10-Q 1 belltower10q.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2009 OR / / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION FROM _______ TO ________. COMMISSION FILE NUMBER 000-52861 BELLTOWER ENTERTAINMENT CORP. _________________________________________________________________ (Exact Name of Small Business Issuer as Specified in its Charter) NEVADA 47-0926554 _______________________________ ___________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11684 VENTURA BOULEVARD, SUITE 684 STUDIO CITY, CA 91604 ________________________________________ __________ (Address of principal executive offices) (Zip code) Issuer's telephone number: (877) 355-1388 N/A ____________________________________________________ (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): ________________________________________________________________________________ Non-accelerated filer Smaller Large accelerated (Do not check if a smaller reporting filer Accelerated filer reporting company) company [ ] [ ] [ ] [X] ________________________________________________________________________________ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] State the number of shares outstanding of each of the issuer's classes of common equity, for the period covered by this report and as at the latest practicable date: At October 31, 2009, there were outstanding 40,371,424 shares of the Registrant's Common Stock, $.0001 par value and as of the date hereof, there are outstanding 42,761,424 shares of the Registrant's Common Stock, $.0001 par value. TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: Yes [ ] No [X] 1 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BELLTOWER ENTERTAINMENT CORP. INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) JULY 31, 2009 Page Condensed Consolidated Financial Statements: Condensed Consolidated Balance Sheets (unaudited) F-1 Condensed Consolidated Statements of Operations (unaudited) F-2 Condensed Consolidated Statements of Cash Flows (unaudited) F-3 Notes to Financial Statements F-4 2

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F-3 BELLTOWER ENTERTAINMENT CORP. (FORMERLY BRITTON INTERNATIONAL, INC.) Notes to Consolidated Financial Statements October 31, 2009 NOTE 1 - NATURE OF OPERATIONS Belltower Entertainment Corp. ("Belltower", "We", or the "Company") was incorporated in the State of Nevada on August 1, 2003. We were established as an online retailer of jewelry, watches and jewelry related products. Our jewelry business was discontinued on October 2, 2007. On September 5, 2008, the Company acquired all of the issued and outstanding stock of Calico Entertainment Group, Inc. in exchange for 1,725,000 (reverse split adjusted) newly issued shares of Belltower. Upon completion of the transaction the shareholders of Calico owned approximately 5% of the issued and outstanding shares of Belltower. On April 28, 2008 a corporation was formed under the laws of the State of Nevada called Belltower Entertainment Corp. and on September 15, 2008, Britton International Inc. acquired one hundred shares of its common stock for cash. As such, Belltower Entertainment Corp. became a wholly-owned subsidiary of Britton. On September 24, 2008, Belltower was merged with and into Britton. As a result of the merger, the corporate name of Britton was changed to "Belltower Entertainment Corp." Our fiscal year end is April 30th. On September 15, 2008 a corporation was formed under the laws of the Sate of Nevada named 3A Productions Corp. and on September 15, 2008, Belltower Entertainment Corp. acquired one hundred shares of its common stock (100% of the issued and outstanding shares on that date). As such, 3A Productions Corp. became a wholly-owned subsidiary of Belltower Entertainment Corp. On September 19, 2008 a corporation was formed under the laws of the Sate of California named Y2K Productions, Inc. and on September 19, 2008, Belltower Entertainment Corp. acquired one hundred shares of its common stock (100% of the issued and outstanding shares on that date). As such, Y2K Productions Inc. became a wholly-owned subsidiary of Belltower Entertainment Corp. On August 19, 2009 a Limited Liability Company (LLC) was formed under the laws of the State of Nevada and named 19th Hole Productions, LLC. Belltower Entertainment Corp. is the sole member of the LLC and as such is a wholly owned subsidiary. Belltower Entertainment Corp., through its wholly owned subsidiaries, Calico Entertainment Group, Y2K Productions, Inc., 3A Productions Corp. and 19th Hole Productions, LLC is a producer and distributor of feature length motion pictures. F-4 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to assist in understanding Belltower Entertainment Corp.'s financial statements. The financial statements and notes are representations of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the financial statements. The financial statements reflect the following significant accounting policies: REVENUE RECOGNITION Revenues are recognized in accordance with AICPA Statement of Position (SOP) 00-2, "Accounting by Producers or Distributors of Films" (codified in FASB ASC Topic 926). Under SOP 00-2 (codified in FASB ASC Topic 926), revenue from the sale or licensing of a film should be recognized only when all five of the following conditions are met: 1. Persuasive evidence of a sale or licensing arrangement with a customer exists. 2. The film is complete and has been delivered or is available for immediate and unconditional delivery (in accordance with the terms of the arrangement). 3. The license period has begun and the customer can begin its exploitation, exhibition, or sale. 4. The fee is fixed or determinable. 5. Collection of the fee is reasonably assured. