewed for
impairment in accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-lived Assets," (codified in FASB ASC Topic 360). Intangible
assets, such as purchased technology, trademark, customer list, user base and
non-compete agreements, arising from the acquisitions of subsidiaries and
variable interest entities are recognized and measured at fair value upon
acquisition. Intangible assets are amortized over their estimated useful lives
from one to ten years. The Company reviews the amortization methods and
estimated useful lives of intangible assets at least annually or when events or
changes in circumstances indicate that it might be impaired. The recoverability
of an intangible asset to be held and used is evaluated by comparing the
carrying amount of the intangible asset to its future net undiscounted cash
flows. If the intangible asset is considered to be impaired, the impairment loss
is measured as the amount by which the carrying amount of the intangible asset
exceeds the fair value of the intangible asset, calculated using a discounted
future cash flow analysis. The Company uses estimates and judgments in its
impairment tests, and if different estimates or judgments had been utilized, the
timing or the amount of the impairment charges could be different.
The cost for the film revenue interest rights are amortized using the
individual-film-forecast method which takes the proportion that current year's
revenues bear to management's estimates of the ultimate revenue at the beginning
of the year expected to be recognized from exploitation, exhibition or sale of
such film over a period not to exceed ten years from the date of initial
release. The Company's management regularly reviews and revises when necessary
its ultimate revenue estimates, which may result in a change in the rate of
amortization of the film cost and/or write-down of all or a portion of the
unamortized costs of the film rights to estimated fair value. The Company's
management estimates the ultimate revenue based on experience with similar
titles or title genre, the general public appeal of the cast, actual performance
(when available) at the box office or in markets currently being exploited, and
other factors such as the quality and acceptance of motion pictures or programs
that competitors release into the marketplace at or near the same time, critical
reviews, general economic conditions and other tangible and intangible factors,
many of which we do not control and which may change. In the normal course of
our business, some films and titles are more successful than anticipated and
some are less successful. Accordingly, we update our estimates of ultimate
revenue based upon the actual results achieved or new information as to
anticipate revenue performance such as (for home video revenues) initial orders
and demand from retail stores when it becomes available. An increase in the
ultimate revenue will generally result in a lower amortization rate while a
decrease in the ultimate revenue will generally result in a higher amortization
rate and periodically results in an impairment requiring a write down of the
film cost to the title's fair value.
These write downs are included in amortization expense within direct operating
expenses in our consolidated statements of operations. To date no revenue has
been received on this film revenue right.
F-11
As of January 31, 2010 and April 30, 2009 intangible assets consist of the
following:
Goodwill $164,884
Film revenue interest 20,000
Logo 10,000
________
194,884
Accumulated amortization -
________
$194,884
========
There is no amortization as of January 31, 2010 and April 30, 2009.
NOTE 6 - COMMON STOCK ISSUED
On July 20, 2007, the Company issued 40,000 (reverse split adjusted) shares of
its common stock in a private offering at $0.25 per share for aggregate proceeds
of $20,000.
On October 1, 2007, the Board of Directors authorized the cancellation of
2,550,000 (reverse split adjusted) shares of its common stock which were
submitted for cancellation by its CEO as to 2,275,000 (reverse split adjusted)
shares and a related party as to 275,000 shares (reverse split adjusted). This
cancellation resulted in the revaluation of share capital as follows: (i) Common
Stock was revalued from $746 to $236, based on par value of $0.0001 times
5,100,000 common shares; and (ii) Paid In Capital was adjusted from $90,691 to
$91,201.
On October 2, 2007, the Board of Directors authorized a 30 for 1 forward stock
split which became effective November 15, 2007. All references to stock issued
and stock outstanding have been retroactively adjusted as if the stock split and
stock dividend had taken place at the earliest date shown.
On May 28, 2008 the Company issued 103,039 shares (reverse split adjusted) of
its common stock in a private offering at $0.10 per share for aggregate proceeds
of $20,658.
On September 5, 2008 Belltower acquired 100% of the issued and outstanding
shares of Calico Entertainment Group, Inc. (Calico) in exchange for 1,725,000
shares (reverse split adjusted) of Britton common stock. The purchase of Calico
was recorded at $0.06 per share, the fair market value of the stock on the date
that the transaction with Calico was announced, less a 20% discount due to
restrictions placed on the issued stock. The value of the purchase was recorded
at $165,600.
On March 16, 2009 a 1 for 2 reverse stock split became effective. Our authorized
shares were reduced from 100,000,000 to 50,000,000 accordingly with par value
remaining at $0.0001 per share.
On May 27, 2009 the Board of Directors approved the payment of accrued legal
services with the issuance of 500,000 shares of our common stock. The stock was
valued at $0.10 per share. The $50,000 expense was recognized as of April 30,
2009.
