bBooth, Inc. — Form 10-Q Summary
Reporting period: Quarter ended March 31, 2015. The filing identifies the registrant as bBooth, Inc., not TON Strategy Co; verify the company and filing match the intended issuer.
Business context and financial results
bBooth was developing and deploying internet-connected recording studios for malls and other high-traffic venues, alongside its “kord” mobile app. It reported no revenue in either Q1 2015 or Q1 2014.
| Metric | Q1 2015 | Q1 2014 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $73,838 | $81,894 |
| General and administrative expense | $1,500,635 | $331,033 |
| Operating loss | $1,574,473 | $412,927 |
| Interest expense, net | $3,409 | $0 |
| Net loss | $1,577,882 | $412,927 |
| Net loss per share, basic and diluted | $0.03 | $0.04 |
| Cash used in operating activities | $1,386,415 | $343,336 |
| Cash used in investing activities | $85,702 | $940 |
| Cash provided by financing activities | $300,000 | $380,000 |
Margins are not meaningful because the company had no revenue. At March 31, 2015, cash was $0, working capital deficit was $657,324, total assets were $1,790,605, current liabilities were $859,309, and notes payable were $525,000. Accumulated deficit was $11,621,949. The filing reported 61.1 million shares outstanding at quarter-end and 61.42 million as of May 15, 2015.
Material changes and unusual items
- Net loss increased by $1,164,955 year over year, primarily as general and administrative expense rose by $1,169,602. Management attributed the increase largely to expanded activity; cited approximate Q1 2015 costs included $229,000 consulting, $99,000 professional fees, $154,000 mall-display rent, and $483,000 salary-related expense.
- In January, the company acquired Songstagram-related assets and intellectual property. Total consideration was $1,315,335, recorded as intangible assets; $84,085 of amortization was recognized in the quarter. The transaction included forgiveness of $861,435 in principal advances and a $43,900 cash payment. Settlement shares valued at $250,000 were issued, and another 320,000 shares valued at $160,000 were issued after quarter-end.
- Operating cash outflow substantially exceeded the $300,000 of new borrowing proceeds, reducing cash from $1,172,117 at year-end to zero. Q1 financing did not cover operating and investing outflows.
- Notes included $100,000 due on demand plus a $5,000 interest fee, $300,000 in demand loans at 12% annual interest, and a $125,000 note at 12% related to financial-advisory fees. The filing classified the $125,000 note as current. Subsequent to quarter-end, the company borrowed another $250,000 in demand loans at 12%.
Outlook, risks, and other disclosures
Management said operating expenses were expected to exceed revenue over the next 12 months and that additional debt or equity financing would be needed. It planned to seek financing and considered related mergers or acquisitions, but provided no quantified revenue or earnings guidance. Management warned that financing might not be available, or could be dilutive, and stated there was no assurance the company would become profitable.
The filing disclosed a going-concern uncertainty: continued operations depended on obtaining financing until the business could generate sufficient cash flow. The interim statements were prepared on a going-concern basis and included no adjustments for a possible failure to continue. Mall-display leases carried monthly payments of $3,500 to $12,000 through May 2015; office rent was $14,805 monthly through July 2015. The company reported no material legal proceedings and said disclosure controls were effective. It checked “No” to having filed all required Exchange Act reports during the preceding 12 months.
Important facts for investors to verify
- Confirm the issuer identity: this filing is for bBooth, Inc., not TON Strategy Co.
- Review the company’s ability to fund operations given zero cash, the working capital deficit, ongoing losses, and demand debt.
- Assess whether the bBooth/kord business generated revenue or achieved deployment and adoption after this reporting period.
- Verify the terms, balances, repayment status, and any related-party aspects of the notes, including post-quarter borrowing.
- Review the Songstagram acquisition’s asset valuation, amortization, and settlement-related share issuance.
- Investigate the filing’s “No” response regarding timely filing of required reports.