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. LOSS PER SHARE Loss per share is computed in accordance with SFAS No. 128, "Earnings per Share"(codified in FASB ASC Topic 260). Basic loss per share is calculated by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share is computed by dividing net loss by the weighted average shares outstanding assuming all dilutive potential common shares were issued. There were no dilutive potential common shares at balance sheet date. The Company has incurred a net loss and has no potentially dilutive common shares, therefore; basic and diluted loss per share is the same. Additionally, for the purposes of calculating diluted loss per share, there were no adjustments to net loss. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of accounts payable, and other financial instruments reflected in the financial statements approximates fair value due to the short-term maturity of the instruments. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. F-5 COMPREHENSIVE INCOME The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income" (codified in FASB ASC Topic 220). SFAS 130 (codified in FASB ASC Topic 220) requires that the components and total amounts of comprehensive income be displayed in the financial statements beginning in 1998. Comprehensive income includes net income and all changes in equity during a period that arises from non-owner sources, such as foreign currency items and unrealized gains and losses on certain investments in equity securities. Comprehensive loss for the periods shown equals the net loss for the period plus the effect of foreign currency translation. INCOME TAXES The Company follows the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes" (codified in FASB ASC Topic 740), which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted rates in effect in the years during which the differences are expected to reverse and upon the possible realization of net operating loss carry-forwards. VALUATION OF LONG-LIVED ASSETS The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of un-depreciated balances through measurement of undiscounted operation cash flows on a basis consistent with accounting principles generally accepted in the United States of America. START-UP COSTS The Company has adopted Statement of Position No. 98-5 ("SOP 98-5"), "Reporting the Costs of Start-Up Activities" (codified in FASB ASC Topic 720). SOP 98-5 (codified in FASB ASC Topic 720) requires that all non-governmental entities expense the cost of start-up activities, including organizational costs as those costs are incurred. CURRENCY The majority of the Company's cash flows are in United States dollars. Accordingly, the US dollar is the Company's functional currency. CASH AND CASH EQUIVALENTS The Company considers cash and cash equivalents to consist of cash on hand and demand deposits in banks with an initial maturity of 90 days or less. F-6 PROPERTY, PLANT AND EQUIPMENT Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of: Equipment 3 -5 years Furniture & Fixtures 5 -10 years Motor Vehicles 5 years As of October 31, 2009 and April 30, 2009 property, plant and equipment consisted of the following: October 31, 2009 April 30, 2009 ________________ ______________ Furniture and fixtures $ 1,405 $ 1,405 Office equipment 9,082 9,082 Leasehold improvements 6,415 6,415 ________ _______ 16,902 16,902 Accumulated depreciation (10,970) (9,316) ________ _______ Total $ 5,932 $ 7,586 ======== ======= Depreciation expense for the six months ended October 31, 2009 was $1,654 and for the year ended April 30, 2009 it was $9,316. INTANGIBLE ASSETS The Company has the following intangible assets as of October 31, 2009 and April 30, 2009: October 31, 2009 April 30, 2009 ________________ ______________ Goodwill $164,884 $164,884 Film revenue interest 20,000 20,000 Logo design s 10,000 10,000 ________ ________ Total $194,884 $194,884 ======== ======== See Footnote 5 for further details. F-7 FILM COSTS Film costs include all direct costs incurred in the physical production of a film, such as the costs of story and scenario (film rights to books, stage plays, or original screenplays); compensation of cast, directors, producers, and extras; costs of set construction, operations, and wardrobe; costs of sound synchronization; costs of rental facilities on location; and postproduction costs (music, special effects, and editing). They can also include allocations of production overhead and capitalized interest costs. Film costs are capitalized until the production is completed. The costs are then amortized according to the individual-film-forecast method, as further described in Footnote 5. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Belltower and its wholly owned subsidiaries Calico Entertainment Group, Inc., 3A Productions Corp. and Y2K Productions, Inc. All material intercompany accounts, transactions and profits have been eliminated in consolidation. RISKS AND UNCERTAINTIES The Company is subject to substantial business risks and uncertainties inherent in starting a new business. There is no assurance that the Company will be able to generate sufficient revenues or obtain sufficient funds necessary for launching a new business venture. RECLASSIFICATION Certain prior year accounts have been reclassified to conform to the current year's presentation. DEVELOPMENT STAGE ENTERPRISE The Company through its acquisition of Calico Entertainment Group, Inc., 3A Productions Corp. and Y2K Productions, Inc. is no longer considered a development stage company as it was during the year ended April 30, 2008. The Company is now engaged in the business of development and production of feature films. OTHER The Company paid no dividends during the periods presented. The Company consists of one reportable business segment. We did not have any off-balance sheet arrangements as of October 31, 2009 and April 30, 