UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For Quarter Ended:   September 30, 2014

 

 

Commission File Number:  333-176093

 

BRICK TOP PRODUCTIONS, INC.

(Exact name of registrant as specified in its charter)

 

Florida

26-4330545

(State or Jurisdiction of Incorporation or Organization)

(IRS Employer ID No.)

 

 

5550 Glades Road, Ste. 500, Boca Raton, Florida

33431

(Address of Principal Executive Office)

(Zip Code)

 

(561) 826-9307

(Issuer’s telephone number)

 

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 periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes     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):

 

Large accelerated filer  

  Accelerated filer   

  Non-accelerated filer     

  Smaller reporting company    

   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No

 

The number of shares outstanding of registrant’s common stock, par value $.0001 per share, as of November 10 , 2014, was 30,974,500 shares.  

 

 
 

 

 

BRICK TOP PRODUCTIONS, INC.

 

INDEX

 

  

  

  

Page

No.

  

  

  

 

PART I

FINANCIAL INFORMATION (unaudited)

3

  

  

  

 

  

Item 1:

Consolidated Financial Statements

3

  

  

  

 

  

  

Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013

3

  

  

  

 

  

  

Consolidated Statements of Operations – For the Three and Nine Months Ended September 30, 2014 and 2013

4

  

  

  

 

  

  

Consolidated Statement of Stockholders' Equity for the year ended December 31, 2013 and the Nine months ended September 30, 2014

5

  

  

  

 

  

  

Consolidated Statements of Cash Flows – For the Nine Months Ended September 30, 2014 and 2013

6

  

  

  

 

  

  

Notes to Financial Statements

7

  

  

  

 

  

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

  

  

  

 

  

Item 3:

Quantitative and Qualitative Disclosure about Market Risk

32

  

  

  

 

  

Item 4:

Controls and Procedures

32

  

  

  

 

PART II

OTHER INFORMATION

33

  

  

  

 

  

Item 1:

Legal Proceedings

33

  

  

  

 

  

Item 1A:

Risk Factors

33

  

  

  

 

  

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

33

  

  

  

 

  

Item 3:

Defaults Upon Senior Securities

33

  

  

  

 

  

Item 4:

Mine Safety Disclosures

33

  

  

  

 

  

Item 5:

Other Information

33

  

  

  

 

  

Item 6:

Exhibits

33

 

 
1

 

 

PART I: FINANCIAL INFORMATION

 

Item 1: Condensed Financial Statements

 

Brick Top Productions, Inc.

 

September 30, 2014 and 2013

 

Index to the Consolidated Financial Statements

 

Contents

Page(s)

  

 

Consolidated Balance Sheets at September 30, 2014 (Unaudited) and December 31, 2013 

3

  

 

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013 (Unaudited)

4

 

Consolidated Statement of Stockholders' Equity for the Year Ended December 31, 2013 and the Nine Months Ended September 30, 2014 (Unaudited)

5

  

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013 (Unaudited)

6

  

 

Notes to the Consolidated Financial Statements (Unaudited) 

7

 

 
2

 

BRICK TOP PRODUCTIONS, INC.

 

CONSOLIDATED BALANCE SHEETS

 

   

September 30, 2014

   

December 31, 2013

 
   

(Unaudited)

         
                 

ASSETS

               

Current Assets

               

Cash

  $ 341,087     $ 135,612  

Accounts receivable

    51,386       -  

Prepaid expenses and other current assets

    15,830       14,513  
                 

Total current assets

    408,303       150,125  
                 

Computer Equipment

               

Computer equipment

    12,218       11,015  

Accumulated depreciation

    (8,982 )     (6,558 )

Computer equipment, net

    3,236       4,457  
                 

Deposits

    1,985       1,985  
                 

Other Assets

               

Goodwill

    319,237       319,237  
                 

Total other assets

    319,237       319,237  
                 

Total assets

  $ 732,761     $ 475,804  
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               

Current Liabilities

               

Accounts payable

  $ 190,508     $ 92,796  

Accrued interest

    3,750       -  

Accrued payroll

    150,000       149,000  

Advances from related parties

    110,847       60,847  

Acquisition payable - S&G

    -       50,000  

Notes payable

    103,152       55,000  

Note payable-related party

    300       -  
                 

Total current liabilities

    558,557       407,643  
                 

Long-term Liabilities

               

Long-term notes payable - officers

    150,000       -  
                 

Total long-term liabilities

    150,000       -  
                 

Total liabilities

    708,557       407,643  
                 

Commitments and Contingencies

               
                 

Stockholders' Equity

               

Preferred stock: $0.0001 par value, 10,000,000 shares authorized; none issued or outstanding

    -       -  

Common stock par value $0.0001: 100,000,000 shares authorized; 30,974,500 and 30,114,500 shares issued and outstanding, respectively

    3,097       3,011  

Additional paid-in capital

    3,858,753       1,491,104  

Accumulated deficit

    (3,789,636 )     (1,396,523 )
                 

Total Brick Top Productions, Inc. Stockholders' Equity

    72,214       97,592  
                 

Non-Controlling Interest in Subsidiaries

               

Noncontrolling interest - capital stock in consolidated subsidiaries

    250       250  

Noncontrolling interest - additional paid-in capital in consolidated subsidiaries

    37,500       37,500  

Noncontrolling interest - accumulated deficit in consolidated subsidiaries

    (85,760 )     (67,181 )
                 

Non-Controlling Interest in Subsidiaries

    (48,010 )     (29,431 )
                 

Total Equity

    24,204       68,161  
                 

Total liabilities and stockholders' equity

  $ 732,761     $ 475,804  

 

See accompanying notes to the consolidated financial statements.

 

 
3

 

   

BRICK TOP PRODUCTIONS, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

   

For the Three Months Ended

   

For the Nine Months Ended

 
   

September 30, 2014

   

September 30, 2013

   

September 30, 2014

   

September 30, 2013

 
   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

 

Revenue

                               

License fees

  $ 374,235     $ -     $ 644,887     $ -  
                                 

Total revenue

    374,235       -       644,887       -  
                                 

Operating expenses

                               

Compensation

    663,886       -       2,254,833       -  

Professional fees

    39,239       40,536       519,665       95,250  

Rent

    4,237               4,237          

General and administrative

    176,735       6,527       353,000       14,426  
                                 

Total operating expenses

    884,097       47,063       3,131,735       109,676  
                                 

Loss from operations

    (509,862 )     (47,063 )     (2,486,848 )     (109,676 )
                                 

Other (income) epxense

                               

Interest expense

    3,371       49       8,573       1,269  

Bad debt recovery

    (7,729 )     -       (7,729 )     -  

Other (income) expense

    -       -       (76,000 )     -  
                                 

Other (income) expense, net

    (4,358 )     49       (75,156 )     1,269  
                                 

Loss before income tax provision

    (505,504 )     (47,112 )     (2,411,692 )     (110,945 )
                                 

Income tax provision

    -       -       -       -  
                                 

Net loss

                               

Net loss before non-controlling interest

    (505,504 )     (47,112 )     (2,411,692 )     (110,945 )

Net loss attributable to non-controlling interest

    11,653       (24 )     (18,579 )     (68 )
                                 

Net loss attributable to Brick Top Productions, Inc. stockholders

  $ (517,157 )   $ (47,088 )   $ (2,393,113 )   $ (110,877 )
                                 

Net loss per common share - basic and diluted

  $ (0.02 )   $ (0.00 )   $ (0.08 )   $ (0.00 )
                                 

Weighted Average Common Shares Outstanding - basic and diluted

    30,974,500       29,715,448       30,897,525       29,709,984  

   

See accompanying notes to the consolidated financial statements.

 

 
4

 

   

BRICK TOP PRODUCTIONS, INC.

