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 OCTOBER 31, 2009
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 47-0926554
_______________________________ ___________________
(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 October 31, 2009, there were outstanding 40,371,424 shares of the
Registrant's Common Stock, $.0001 par value and as of the date hereof, there are
outstanding 42,761,424 shares of the Registrant's Common Stock, $.0001 par
value.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:
Yes [ ] No [X]
1
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BELLTOWER ENTERTAINMENT CORP.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
JULY 31, 2009
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 Financial Statements F-4
2
BELLTOWER ENTERTAINMENT CORP.
(FORMERLY BRITTON INTERNATIONAL, INC.)
CONSOLIDATED BALANCE SHEETS
October 31, April 30,
________________ ______________
2009 2009
________________ ______________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 10,098 $ 9,724
__________ ___________
Total Current Assets 10,098 9,724
Fixed assets, net 5,932 7,586
Film costs 128,530 46,618
Goodwill 164,884 164,884
Intangible assets 30,000 30,000
__________ ___________
Total Assets $ 339,444 $ 258,811
========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 27,221 $ 32,767
Due to related parties 303,732 325,042
Accrued liabilities 34,987 110,577
Accrued interest 8,450 6,857
__________ ___________
Total Current Liabilities 374,391 475,244
__________ ___________
STOCKHOLDERS' EQUITY (DEFICIT)
Common shares, 50,000,000 shares with par value $0.0001
authorized, and 40,371,424 issued and outstanding as of
October 31, 2009 and 37,231,424 as of April 30, 2009 916 602
Additional paid in capital 590,780 277,094
Retained deficit (626,642) (494,130)
__________ ___________
Total Stockholders' Equity (Deficit) (34,947) (216,433)
__________ ___________
Total Liabilities and Stockholders' Equity (Deficit) $ 339,444 $ 258,811
========== ===========
The accompanying notes are an integral part of these audited consolidated
financial statements.
F-1
BELLTOWER ENTERTAINMENT CORP.
(FORMERLY BRITTON INTERNATIONAL, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three month periods ended Six month periods ended
October 31, October 31,
_____________________________________ _____________________________________
2009 2008 2009 2008
________________ ________________ ________________ ________________
Revenue $ - $ - $ - $ -
____________ ____________ ____________ ____________
General, selling and
administrative expenses 78,398 76,997 130,921 121,621
____________ ____________ ____________ ____________
Net loss from operations (78,398) (76,997) (130,921) (121,621)
____________ ____________ ____________ ____________
Nonoperating income (expense)
Interest income - 1 - 3
Interest expense (797) (796) (1,593) (1,580)
Other income (expense) net - - - (22)
____________ ____________ ____________ ____________
Total nonoperating income (expenses) (797) (795) (1,593) (1,599)
____________ ____________ ____________ ____________
Loss before provision for income tax (79,195) (77,792) (132,514) (123,221)
Provision for income tax - - - -
____________ ____________ ____________ ____________
Net loss $ (79,195) $ (77,792) $ (132,514) $ (123,221)
============ ============ ============ ============
Net loss per share:
Basic and Diluted $ (0.0003) $ (0.0021) $ (0.0035) $ (0.0034)
============ ============ ============ ============
Weighted average number of shares outstanding:
Basic and Diluted 36,548,229 36,575,174 38,050,663 35,975,682
============ ============ ============ ============
The accompanying notes to condensed consolidated financial statements are an
integral part of this statement
F-2
BELLTOWER ENTERTAINMENT CORP.