2009. F-8 NOTE 3 - GOING CONCERN Generally accepted accounting principles in the United States of America contemplate the continuation of the Company as a going concern. However, the Company has accumulated operation losses since its inception and currently has limited business operations, which raises substantial doubt about the Company's ability to continue as a going concern. The continuation of the Company is dependent on further financial support of investors and management. Once the Company has established a new business unit, the Company intends to attempt to acquire additional operating capital through equity offerings to the public to fund its business plan but there is no assurance that equity or debt offerings will be successful in raising sufficient funds to assure the eventual profitability of the Company. NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS In May 2008, FASB issued SFAS No. 162, THE HIERARCHY OF GENERAL ACCEPTED ACCOUNTING PRINCIPLES (codified in FASB ASC Topic 105). This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). The Company has adopted this Statement and this adoption did not impact the Company's financial position, results of operations, or cash flows. In May 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position ("FSP") APB 14-1, ACCOUNTING FOR CONVERTIBLE DEBT INSTRUMENTS THAT MAY BE SETTLED IN CASH UPON CONVERSION (INCLUDING PARTIAL CASH SETTLEMENT (codified in FASB ASC Topic 470). FSP APB 14-1 (codified in FASB ASC Topic 470) clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, ACCOUNTING FOR CONVERTIBLE DEBT AND DEBT ISSUED WITH STOCK PURCHASE WARRANTS. Additionally, FSP APB 14-1 (codified in FASB ASC Topic 470) specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's non-convertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company will adopt FSP APB 14-1 (codified in FASB ASC Topic 470) beginning July 1, 2009, and this standard must be applied on a retroactive basis. The Company is evaluating the impact the adoption of FSP APB 14-1 (codified in FASB ASC Topic 470) will have on its consolidated financial position and results of operations. In February 2007, FASB issued SFAS No. 159, THE FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES (codified in FASB ASC Topic 825) - INCLUDING AN AMENDMENT OF FASB STATEMENT NO. 115 (codified in FASB ASC Topic 320). This standard permits fair value measurement of certain financial assets and liabilities in an effort to eliminate volatility of earnings created by current practice. Most of the Statement applies only to companies that elect fair value. However, the amendment to FASB Statement No. 115 (codified in FASB ASC Topic 320), Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. This statement is effective for the first fiscal period beginning after November 15, 2007. The Company has adopted this Statement and this adoption did not impact the Company's financial position, results of operations, or cash flows. Various additional accounting pronouncements have been issued during 2007 to 2009, none of which are expected to have any material effect on the financial statements of the Company. F-9 NOTE 5 - INTANGIBLE ASSETS The Company applies the criteria specified in SFAS No. 141, "Business Combinations" (codified in FASB ASC Topic 805) to determine whether an intangible asset should be recognized separately from goodwill. Intangible assets acquired through business acquisitions are recognized as assets separate from goodwill if they satisfy either the "contractual-legal" or "separability" criterion. Per SFAS 142 (codified in FASB ASC Topic 350), intangible assets with definite lives are amortized over their estimated useful life and reviewed for impairment in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets," (codified in FASB ASC Topic 360). Intangible assets, such as purchased technology, trademark, customer list, user base and non-compete agreements, arising from the acquisitions of subsidiaries and variable interest entities are recognized and measured at fair value upon acquisition. Intangible assets are amortized over their estimated useful lives from one to ten years. The Company reviews the amortization methods and estimated useful lives of intangible assets at least annually or when events or changes in circumstances indicate that it might be impaired. The recoverability of an intangible asset to be held and used is evaluated by comparing the carrying amount of the intangible asset to its future net undiscounted cash flows. If the intangible asset is considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of the intangible asset exceeds the fair value of the intangible asset, calculated using a discounted future cash flow analysis. The Company uses estimates and judgments in its impairment tests, and if different estimates or judgments had been utilized, the timing or the amount of the impairment charges could be different. The cost for the film revenue interest rights are amortized using the individual-film-forecast method which takes the proportion that current year's revenues bear to management's estimates of the ultimate revenue at the beginning of the year expected to be recognized from exploitation, exhibition or sale of such film over a period not to exceed ten years from the date of initial release. The Company's management regularly reviews and revises when necessary its ultimate revenue estimates, which may result in a change in the rate of amortization of the film cost and/or write-down of all or a portion of the unamortized costs of the film rights to estimated fair value. The Company's management estimates the ultimate revenue based on experience with similar titles or title genre, the general public appeal of the cast, actual performance (when available) at the box office or in markets