 

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

For the Year Ended December 31, 2013 and the Nine Months Ended September 3 0 , 2014

(Unaudited)

 

    BTOP Stockholders' Equity     Non-controlling Interest          
   

Common Stock, Par

Value $0.0001

                                                                 
   

Number of Shares

   

Amount

   

Additional Paid-in Capital

   

Accumulated

Deficit

   

Brick Top Productions, Inc. Stockholders' Equity

   

Common

stock

   

Additional Paid-in Capital

   

Accumulated Deficit

   

Non Controlling Interest

   

Total Equity (Deficit)

 
                                                                                 

Balance, December 31, 2012

    29,692,000     $ 2,969     $ 1,021,146     $ (967,859 )   $ 56,256     $ -     $ -     $ (9 )   $ (9 )   $ 56,247  
                                                                                 

Stock issued for cash at $1.00 per share,

    422,500       42       422,458               422,500                                       422,500  
                                                                                 

Capital contribution from shareholder

                    47,500               47,500                                       47,500  
                                                                                 

Acquisition of S&G Holdings

                                            250       37,500       (65,829 )     (28,079 )     (28,079 )
                                                                                 

Net loss

                            (428,664 )     (428,664 )                     (1,343 )     (1,343 )     (430,007 )
                                                                                 

Balance, December 31, 2013

    30,114,500       3,011       1,491,104       (1,396,523 )     97,592       250       37,500       (67,181 )     (29,431 )     68,161  
                                                                                 

Common stock issued for cash

    60,000       6       39,994               40,000                                       40,000  
                                                                                 

Common stock issued for non-employee services

    400,000       40       399,960               400,000                                       400,000  
                                                                                 

Common stock issued for employee services

    350,000       35       349,965               350,000                                       350,000  
                                                                                 

Common stock issued for employee services

    50,000       5       49,995               50,000                                       50,000  
                                                                                 

Common stock issued for employee services

                    (50,000 )             (50,000 )                                     (50,000 )
                                                                                 

Amortization of common stock issued for employee services

                    25,000               25,000                                       25,000  
                                                                                 

Warrant issued for employee services

                    1,476,735               1,476,735                                       1,476,735  
                                                                                 

Capital contribution from shareholder

                    76,000               76,000                                       76,000  
                                                                                 

Net loss

                            (2,393,113 )     (2,393,113 )                     (18,579 )     (18,579 )     (2,411,692 )
                                                                                 

Balance, September 30, 2014

    30,974,500     $ 3,097     $ 3,858,753     $ (3,789,636 )   $ 72,214     $ 250     $ 37,500     $ (85,760 )   $ (48,010 )   $ 24,204  

 

See accompanying notes to the consolidated financial statements.

 

 
5

 

 

 BRICK TOP PRODUCTIONS, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   

For the Nine Months Ended

 
   

September 30, 2014

   

September 30, 2013

 
   

(Unaudited)

   

(Unaudited)

 
                 

Cash flows from operating activities:

               

Net loss before non-controlling interest

  $ (2,411,692 )   $ (110,945 )

Adjustments to reconcile net loss to net cash used in operating activities

               

Depreciation expense

    2,425       1,711  

Stock based compensation

    2,251,735       -  

Changes in operating assets and liabilities:

               

Accounts receivable

    (51,386 )     -  

Prepayments and other current assets

    (1,317 )     -  

Deposits

    -       229  

Accounts payable

    97,711       (16,680 )
Accrued expenses and other current liabilities     4,750       -  
                 

Net cash used in operating activities

    (107,774 )     (125,685 )
                 

Cash flows from investing activities:

               

Purchase of computer equipment

    (1,203 )     -  

Acquisition payable

    (50,000 )     -  

Net cash used in investing activities

    (51,203 )     -  
                 

Cash flows from financing activities:

               

Advances from (repayments to) related parties

    50,000       50  

Proceeds from note payable

    200,000       -  

Repayments of note payable

    (1,548 )     -  

Proceeds from sale of common stock and warrants, net of issuance cost

    40,000       253,000  

Contribution to capital

    76,000       -  
                 

Net cash provided by financing activities

    364,452       253,050  
                 

Net change in cash

    205,475       127,365  
                 

Cash at beginning of the period

    135,612       3,154  
                 

Cash at end of the period

  $ 341,087     $ 130,519  
                 

Supplemental disclosure of cash flows information:

               

Interest paid

  $ 2,722     $ -  

Income tax paid

  $ -     $ -  
                 

Non cash financing and investing activities:

               
Issuance of common stock for services   $ 2,251,735     $ -  

 

See accompanying notes to the consolidated financial statements.  

 

 
6

 

   

Brick Top Productions, Inc.

September 30 , 2014 and 2013

Notes to the Consolidated Financial Statements

(Unaudited)

 

Note 1 - Organization and Operations

 

Brick Top Productions, Inc.

 

Brick Top Productions, Inc. (the “Company”) was incorporated under the laws of the State of Florida on February 20, 2009 under the name “York Entertainment, Inc.”

 

Acquisition of a Majority Equity Interest of York Productions, LLC

 

York Productions, LLC (“York”) was organized under the laws of the State of Florida on October 22, 2008. On June 1, 2010, the Company acquired 6,000 Class A units of York Productions, LLC for $75,000, representing a 60% equity interest. York Productions, LLC was currently inactive.

 

Formation of York Productions II, LLC

 

York Productions II, LLC (“York II”) was organized under the laws of the State of Florida on June 13, 2013. The Company owns 6,000 Class A units of York Productions II, LLC, representing a 60% equity interest. York Productions II, LLC was currently inactive.

  

Acquisition of a Majority Equity Interest of S&G Holdings, Inc.

 

S&G Holdings, Inc. doing business as High Five Entertainment (“S&G”) was organized under the laws of the State of Tennessee on January 4, 2005. On December 24, 2013, the Company acquired 75% of the issued and outstanding shares of common stock of S&G for $235,000 including $210,000 to the stockholders of S&G and $25,000 to a brokerage firm in connection with the acquisition. The Company also agreed to make a capital contribution of $100,000 to S&G at closing as well as an additional $365,000 capital contribution prior to September 2014. It has complied with all of its obligations.

 

 
7

 

 

S & G Holdings, Inc.

 

S & G Holdings, Inc. (“S & G” or the “Company”) was formed for the sole purpose of acquiring all of the assets, rights and properties of HFE Holdings, LLC, a limited liability company organized under the laws of the State of Tennessee (“HFE”). HFE produces programming for television and other media.

 

On December 31, 2004, S & G, an unincorporated company, completed the acquisition of HFE. The Company acquired the accounts receivable, inventories, prepaid expenses, contract rights, tangible and intangible property of HFE and 100% of the equity interest of High Five Television, LLC (“Television”), a limited liability company organized under the laws of the State of Tennessee. In connection with the consummation of the acquisition of HFE the Company agreed to pay (i) $18,800 in cash at closing and (ii) a royalty in the amount of $1,200,000; $81,200 of which was paid at closing and the remaining balance of $1,118,800 to be paid with (a) 3% of all gross billing to be paid quarterly based on the prior quarter’s receipts and (b) $6,500 as a royalty for one specific series.

 

Subsequent to the acquisition S & G was incorporated under the laws of the State of Tennessee on January 4, 2005.

 

Note 2 - Summary of Significant Accounting Policies

 

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Basis of presentation - Unaudited Interim Financial Information

 

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2013 and notes thereto contained in the information filed as part of the Company’s Form 10-K, which was filed on April 16, 2014.

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted 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(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

 

 

(i)

Assumption as a going concern : Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business;

 

 
8

 

   

 

(ii)

Fair value of long-lived assets : Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

 

(iii)

Valuation allowance for deferred tax assets : Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

 

(iv)

Estimates and assumptions used in valuation of equity instruments : Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk free rate(s) to value share options and similar instruments.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

 

Principles of Consolidation

 

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, in which the parent’s power to control exists.

 

 
9

 

   

The Company's consolidated subsidiaries and/or entities are as follows:

 

Name of consolidated

subsidiary or entity

State or other jurisdiction of

incorporation or organization

Date of incorporation or

formation (date of acquisition, if applicable)

 

Attributable

interest

 
             

York Productions, LLC

The State of Florida

October 22, 2008

(June 1, 2010)

    60%  
             

York Productions II, LLC

The State of Florida

June 13, 2013

    60%  
             

S&G Holdings, Inc.

The State of Tennessee

January 4, 2005

(December 24, 2013)

    75%  

 

The consolidated financial statements include all accounts of the Company, York and S&G as of the reporting period ending date(s) and for the reporting period(s) then ended.

 

All inter-company balances and transactions have been eliminated.