On June 23, 2009 the Board of Directors approved the payment of accrued
accounting services with the issuance of 250,000 shares of our common stock. The
stock was valued at $0.10 per share. The $25,000 expense was recognized as of
April 30, 2009.
On December 11, 2009 the Board of Directors approved and issued 500,000 shares
of common stock for the payment of services rendered by a consultant to the
Company. These shares were valued at $0.10 per share and a related expense was
recognized of $50,000.
During the quarter ending January 31, 2010, 390,000 shares of common stock were
issued to a Director of the Company in repayment of $39,000 of previous loans
provided to the Company.
During the nine months ended January 31, 2010 the Company issued 3,220,000 shares
of common stock to various individuals for $322,000.
NOTE 7 - RELATED PARTY TRANSACTIONS
At January 31, 2010 and April 30, 2009, the Company had a related party
shareholder loan outstanding of $63,195. This loan is uncollateralized, accrues
interest at 5% per annum and has no fixed repayment date. Accrued interest as of
January 31, 2010 and April 30, 2009 was $9,246 and $6,857, respectively.
As of January 31, 2010 and April 30, 2009, the company also has a non interest
bearing related party shareholder loan outstanding of $244,511 and $261,847,
respectively, owed to a director and officer of the Company.
As of January 31, 2010 the Company has a loan payable to an Officer of the
Company in the amount of $10,000.
NOTE 8 - SUBSEQUENT EVENT
Subsequent to January 31, 2010 the Company formed and became the sole member of
Little Treasure Productions, LLC. This entity was formed to become the
production vehicle for the feature film with the working title "The Little
Treasure", which began pre-production in March 2010.
F-13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Belltower Entertainment Corp, formerly Britton International Inc.
(sometimes the "Company") is a Nevada corporation incorporated on August 1,
2003. On September 5, 2008, we acquired all of the outstanding shares of capital
stock of Calico Entertainment Group, Inc. ("Calico") from the shareholders of
Calico and the Company (directly or through Calico) is currently engaged in the
production, as an independent filmmaker, and in distribution of feature length
and shorter length movies.
The Company believes that the entertainment industry is experiencing major
market expansion along with major structural and technological change. Although
the industry is dominated by the major studios, the Company believes that there
is still opportunity for independent filmmakers in the domestic and foreign
markets.
We currently own a 20% revenue interest in an original literary composition
and completed film project called "Stuck" that we acquired from Prodigy Pictures
Inc. in 2007; said revenue interest is subject to the repayment of prior
financing on the film from the net proceeds from distribution. Our interest and
participation in the investment is passive and we will be relying upon Prodigy
Pictures Inc. to monitor the investment. Prodigy Pictures Inc. currently owns a
40% revenue interest in the film and owns approximately 2% of our issued and
outstanding common stock.
In addition, we are in the process of developing a production slate of
future projects. We are developing a film project currently known as "Dance the
Green," a story of a legendary golfer named Moe Norman. Further, we are
in pre-production for a film project currently known as "Little Treasure," a
family comedy and we also developing a film project currently known as
"Smokescreen," an action-adventure story about marijuana smuggling based upon a
Robert Sabbag novel of the same name. Further, we are currently negotiating for
other potential feature film projects. We anticipate that any selection of a
film project and our participation in the venture may be complex and extremely
risky. Further, there can be no assurance that any of our production slate
will be completed or if completed, successful. Due to current general economic
condition and the shortages of available capital, there is no assurance that
we will be able to identify and evaluate other suitable film projects.
We intend to use outside financing wherever it is possible for our film
projects. This ability will allow the Company to attract higher quality
independent projects. Typically a single purpose entity specific to the film
project is established to produce and finance the film. We have formed Y2K
Productions, Inc., 19th Hole Productions, LLC and 3A Productions Corp, to serve
as these entities. We are in the process of forming Little Treasure Productions,
LLC for the production of "Little Treasure." The entity, with the Company or
Calico, then contracts with the financing parties and the owners of the film
project. We will be competing, however, with other established and well-
financed entities. Our competitive advantage is that we will be able to provide
the targeted independent project with less production restrictions and a
larger ownership in the completed project. We further have had preliminary
negotiations, at a favorable cost, with established production facilities in
Canada and China. There is no assurance that these negotiations will result in
enhancing or increasing our competitive advantage, if any, or result in us
utilizing the production facility or completing a film project.
4
Liquidity
As of January 31, 2010, we had total assets of $472,027 and total liabilities of
$481,316 and we had a negative net worth of $(9,289). As of April 30, 2009, we
had total assets of $258,811 and total liabilities of $475,244 and a negative
net worth of ($216,433). As of January 31, 2010 we had a cash balance of
$10,360, and as of April 30, 2009 we had a cash balance of $9,724.
We have had no revenues for the nine month periods ended January 31, 2010 and
January 31, 2009. We have an accumulated deficit from inception through January
31, 2010 of $9,289 and as of April 30, 2009 of $216,433.