currently being exploited, and other factors such as the quality and acceptance of motion pictures or programs that competitors release into the marketplace at or near the same time, critical reviews, general economic conditions and other tangible and intangible factors, many of which we do not control and which may change. In the normal course of our business, some films and titles are more successful than anticipated and some are less successful. Accordingly, we update our estimates of ultimate revenue based upon the actual results achieved or new information as to anticipated revenue performance such as (for home video revenues) initial orders and demand from retail stores when it becomes available. An increase in the ultimate revenue will generally result in a lower amortization rate while a decrease in the ultimate revenue will generally result in a higher amortization rate and periodically results in an impairment requiring a write down of the film cost to the title's fair value. These write downs are included in amortization expense within direct operating expenses in our consolidated statements of operations. To date no revenue has been received on this film revenue right. F-10 As of October 31, 2009 and April 30, 2009 intangible assets consist of the following: Goodwill $164,884 Film revenue interest 20,000 Logo 10,000 ________ 194,884 Accumulated amortization - ________ $194,884 ======== There is no amortization as of October 31, 2009 and April 30, 2009. NOTE 6 - COMMON STOCK ISSUED On July 20, 2007, the Company issued 40,000 (reverse split adjusted) shares of its common stock in a private offering at $0.25 per share for aggregate proceeds of $20,000. On October 1, 2007, the Board of Directors authorized the cancellation of 2,550,000 (reverse split adjusted) shares of its common stock which were submitted for cancellation by its CEO as to 2,275,000 (reverse split adjusted) shares and a related party as to 275,000 shares (reverse split adjusted). This cancellation resulted in the revaluation of share capital as follows: (i) Common Stock was revalued from $746 to $236, based on par value of $0.0001 times 5,100,000 common shares; and (ii) Paid In Capital was adjusted from $90,691 to $91,201. On October 2, 2007, the Board of Directors authorized a 30 for 1 forward stock split which became effective November 15, 2007. All references to stock issued and stock outstanding have been retroactively adjusted as if the stock split and stock dividend had taken place at the earliest date shown. On May 28, 2008 the Company issued 103,039 shares (reverse split adjusted) of its common stock in a private offering at $0.10 per share for aggregate proceeds of $20,658. On September 5, 2008 Belltower acquired 100% of the issued and outstanding shares of Calico Entertainment Group, Inc. (Calico) in exchange for 1,725,000 shares (reverse split adjusted) of Britton common stock. The purchase of Calico was recorded at $0.06 per share, the fair market value of the stock on the date that the transaction with Calico was announced, less a 20% discount due to restrictions placed on the issued stock. The value of the purchase was recorded at $165,600. F-11 On March 16, 2009 a 1 for 2 reverse stock split became effective. Our authorized shares were reduced from 100,000,000 to 50,000,000 accordingly with par value remaining at $0.0001 per share. On May 27, 2009 the Board of Directors approved the payment of accrued legal services with the issuance of 500,000 shares of our common stock. The stock was valued at $0.10 per share. The $50,000 expense was recognized as of April 30, 2009. On June 23, 2009 the Board of Directors approved the payment of accrued accounting services with the issuance of 250,000 shares of our common stock. The stock was valued at $0.10 per share. The $25,000 expense was recognized as of April 30, 2009. During the quarter ended October 31, 2009 the Company sold 2,390,000 shares of common stock at a price of $0.10 per share to various individuals. NOTE 7 - RELATED PARTY TRANSACTIONS At October 31, 2009 and April 30, 2009, the Company had a related party shareholder loan outstanding of $63,195. This loan is uncollateralized, accrues interest at 5% per annum and has no fixed repayment date. Accrued interest as of October 31, 2009 and April 30, 2009 was $8,450 and $6,857, respectively. As of October 31, 2009 April 30, 2009, the company also has a non interest bearing related party shareholder loan outstanding of $260,991 and $261,847, respectively, owed to a director and officer of the Company. NOTE 8 - COMMITMENTS The Company leased office facilities under an operating lease which terminated on April 30, 2009. The lease contained an option to continue on a month-to-month basis after April 30, 2009, subject to either party's right to give each other not less than sixty (60) days written notice of intention to terminate, which notice was given and was effective on April 30, 2009. Rental expense for this lease consisted of $28,800 for the year ended April 30, 2009. The Company has no future minimum lease obligations. NOTE 9 - SUBSEQUENT EVENT On November 12, 2009 the Company agreed to issue 830,000 shares of its common stock, valued at $0.10 per share, to cancel related party debt of $83,000. F-12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Belltower Entertainment Corp, formerly Britton International Inc. (sometimes the "Company") is a Nevada corporation incorporated on August 1, 2003. On September 5, 2008, we acquired all of the outstanding shares of capital stock of CaliCo Entertainment Group, Inc. ("CaliCo) from the shareholders of CaliCo and the Company (directly or through Calico) is currently engaged in the production, as an independent filmmaker, and in distribution of feature length and shorter length movies. The Company believes