 

Business Combinations

 

The Company applies Topic 805 “Business Combinations” of the FASB Accounting Standards Codification (formerly Statement of Financial Accounting Standards No. 141 (R) “Business Combinations” (“SFAS No. 141(R)”)) for transactions that represent business combinations to be accounted for under the acquisition method. Pursuant to ASC Paragraph 805-10-25-1 in order for a transaction or other event to be considered as a business combination it is required that the assets acquired and liabilities assumed constitute a business. Upon determination of transactions representing business combinations the Company then (i) identifies the accounting acquirer; (ii) identifies and estimates the fair value of the identifiable tangible and intangible assets acquired, separately from goodwill; (iii) estimates the business enterprise value of the acquired entities; (iv) allocates the purchase price of acquired entities to the tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values at the date of acquisition. The excess of the liabilities assumed and the purchase price over the assets acquired was recorded as goodwill and the excess of the assets acquired over the liabilities assumed and the purchase price was recorded as a gain from bargain purchase.

 

Identification of the Accounting Acquirer

 

The Company used the existence of a controlling financial interest to identify the acquirer—the entity that obtains control of the acquiree in accordance with ASC paragraph 805-20-25-5 and identifies the acquisition date, which is the date on which it obtains control of the acquiree in accordance with ASC paragraph 805-20-25-6. The date on which the acquirer obtains control of the acquiree generally is the date on which the acquirer legally transfers the consideration, acquires the assets, and assumes the liabilities of the acquiree—the closing date.

 

Intangible Assets Identification, Estimated Fair Value and Useful Lives

 

In accordance with ASC Section 805-20-25 as of the acquisition date, the acquirer shall recognize, separately from goodwill, the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. Recognition of identifiable assets acquired and liabilities assumed is subject to the conditions specified in ASC paragraphs 805-20-25-2 through 25-3.

 

The recognized intangible assets of the acquiree were valued through the use of the market, income and/or cost approach, as appropriate. The Company utilizes the income approach on a debt-free basis to estimate the fair value of the identifiable assets acquired in the acquiree at the date of acquisition. This method eliminates the effect of how the business is presently financed and provides an indication of the value of the total invested capital of the Company or its business enterprise value.

 

 
10

 

 

Inherent Risk in the Estimates

 

Management makes estimates of fair values based upon assumptions believed to be reasonable. These estimates are based on historical experience and information obtained from the management of the acquired companies. Critical estimates in valuing certain of the intangible assets include but are not limited to: future expected cash flows from revenues, customer relationships, key management and market positions, assumptions about the period of time the acquired trade names will continue to be used in the Company’s combined portfolio of products and/or services, and discount rates used to establish fair value. These estimates are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

 

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: 

 

Level 1

  

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

  

  

  

Level 2

  

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

  

  

  

Level 3

  

Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable, accrued interest and accrued payroll, approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

 

Carrying Value, Recoverability and Impairment of Long-Lived Assets

 

The Company has adopted Section 360-10-35 of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17 an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.

 

 
11

 

 

Pursuant to ASC Paragraph 360-10-35-21 the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

 

Pursuant to ASC Paragraphs 360-10-45-4 and 360-10-45-5 an impairment loss recognized for a long-lived asset (asset group) to be held and used shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amount of that loss. A gain or loss recognized on the sale of a long-lived asset (disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amounts of those gains or losses.

 

Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives of five (5) years. Upon sale or retirement of computer equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

 

Capitalized Pilot Costs - Film Property and Screenplay Rights

 

The Company capitalizes costs it incurs to buy film or transcripts that will later be marketed or be used in the production of films according to ASC 926, Entertainment – Films . The Company will begin to amortize capitalized film cost when a film is released and it begins to recognize revenue from the film.

 

Goodwill

 

Goodwill represents the excess of the cost of an acquired entity over the fair value of the net assets at the date of acquisition. Under paragraph 350-20-35-1 of the FASB Accounting Standards Codification, goodwill acquired in a business combination with indefinite useful lives are not amortized; rather, goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired.

 

 
12

 

 

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

 

Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

 

Commitment and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

 

Non-controlling Interest

 

The Company follows paragraph 810-10-65-1 of the FASB Accounting Standards Codification to report the non-controlling interest in its majority owned subsidiaries in the consolidated balance sheets within the equity section, separately from the Company’s stockholders’ equity. Non-controlling interest represents the non-controlling interest holders’ proportionate share of the equity of the Company’s majority-owned subsidiaries. Non-controlling interest is adjusted for the non-controlling interest holders’ proportionate share of the earnings or losses and other comprehensive income (loss) and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.

 

 
13

 

 

Revenue Recognition

 

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. In addition to the aforementioned general policy, the following is the specific revenue recognition policy.

 

Revenues from the sale of programming for television and other media are recognized when

 

 

Persuasive evidence of an arrangement exists;

 

 

The show/episode is complete, and in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery;

 

 

The price to the customer is fixed and determinable; and

 

 

Collectability is reasonably assured.

 

Stock-Based Compensation for Obtaining Employee Services

 

The Company accounts for share-based payment transactions issued to employees under the guidance of the Topic 718 Compensation—Stock Compensation of the FASB Accounting Standards Codification (“ASC Topic 718”).

 

Pursuant to ASC Section 718-10-20 an employee is an individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. Internal Revenue Service (“IRS”) Revenue Ruling 87-41. A nonemployee director does not satisfy this definition of employee. Nevertheless, nonemployee directors acting in their role as members of a board of directors are treated as employees if those directors were elected by the employer’s shareholders or appointed to a board position that will be filled by shareholder election when the existing term expires. However, that requirement applies only to awards granted to nonemployee directors for their services as directors. Awards granted to nonemployee directors for other services shall be accounted for as awards to non-employees.

 

Pursuant to ASC Paragraphs 718-10-30-2 and 718-10-30-3 a share-based payment transaction with employees shall be measured based on the fair value of the equity instruments issued and an entity shall account for the compensation cost from share-based payment transactions with employees in accordance with the fair value-based method, i.e., the cost of services received from employees in exchange for awards of share-based compensation generally shall be measured based on the grant-date fair value of the equity instruments issued or the fair value of the liabilities incurred/settled.

 

Pursuant to ASC Paragraphs 718-10-30-6 and 718-10-30-9 the measurement objective for equity instruments awarded to employees is to estimate the fair value at the grant date of the equity instruments that the entity is obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments (for example, to exercise share options). That estimate is based on the share price and other pertinent factors, such as expected volatility, at the grant date. As such, the fair value of an equity share option or similar instrument shall be estimated using a valuation technique such as an option pricing model. For this purpose, a similar instrument is one whose fair value differs from its intrinsic value, that is, an instrument that has time value.

 

 
14

 

 

If the Company’s common shares are traded in one of the national exchanges the grant-date share price of the Company’s common stock will be used to measure the fair value of the common shares issued, however, if the Company’s common shares are thinly traded the use of share prices established in its most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

  

Pursuant to ASC Paragraph 718-10-55-21 if an observable market price is not available for a share option or similar instrument with the same or similar terms and conditions, an entity shall estimate the fair value of that instrument using a valuation technique or model that meets the requirements in paragraph 718-10-55-11 and takes into account, at a minimum, all of the following factors:

 

a.

The exercise price of the option.

 

b.

The expected term of the option, taking into account both the contractual term of the option and the effects of employees’ expected exercise and post-vesting employment termination behavior: The expected life of options and similar instruments represents the period of time the option and/or warrant are expected to be outstanding. Pursuant to paragraph 718-10-S99-1, it may be appropriate to use the simplified method , i.e., expected term = ((vesting term + original contractual term) / 2) , if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options and similar instruments as the company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

 

c.

The current price of the underlying share.

 

d.

The expected volatility of the price of the underlying share for the expected term of the option. Pursuant to ASC Paragraph 718-10-55-25 a newly publicly traded entity might base expectations about future volatility on the average volatilities of similar entities for an appropriate period following their going public. A nonpublic entity might base its expected volatility on the average volatilities of otherwise similar public entities. For purposes of identifying otherwise similar entities, an entity would likely consider characteristics such as industry, stage of life cycle, size, and financial leverage. Because of the effects of diversification that are present in an industry sector index, the volatility of an index should not be substituted for the average of volatilities of otherwise similar entities in a fair value measurement. Pursuant to paragraph 718-10-S99-1 if shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. The Company uses the average historical volatility of the comparable companies over the expected term of the share options or similar instruments as its expected volatility.

