Belltower Entertainment (BTOW) 10QSB 2007 Q3 Quarterly report (small business)

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 January 31, 2007

[  ]  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 [X]  No [  ]

The issuer had 7,380,209 shares of common stock issued and outstanding as of February 20, 2007.

Transitional Small Business Disclosure Format (Check One):  Yes [  ]  No [X]

PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (unaudited)

INDEX TO FINANCIAL STATEMENTS

Quarter Three – Fiscal 2007

	Page
Financial Statements – for the 3 and 9 month periods ending January 31, 2007 and 2006:
Balance Sheets	F-2
Statements of Operations	F-3
Statement of Stockholders’ Equity	F-4
Statements of Cash Flows	F-5 to F-6
Notes to Financial Statements	F-7 to F-8

BRITTON INTERNATIONAL INC.
(a Development Stage Company)

Balance Sheets

ASSETS
		January 31, 2007 (unaudited)		April 30, 2006 (See Note 1)
CURRENT ASSETS
Cash	$	14,888	$	9,300
Prepaid expenses		4,143		5,933
Accounts receivable		-		23,275
Total current assets		19,031		38,508
OTHER ASSETS
Property and Equipment, net of accumulated depreciation    of $11,685 as of January 31, 2007 and $11,489 as of    April 30, 2006		2,942		8,719
Total assets	$	21,973	$	47,227
		=============		=============
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	6,057	$	26,902
Accounts payable, related parties		-		4,996
Shareholder loans (Note 4)		40,000		1,031
Accrued interest payable		753		563
Total current liabilities		46,810		33,492
STOCKHOLDERS’ EQUITY (DEFICIT)
Common shares, 100,000,000 shares with par value of    $0.0001 authorized, 7,380,209 shares issued and outstanding    as of January 31, 2007 and April 30, 2006		738		738
Paid-in Capital		70,699		70,699
Accumulated deficit in the development stage		(95,951)		(57,402)
Accumulated other comprehensive income (loss)		(323)		(300)
Total stockholders’ equity (deficit)		(24,837)		13,735
Total liabilities and stockholders’ equity	$	21,973	$	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 Ending January 31, 2007		3 Months Ending January 31, 2006		9 Months Ending January 31, 2007		9 Months Ending January 31, 2006		August 1, 2003 (inception) through January 31, 2007
REVENUES:
Sales	$	10,729	$	16,955	$	34,737	$	52,532	$	300,413
Cost of Goods Sold		9,755		14,624		32,013		46,202		270,980
GROSS MARGIN	$	974	$	2,331	$	2,724	$	6,330	$	29,433
EXPENSES:
Website expenses	$	205	$	379	$	4,427	$	660	$	13,739
Directors & Officers fees		-		-		-		-		500
Professional fees		6,573		8,313		31,343		36,060		81,672
Advertising		-		-		-		50		3,944
Depreciation		196		1,206		2,255		3,225		11,686
Administrative expenses		463		965		2,519		2,847		11,379
Bad debt expense		-		-		-		-		1,020
Total expenses	$	7,437	$	10,863	$	40,544	$	42,842	$	123,940
Net Income (loss) from operations		(6,463)		(8,532)		(37,820)		(36,512)		(94,507)
Interest income		66		47		109		73		411
Interest expense		(509)		(163)		(838)		(469)		(1,855)
Net (loss)	$	(6,906)	$	(8,648)	$	(38,549)	$	(36,908)	$	(95,951)
		==========		==========		==========		==========		============
Loss per common share	$	Nil	$	Nil	$	Nil	$	Nil	$	(0.01)
Weighted average shares
outstanding		7,380,209		7,046,876		7,380,209		7,046,876		6,758,905
OTHER COMPREHENSIVE INCOME (LOSS):
Net Income (loss)	$	(6,906)	$	(8,648)	$	(38,549)	$	(36,908)	$	(95,951)
Foreign currency translation adjustment		(15)		81		(23)		68		(323)
Total Other Comprehensive Income (Loss)	$	(6,921)	$	(8,567)	$	(38,572)	$	(36,840)	$	(96,274)