(FORMERLY BRITTON INTERNATIONAL, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six month periods
ended October 31,
_____________________________
2009 2008
_________ _________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(132,514) $(123,221)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,654 1,261
Related party interest accrued 1,591 -
(Increase)/decrease in current assets:
Film costs (81,912) (19,977)
Prepaid expenses - 496
Deposits - (3,200)
Increase/(decrease) in current liabilities:
Accounts payable (5,546) 6,380
Accrued expenses (589) 16,865
_________ _________
Total Adjustments (84,802) 1,825
_________ _________
NET CASH USED IN OPERATING ACTIVITIES (217,316) (121,395)
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired during acquisition - (432)
Purchase of fixed assets - (16,902)
Purchase of intangible assets - (10,000)
_________ _________
NET CASH USED IN INVESTING ACTIVITIES - (27,334)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds Note payable - 25,000
Proceeds from issuance of Common stock 239,000 20,658
Proceeds from related party loans - 102,160
Payments on related party loans (21,310) -
_________ _________
NET CASH PROVIDED BY INVESTING ACTIVITIES 217,690 147,818
_________ _________
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 374 (910)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,724 910
_________ _________
CASH AND CASH EQUIVALENTS, ENDING OF PERIOD $ 10,098 $ -
========= =========
The accompanying notes are an intergral part of these audited consolidated
financial statements.
F-3
BELLTOWER ENTERTAINMENT CORP.
(FORMERLY BRITTON INTERNATIONAL, INC.)
Notes to Consolidated Financial Statements
October 31, 2009
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.
F-4
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.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of accounts payable, and other financial instruments
reflected in the financial statements approximates fair value due to the
short-term maturity of the instruments. It is management's opinion that the
Company is not exposed to significant interest, currency or credit risks arising
from these financial instruments.
F-5
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 follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes" (codified in FASB ASC
Topic 740), which requires the Company to recognize deferred tax liabilities and
assets for the expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns using the
liability method. Under this method, deferred tax liabilities and assets are
determined based on the temporary differences between the financial statement
carrying amounts and tax bases of assets and liabilities using enacted rates in
effect in the years during which the differences are expected to reverse and
upon the possible realization of net operating loss carry-forwards.
VALUATION OF LONG-LIVED ASSETS
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.
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.
CURRENCY
The majority of the Company's cash flows are in United States dollars.
Accordingly, the US dollar is the Company's functional currency.
CASH AND CASH EQUIVALENTS
The Company considers cash and cash equivalents to consist of cash on hand and
demand deposits in banks with an initial maturity of 90 days or less.
F-6
PROPERTY, PLANT AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Depreciation of property and equipment is provided using the straight-line
method for substantially all assets with estimated lives of:
Equipment 3 -5 years
Furniture & Fixtures 5 -10 years
Motor Vehicles 5 years
As of October 31, 2009 and April 30, 2009 property, plant and equipment
consisted of the following:
October 31, 2009 April 30, 2009
________________ ______________
Furniture and fixtures $ 1,405 $ 1,405
Office equipment 9,082 9,082
Leasehold improvements 6,415 6,415
________ _______
16,902 16,902
Accumulated depreciation (10,970) (9,316)
________ _______
Total $ 5,932 $ 7,586
======== =======
Depreciation expense for the six months ended October 31, 2009 was $1,654 and
for the year ended April 30, 2009 it was $9,316.
INTANGIBLE ASSETS
The Company has the following intangible assets as of October 31, 2009 and April
30, 2009:
October 31, 2009 April 30, 2009
________________ ______________
Goodwill $164,884 $164,884
Film revenue interest 20,000 20,000
Logo design s 10,000 10,000
________ ________
Total $194,884 $194,884
======== ========
See Footnote 5 for further details.
F-7
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.
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. 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.
OTHER
The Company paid no dividends during the periods presented.
The Company consists of one reportable business segment.
We did not have any off-balance sheet arrangements as of October 31, 2009 and
April 30, 2009.
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
In May 2008, FASB issued SFAS No. 162, THE HIERARCHY OF GENERAL ACCEPTED
ACCOUNTING PRINCIPLES (codified in FASB ASC Topic 105). This Statement
identifies the sources of accounting principles and the framework for selecting
the principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
The Company has adopted this Statement and this adoption did not impact the
Company's financial position, results of operations, or cash flows.