 

e.

The expected dividends on the underlying share for the expected term of the option. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

 

f.

The risk-free interest rate(s) for the expected term of the option. Pursuant to ASC 718-10-55-28 a U.S. entity issuing an option on its own shares must use as the risk-free interest rates the implied yields currently available from the U.S. Treasury zero-coupon yield curve over the contractual term of the option if the entity is using a lattice model incorporating the option’s contractual term. If the entity is using a closed-form model, the risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model.

 

 
15

 

 

Pursuant to ASC Paragraphs 718-10-30-11 and 718-10-30-17 a restriction that stems from the forfeitability of instruments to which employees have not yet earned the right, such as the inability either to exercise a non-vested equity share option or to sell non-vested shares, is not reflected in estimating the fair value of the related instruments at the grant date. Instead, those restrictions are taken into account by recognizing compensation cost only for awards for which employees render the requisite service and a non-vested equity share or non-vested equity share unit awarded to an employee shall be measured at its fair value as if it were vested and issued on the grant date.

 

Pursuant to ASC Paragraphs 718-10-35-2 and 718-10-35-3 the compensation cost for an award of share-based employee compensation classified as equity shall be recognized over the requisite service period, with a corresponding credit to equity (generally, paid-in capital). The requisite service period is the period during which an employee is required to provide service in exchange for an award, which often is the vesting period. The total amount of compensation cost recognized at the end of the requisite service period for an award of share-based compensation shall be based on the number of instruments for which the requisite service has been rendered (that is, for which the requisite service period has been completed). An entity shall base initial accruals of compensation cost on the estimated number of instruments for which the requisite service is expected to be rendered. That estimate shall be revised if subsequent information indicates that the actual number of instruments is likely to differ from previous estimates. The cumulative effect on current and prior periods of a change in the estimated number of instruments for which the requisite service is expected to be or has been rendered shall be recognized in compensation cost in the period of the change. Previously recognized compensation cost shall not be reversed if an employee share option (or share unit) for which the requisite service has been rendered expires unexercised (or unconverted).

 

Under the requirement of ASC Paragraph 718-10-35-8 the Company made a policy decision to recognize compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

 

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

 

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under the guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).

 

Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services.

 

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that the counterparty has the right to exercise expires unexercised.

 

 
16 

 

 

Pursuant to ASC Paragraphs 505-50-30-2 and 505-50-30-11 share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date: (a) The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); or (b) The date at which the counterparty's performance is complete. If the Company’s common shares are traded in one of the national exchanges the grant-date share price of the Company’s common stock will be used to measure the fair value of the common shares issued, however, if the Company’s common shares are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

 

Pursuant to ASC Paragraph 718-10-55-21 if an observable market price is not available for a share option or similar instrument with the same or similar terms and conditions, an entity shall estimate the fair value of that instrument using a valuation technique or model that meets the requirements in paragraph 718-10-55-11 and takes into account, at a minimum, all of the following factors:

 

a.

The exercise price of the option.

 

b.

The expected term of the option, taking into account both the contractual term of the option and the effects of employees’ expected exercise and post-vesting employment termination behavior: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

 

c.

The current price of the underlying share.

 

d.

The expected volatility of the price of the underlying share for the expected term of the option. Pursuant to ASC Paragraph 718-10-55-25 a newly publicly traded entity might base expectations about future volatility on the average volatilities of similar entities for an appropriate period following their going public. A nonpublic entity might base its expected volatility on the average volatilities of otherwise similar public entities. For purposes of identifying otherwise similar entities, an entity would likely consider characteristics such as industry, stage of life cycle, size, and financial leverage. Because of the effects of diversification that are present in an industry sector index, the volatility of an index should not be substituted for the average of volatilities of otherwise similar entities in a fair value measurement. Pursuant to paragraph 718-10-S99-1 if shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. The Company uses the average historical volatility of the comparable companies over the expected term of the share options or similar instruments as its expected volatility.

 

e.

The expected dividends on the underlying share for the expected term of the option. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

 

f.

The risk-free interest rate(s) for the expected term of the option. Pursuant to ASC 718-10-55-28 a U.S. entity issuing an option on its own shares must use as the risk-free interest rates the implied yields currently available from the U.S. Treasury zero-coupon yield curve over the contractual term of the option if the entity is using a lattice model incorporating the option’s contractual term. If the entity is using a closed-form model, the risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model.

 

 
17

 

 

Pursuant to ASC paragraph 505-50-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.

 

Income Tax Provision

 

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25.addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

 

Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

 

Uncertain Tax Positions

 

The Company did not take any uncertain tax positions and had no adjustments to the unrecognized tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the reporting period ended September 30, 2014 or 2013.

 

Pro Forma Income Tax Information (Unaudited)

 

The pro forma income tax information, inclusive of income tax rate, income tax provision (benefits), if any, deferred tax assets and valuation allowance on deferred tax assets, presented in the accompanying pro forma combined financial statements and the pro forma income tax note reflect the provision for income tax, based on the combined results of operations of the Company and the acquired entities for the periods presented, which would have been recorded as if the acquisition of the acquired entities had occurred as of the first date of the first period presented.

 

Net Income (Loss) per Common Share

 

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants.

 

There were no potentially dilutive shares outstanding for the reporting period ended September 30, 2014 or 2013.

 

 
18

 

 

Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

 

Subsequent Events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

 

Recently Issued Accounting Pronouncements

 

In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “ Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”)

 

This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606,  Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

 

To achieve that core principle, an entity should apply the following steps:

 

 

1.

Identify the contract(s) with the customer

 

2.

Identify the performance obligations in the contract

 

3.

Determine the transaction price

 

4.

Allocate the transaction price to the performance obligations in the contract

 

5.

Recognize revenue when (or as) the entity satisfies a performance obligations

 

The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about the following:

 

 

1.

Contracts with customers  – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)

 

2.

Significant judgments and changes in judgments  – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations

 

3.

Assets recognized from the costs to obtain or fulfill a contract.

 

ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities.  Early application is not permitted.

 

 
19

 

 

In June 2014, the FASB issued the FASB Accounting Standards Update No. 2014-12 “ Compensation—Stock Compensation (Topic 718) : Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”).

 

The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period.  The Update requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.

 

The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted.

 

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact the adoption of ASU 2014-15 will have on its financial statements.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

 

Note 3 – Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit at September 30, 2014, a net loss and net cash used in operating activities for the reporting period then ended. These conditions raise substantial doubt about its ability to continue as a going concern.

 

The Company is attempting to produce sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to produce sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenues and in its ability to raise additional funds.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 

 

Notwithstanding the foregoing, the Company believes it will continue as a going concern. Recent discussions in relation to significant revenue generating projects, together with past projects which have moved into assumptive revenue positions and the acquisition of certain intellectual property rights lend to the Company's belief.

 

Note 4 - Business Acquisitions

 

(i)     Acquisition of S&G Holdings, Inc.

 

On December 24, 2013, the Company acquired 75% of the issued and outstanding shares of common stock of S&G for $210,000. The Company also agreed to make a capital contribution of $100,000 to S&G at closing as well as an additional $365,000 capital contributions prior to September 2014. In addition, the Company paid $25,000 to a third party as commission for bringing in the acquisition.

 

 
20

 

 

Identification of the Accounting Acquirer

 

The Company used the existence of a controlling financial interest to identify the acquirer—the entity that obtains control of the acquiree in accordance with ASC paragraph 805-20-25-5 and identifies the acquisition date, which is the date on which it obtains control of the acquiree in accordance with ASC paragraph 805-20-25-6. The management of the Company specifically addressed (i) the ownership interest of each party after the acquisition; (ii) the members of the board of directors from both companies; and (iii) senior management from both companies and determined that Brick Top Productions, Inc. was the accounting acquirer for the merger between Brick Top Productions, Inc. and S&G Holdings, Inc.

 

Intangible Assets Identification, Estimated Fair Value and Useful Lives

 

The Company determined that there were no separate recognizable intangible assets that possessed economic value from S&G.

 

Business Enterprise Valuation

 

The Company determined that the business enterprise value of S&G approximates its net book.

