SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 10-QSB
____________________________
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_______________ to _______________
Commission File # 333-131348
BRITTON INTERNATIONAL INC.
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
47-0926548
(IRS Employer Identification Number)
725 Kendall Lane, Boulder City, Nevada 89005
(Address of principal executive offices)
(702) 293-3613
(Issuer’s telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 shell company as defined in Rule 12b-2 of the Exchange Act. Yes [ ] No [X]
The issuer had 7,380,209 shares of common stock issued and outstanding as of August 17, 2006.
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
INDEX TO FINANCIAL STATEMENTS
Quarter One – Fiscal 2007
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Page | |
Financial Statements – for the 3 month periods ending July 31, 2006 and 2005: | |
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Balance Sheets | F-2 |
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Statements of Operations | F-3 |
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Statement of Stockholders’ Equity | F-4 |
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Statements of Cash Flows | F-5 to F-6 |
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Notes to Financial Statements | F-7 to F-8 |
F-1
BRITTON INTERNATIONAL INC.
(a Development Stage Company)
Balance Sheets
ASSETS | ||||
July 31, | April 30, | |||
CURRENT ASSETS | ||||
Cash | $ | 5,934 | $ | 9,300 |
Prepaid expenses | 119 | 5,933 | ||
Accounts receivable | - | 23,275 | ||
Total current assets | 6,053 | 38,508 | ||
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OTHER ASSETS | ||||
Property and Equipment, net of accumulated | 4,168 | 8,719 | ||
| ||||
Total assets | $ | 10,221 | $ | 47,227 |
| ============ | ============ | |||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| ||||
CURRENT LIABILITIES | ||||
Accounts payable | $ | 17,373 | $ | 26,902 |
Accounts payable, related parties | - | 4,996 | ||
Shareholder loans | 1,044 | 1,031 | ||
Accrued interest payable | 47 | 563 | ||
Total current liabilities | 18,464 | 33,492 | ||
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| ||||
STOCKHOLDERS’ EQUITY (DEFICIT) | ||||
Common shares, 100,000,000 shares with par | 738 | 738 | ||
Paid-in Capital | 70,699 | 70,699 | ||
Accumulated deficit in the development stage | (79,368) | (57,402) | ||
Accumulated other comprehensive income (loss) | (312) | (300) | ||
Total stockholders’ equity (deficit) | (8,243) | 13,735 | ||
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Total liabilities and stockholders’ equity | $ | 10,221 | $ | 47,227 |
============ | ============ | |||
The accompanying notes to financial statements are an integral part of this statement
F-2
BRITTON INTERNATIONAL INC.
(a Development Stage Company)
Statements of Operations
3 Months | 3 Months | August 1, | ||||
REVENUES: | ||||||
Sales | $ | 3,085 | $ | 2,476 | $ | 268,761 |
| ||||||
Cost of Goods Sold | 2,088 | 2,127 | 241,054 | |||
GROSS MARGIN | 997 | 349 | 27,707 | |||
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EXPENSES: | ||||||
Website expenses | $ | 3,962 | $ | 151 | $ | 13,274 |
Directors & Officers fees | - | - | 500 | |||
Professional fees | 16,457 | 21,897 | 66,786 | |||
Advertising | - | - | 3,944 | |||
Depreciation | 1,029 | 1,010 | 10,460 | |||
Administrative expenses | 1,486 | 266 | 10,347 | |||
Bad debt expense | - | - | 1,020 | |||
Total expenses | 22,934 | 23,324 | 106,331 | |||
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Net Income (loss) from operations | (21,937) | (22,975) | (78,624) | |||
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Interest income | 26 | 20 | 328 | |||
Interest expense | (55) | (150) | (1,072) | |||
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Net (loss) | $ | (21,966) | $ | (23,105) | $ | (79,368) |
| ============ | ============ | ============= | ||||
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Loss per common share | $ | * | $ | * | $ | (0.01) |
| ============ | ============ | ============= | ||||
*less than $(0.01) per share | ||||||
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Weighted average shares | ||||||
Outstanding | 7,380,209 | 7,046,876 | 6,708,793 | |||
| ============ | ============ | ============= | ||||
| ||||||
OTHER COMPREHENSIVE INCOME | ||||||
Net Income (loss) | $ | (21,966) | $ | (23,105) | $ | (79,368) |
Foreign currency translation adjustment | (12) | (91) | (312) | |||
Total Other Comprehensive Income (Loss) | $ | (21,978) | $ | (23,196) | $ | (79,680) |
The accompanying notes to financial statements are an integral part of this statement
F-3
BRITTON INTERNATIONAL INC.