In May 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff
Position ("FSP") APB 14-1, ACCOUNTING FOR CONVERTIBLE DEBT INSTRUMENTS THAT MAY
BE SETTLED IN CASH UPON CONVERSION (INCLUDING PARTIAL CASH SETTLEMENT (codified
in FASB ASC Topic 470). FSP APB 14-1 (codified in FASB ASC Topic 470) clarifies
that convertible debt instruments that may be settled in cash upon either
mandatory or optional conversion (including partial cash settlement) are not
addressed by paragraph 12 of APB Opinion No. 14, ACCOUNTING FOR CONVERTIBLE DEBT
AND DEBT ISSUED WITH STOCK PURCHASE WARRANTS. Additionally, FSP APB 14-1
(codified in FASB ASC Topic 470) specifies that issuers of such instruments
should separately account for the liability and equity components in a manner
that will reflect the entity's non-convertible debt borrowing rate when interest
cost is recognized in subsequent periods. FSP APB 14-1 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. The Company will adopt FSP APB
14-1 (codified in FASB ASC Topic 470) beginning July 1, 2009, and this standard
must be applied on a retroactive basis. The Company is evaluating the impact the
adoption of FSP APB 14-1 (codified in FASB ASC Topic 470) will have on its
consolidated financial position and results of operations.
In February 2007, FASB issued SFAS No. 159, THE FAIR VALUE OPTION FOR FINANCIAL
ASSETS AND FINANCIAL LIABILITIES (codified in FASB ASC Topic 825) - INCLUDING AN
AMENDMENT OF FASB STATEMENT NO. 115 (codified in FASB ASC Topic 320). This
standard permits fair value measurement of certain financial assets and
liabilities in an effort to eliminate volatility of earnings created by current
practice. Most of the Statement applies only to companies that elect fair value.
However, the amendment to FASB Statement No. 115 (codified in FASB ASC Topic
320), Accounting for Certain Investments in Debt and Equity Securities, applies
to all entities with available-for-sale and trading securities. This statement
is effective for the first fiscal period beginning after November 15, 2007. The
Company has adopted this Statement and this adoption did not impact the
Company's financial position, results of operations, or cash flows.
Various additional accounting pronouncements have been issued during 2007 to
2009, none of which are expected to have any material effect on the financial
statements of the Company.
F-9
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
anticipated 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-10
As of October 31, 2009 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 October 31, 2009 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.
F-11
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.
During the quarter ended October 31, 2009 the Company sold 2,390,000 shares of
common stock at a price of $0.10 per share to various individuals.
NOTE 7 - RELATED PARTY TRANSACTIONS
At October 31, 2009 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
October 31, 2009 and April 30, 2009 was $8,450 and $6,857, respectively.
As of October 31, 2009 April 30, 2009, the company also has a non interest
bearing related party shareholder loan outstanding of $260,991 and $261,847,
respectively, owed to a director and officer of the Company.
NOTE 8 - COMMITMENTS
The Company leased office facilities under an operating lease which terminated
on April 30, 2009. The lease contained an option to continue on a month-to-month
basis after April 30, 2009, subject to either party's right to give each other
not less than sixty (60) days written notice of intention to terminate, which
notice was given and was effective on April 30, 2009. Rental expense for this
lease consisted of $28,800 for the year ended April 30, 2009. The Company has no
future minimum lease obligations.
NOTE 9 - SUBSEQUENT EVENT
On November 12, 2009 the Company agreed to issue 830,000 shares of its common
stock, valued at $0.10 per share, to cancel related party debt of $83,000.
F-12
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
developing a film project currently known as "Little Treasure," a family comedy
and 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. This 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.
3
Liquidity
As of October 31, 2009, we had total assets of $339,444 and total liabilities of
$374,391 and we had a negative net worth of $(34,947). 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 October 31, 2009 we had a cash balance of
$10,098, and as of April 30, 2009 we had a cash balance of $9,724.
We have had no revenues for the six month period ended October 31, 2008 and
October 31, 2009. We have an accumulated deficit from inception through October
31, 2009 of $34,947 and as of April 30, 2009 of $216,433.
At October 31, 2009 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 October 31, 2009 and April 30,
2009, there was $8,450 and $6,857 in accrued interest due, respectively.
As of October 31, 2009 and April 30, 2009, we also had a non interest bearing
related party shareholder loan outstanding of $303,732 and $261,847,
respectively, owed to a director and officer of the Company.