 

Allocation of Purchase Price

 

The acquisition was accounted for using the purchase method of accounting in accordance with section 805-10-55 of the FASB Accounting Standards Codification by allocating the purchase price over the assets acquired, including intangible assets and liabilities assumed, based on their estimated fair values at the date of acquisition.  The excess of the liabilities assumed and the purchase price over the net assets acquired was recorded as goodwill.  The purchase price has been allocated to the assets and liabilities as follows:

 

Total assets acquired

  $ 42,457  

Goodwill

    319,237  

Total liabilities assumed

    (126,694

)

Acquisition price

  $ 235,000  

 

Note 5 – Property and Equipment

 

 

(i)

  Depreciation and Amortization Expense

 

Depreciation and amortization expense was $2,425 and $1,711 for the reporting period ended September 30, 2014 and 2013, respectively.

 

 

(ii)

Impairment

 

The Company completed the annual impairment test of property and equipment and determined that there was no impairment as the fair value of property and equipment, exceeded their carrying values at December 31, 2013.

 

Note 6 - Capitalized Pilot Costs

 

On June 4, 2010, the Company’s majority owned subsidiary, York Productions, LLC, entered into a Production Services Agreement with Nick Nick, Inc. Under this agreement, York Productions, LLC contributed $85,000 in capital to Nick Nick, Inc. for the production of the “Doorman” pilot. Additionally, York Productions, LLC is assigned rights to “Intellectual Property” by Nick Nick, Inc. Artwork necessary to the sale and distribution of the property has been completed and it is assumptively ready for sale.

 

 
21

 

 

The Company capitalizes film costs. The total capitalized pilot costs on the balance sheet of $292,931 are attributable to the “Doorman” pilot, which was completed on September 29, 2011. The Company will begin amortization of capitalized film costs and accrual (expensing) of participation costs when a film is released and it begins to recognize revenue from that film. The costs of producing a film and bringing that film to market consist of film costs, participation costs, exploitation costs, and manufacturing costs. Pursuant to FASB Codification Topic 926-20-35, the Company will begin amortization of capitalized film costs using the individual-film-forecast-computation which amortizes or accrues such costs in the same ratio that current period actual revenue bears to the estimated remaining unrecognized ultimate revenue after an individual film is released.

 

Impairment

 

The Company completed the annual impairment test of capitalized pilot costs and determined that there was an impairment of $292,931 at December 31, 2013.

 

Note 7 – Goodwill

 

Goodwill, stated at cost, less accumulated impairment consisted of the following:

 

   

September 30, 2014

   

December 31, 2013

 
                 

Acquisition of S&G

               
                 

Goodwill

  $ 319,237     $ 319,237  
                 

Accumulated impairment

    (-

)

    (-

)

                 
    $ 319,237     $ 319,237  

 

Impairment

 

The Company completed the annual impairment test of goodwill and determined that there was no impairment as the fair value of goodwill exceeded their carrying values at December 31, 2013.

 

Note 8 – Note Payable

 

On May 30, 2014, the Company executed a Promissory Note with a financial institution for $50,000. The Note bears a variable interest rate that is currently at 4.950%. The full principal and interest on the Note is due in full by June 1, 2015. At September 30, 2014, the balance due on the Promissory Note was $49,000.

 

On April 10, 2014, the Company executed a Line of Credit with a financial institution for $75,000. The Line of Credit bears variable interest rate that is currently at 4.750%. The full principal and interest on the Line of Credit is due on demand. At September 30, 2104, the balance due on the Line of Credit was $54,152 and is included in Notes Payable on the balance sheet.

 

Note 9 - Commitments and Contingencies

 

Effective as of July 14, 2014, the Board of Directors of Brick Top Productions, Inc. (the “Company”), appointed Frank Esposito as the Company's Chief Legal Officer. In consideration for his services, the Company entered into an agreement with Esposito, PLLC, d/b/a Esposito Partners, providing for base retainer payments of $5,000 per month.

 

 
22

 

 

Lease Agreements

 

Regus Management Group, LLC

 

On September 28, 2011, the Company entered into a lease agreement with Regus Management Group, LLC. The term of the lease is effective from November 1, 2011 to October 31, 2012 which was subsequently extended to expiring on October 31, 2013. The monthly rent base payment is $1,107. The lease expired and is currently on a month to month basis.

 

Town Center Executive Suites

 

On April 1, 2014, the Company entered into a lease agreement with Town Center Executive Suites. The term of the lease is effective from April 1, 2014 to March 31, 2015. The monthly rent base payment is $700.

 

Employment Agreements

 

Chief Executive Officer

 

On September 21, 2010, the Company entered into an employment agreement (“Employment Agreement”) with its chief executive officer (“CEO”), which requires that the CEO be paid an annual base salary of $150,000 for three (3) years from date of signing. Employee may extend the Employment Agreement for an additional three (3) years. The contract expired without being extended.

 

On October 1, 2011, the Company’s CEO agreed to waive future base salary under his employment agreement, until further notice, in an effort to reduce the operating expenses.

 

President, S&G Holdings, Inc.

 

On December 24, 2013, the Company entered into an employment agreement with Martin Fischer, the president of S&G Holdings, Inc. The agreement is for a five year term, which may be renewed for an additional five years and requires an annual base salary of $144,000 for year 1, $151,200 for year 2, $158,760 for year 3, $166,698 for year 4 and $175,033 for year 5. The agreement also entitles the president to a cash bonus of up to $100,000 annually based on net income levels and a monthly $500 automobile allowance.

 

Note 10 - Stockholders' Equity

 

Shares Authorized

 

Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is One Hundred and Ten Million (110,000,000) shares of which Ten Million (10,000,000) shares shall be Preferred Stock, par value $0.0001 per share, and One Hundred Million (100,000,000) shares shall be Common Stock, par value $0.0001 per share.

 

Common Stock

 

Common Shares Issued for Cash

 

From January 17, 2013 through December 10, 2013, the Company sold 422,500 common shares at $1.00 per share, or $422,500 in cash to thirty-four (34) investors.

 

On January 10, 2014, the Company issued 400,000 of its common shares to a third party for outside services. The shares were valued at $1.00 per share.

 

On January 10, 2014, the Company issued 350,000 of its common shares to two (2) employees as compensation. The shares were valued at $1.00 per share.

 

Effective April 4, 2014, the Board of Directors of the Company appointed Donovan J. Leitch to the Board of Directors.  In consideration for his services to the Board, the Company issued Mr. Leitch 50,000 shares of common stock, and agreed to issue an additional 50,000 shares of common stock to Mr. Leitch on each of the following four (4) anniversaries of said appointment, as long as Mr. Leitch remains a member of the Board on such dates. The shares were valued at $1.00 per share. As of September 30, 2014, the Company recognized $25,000 as compensation expense.

 

 
23

 

 

On May 27, 2014, the Company sold 60,000 of its common shares at $0.67 per share, or $40,000 in cash to two (2) investors.

 

During the reporting period ended September 30, 2014, the CEO of the Company made a capital contribution of $76,000 that the Company has recorded as Additional Paid in Capital. 

 

 

Warrants Issued for Obtaining Employee Services

 

On January 10, 2014, the Company awarded the President of S&G Holdings, Inc. a warrant to purchase 1,491,350 common shares with an exercise price at $0.01 per share expiring five years from the date of issuance. The President of S&G will also be appointed to the Board of Directors of the Company.

 

The Warrant shall vest as follows: (i) on March 31, 2014, the right to exercise the Warrant and to receive 50% of the Warrant Shares shall vest; (ii) on June 30, 2014, the right to exercise the Warrant and to receive an additional 25% of the Warrant Shares shall vest; and (iii) on September 30, 2014, the right to exercise the Warrant and to receive the remaining 25% of the Warrant Shares shall vest.

 

The Company estimated the fair value of the stock warrants on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:

 

   

January 10, 2014

 
         

Expected life (year) – Simplified method

    5  
         

Expected volatility (*)

    68.32

%

         

Expected annual rate of quarterly dividends

    0

%

         

Risk-free interest rate(s)

    0.77

%

 

 

*

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company plans to engage in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life and averaged them as its expected volatility.

 

The estimated fair value of the stock warrant was $1,476,735 on the date of grant, which are initially recorded as additional paid-in capital and amortized ratably over the vesting period of 9 months Compensation - officers.