(a Development Stage Company)
Statements of Stockholders’ Equity
Deficit | |||||||||||
Accumulated | Accumulated | ||||||||||
Other | During the | Total | |||||||||
Common | Common | Paid-in | Comprehensive | Development | Stockholders’ | ||||||
Shares | Stock | Capital | Income | Stage | Equity | ||||||
Net loss for the period from | — | $ | — | $ | — | $ | — | $ | (4,737) | $ | (4,737) |
Common shares issued for services | 5,000,000 | $ | 500 | $ | — | $ | — | $ | — | $ | 500 |
Common shares issued for purchase | 1,000,000 | $ | 100 | $ | 9,900 | $ | — | $ | — | $ | 10,000 |
Common shares issued for | 656,876 | $ | 66 | $ | 13,072 | $ | — | $ | — | $ | 13,138 |
Balance, April 30, 2004 | 6,656,876 | $ | 666 | $ | 22,972 | $ | — | $ | (4,737) | $ | 18,901 |
| |||||||||||
Common shares issued for | 390,000 | 39 | 7,761 | — | — | 7,800 | |||||
Net loss for year ended | (356) | (8,569) | (8,925) | ||||||||
Balance, April 30, 2005 | 7,046,876 | $ | 705 | $ | 30,733 | $ | (356) | $ | (13,306) | $ | 17,776 |
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Common shares issued for cash | 333,333 | $ | 33 | $ | 39,966 | $ | — | $ | — | 39,999 | |
Net loss for year ended | — | — | — | 56 | (44,096) | (44,040) | |||||
Balance, April 30, 2006 | 7,380,209 | $ | 738 | $ | 70,699 | $ | (300) | $ | (57,402) | $ | 13,735 |
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Net loss for three month period | — | — | — | (12) | (21,966) | (21,978) | |||||
| ======== | ======= | ======== | ========== | ========== | ========= | ||||||
Balance, July 31, 2006 | 7,380,209 | $ | 738 | $ | 70,699 | $ | (312) | $ | (79,368) | $ | (8,243) |
| ======== | ======= | ======== | ========== | ========== | ========= |
The accompanying notes to financial statements are an integral part of this statement
F-4
BRITTON INTERNATIONAL INC.
(a Development Stage Company)
Statements of Cash Flows
3 Months | 3 Months | August 1, 2003 (inception) through | ||||
July 31, | July 31, | July 31, | ||||
2006 | 2005 | 2006 | ||||
Cash flows from operating activities: | ||||||
Net loss for the period | $ | (21,966) | $ | (23,105) | $ | (79,368) |
Reconciling adjustments: | ||||||
Adjustments to reconcile net loss | ||||||
to net cash used in operating | ||||||
Activities | ||||||
Depreciation | 1,029 | 1,010 | 10,460 | |||
Bad debt expense | - | - | 1,020 | |||
Website asset impairment charge | 3,523 | - | 3,523 | |||
Accrued interest on shareholder loans | 13 | - | 44 | |||
Services paid by share issuance | - | - | 500 | |||
Net change in operating assets | ||||||
and liabilities | ||||||
Prepaid expenses | 5,814 | 2,491 | (119) | |||
Accounts receivable | 23,275 | (140) | (1,020) | |||
Accounts payable and accrued liabilities | (15,042) | 6,530 | 17,419 | |||
Net cash provided (used) by operating activities | (3,354) | (13,214) | (47,541) | |||
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Cash flows from investing activities: | ||||||
Purchase of Property and Equipment | - | (4,228) | (8,150) | |||
Net cash used by investing activities | - | (4,228) | (8,150) | |||
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Cash flows from financing activities: | ||||||
Common stock issued for cash | - | - | 60,937 | |||
Loans by stockholders | - | - | 1,000 | |||
Net cash provided by financing activities | - | - | 61,937 | |||
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Effect of foreign currency translation | (12) | (91) | (312) | |||
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Net increase in cash | (3,366) | (17,533) | 5,934 | |||
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Cash, beginning of period | 9,300 | 24,949 | — | |||
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Cash, end of period | $ | 5,934 | $ | 7,416 | $ | 5,934 |
| =========== | =========== | ============= |
The accompanying notes to financial statements are an integral part of this statement
F-5
BRITTON INTERNATIONAL INC.
(a Development Stage Company)
Statements of Cash Flows
3 Months | 3 Months | August 1, 2003 (inception) through | ||||
July 31, | July 31, | July 31, | ||||
2006 | 2005 | 2006 | ||||
Supplemental cash flow information: | ||||||
Interest received | $ | 26 | $ | 20 | $ | 328 |
| =========== | =========== | ============= | ||||
Interest paid | $ | — | $ | — | $ | — |
| =========== | =========== | ============= | ||||
Income taxes paid | $ | — | $ | — | $ | — |
| =========== | =========== | ============= | ||||
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Supplemental schedule of non-cash investing | ||||||
Common stock issued for services | $ | — | $ | — | $ | 500 |
| =========== | =========== | ============= | ||||
Common stock issued for purchase of | $ | — | $ | — | $ | 10,000 |
=========== | =========== | ============= | ||||
The accompanying notes to financial statements are an integral part of this statement
F-6
BRITTON INTERNATIONAL INC.
