Filing Overview
Issuer identified in the filing: Brick Top Productions, Inc., not Fubotv Inc. The filing is a Form 10-K for the fiscal year ended December 31, 2012, filed April 15, 2013. Brick Top describes itself as a Florida development-stage company focused on financing, producing and distributing television and film projects. It consolidates its 60%-owned subsidiary, York Productions, LLC.
Business Context and Reporting Period
- The company’s only completed project was the television pilot The Doorman, completed in 2011 and still being marketed to television networks.
- The company had not commenced planned principal motion-picture production operations and had generated no revenue since inception.
- Management stated that additional capital was required to implement its business plan, including potential production of Bless Me Father and development of a smartphone application for short-form content.
- The company had 29,692,000 common shares outstanding at December 31, 2012 and 29,754,500 shares outstanding as of March 31, 2013.
Financial Performance and Position
| Metric | 2012 | 2011 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $141,361 | $311,641 |
| Net loss attributable to common stockholders | $141,361 | $311,641 |
| Net loss per basic and diluted share | $(0.00) | $(0.01) |
| Cash from operating activities | $(103,703) | $(155,073) |
| Cash used in investing activities | $(840) | $(18,202) |
| Cash from financing activities | $53,297 | $170,094 |
| Ending cash | $3,154 | $54,400 |
| Total assets | $303,262 | $356,130 |
| Total liabilities | $247,015 | $207,022 |
| Equity | $56,247 | $149,108 |
- Capitalized pilot costs were $292,931 at year-end and represented substantially all of the company’s non-cash asset base. Amortization is expected to begin when the project is released and revenue is recognized.
- Current liabilities consisted primarily of $186,218 of accrued expenses and $60,797 of advances from the chief executive officer and significant stockholder.
- The company reported negative working capital of $243,861 and no interest or income taxes paid during the year.
- No debt financing commitments from third parties were available, and the filing states that officers and shareholders had not committed to provide additional financing.
Material Changes Versus the Prior Comparable Period
- Revenue remained at zero, while the net loss declined by $170,280, or approximately 55%, from $311,641 to $141,361.
- Operating expenses declined primarily because compensation expense fell from $200,000 to zero; general and administrative expense also declined from $55,411 to $16,023.
- Professional fees increased from $41,802 to $109,982, and rent increased from $9,428 to $15,356.
- Cash used in operations improved by $51,370, but ending cash declined by $51,246 because financing proceeds of $53,297 were insufficient to cover operating and investing cash requirements.
- The company issued 48,500 shares to five accredited investors for $48,500 during 2012 and received $4,797 of additional stockholder advances.
- Total liabilities increased by $39,993, while total equity declined by $92,861 as accumulated losses increased.
Outlook, Risks, Contingencies and Unusual Items
- The independent auditor stated that recurring losses, accumulated deficits, no revenue since inception and negative operating cash flow raised substantial doubt about the company’s ability to continue as a going concern. The financial statements contain no adjustments for this uncertainty.
- Management expects to seek additional equity or loan financing, but disclosed that no financing was currently committed and that acceptable financing may not be available.
- The company’s ability to generate revenue depends on marketing The Doorman, acquiring additional film rights and obtaining production capital. Network sale timing for the pilot was estimated at approximately three to 36 months, but no sale was assured.
- Proposed development of Bless Me Father was estimated to cost approximately $300,000, while the proposed smartphone platform was estimated to cost approximately $50,000. Neither project had been fully funded or contractually secured.
- The company competes with major television networks and film studios with substantially greater financial resources.
- Management concluded that disclosure controls and internal control over financial reporting were not effective, primarily because the company had only two employees and lacked segregation of duties.
- The company had no audit, compensation, or nominating committee and had not adopted a code of ethics as of the filing date.
- The common stock was thinly traded: the filing reports one OTCBB trade of 100 shares at $5.00 per share, 71 holders of record and no established public market.
- The CEO had waived future base salary, but previously accrued unpaid compensation remained part of the company’s obligations. The CEO beneficially owned 73.6% of the outstanding common stock.
- The company disclosed no legal proceedings and no off-balance-sheet arrangements as of March 31, 2013.
Most Important Facts to Verify
- Verify that this filing belongs to Brick Top Productions, Inc. rather than Fubotv Inc.; the issuer name in the supplied filing does not match the request metadata.
- Confirm the company’s ability to continue as a going concern given $3,154 of cash, negative working capital, recurring losses and no committed financing.
- Assess the recoverability of the $292,931 capitalized The Doorman pilot costs, particularly if the project is not sold or monetized.
- Review accrued expenses, stockholder advances and any unpaid executive compensation for repayment terms and potential dilution or liquidity effects.
- Evaluate the ineffective internal controls, limited staffing, concentrated ownership and absence of board committees.
- Confirm whether subsequent 2013 share issuances, including the disclosed $87,500 offering, materially changed capitalization or liquidity.