 

Summary of the Company’s Stock Warrant Activities

 

The table below summarizes the Company’s stock warrant activities:

 

   

Number of

Warrant Shares

   

Exercise Price Range

Per Share

   

Weighted Average

Exercise Price

   

Fair Value

at Date of Grant

   

Aggregate

Intrinsic

Value

 
                                         

Balance, December 31, 2013

    -     $ -     $ -     $ -     $ -  
                                         

Granted

    1,491,350       0.01       0.01       1,476,735       1,476,437  
                                         

Canceled

    -       -       -       -       -  
                                         

Exercised

    -       -       -       -       -  
                                         

Expired

    -       -       -       -       -  
                                         

Balance, September 30, 2014

    1,491,350     $ 0.01     $ 0.01     $ 1,476,735     $ 1,476,437  
                                         

Vested and exercisable, September 30, 2014

    1,491,350     $ 0.01     $ 0.01     $ 1,476,735     $ 1,476,437  
                                         

Unvested, September 30, 2014

    -     $ -     $ -     $ -     $ -  

 

 
24

 

 

The following table summarizes information concerning outstanding and exercisable warrants as of September 30, 2014:

 

       

Warrants Outstanding

   

Warrant s Exercisable

 

Range of

Exercise Prices

   

Number

Outstanding

   

Average

Remaining

Contractual

Life (in years)

   

Weighted

Average

Exercise Price

   

Number

Exercisable

   

Average

Remaining

Contractual

Life (in years)

   

Weighted

Average

Exercise Price

 
                                                     
$ 0.01       1,491,350       4.38     $ 0.01       1,491,350       4.38     $ 0.01  
                                                     
$ 0.01       1,491,350       4.38     $ 0.01       1,491,350       4.38     $ 0.01  

 

Note 11 - Related Party Transactions

 

Advances from Chief Executive Officer and Stockholder

 

From time to time, the Chairman, CEO and significant stockholder of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand. The balance of these advances at September 30, 2014 and 2013 were $110,847 and $60,847, respectively.

 

Note Payable – Related Party

 

On April 1, 2014, effective March 31, 2014, the Company’s CEO loaned the Company $150,000, for a promissory note in the principal amount of $150,000, with interest at 5% per annum with principal and interest due on the maturity date of October 1, 2015.

 

Capital Contribution

 

During the reporting period ended September 30, 2014, the CEO of the Company made a capital contribution of $76,000 which was recorded as Additional Paid in Capital. 

 

Note 12 - Subsequent Events

 

The Company has evaluated all events that occurred after the balance sheet through the date when the financial statements were issued to determine if they must be reported. The management of the Company determined that there was a certain reportable event to be disclosed as follows:

 

On October 1, 2014, the Company’s CEO loaned the Company $150,000, pursuant to a promissory note in the principal amount of $150,000, with interest at 5% per annum with principal and interest due on the maturity date of October 1, 2015.

 

 
25

 

 

Item 2:       Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward Looking Statements

 

Certain statements contained in this report that are not historical fact are "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. The words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "believes," "estimates," "projects" or similar expressions are intended to identify these forward-looking statements. These statements are subject to risks and uncertainties beyond our reasonable control that could cause our actual business and results of operations to differ materially from those reflected in our forward-looking statements. The safe harbor provisions provided in the Securities Litigation Reform Act do not apply to forward-looking statements the Company makes in this report. Forward-looking statements are not guarantees of future performance. Our forward-looking statements are based on trends which we anticipate in our industry and our good faith estimate of the effect on these trends of such factors as industry capacity, product demand and product pricing. The inclusion of projections and other forward-looking statements should not be regarded a representation by us or any other person that we will realize our projections or that any of the forward-looking statements contained in this prospectus will prove to be accurate.

 

Overview

 

Introduction

 

Brick Top Productions, Inc., ("we" or the "Company") is a corporation organized on February 20, 2009, under the laws of the State of Florida.  The Company was organized for the purpose of financing, producing and distributing to third parties one or more television series and feature films to be licensed for exploitation in domestic and international theatrical, television, cable, home video and pay per view markets. Brick Top Productions, Inc., has expanded its focus to the acquisition and financing of, profitable synergistic entertainment production companies. The Company will need to raise additional capital to implement our current business plan.

 

The Company completed production of a television pilot titled “ Nick The Doorman ”. The Company is actively interviewing persons to serve as a show runner for the pilot. A “show runner” is a person that is responsible for presenting a television pilot or idea for sale to major television networks through his or her professional industry contacts. Show runners are only paid if and when a show is sold to a network, at which point we would receive revenue. The show runner’s compensation would be a predetermined fee set in his or her agreement with the company. This fee will be anywhere from 3 to 5% of the total commitment that the network will pay for the project. This process can take anywhere from approximately 3 months to as long as 36 months from the date of project completion. Nicholas Turturro, the writer and producer of the pilot, has estimated that the project will be marketable for approximately 4 to 6 years, at which point the market demand for the actors associated with the project may become stale. The company intends to market the project for four to six years based on Mr. Turturro’s opinion. This opinion is based solely on Mr. Turturro’s past industry experience. Mr. Turturro’s opinion may prove to be incorrect and the project may not be marketable for as long as he believes it will. We are also considering completing the project as a full length feature film. We have a LOI from a distributor that is interested in distributing “ Nick The Doorman”  as a full length feature film. This would require us to shoot an additional 90 minutes of footage to combine with the existing 90 minutes that we already have. Nick Turturro believes this will increase the projects marketability. The cost to complete would be an additional $100,000.

 

The Company has completed the acquisition of the rights to a screenplay written by Nicholas Turturro titled “ Bless Me Father .” We intend to finance, produce and sell the distribution rights once we have the additional capital necessary to do so. We expect total project costs to be approximately $300,000. This project would be facilitated through our subsidiary York Productions II LLC. The budget for this project would consist of approximately $17,000 for writers and scripts, $10,000 for a Line Producer, $30,000 for a Director, $105,000 for the cast, $10,000 for travel/living expenses, $17,000 for production staff, $10,000 for set design and construction, $5,0000 for lighting, $10,000 for camera and sound operators, $12,000 for wardrobe and hair/makeup, $22,000 for transportation, $27,000 for locations/unit expenses and $25,000 for post-production, editing  and music. We can begin development as soon as we raise the additional necessary capital required to fund this project. This project would take approximately 6 months from acquisition of the rights to completion of post-production. Upon completion we would attempt to pre-sell the distribution rights abroad, at no additional cost to the Company in order to generate revenue and fully or partially cover the costs of the project. This phase of the project would take approximately 90 - 120 days to complete if successful.

 

 
26

 

 

We are actively seeking additional opportunities to finance television and film projects. Ultimately, our goal is to pursue the production of one or more feature films utilizing prominent actors.  The costs of such projects typically range from approximately $200,000 to as much as $10,000,000 and can take as little as 3 months to as long as 1 year to complete. Major television and film projects often provide the opportunity to pre-sell exclusive distribution rights to overseas territories, thereby hedging part of the project cost.  At any given time there are thousands of scripts for screenplays that are circulating throughout the motion picture industry, all of which are seeking financing, production and/ or distribution. Overseas territories will pay for the exclusive rights to distribute a particular film. These rights can be pre-sold to hedge the cost of the film. There is no determining body that sets the pricing. There is a constantly changing guideline that is determined by an actor’s marketability and what his or her films have recently commanded for distribution rights. This merely represents a set of guidelines that is a starting point for negotiations. Initially this will be our primary method of distribution. In the event we are able to pre-sell international distribution rights for a project we will then look to secure domestic distribution of the project. Our goal is to raise capital through an equity offering which will enable us to acquire the rights to finance, produce and contract distribution of these projects. The costs will vary per project, determined by the level of talent, location and scope of the production. The pre-sale of distribution rights is applicable only to full length feature film projects and does not apply to television projects such as  The Doorman .