Additional Financing after October 31, 2009:
Between November 1, 2009 and the date hereof, we sold and issued or agreed to
sell and issue 2,390,000 shares of our shares of common stock to six 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:
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.
4
Management has concluded that our internal control over financial reporting was
effective as of the quarter ended October 31, 2009.
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.
1. The film industry is highly competitive and we will be competing with
companies with much greater resources than we have.
The business in which we engage is significantly competitive. Each of our
primary business operations is subject to competition from companies which, in
some instances, have greater production, distribution and capital resources than
us. We compete for relationships with a limited supply of facilities and
talented creative personnel to produce our films. We will compete with major
motion picture studios, such as Warner Brothers and The Walt Disney Company, for
the services of writers, actors and other creative personnel and specialized
production facilities. We also anticipate that we will compete with a large
number of United States-based and international distributors of independent
films, including divisions of The Walt Disney Company/Pixar, Warner Brothers,
Universal, Paramount/Dreamworks, Fox and Sony/MGM in the production of films
expected to appeal to international audiences. More generally, we anticipate we
will compete with various other leisure-time activities, such as home videos,
movie theaters, personal computers and other alternative sources of
entertainment.
The production and distribution of theatrical productions, television animation,
videocassettes and video disks are significantly competitive businesses, as they
compete with each other, in addition to other forms of entertainment and leisure
activities, including video games and on-line services, such as the Internet.
There is also active competition among all production companies in these
industries for services of producers, directors, actors and others and for the
acquisition of literary properties. The increased number of theatrical films
released in the United States has resulted in increased competition for theater
space and audience attention. Revenues for film entertainment products depend in
part on general economic conditions, but the competitive situation of a producer
of films is still greatly affected by the quality of, and public response to,
the entertainment product that the producer makes available to the marketplace.
There is strong competition throughout the home video industry, both from home
video subsidiaries of several major motion picture studios and from independent
companies, as well as from new film viewing opportunities such as pay-per-view.
5
We also anticipate competing with several major film studios such as Paramount
Communications/Dreamworks SGA, MCA/Universal, Sony Pictures Entertainment/
MGM/UA Inc, Twentieth Century Fox; Time Warner; and Disney/Pixar, which are
dominant in the motion picture industry, in addition to numerous independent
motion picture and television production companies, television networks and pay
television systems, for the acquisition of literary properties, the services of
performing artists, directors, producers, other creative and technical
personnel, and production financing.
2. Audience acceptance of our films will determine our success, and the
prediction of such acceptance is inherently risky.
We believe that a production's theatrical success is dependent upon general
public acceptance, marketing, advertising and the quality of the production. The
Company's production will compete with numerous independent and foreign
productions, in addition to productions produced and distributed by a number of
major domestic companies, many of which are divisions of conglomerate
corporations with assets and resources substantially greater than that of ours.
Our management believes that in recent years there has been an increase in
competition in virtually all facets of our business. The growth of pay-per-view
television and the use of home video products may have an effect upon theater
attendance and non-theatrical motion picture distribution. As we may distribute
productions to all of these markets, it is not possible to determine how our
business will be affected by the developments, and accordingly, the resultant
impact on our financial statements. Moreover, audience acceptance can be
affected by any number of things over which we cannot exercise control, such as
a shift in leisure time activities or audience acceptance of a particular genre,
topic or actor
3. The competition for booking screens may have an adverse effect to any
theatrical revenues.
In the distribution of motion pictures, there is very active competition to
obtain bookings of pictures in theaters and television networks and stations
throughout the world. A number of major motion picture companies have acquired
motion picture theaters. Such acquisitions may have an adverse effect on our
distribution endeavors and our ability to book certain theaters which, due to
their prestige, size and quality of facilities, are deemed to be especially
desirable for motion picture bookings.
4. Governmental restrictions may adversely affect our revenues.
In addition, our ability to compete in certain foreign territories with either
film or television product is affected by local restrictions and quotas. In
certain countries, local governments require that a minimum percentage of
locally produced productions be broadcast, thereby further reducing available
time for exhibition of our productions. Additional or more restrictive
theatrical or television quotas may be enacted and countries with existing
quotas may more strictly enforce such quotas.