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     August 1, 2003 (inception)     through April 30, 2004	—	$	—	$	—	$	—	$	(4,737)	$	(4,737)
Common shares issued for services     at $0.0001 on August 7, 2003	5,000,000	$	500	$	—	$	—	$	—	$	500
Common shares issued for purchase    of website at $0.01 on November    12, 2003	1,000,000	$	100	$	9,900	$	—	$	—	$	10,000
Common shares issued for     cash at $0.02 during the period     ended April 30, 2004	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     cash at $0.02 during the period     ended April 30, 2005	390,000		39		7,761		—		—		7,800
Net loss for year ended     April 30, 2005							(356)		(8,569)		(8,925)
Balance, April 30, 2005	7,046,876	$	705	$	30,733	$	(356)	$	(13,306)	$	17,776
Common shares issued for cash     at $0.12 on December 12, 2005	333,333	$	33	$	39,966	$	—	$	—		39,999
Net loss for year ended     April 30, 2006	—		—		—		56		(44,096)		(44,040)
Balance, April 30, 2006	7,380,209	$	738	$	70,699	$	(300)	$	(57,402)	$	13,735
Net loss for nine month period    ended January 31, 2007	—		—		—		(23)		(38,549)		(38,572)
Balance, January 31, 2007	7,380,209	$	738	$	70,699	$	(323)	$	(95,951)	$	(24,837)
	=======		======		======		=========		=========		=========

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

		9 months ending January 31, 2007		9 months ending January 31, 2006		August 1, 2003 (inception) through January 31, 2007
Cash flows from operating activities:
Net loss for the period	$	(38,549)	$	(36,908)	$	(95,951)
Reconciling adjustments:
Adjustments to reconcile net loss
to net cash used in operating
Activities
Depreciation		2,255		3,225		11,686
Bad debt expense		-		-		1,020
Website asset impairment charge		3,523		-		3,523
Accrued interest on loans		753		469		1,431
Services paid by share issuance		-		-		500
Net change in operating assets
and liabilities
Prepaid expenses		1,790		(2,552)		(4,143)
Accounts receivable		23,275		(214)		(1,020)
Accrued liabilities		(26,436)		6,974		5,378
Net cash provided (used) by operating activities		(33,389)		(29,006)		(77,576)
Cash flows from investing activities:
Purchase of Property and Equipment		-		(8,150)		(8,150)
Net cash used by investing activities		-		(8,150)		(8,150)
Cash flows from financing activities:
Common stock issued for cash		-		40,000		60,937
Loans by stockholders		39,000		1,000		40,000
Net cash provided by financing activities		39,000		41,000		100,937
Effect of foreign currency translation		(23)		68		(323)
Net increase in cash		5,588		3,912		14,888
Cash, beginning of period		9,300		24,949		—
Cash, end of period	$	14,888	$	28,861	$	14,888
		============		============		=============

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

		9 Months ending		9 Months ending		August 1, 2003 (inception) through
		January 31,		January 31,		January 31,
		2007		2006		2007
Supplemental cash flow information:
Interest received	$	109	$	73	$	411
		============		============		=============
Supplemental schedule of non-cash investing and financing activities:
Common stock issued for services	$	—	$	—	$	500
		============		============		=============
Common stock issued for purchase of           website	$	—	$	—	$	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 up on the facts 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 operating 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. To address this issue, during fiscal 2007 the Company has acquired an additional $39,000 in operating capital through shareholder loans from its President. Currently, the Company projects further shareholder loans will be forthcoming from its President to fund its business plan and it is possible the Company will also need to complete equity private placements in the future. However, there is no assurance that such debt and equity offerings will be successful in raising sufficient funds to assure the e ventual profitability of the Company.

Note 3 – Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes, (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position

F-7

BRITTON INTERNATIONAL INC.
(a Development Stage Company)

Notes to Financial Statements

taken or expected to be taken in a tax return. FIN 48 is effective for financial statement as of January 1, 2007. The Company has not yet determined the affect of applying FIN 48.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”). FAS 157 defines fair value, establishes a framework for  measuring fair value and expands disclosures about fair value measurements but does not require any new fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company has adopted this Statement and this adoption did not impact the Company's financial position, results of operations, or cash flows.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, (“FAS 158”). FAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multi-employer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. FAS 158 is effective for financial statements as of December 31, 2006. The Company has adopted this Statement and this adoption did not impact the Company's financial position, results of operations, or cash flows.