 

We have explored and negotiated an agreement for the construction of a platform necessary to disseminate content (a series of 5-10 minute shorts) via a smart phone application.  We already have over 90 minutes of completed footage from filming “ Nick The Doorman ”.  The estimated cost is approximately $50,000. The first step is analysis and design which will cost $6,000 and take approximately 2 weeks. The development (coding) will cost $30,000 and take approximately 2 months to complete. The quality control will cost $10,000 and take approximately 1 week. The final step is deployment which will cost $4,000 and will be completed in three days. We will require additional capital to complete this project. Our goal is to advertise our link through various social networking sites which will drive traffic to our site which in turn will create a desirable advertising venue. This part of the project will not require additional capital and will take approximately 3 to 5 months. We anticipate this entire process to take approximately 6 to 8 months from start to completion at which time we would expect it to begin generating revenue.

 

We have engaged in due diligence activities centering around two acquisitions that we believe will lead to additional operating revenue in the near term.

 

On December 24, 2013, the Company entered into a Stock Purchase Agreement with Martin Fischer (the “SPA”), pursuant to which the Company acquired from Mr. Fischer seventy-five (75%) percent of the issued and outstanding stock (the “Shares”) of S&G Holdings, Inc., a Tennessee corporation doing business as High Five Entertainment (“High Five”), making High Five a majority owned subsidiary of the Company. Under the terms of the SPA, the Company paid Mr. Fischer Two Hundred Ten Thousand ($210,000) Dollars at closing, made a capital contribution to High Five in the amount of One Hundred Thousand ($100,000) Dollars at closing, and agreed to make additional capital contributions of Three Hundred Sixty Five Thousand ($365,000) Dollars to High Five over the first nine (9) months of 2014, to fund business operations. In the event the Company fails to make the required capital contributions to High Five, the Company will be required to return certain of the Shares to Mr. Fischer.

 

High Five Entertainment

 

High Five Entertainment is an internationally recognized, Emmy Award-winning entertainment production company based in Nashville, Tennessee specializing in the development and presentation of quality television programming including series, specials, pilots, live events and award shows.

 

Founded in Los Angeles, California in 1983, High Five’s unwavering commitment to excellence in entertainment production for more than 30 years continues to foster an impressive legacy of unsurpassed client satisfaction through collaborative creative development, meticulous planning and flawless delivery of world-class entertainment properties.

 

 
27

 

 

Relocating to Nashville in the early nineties, High Five Entertainment became synonymous with the presentation of groundbreaking music television events (“The Women of Country” CBS, “This Is Garth Brooks” NBC, “At the Ryman” CMT and “The Road” Tribune Entertainment). Today, High Five continues to be one of the premiere producers of quality music-television entertainment with ongoing episodes of Opry Live and of names synonymous with the presentation of groundbreaking music television events and a number of PBS Specials ranging from the legendary “Levon Helm - Ramble At The Ryman”.

 

High Five made an extremely successful foray into the fascinating world of motorsports entertainment, producing SPEED Channel’s (soon to be Fox Sports One) top-rated series “Pass Time”, a riveting, fast-paced game show for gear heads. HFE produced more than 150 episodes of the show. Also for SPEED Channel, High Five produced two seasons the popular unscripted series "Drag Race High" pitting two area high school motor-shop classes in direct head to head competition building and racing their own dragsters. HFE followed this with the series “Burnout –The Ultimate Drag Race Challenge” in Phoenix, AZ which aired on MTV2.

 

HFE also recently produced a record-breaking PBS pledge special with Dr. Daniel Amen, iChange Your Brain, Change Your Life”, and the follow-up special “A Magnificent Mind At Any Age”.

 

High Five Entertainment will be collaborating with television maverick, Rich Christensen, the creator, producer and host of several successful car racing television show franchises, to exclusively produce the television and internet show projects that he is presently developing. 

 

High Five Entertainment, produced television's first ever live musical performances weaved throughout a previously recorded network television premiere. On September 24, 2014, in connection with ABC's Nashville premieres on both the East Coast and West Coast, High Five Entertainment mixed fantasy and reality as it brought together the Nashville stars with actual country music legends, broadcasting two concerts directly from the Bluebird Café set. Receiving real life acclaim for the innovation and quality, High Five Entertainment continues its ground breaking work. The progressive mixture of live and taped footage comes immediately after High Five produced the Americana Music Honors & Awards, another in a series of well received accomplishments.

 

High Five again produced the Country Music Awards Red Carpet event for the CMT network, leading in to the 48th Annual CMA Awards. We believe High Five Entertainment will continue to produce its ground breaking and well received programming in the immediate future.

 

The Company recently acquired intellectual property rights in relation to the trademarked Carolco Pictures, a name synonymous with high quality blockbuster films from the Terminator series, Rambo series and Basic Instinct to Total Recall and the Doors, amongst many others. The Company believes it will leverage the name that brought the public such noteworthy films and capitalize on this acquisition.

 

Competition

 

We face stiff competition from other participants in the television and motion picture business, including major networks such as ABC, NBC, CBS, for example, and major studios such as Sony, Miramax, Paramount Pictures Corporation, Universal Pictures, and Columbia Pictures, for example, which have access to funding substantially greater than that which is available to us.

 

Employees

 

As of the date of this filing our officers and an administrative assistant are our only employees. The Company, however, utilizes the services of a number of consultants, independent contractors and professionals. Proceeding in this manner allows the Company to operate efficiently and pragmatically. Additional employees will be hired in the future as the Company's business expands.  

 

 
28

 

 

Critical Accounting Policies

 

Critical Accounting Policies

 

Principles of Consolidation. The consolidated financial statements of Company include the accounts of Brick Top Productions and its majority-owned subsidiaries, York Productions, LLC, York Productions II, LLC, and S&G Holdings, Inc. All significant intercompany balances and transactions have been eliminated.

 

Income Taxes. The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date. The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.  Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. 

 

Capitalized Pilot Costs - Film Property and Screenplay Rights. The Company capitalizes costs it incurs to buy film or transcripts that will later be marketed or be used in the production of films according to ASC 926, Entertainment – Films . The Company will begin to amortize capitalized film cost when a film is released and it begins to recognize revenue from the film.

 

Non-Controlling Interest. The Company follows paragraph 810-10-65-1 of the FASB Accounting Standards Codification to report the non-controlling interest in York Productions, LLC, York Productions II, LLC, and S&G Holdings, Inc., its majority owned subsidiary in the consolidated statements of balance sheets within the equity section, separately from the Company’s stockholders’ equity.  Non-controlling interest represents the non-controlling interest holder’s proportionate share of the equity of the Company’s majority-owned subsidiary, York Productions, LLC and S&G Holdings, Inc.  Non-controlling interest is adjusted for the non-controlling interest holder’s proportionate share of the earnings or losses and other comprehensive income (loss) and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.

 

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted 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 reporting period. Actual results could differ from those estimates.

 

Jumpstart Our Business Startups Act of 2012. The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. Pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth company.” This election will permit us to delay the adoption of new or revised accounting standards that will have different effective dates for public and private companies until such time as those standards apply to private companies.   Upon the issuance of a new or revised accounting standard that applies to our financial statements and has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt said accounting standard.  We may take advantage of the extended transition period until the first to occur of the date we (i) are no longer an “emerging growth company” or (ii) affirmatively and irrevocably opt out of the extended transition period.  Consequently, our financial statements may not be comparable to companies that comply with public company effective dates.  

 

 
29

 

 

For additional discussion regarding the JOBS Act and the exemptions available to “emerging growth companies” thereunder, please refer to the risk factor entitled “We are an “emerging growth company” and we cannot be certain if we will be able to maintain such status or if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors” contained in the section of this Prospectus entitled “Risk Factors.”

  

Results of Operations for the Three Months Ended September 30, 2014 Compared to the Three Months Ended September 30, 2013

 

   

Three Months

Ended September 30,

 
   

2014

   

2013

 

Revenue

  $ 374,235    

Nil

 

Operating expenses

  $ 884,097     $ 47,063  

Net Loss from Operations before non-controlling interest

  $ (505,504

)

  $ (47,112

)

Net Loss attributable to non-controlling interest

  $ (11,653

)

  $ (24

)

Net Loss attributable to Brick Top Productions’ stockholders

  $ (517,157

)

  $ (47,088

)

 

Revenues for the three months ended September 30, 2014 were $374,235 as compared to $0 for the three months ended September 30, 2013. The increase in revenues is due to the acquisition of S & G Holdings, Inc. during the fourth quarter of 2013. Our future revenue plan concentrates on the production of additional award winning programming from our subsidiaries, including S & G Holdings, Inc. and on our ability to effectively market The Doorman pilot and close new viable acquisitions of film rights. In addition, we are conducting due diligence on the acquisition of a production company that has garnered interest from several notable media outlets and hope to close an additional transaction shortly that we believe will lead to additional, high profile, revenue streams.