that the entertainment industry is experiencing major market expansion along with major structural and technological change. Although the industry is dominated by the major studios, the Company believes that there is still opportunity for independent filmmakers in the domestic and foreign markets. We currently own a 20% revenue interest in an original literary composition and completed film project called "Stuck" that we acquired from Prodigy Pictures Inc. in 2007; said revenue interest is subject to the repayment of prior financing on the film from the net proceeds from distribution. Our interest and participation in the investment is passive and we will be relying upon Prodigy Pictures Inc. to monitor the investment. Prodigy Pictures Inc. currently owns a 40% revenue interest in the film and owns approximately 2% of our issued and outstanding common stock. In addition, we are in the process of developing a production slate of future projects. We are developing a film project currently known as "Dance the Green," a story of a legendary golfer named Moe Norman. Further, we are developing a film project currently known as "Little Treasure," a family comedy and a film project currently known as "Smokescreen," an action-adventure story about marijuana smuggling based upon a Robert Sabbag novel of the same name. Further, we are currently negotiating for other potential feature film projects. We anticipate that any selection of a film project and our participation in the venture may be complex and extremely risky. Further, there can be no assurance that any of our production slate will be completed or if completed, successful. Due to current general economic condition and the shortages of available capital, there is no assurance that we will be able to identify and evaluate other suitable film projects. We intend to use outside financing wherever it is possible for our film projects. This ability will allow the Company to attract higher quality independent projects. Typically a single purpose entity specific to the film project is established to produce and finance the film. We have formed Y2K Productions, Inc., 19th Hole Productions, LLC and 3A Productions Corp, to serve as these entities. This entity, with the Company or CaliCo, then contracts with the financing parties and the owners of the film project. We will be competing, however, with other established and well-financed entities. Our competitive advantage is that we will be able to provide the targeted independent project with less production restrictions and a larger ownership in the completed project. We further have had preliminary negotiations, at a favorable cost, with established production facilities in Canada and China. There is no assurance that these negotiations will result in enhancing or increasing our competitive advantage, if any, or result in us utilizing the production facility or completing a film project. 3 Liquidity As of October 31, 2009, we had total assets of $339,444 and total liabilities of $374,391 and we had a negative net worth of $(34,947). As of April 30, 2009, we had total assets of $258,811 and total liabilities of $475,244 and a negative net worth of ($216,433). As of October 31, 2009 we had a cash balance of $10,098, and as of April 30, 2009 we had a cash balance of $9,724. We have had no revenues for the six month period ended October 31, 2008 and October 31, 2009. We have an accumulated deficit from inception through October 31, 2009 of $34,947 and as of April 30, 2009 of $216,433. At October 31, 2009 and April 30, 2009, we had a related party shareholder loan outstanding of $63,195. This loan is uncollateralized, accrues interest at 5% per annum and has no fixed repayment date. As of October 31, 2009 and April 30, 2009, there was $8,450 and $6,857 in accrued interest due, respectively. As of October 31, 2009 and April 30, 2009, we also had a non interest bearing related party shareholder loan outstanding of $303,732 and $261,847, respectively, owed to a director and officer of the Company. Additional Financing after October 31, 2009: Between November 1, 2009 and the date hereof, we sold and issued or agreed to sell and issue 2,390,000 shares of our shares of common stock to six purchasers, for cash or in cancellation of indebtedness, at $.10 per share. The sale and issuance of the shares is exempt from registration under the Securities Act of 1933, as amended. Each of the issuees or proposed issuees have acquired or will acquire the shares for investment and not with a view to distribution to the public. All of these shares have been or will be issued for investment purposes in a "private transaction" and are or will be "restricted" shares as defined in Rule 144 under the Securities Act of 1933, as amended. ITEM 3. EVALUATION OF DISCLOSURE ON CONTROLS AND PROCEDURES. Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this Form 10Q (and the financial statements contained in the report), our president and treasurer have determined that our current disclosure controls and procedures are effective. There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) or any other factors during the quarter covered by this report, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. ITEM 4(T). CONTROLS AND PROCEDURES. Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that: o Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; o Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and o Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on the financial statements. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. It is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. It also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process certain safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over our financial reporting. To avoid segregation of duties due to management accounting size, management has engaged an outside CPA to assist in the financial reporting. Management has used the framework set forth in the report entitled Internal Control - Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. 