(a Development Stage Company)
Notes to Financial Statements
Note 1 – Management’s Statement
The financial statements included herein have been prepared by Britton International Inc. (the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”) for reporting on interim statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the April 30, 2006 audited financial statements and the accompanying notes included in the Company’s Form SB-2 filed with the Commission. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the fa cts that will exist, and procedures that will be followed by the Company later in the year. The results of operations for the interim periods are not necessarily indicative of the results for the full year. In management’s opinion all adjustments necessary for a fair presentation of the Company’s financial statements are reflected in the interim periods included.
Amounts shown for April 30, 2006 are based upon the audited financial statements of that date.
Note 2– 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 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 upon the continuing financial support of new investors, existing stockholders and the Company’s suppliers. In August 2006 the Company acquired an additional $10,000 in operating capital through a shareholder loan from its President and projects it will require further shareholder loans to fund its business plan. However, it is possible the Company will also need to complete equity private placements in the future and there is no assurance that such equity offerings will be successful in raising sufficient funds to assure the eventual profitability of the Company.
Note 3 – Asset Impairment
The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of un-depreciated balances through measurement of undiscounted operation cash flows on a basis consistent with accounting principles generally accepted in the United States of America. During the first quarter of fiscal 2007, the Company determined there was substantial doubt that an upgrade it had contracted for
F-7
F-8
In sum, our goals are:
1. To generate maximum sales revenues by offering an extensive range of superior jewelry products to online consumers at competitive prices
2. To generate referral and repeat business by offering exceptional service and sales follow-up to our customers
3. To maximize the competitive advantage we hold through the sale of Canadian diamonds which consumers value as being sourced through “ethical” mining operations.
Our financial statements are prepared in accordance with U.S. generally accepted accounting principles and we have expensed all development expenses related to the establishment of the company.
Results of Operations for the Comparative Three Month Periods Ended July 31, 2006 and July 31, 2005
Sales
Sales increased marginally to $3,085 for the three months ended July 31, 2006 compared with $2,476 for the three months ended July 31, 2005. This represents an increase of 25% and is we believe attributable to increased consumer acceptance of our website as a trusted source for diamond and jewelry purchases. Although there are many factors which may affect our sales in the future, in general, we anticipate an increase in sales during upcoming quarters as we increase our marketing efforts related to showcasing our offerings of diamonds.
- Website expenses
- Director & Officer fees
- Professional fees
- Advertising
- Depreciation
- Administrative expenses
- Bad debt expense
Website Expenses
Website expenses normally include fees from Internet Service Providers for access to the Internet, fees from technical service providers for website maintenance and fees from merchant services such as PayPal which facilitate certain functions on our website. During the current quarter an asset impairment charge of $3,523 was added to website expenses as detailed in Note 3 of our attached financial statements. This charge was precipitated by an evaluation by our board that there was substantial doubt that an upgrade the Company had contracted for its website would reach completion. As a result the board determined it was appropriate to write down the value of the website asset by the undepreciated value of the website upgrade which had been entered to the Company’s books.
Excluding the asset impairment charge of $3,523, website expenses increased to $439 during three months ended July 31, 2006 from $151 during three months ended July 31, 2005, representing an increase of 191%. This increase is explained by: the existence of non-recurring expenditures in three months ended July 31, 2006 for regular updating and modifications to our existing website. Going forward we project Website expenses will marginally increase from current levels due to higher expected sales traffic on the website.
Director & Officer Fees
Director & Officer Fees were $nil and $nil for three months ended July 31, 2006 and three months ended July 31, 2005 respectively. We do not expect to incur future costs in this area until the Company becomes profitable.
Professional Fees
Professional fees were $16,457 in three months ended July 31, 2006 versus $21,897 in three months ended July 31, 2005. The decreased cost in the current period is attributable to lesser requirements for accounting, audit and legal professional services now that the Company’s Registration Statement on Form SB-2 has become effective. We project professional fees will decrease in the upcoming year because fees charged in quarter one include the cost of our fiscal 2006 year end audit.
Bad Debt Expense
Bad Debt Expense was $nil in three months ended July 31, 2006 versus $nil in three months ended July 31, 2005. We do not expect to incur bad debt expenses in upcoming quarters.
Net Loss
We incurred a net loss of $(21,966) for the three months ended July 31, 2006 compared with a net loss of $(23,105) for the three months ended July 31, 2005. This represents an improvement of 5%.
Material Events and Uncertainties
Our operating results are difficult to forecast. Our prospects should be evaluated in light of the risks, expenses and difficulties commonly encountered by comparable early stage companies in rapidly evolving markets. There can be no assurance that we will successfully address such risks, expenses and difficulties. In addition, even though we have an operational business with revenues, we cannot assure you that our revenues will increase or that we will become profitable in the future.