 

Operating expenses for the three months ended September 30, 2014 were $884,097 compared to $47,063 for the three months ended September 30, 2013. The increase in operating expenses is due to the acquisition of S & G Holdings, Inc. during the fourth quarter of 2013 and concomitant stock compensation booked as $504,754.

 

The Company has realized a net loss of $517,157 for the three months ended September 30, 2014 compared to a net loss of $47,088 for the three months ended September 30, 2013. The increase in net loss is due to the acquisition of S & G Holdings, Inc. during the fourth quarter of 2013 and concomitant stock compensation and or awards.

 

Results of Operations for the Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013

 

   

Nine Months

Ended September 30,

 
   

2014

   

2013

 

Revenue

  $ 644,887    

Nil

 

Operating expenses

  $ 3,131,735     $ 109,676  

Net Loss from Operations before non-controlling interest

  $ (2,411,692

)

  $ (110,945

)

Net Loss attributable to non-controlling interest

  $ (18,579

)

  $ (68

)

Net Loss attributable to Brick Top Productions’ stockholders

  $ (2,393,113

)

  $ (110,877

)

 

Revenues for the nine months ended September 30, 2014 were $644,887 as compared to $0 for the nine months ended September 30, 2013. The increase in revenues is due to the acquisition of S & G Holdings, Inc. during the fourth quarter of 2013. 

 

 
30

 

 

Our future revenue plan concentrates on the production of additional award winning programming from our subsidiaries, including S & G Holdings, Inc. and on our ability to effectively market The Doorman pilot and close new viable acquisitions of film / television / media rights. In addition, we are conducting due diligence on the acquisition of a production company that has garnered interest from several notable media outlets and hope to close an additional transaction shortly that we believe will lead to additional, high profile, revenue streams.

 

Operating expenses for the nine months ended September 30, 2014 were $3,131,735 compared to $109,676 for the nine months ended September 30, 2013. The increase in operating expenses is due to the acquisition of S & G Holdings, Inc. during the fourth quarter of 2013 and concomitant stock compensation booked as $2,251,735.

 

The Company has realized a net loss of $2,393,113 for the nine months ended September 30, 2014 compared to a net loss of $110,877 for the nine months ended September 30, 2013. The increase in net loss is due to the acquisition of S & G Holdings, Inc. during the fourth quarter of 2013 and concomitant stock compensation and or awards.

 

Liquidity and Capital Resources

 

   

Nine Months

Ended

September 30, 2014

   

Nine Months

Ended

September 30, 2013

 

Net Cash Used In Operating Activities

  $ (107,774

)

  $ (125,685

)

Net Cash Used in Investing Activities

  $ (51,203

)

  $ -  

Net Cash Provided by Financing Activities

  $ 364,452     $ 253,050  

Net Change in Cash

  $ 205,475     $ 127,365  

 

As of September 30, 2014, our total assets were $732,761 and our total liabilities were $704,807 and we had negative working capital of $(146,504). Our financial statements report a net loss of $2,411,692 for the nine months ended September 30, 2014 and a net loss of $110,945 for the nine months ended September 30, 2013, based primarily on stock compensation, as detailed above.

 

Pursuant to the terms of our employment agreement with Mr. Bafer, we are obligated to pay Mr. Bafer $150,000 per year. On October 1, 2011, Mr. Bafer agreed to waive future base salary under his employment agreement, until further notice, in an effort to reduce our operating expenses.  Prior to that, we did not have sufficient cash flows to make the required payments under the agreement and therefore accrued all unpaid salary until such time we generate revenues from operations or raise additional capital through one or more financing transactions.

 

As part of the Company’s acquisition of S&G Holdings, Inc. (doing business as High Five Entertainment), the Company entered into an Executive Employment Agreement with Mr. Martin Fischer, pursuant to which Mr. Fischer will serve as High Five’s president for an initial term of five years with an initial base salary of $144,000.  He will also be entitled to an annual bonus of up to $100,000 and a monthly car allowance of $500.  In addition, the Company awarded Mr. Fischer a warrant to purchase 1,491,351 shares of common stock, the warrant vests throughout 2014.

 

We have suffered recurring losses from operations. These losses and fluctuations, particularly in nascent operations, are, we believe, common among companies in our market sector. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard, we have raised additional capital through equity offerings and loan transactions, and, in the short term, will seek to raise additional capital in such manners to fund our operations.  We have a $50,000 line of credit from Regions Bank with a maturity date of June 1, 2015.  Our officers and shareholders have not made any written or oral agreement to provide us additional financing.  There can be no assurance that we will be able to continue to raise capital on terms and conditions that are deemed acceptable to us.

 

We have engaged in due diligence activities centering around two acquisitions that we believe will lead to additional operating revenue in the near term. 

 

 
31

 

 

Off Balance Sheet Arrangements

 

As of September 30, 2014, there were no off balance sheet arrangements.

 

Jumpstart Our Business Startups Act of 2012

 

The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. Pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth company.” This election will permit us to delay the adoption of new or revised accounting standards that will have different effective dates for public and private companies until such time as those standards apply to private companies. Consequently, our financial statements may not be comparable to companies that comply with public company effective dates.

 

Item 3: Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4:   Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

Under the PCAOB standards, a control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit the attention by those responsible for oversight of the company's financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013, utilizing the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of September 30, 2014, was not effective, primarily as a result of the fact that the Company has only two employees, only one of whom has a background in accounting, and lacks segregation of duties.

 

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Management necessarily applied its judgment in assessing the benefits of controls relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected.

 

Changes in Internal Control over Financial Reporting.

 

There have been no changes in our internal controls over financial reporting that occurred during the third fiscal quarter of 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
32

 

 

PART II – OTHER INFORMATION

 

Item 1:       Legal Proceedings

 

None.

 

Item 1A:    Risk Factors

 

Not applicable for smaller reporting companies. 

 

Item 2:       Unregistered Sales of Equity Securities and Use of Proceeds

 

None. 

  

Item 3:       Defaults Upon Senior Securities

 

None. 

 

Item 4:       Mine Safety Disclosures

 

Not applicable. 

 

Item 5:       Other Information

 

None. 

 

Item 6:       Exhibits and Reports on Form 8-K

 

The following exhibits are filed with this report on Form 10-Q:

 

Exhibit

Title

 

 

31.1

Certification pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002

  

  

32.1

Certification pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act of 2002

  

  

101.INS**

XBRL Instance

  

  

101.SCH**

XBRL Taxonomy Extension Schema

  

  

101.CAL**

XBRL Taxonomy Extension Calculation

  

  

101.DEF**

XBRL Taxonomy Extension Definition

  

  

101.LAB**

XBRL Taxonomy Extension Labels

  

  

101.PRE**

XBRL Taxonomy Extension Presentation

  

  

** XBRL

Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 
33

 

 

(b) Reports on Form 8-K. During the fiscal quarter ended September 30, 2014 - None

 

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.

 

 

 

BRICK TOP PRODUCTIONS, INC.

 

 

 

 

 

Date: November 14, 2014

By:

/s/ Alexander Bafer

 

 

 

Alexander Bafer

 

 

 

Chief Executive Officer and

 

 

 

Chief Financial Officer

 

  

 

34

EXHIBIT 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

 

I, Alexander Bafer, certify that:

 

1. I am the Chief Executive Officer of Brick Top Productions, Inc. I have reviewed this report on Form 10-Q of Brick Top Productions, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: November 14, 2014

 

/s/ Alexander Bafer

 

Alexander Bafer

 

Chief Executive Officer

  Brick Top Productions, Inc.

 

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

The certification set forth below is being submitted in connection with the Quarterly Report of Brick Top Productions, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 (the “Report”), for the purpose of complying with Rule 13(a)-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

 

I, Alexander Bafer, Chief Executive Officer of the Company, certify that, to the best of my knowledge:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Dated: November 14, 2014

 

 

/S/ Alexander Bafer

 

Alexander Bafer

 

Chief Executive Officer

 

Brick Top Productions, Inc.