4 Management has concluded that our internal control over financial reporting was effective as of the quarter ended October 31, 2009. The Company was not an "accelerated filer" for the 2009 fiscal year because it is qualified as a "small business issuer". Hence, under current law, the internal controls certification and attestation requirements of Section 404 of the Sarbanes-Oxley act will not apply to the Company. PART II OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS..................................................NONE ITEM 1A. RISK FACTORS. 1. The film industry is highly competitive and we will be competing with companies with much greater resources than we have. The business in which we engage is significantly competitive. Each of our primary business operations is subject to competition from companies which, in some instances, have greater production, distribution and capital resources than us. We compete for relationships with a limited supply of facilities and talented creative personnel to produce our films. We will compete with major motion picture studios, such as Warner Brothers and The Walt Disney Company, for the services of writers, actors and other creative personnel and specialized production facilities. We also anticipate that we will compete with a large number of United States-based and international distributors of independent films, including divisions of The Walt Disney Company/Pixar, Warner Brothers, Universal, Paramount/Dreamworks, Fox and Sony/MGM in the production of films expected to appeal to international audiences. More generally, we anticipate we will compete with various other leisure-time activities, such as home videos, movie theaters, personal computers and other alternative sources of entertainment. The production and distribution of theatrical productions, television animation, videocassettes and video disks are significantly competitive businesses, as they compete with each other, in addition to other forms of entertainment and leisure activities, including video games and on-line services, such as the Internet. There is also active competition among all production companies in these industries for services of producers, directors, actors and others and for the acquisition of literary properties. The increased number of theatrical films released in the United States has resulted in increased competition for theater space and audience attention. Revenues for film entertainment products depend in part on general economic conditions, but the competitive situation of a producer of films is still greatly affected by the quality of, and public response to, the entertainment product that the producer makes available to the marketplace. There is strong competition throughout the home video industry, both from home video subsidiaries of several major motion picture studios and from independent companies, as well as from new film viewing opportunities such as pay-per-view. 5 We also anticipate competing with several major film studios such as Paramount Communications/Dreamworks SGA, MCA/Universal, Sony Pictures Entertainment/ MGM/UA Inc, Twentieth Century Fox; Time Warner; and Disney/Pixar, which are dominant in the motion picture industry, in addition to numerous independent motion picture and television production companies, television networks and pay television systems, for the acquisition of literary properties, the services of performing artists, directors, producers, other creative and technical personnel, and production financing. 2. Audience acceptance of our films will determine our success, and the prediction of such acceptance is inherently risky. We believe that a production's theatrical success is dependent upon general public acceptance, marketing, advertising and the quality of the production. The Company's production will compete with numerous independent and foreign productions, in addition to productions produced and distributed by a number of major domestic companies, many of which are divisions of conglomerate corporations with assets and resources substantially greater than that of ours. Our management believes that in recent years there has been an increase in competition in virtually all facets of our business. The growth of pay-per-view television and the use of home video products may have an effect upon theater attendance and non-theatrical motion picture distribution. As we may distribute productions to all of these markets, it is not possible to determine how our business will be affected by the developments, and accordingly, the resultant impact on our financial statements. Moreover, audience acceptance can be affected by any number of things over which we cannot exercise control, such as a shift in leisure time activities or audience acceptance of a particular genre, topic or actor 3. The competition for booking screens may have an adverse effect to any theatrical revenues. In the distribution of motion pictures, there is very active competition to obtain bookings of pictures in theaters and television networks and stations throughout the world. A number of major motion picture companies have acquired motion picture theaters. Such acquisitions may have an adverse effect on our distribution endeavors and our ability to book certain theaters which, due to their prestige, size and quality of facilities, are deemed to be especially desirable for motion picture bookings. 