Additional or more restrictive quotas or stringent enforcement of existing
quotas could materially and adversely affect our business by limiting our
ability to fully exploit our productions internationally.
5. We have limited financial resources and there are risks we may be unable to
acquire financing when needed.
6
To achieve and maintain competitiveness, we may be required to raise substantial
funds. Our forecast for the period for which our financial resources will be
adequate to support our operations involves risks and uncertainties and actual
results could fail as a result of a number of factors. We anticipate that we may
need to raise additional capital to develop, promote and distribute our films.
Such additional capital may be raised through public or private financing as
well as borrowings and other sources. Public or private offerings may dilute the
ownership interests of our stockholders. Additional funding may not be available
under favorable terms, if at all. If adequate funds are not available, we may be
required to curtail Operations significantly or to obtain funds through entering
into arrangements with collaborative partners or others that may require us to
relinquish rights to certain products and services that we would not otherwise
relinquish and thereby reduce revenues to the company.
6. We are at risk of internet competition which may develop and the effects of
which we cannot predict.
The Internet market is new, rapidly evolving and intensely competitive. We
believe that the principal competitive factors in maintaining an Internet
business are selection, convenience of download and other features, price, speed
and accessibility, customer service, quality of image and site content, and
reliability and speed of fulfillment. Many potential competitors have longer
operating histories, more customers, greater brand recognition, and
significantly greater financial, marketing and other resources. In addition,
larger, well-established and well- financed entities may acquire, invest in, or
form joint ventures as the Internet, and e-commerce in general, become more
widely accepted. Although we believe that the diverse segments of the Internet
market will provide opportunities for more than one supplier of productions
similar to CaliCo's, it is possible that a single supplier may dominate one or
more market segments. We also have significant competition from online websites
in international markets, including competition from US-based competitors in
addition to online companies that are already well established in those foreign
markets. Many of our existing competitors, in addition to a number of potential
new competitors, have significantly greater financial, technical and marketing
resources than we do.
7. We are at risk of technological changes to which we may be unable to adapt
as swiftly as our competition.
We believe that our future success will be partially affected by continued
growth in the use of the Internet. E-commerce and the distribution of goods and
services over the Internet for film product are relatively new, and predicting
the extent of further growth, if any, are difficult. The market for Internet
products and services is characterized by rapid technological developments,
evolving industry standards and customer demands and frequent new product
introductions and enhancements. For example, to the extent that higher bandwidth
Internet access becomes more widely available using cable modems or other
technologies, we may be required to make significant changes to the design and
content of our films and distribution process in order to compete effectively.
Our failure to adapt to these or any other technological developments
effectively could adversely affect our business, operating results, and
financial condition.
8. We face risks of compliance with government regulation of the film
industry.
The following does not purport to be a summary of all present and proposed
federal, state and local regulations and legislation relating to the production
and distribution of film entertainment and related products; rather, the
following attempts to identify those aspects that could affect our business.
Also, other existing legislation and regulations, copyright licensing, and, in
many jurisdictions, state and local franchise requirements, are currently the
subject of a variety of judicial proceedings, legislative hearings and
administrative and legislative proposals which could affect, in various manners,
the methods in which the industries involved in film entertainment operate.
Audiovisual works such as motion pictures and television programs are not
included in the terms of the General Agreement on Tariffs and Trade. As a
result, many countries, including members of the European Union, are able to
enforce quotas that restrict the number of United States produced feature films
which may be distributed in such countries. Although the quotas generally apply
only to television programming and not to theatrical exhibitions of motion
pictures, there can be no assurance that additional or more restrictive
theatrical or television quotas will not be enacted or that existing quotas will
not be more strictly enforced. Additional or more restrictive quotas or more
stringent enforcement of existing quotas could materially or adversely limit our
ability to exploit our productions completely. The Office of the United States
Trade Representative (USTR) under the Executive Office of the President cites
such restrictive trade practices in Korea, China, and the European Union as a
whole with even more restrictive practices in France, Italy and Spain.
7
Voluntary industry embargos or United States government trade sanctions to
combat piracy, if enacted, could impact the amount of revenue that we realize
from the international exploitation of our film productions.
