Business context and reporting period
This Form 10-Q covers the quarter and nine months ended September 30, 2015. The filing identifies the registrant as bBooth, Inc., not TON Strategy Co; confirm the filing’s attribution before relying on it. bBooth was developing and deploying internet-connected recording studios and a related mobile app, kord. The company reported no revenue in either the three- or nine-month period.
Key financial metrics
| Metric | Q3 2015 / September 30, 2015 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 for Q3 and $0 for the first nine months | $0 for the comparable 2014 periods |
| Net loss | $2.55 million for Q3; $5.13 million for nine months | $1.09 million for Q3 2014; $1.88 million for nine months 2014 |
| Operating loss | $2.52 million for Q3; $5.06 million for nine months | $1.00 million for Q3 2014; $1.78 million for nine months 2014 |
| Cash and total assets | $14,947 cash; $441,634 total assets | $1.17 million cash and $2.43 million assets at December 31, 2014 |
| Current liabilities and working capital | $2.09 million current liabilities; $2.01 million working-capital deficit | $411,958 current liabilities at December 31, 2014 |
| Debt | $1.63 million in current notes payable; $900,942 owed to the majority shareholder | $100,000 in notes payable at December 31, 2014 |
| Cash flow, nine months | $2.45 million used in operations; $105,929 used in investing; $1.40 million provided by financing | $2.03 million used in operations; $279,380 used in investing; $2.21 million provided by financing in 2014 |
Margins cannot be meaningfully assessed because there was no revenue. No cash-flow figures are presented separately for Q3 in the supplied filing text.
Material changes versus the prior comparable period
- Nine-month net loss increased by $3.25 million year over year; Q3 net loss increased by $1.46 million.
- Q3 general and administrative expense rose by $414,777 year over year; nine-month expense rose by $2.14 million. Management attributed much of the increase to share-based compensation and Songstagram-related amortization, as well as operating, consulting, rent, and salary costs.
- A $1.10 million impairment charge was recorded in Q3 after the company concluded it had no reliable predictors of future cash flows from acquired intangible assets. The filing also reports $331,008 of nine-month amortization on those assets.
- Cash fell by approximately $1.16 million from year-end 2014. Current notes payable rose to $1.63 million, including additional borrowing from the majority shareholder.
- The Songstagram asset acquisition had total stated consideration of $1.44 million. The acquired intangible assets were substantially impaired during the period.
Outlook, risks, and notable items
- No revenue or earnings guidance is provided. Management expects operating expenses to continue exceeding revenue over the next 12 months and says additional debt or equity financing is needed to continue operations.
- The company reports operating losses since inception, negative operating cash flows, and a $15.18 million accumulated deficit. Management states that continued operations depend on obtaining financing; it gives no assurance of profitability or successful fundraising. The filing includes a going-concern warning.
- Many notes are unsecured and due on demand; several bear 12% interest. A $125,000 note tied to a financial-advisory engagement is due earlier upon a qualifying private placement or in March 2017, and the company said it expected the transaction within 12 months.
- The majority shareholder paid a $90,942 balance on a 20% note at its September 30 due date; the amount was replaced by a demand loan bearing 12% interest.
- Management reported disclosure controls and procedures effective as of September 30, 2015, with no material quarterly change in internal control. The filing’s cover page has “No” checked for having filed all required reports during the preceding 12 months.
- Subsequent to quarter-end, the company issued 100,000 shares to a vendor for future services. The filing reports no material pending legal proceedings.
Most important facts for investors to verify
- Confirm the registrant and filing identity: the supplied filing is for bBooth, Inc., despite the request metadata naming TON Strategy Co.
- Verify the cover-page reporting-compliance checkbox and the status of any overdue SEC reports.
- Assess whether financing was obtained after quarter-end and whether demand debt, near-zero cash, and the working-capital deficit threaten continued operations.
- Review the Songstagram acquisition valuation and impairment assumptions, and the company’s ability to generate revenue from its booth and app platform.
- Reconcile share counts: the balance sheet reports 63,475,000 shares at September 30, while the cover page reports 63,575,000 outstanding as of November 13, 2015.