4. Governmental restrictions may adversely affect our revenues. In addition, our ability to compete in certain foreign territories with either film or television product is affected by local restrictions and quotas. In certain countries, local governments require that a minimum percentage of locally produced productions be broadcast, thereby further reducing available time for exhibition of our productions. Additional or more restrictive theatrical or television quotas may be enacted and countries with existing quotas may more strictly enforce such quotas. Additional or more restrictive quotas or stringent enforcement of existing quotas could materially and adversely affect our business by limiting our ability to fully exploit our productions internationally. 5. We have limited financial resources and there are risks we may be unable to acquire financing when needed. 6 To achieve and maintain competitiveness, we may be required to raise substantial funds. Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors. We anticipate that we may need to raise additional capital to develop, promote and distribute our films. Such additional capital may be raised through public or private financing as well as borrowings and other sources. Public or private offerings may dilute the ownership interests of our stockholders. Additional funding may not be available under favorable terms, if at all. If adequate funds are not available, we may be required to curtail Operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain products and services that we would not otherwise relinquish and thereby reduce revenues to the company. 6. We are at risk of internet competition which may develop and the effects of which we cannot predict. The Internet market is new, rapidly evolving and intensely competitive. We believe that the principal competitive factors in maintaining an Internet business are selection, convenience of download and other features, price, speed and accessibility, customer service, quality of image and site content, and reliability and speed of fulfillment. Many potential competitors have longer operating histories, more customers, greater brand recognition, and significantly greater financial, marketing and other resources. In addition, larger, well-established and well- financed entities may acquire, invest in, or form joint ventures as the Internet, and e-commerce in general, become more widely accepted. Although we believe that the diverse segments of the Internet market will provide opportunities for more than one supplier of productions similar to CaliCo's, it is possible that a single supplier may dominate one or more market segments. We also have significant competition from online websites in international markets, including competition from US-based competitors in addition to online companies that are already well established in those foreign markets. Many of our existing competitors, in addition to a number of potential new competitors, have significantly greater financial, technical and marketing resources than we do. 7. We are at risk of technological changes to which we may be unable to adapt as swiftly as our competition. We believe that our future success will be partially affected by continued growth in the use of the Internet. E-commerce and the distribution of goods and services over the Internet for film product are relatively new, and predicting the extent of further growth, if any, are difficult. The market for Internet products and services is characterized by rapid technological developments, evolving industry standards and customer demands and frequent new product introductions and enhancements. For example, to the extent that higher bandwidth Internet access becomes more widely available using cable modems or other technologies, we may be required to make significant changes to the design and content of our films and distribution process in order to compete effectively. Our failure to adapt to these or any other technological developments effectively could adversely affect our business, operating results, and financial condition. 8. We face risks of compliance with government regulation of the film industry. The following does not purport to be a summary of all present and proposed federal, state and local regulations and legislation relating to the production and distribution of film entertainment and related products; rather, the following attempts to identify those aspects that could affect our business. Also, other existing legislation and regulations, copyright licensing, and, in many jurisdictions, state and local franchise requirements, are currently the subject of a variety of judicial proceedings, legislative hearings and administrative and legislative proposals which could affect, in various manners, the methods in which the industries involved in film entertainment operate. Audiovisual works such as motion pictures and television programs are not included in the terms of the General Agreement on Tariffs and Trade. As a result, many countries, including members of the European Union, are able to enforce quotas that restrict the number of United States produced feature films which may be distributed in such countries. Although the quotas generally apply only to television programming and not to theatrical exhibitions of motion pictures, there can be no assurance that additional or more restrictive theatrical or television quotas will not be enacted or that existing quotas will not be more strictly enforced. Additional or more restrictive quotas or more stringent enforcement of existing quotas could materially or adversely limit our ability to exploit our productions completely. The Office of the United States Trade Representative (USTR) under the Executive Office of the President cites such restrictive trade practices in Korea, China, and the European Union as a whole with even more restrictive practices in France, Italy and Spain. 