The Code and Ratings Administration of the Motion Picture Association of America
assigns ratings indicating age group suitably for the theatrical distribution
for motion pictures. United States television stations and networks, in addition
to foreign governments, could impose additional restrictions on the content of
motion pictures which may restrict, in whole or in part, theatrical or
television exhibitions in particular territories. Congress and the Federal Trade
Commission are considering, and in the future may adopt, new laws, regulations
and policies regarding a wide variety of matters that may affect, directly or
indirectly, the operation, ownership and profitably of our business.
9. The motion picture industry is at high risk for piracy which may effect our
earnings.
The motion picture industry, including us, may continue to lose an indeterminate
amount of revenue as a result of motion picture piracy both in the country to
unauthorized copying from our films at post production houses, copies of prints
in circulation to theaters, unauthorized video taping at theaters and other
illegal means of acquiring our copywritten material. The USTR has placed
Argentina, Brazil, Egypt, Indonesia, Israel, Kuwait, Lebanon, Pakistan, the
Philippines, Russia, The Ukraine and Venezuela on the 301 Special Watch List for
excessive rates of piracy of motion pictures and optical disks. The USTR has
placed Azerbaijan, Bahamas, Belarus, Belize, Bolivia, Bulgaria, Colombia, the
Dominican Republic, Ecuador, Hungary, Italy, Korea, Latvia, Lithuania, Mexico,
Peru, Romania, Taiwan, Tajikistan, Thailand, and Uzbekistan on the watch list
for excessive piracy.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
For the quarter ending October 31, 2009, we sold and issued an aggregate of
830,000 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 two 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 will become
Chairman of the Board of Directors and Nina Yang will become the Chief Executive
Officer replacing Donald K. Bell. In addition, Lawrence Lichter has been
selected to be our Chief Financial Officer.
On June 29, 2005, the Securities and Exchange Commission adopted final rules
amending the Form S-8 and the Form 8-K applicable to shell companies. The
amendments expand the definition of a shell company to be broader than a company
with no or nominal operations/assets or assets consisting of cash and cash
equivalents, the amendments prohibit the use of a From S-8 (a form used by a
corporation to register securities issued to an employee, director, officer,
consultant or advisor, under certain circumstances), and revised the Form 8-K to
require a shell company to include current Form 10 information, including
audited financial statements, in the filing on Form 8-K that the shell company
files to report the acquisition of the business opportunity. The rules were
designed to assure that investors in shell companies that acquire operations or
assets have access on a timely basis to the same kind of information as is
available to investors in public companies with continuing operations.
On February 15, 2008, the Securities and Exchange Commission adopted final rules
amending Rule 144 (and Rule 145) for shell companies. The amendments currently
in full force and effect provide that the current revised holding periods
applicable to affiliates and non-affiliates is not now available for securities
currently issued by either a reporting or non-reporting shell company, unless
certain conditions are met. An investor will be able to resell securities issued
by a shell company subject to Rule 144 conditions if the reporting or
non-reporting issuer (i) had ceased to be a shell, (ii) is subject to the 1934
Act reporting obligations, (iii) has filed all required 1934 Act reports during
the proceeding twelve months, and (iv) at least 90 days has elapsed from the
time the issuer has filed the "Form 10 Information" reflecting the fact that it
had ceased to be a shell company before any securities were sold under Rule 144.
We are no longer a shell issuer. We had continued to report as a shell issuer to
the date of this Form 10-Q. We reported on a Form 8-K filed on September 8, 2009
the events of our business combination that resulted in our entry into the
entertainment industry and we have filed our Form 10-K subsequent to the
business combination. The Form 8-K and the Form 10-K contain the Form 10
Information required by the final rules amending Rule 144 (and Rule 145) of
February 14, 2008.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
There was a Form 8-K filed on August 25, 2009 during the quarter for which this
report is filed.
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.
8
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: December 21, 2009
BELLTOWER ENTERTAINMENT CORP.
By: /s/ DONALD K. BELL
_________________________________________
Donald K. Bell
Director and President
(Principal Executive) and Financial
and Accounting Officer
9