At January 31, 2010 and April 30, 2009, we had a related party shareholder loan
outstanding of $63,195. This loan is uncollateralized, accrues interest at 5%
per annum and has no fixed repayment date. As of January 31, 2010 and April 30,
2009, there was $9,246 and $6,857 in accrued interest due, respectively.
As of January 31, 2010 and April 30, 2009, we also had a non interest bearing
related party shareholder loan outstanding of $296,816 and $325,042,
respectively, owed to a director and officer of the Company.
Additional Financing after January 31, 2010:
Between January 31, 2010 and the date hereof, we sold and issued or agreed to
sell and issue 5,555,500 shares of our shares of common stock to fifteen (15)
purchasers, for cash or in cancellation of indebtedness, at $.10 per share.
The sale and issuance of the shares is exempt from registration under the
Securities Act of 1933, as amended. Each of the issuees or proposed issuees have
acquired or will acquire the shares for investment and not with a view to
distribution to the public. All of these shares have been or will be issued for
investment purposes in a "private transaction" and are or will be "restricted"
shares as defined in Rule 144 under the Securities Act of 1933, as amended.
ITEM 3. EVALUATION OF DISCLOSURE ON CONTROLS AND PROCEDURES.
Based on an evaluation of our disclosure controls and procedures as of the end
of the period covered by this Form 10Q (and the financial statements contained
in the report), our president and treasurer have determined that our current
disclosure controls and procedures are effective.
There have not been any changes in our internal control over financial reporting
(as such term is defined in Rule 13a-15(f) under the Exchange Act) or any other
factors during the quarter covered by this report, that have materially
affected, or are reasonably likely to materially affect our internal control
over financial reporting.
ITEM 4(T). CONTROLS AND PROCEDURES.
Internal control over financial reporting refers to the process designed by, or
under the supervision of, our Chief Executive Officer and Chief Financial
Officer, and effected by our Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles, and includes those policies and
procedures that:
5
o Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets;
o Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorization
of our management and directors; and
o Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisitions, use or disposition of our assets that
could have a material effect on the financial statements.
Internal control over financial reporting cannot provide absolute assurance of
achieving financial reporting objectives because of its inherent limitations. It
is a process that involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human failures. It also can be
circumvented by collusion or improper management override.
Because of such limitations, there is a risk that material misstatements may not
be prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the
financial reporting process. Therefore, it is possible to design into the
process certain safeguards to reduce, though not eliminate, this risk.
Management is responsible for establishing and maintaining adequate internal
control over our financial reporting. To avoid segregation of duties due to
management accounting size, management has engaged an outside CPA to assist in
the financial reporting.
Management has used the framework set forth in the report entitled Internal
Control - Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the
effectiveness of our internal control over financial reporting.
Management has concluded that our internal control over financial reporting was
effective as of the quarter ended January 31, 2010.
The Company was not an "accelerated filer" for the 2009 fiscal year because it
is qualified as a "small business issuer". Hence, under current law, the
internal controls certification and attestation requirements of Section 404 of
the Sarbanes-Oxley act will not apply to the Company.
PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.................................................NONE
ITEM 1A - RISK FACTORS.
There has been no material change in the risk factors previously disclosed.
6
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
For the quarter ending January 31, 2010, we sold and issued an aggregate of
3,220,000 shares of common stock at $0.10 per share. The sale and issuance of
the shares was exempt from registration under the Securities Act of 1933,
as amended, by virtue of section 4(2) as a transaction not involving a public
offering. Each of the shareholders had acquired the shares for investment
and not with a view to distribution to the public. All of these shares had been
issued for investment purposes in a "private transaction" and were "restricted"
shares as defined in Rule 144 under the Securities Act of 1933, as amended.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES...................................None
ITEM 4 - SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS................None
ITEM 5 - OTHER INFORMATION
On December 20, 2009, the directors of the Company, by written consent, selected
Nina Yang to be a member of the Board of Directors. Donald K. Bell became
Chairman of the Board of Directors and Nina Yang became the Chief Executive
Officer replacing Donald K. Bell. In addition, Lawrence Lichter was selected to
be our Chief Financial Officer.
We have entered into a consulting contract with Leiden Communications Corp., on
a month to month basis, commencing on March 1, 2010, for $2,500 per month, to
provide investor relations.
7
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
There were no 8-K's filed during the reporting period.
The following exhibits are filed with this report:
31.1 Rule 13a-14(a)/15d-14(a) - Certification of Chief Executive Officer.
31.2 Rule 13a-14(a)/15d-14(a) - Certification of Chief Financial Officer.
32.1 Section 1350 Certification - Chief Executive Officer.
32.1 Section 1350 Certification - Chief Financial Officer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: March 22, 2010
BELLTOWER ENTERTAINMENT CORP.
By: /s/ NINA YANG
_________________________________________
Nina Yang
President
8
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