Note 4 – Related Party Transactions

The Company has purchased products for resale from a related party, Britton Jewellery Inc., which holds 13.6% of the Company’s common shares. Transactions with this related party comprised 92% and 14% of the Company’s total jewelry purchases in during the 3 month periods ended January 31, 2007 and January 31, 2005 respectively. At January 31, 2007, the Company had a credit balance with the related party of $784.

As at January 31, 2007, the Company had one related party shareholder loan outstanding of $40,753.25 which included $753.25 of accrued interest. This loan accrues interest at 5% per annum, is unsecured and has no fixed repayment date. During the 3 month period ended January 31, 2007, loans from shareholders, including accrued interest, increased by $16,471.63.

F-8

ITEM 2. MANAGEMENTS’ DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  

This quarterly report on Form 10-QSB contains "forward-looking statements" relating to the registrant which represent the registrant's current expectations or beliefs including, statements concerning registrant’s operations, performance, financial condition and growth.  For this purpose, any statement contained in this quarterly report on Form 10-QSB that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "anticipation", "intend", "could", "estimate", or "continue" or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel and variability of quarterly results, ability of registrant to continue its growth strategy and competition, certain of which are beyond the registrant's control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

Overview

We are a start-up, development stage company with a limited operating history. Our website, www.britton.com, was operated by Britton Jewellery Inc. (“BJI”) since the late 1990’s but has been operated by us only since we purchased it from BJI in November 2003. After some reconfiguration of the website, we made our first sale through the site on February 8, 2004. Our mission is to combine the advantages of online commerce with a superior customer focus in order to be an authoritative source for diamonds, watches and jewelry products.

During the quarter, management and the board undertook a comprehensive review of the development of our business over the last two years. In general, we are not satisfied with the growth of sales and our market penetration for our products in North America. Since inception we have experienced negative cash flow from operations and, unless we diversify, expect to experience significant negative cash flow from operations for the foreseeable future as we expend greater funds on marketing and sales related initiatives. Although we expect to have sufficient working capital to pursue our current plans and will continue with operation of our jewelry operations, management also intends to devote time to identifying potential expansion opportunities and/or acquisitions with a view towards generating additional revenues for the Company. 

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 and Nine Month Periods Ended January 31, 2007 and January 31, 2006

Sales
Sales decreased to $10,729 and 16,955 respectively for the three and nine month periods ended January 31, 2007 compared with $16,955 and $52,532 respectively for the three month and nine month periods ended January 31, 2006. This represents decreases of 37% and 34% respectively and may be attributable to increased competition on the Internet for retail jewelry consumers.

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Cost of Goods Sold
Cost of Goods Sold (“COGS”) include the wholesale costs for jewelry and diamonds which are re-sold via our website. GOGS were $9,755 and 32,013 respectively during the three and nine month periods ended January 31, 2007 compared with $14,624 and $46,202 respectively for three and nine month periods ended January 31, 2006. The comparative ratio of COGS to Sales for the current nine month period compared to the same period last year increased from 88% to 92%. This change is a concern to management.

Gross Margin
Gross Margin is calculated by subtracting COGS from Sales. Gross Margin decreased from $2,331 and $6,330 respectively for the three and nine month periods ended January 31, 2006 to $974 and $2,724 respectively for the three and nine month periods ended January 31, 2007. The nine month decline represents a decrease of 63% and is a concern to management.

Our operating expenses are classified into seven categories:
-       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. Website expenses were $205 and $4,427 respectively during three and nine month periods ended January 31, 2007 compared with $379 and $660 respectively during three and nine month periods ended January 31, 2006. The increase in the current nine month period is explained by the addition to expenses of a write-off of a website upgrade which was not completed. Going forward we project Website expenses will remain at the relative level experienced in the current 3 month period.

Director & Officer Fees
Director & Officer Fees were $nil and $nil respectively for three and nine month periods ended January 31, 2007 compared with $nil and $nil respectively for the three and nine month periods ended January 31, 2006. We do not expect to incur future costs for Director & Officer Fees.

Professional Fees
Professional fees were $6,573 and $31,343 respectively in the three and nine month periods ended January 31, 2007 versus $8,313 and $36,060 respectively in three and nine month periods ended January 31, 2006. We project professional fees will remain at current levels.

Advertising
Advertising expenses are comprised of fees charged by Internet search engines such as Google for the direction of consumer traffic to the Company’s website. Advertising expenses were $nil and $nil respectively during the three and nine month periods ended January 31, 2007 versus $50 and $50 respectively during three and nine month periods ended January 31, 2006.  

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Depreciation
As detailed in Note 1 of our audited Financial Statements for fiscal year ended April 30, 2006, depreciation is recorded for amortization of the purchase of our website and subsequent investments in development of the website and for the amortization of investments in photographic equipment used to create images for posting on the website. Depreciation is a non-cash expense which is calculated on a straight-line basis. An amortization period of three years is used for the website assets and a period of 5 years is used for the photographic equipment. In accordance with US tax law, the first year depreciation expense for assets is recorded as one-half of the total for a normal year. Depreciation in three and nine month periods ended January 31, 2007 was $196 and $2,255 respectively versus $1,206 and $3,225 respectively in three and nine month periods ended January 31, 2006. 

Administrative Expenses
Administrative expenses were $463 and $2,519 respectively for the three and nine month periods ended January 31, 2007 versus $965 and $2,847 respectively in three and nine month periods ended January 31, 2006. We expect administrative fees to remain at current levels during the coming quarters.

Bad Debt Expense
Bad Debt Expense was $nil and $nil respectively in three and nine month periods ended January 31, 2007 versus $nil and $nil respectively in three and nine month periods ended January 31, 2006. We do not expect to incur bad debt expenses in upcoming quarters.

Net Loss
We incurred net losses of $(6,906) and $(38,549) respectively for the three and nine month periods ended January 31, 2007 compared with net losses of $(8,648) and $(36,908) respectively for the three and nine month periods ended January 31, 2006.

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.

Liquidity and Capital Resources

Since the date of our incorporation, we have raised $60,937 though private placements of our common shares and $40,000 through shareholder loans. However, during fiscal 2007 we have seen poor performance in our sales and this is a matter of concern to management. As of January 31, 2007 we had cash on hand of $14,888. We project we must increase sales from current levels or we will need to raise additional funds.

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ITEM 3. CONTROLS AND PROCEDURES

Disclosure controls and procedures

As of the end of the period covered by this report (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of the Company's Principal Executive Officer and Principal Financial Officer (the “Certifying Officers”) of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e)) under the Exchange Act. Based on that evaluation, the Certifying Officers have concluded that, as of the Evaluation Date, the disclosure controls and procedures in place were adequate to ensure that information required to be disclosed by us, including our consolidated subsidiaries, in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported on a timely basis in accordance with applicable rules and regulations.

Internal control over financial reporting

The Certifying Officers reviewed our internal control over financial reporting (as defined in rules 13a-15(f) and 15d-15(f)) under the Exchange Act as of the Evaluation Date and concluded that no changes occurred in such control or in other factors during the first quarter of our fiscal year ending January 31, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There is no litigation pending or threatened by or against us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company did not make any sales of equity securities during the quarter.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has no senior securities outstanding.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the quarter ended January 31, 2007, no matters were submitted to a vote of the Company's security holders, through the solicitation of proxies or otherwise.

ITEM 5. OTHER INFORMATION

(a) During the quarter there was no information which would have been required to be filed via a report on Form 8-K.

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(b) During the quarter there were no material changes to the procedures by which security holders may recommend nominees to the registrant’s board of directors.

ITEM 6. EXHIBITS

EXHIBIT INDEX

Number            Exhibit Description

3.1                    Articles of Incorporation*

3.2                    Certificate of Amendment of Articles of Incorporation*

3.3                    Bylaws*

10.1                  Website Asset Purchase Agreement*

31.1                  Certificate of President (chief executive officer) pursuant to 18 U.S.C. Section
                         1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2                  Certificate of Chief Financial Officer (principal financial officer) pursuant to 18
                         U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
                        Act of 2002

32.1                  Certificate of President (chief executive officer) and Treasurer (principal
                         financial officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                         Section 906 of the Sarbanes-Oxley Act of 2002

*    Filed as an exhibit to our registration statement on Form SB-2 filed January 27, 2006 and incorporated herein by this reference


SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BRITTON INTERNATIONAL INC.

/s/ Jacek Oscilowicz
Jacek Oscilowicz
President & CEO, CFO

Dated: February 20, 2007

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