7 Voluntary industry embargos or United States government trade sanctions to combat piracy, if enacted, could impact the amount of revenue that we realize from the international exploitation of our film productions. The Code and Ratings Administration of the Motion Picture Association of America assigns ratings indicating age group suitably for the theatrical distribution for motion pictures. United States television stations and networks, in addition to foreign governments, could impose additional restrictions on the content of motion pictures which may restrict, in whole or in part, theatrical or television exhibitions in particular territories. Congress and the Federal Trade Commission are considering, and in the future may adopt, new laws, regulations and policies regarding a wide variety of matters that may affect, directly or indirectly, the operation, ownership and profitably of our business. 9. The motion picture industry is at high risk for piracy which may effect our earnings. The motion picture industry, including us, may continue to lose an indeterminate amount of revenue as a result of motion picture piracy both in the country to unauthorized copying from our films at post production houses, copies of prints in circulation to theaters, unauthorized video taping at theaters and other illegal means of acquiring our copywritten material. The USTR has placed Argentina, Brazil, Egypt, Indonesia, Israel, Kuwait, Lebanon, Pakistan, the Philippines, Russia, The Ukraine and Venezuela on the 301 Special Watch List for excessive rates of piracy of motion pictures and optical disks. The USTR has placed Azerbaijan, Bahamas, Belarus, Belize, Bolivia, Bulgaria, Colombia, the Dominican Republic, Ecuador, Hungary, Italy, Korea, Latvia, Lithuania, Mexico, Peru, Romania, Taiwan, Tajikistan, Thailand, and Uzbekistan on the watch list for excessive piracy. ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS For the quarter ending October 31, 2009, we sold and issued an aggregate of 830,000 shares of common stock at $0.10 per share. The sale and issuance of the shares was exempt from registration under the Securities Act of 1933, as amended, by virtue of section 4(2) as a transaction not involving a public offering. Each of the two shareholders had acquired the shares for investment and not with a view to distribution to the public. All of these shares had been issued for investment purposes in a "private transaction" and were "restricted" shares as defined in Rule 144 under the Securities Act of 1933, as amended. ITEM 3 - DEFAULTS UPON SENIOR SECURITIES....................................None ITEM 4 - SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS.................None ITEM 5 - OTHER INFORMATION On December 20, 2009, the directors of the Company, by written consent, selected Nina Yang to be a member of the Board of Directors. Donald K. Bell will become Chairman of the Board of Directors and Nina Yang will become the Chief Executive Officer replacing Donald K. Bell. In addition, Lawrence Lichter has been selected to be our Chief Financial Officer. On June 29, 2005, the Securities and Exchange Commission adopted final rules amending the Form S-8 and the Form 8-K applicable to shell companies. The amendments expand the definition of a shell company to be broader than a company with no or nominal operations/assets or assets consisting of cash and cash equivalents, the amendments prohibit the use of a From S-8 (a form used by a corporation to register securities issued to an employee, director, officer, consultant or advisor, under certain circumstances), and revised the Form 8-K to require a shell company to include current Form 10 information, including audited financial statements, in the filing on Form 8-K that the shell company files to report the acquisition of the business opportunity. The rules were designed to assure that investors in shell companies that acquire operations or assets have access on a timely basis to the same kind of information as is available to investors in public companies with continuing operations. On February 15, 2008, the Securities and Exchange Commission adopted final rules amending Rule 144 (and Rule 145) for shell companies. The amendments currently in full force and effect provide that the current revised holding periods applicable to affiliates and non-affiliates is not now available for securities currently issued by either a reporting or non-reporting shell company, unless certain conditions are met. An investor will be able to resell securities issued by a shell company subject to Rule 144 conditions if the reporting or non-reporting issuer (i) had ceased to be a shell, (ii) is subject to the 1934 Act reporting obligations, (iii) has filed all required 1934 Act reports during the proceeding twelve months, and (iv) at least 90 days has elapsed from the time the issuer has filed the "Form 10 Information" reflecting the fact that it had ceased to be a shell company before any securities were sold under Rule 144. We are no longer a shell issuer. We had continued to report as a shell issuer to the date of this Form 10-Q. We reported on a Form 8-K filed on September 8, 2009 the events of our business combination that resulted in our entry into the entertainment industry and we have filed our Form 10-K subsequent to the business combination. The Form 8-K and the Form 10-K contain the Form 10 Information required by the final rules amending Rule 144 (and Rule 145) of February 14, 2008. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K There was a Form 8-K filed on August 25, 2009 during the quarter for which this report is filed. The following exhibits are filed with this report: 31.1 Rule 13a-14(a)/15d-14(a) - Certification of Chief Executive Officer. 31.2 Rule 13a-14(a)/15d-14(a) - Certification of Chief Financial Officer. 32.1 Section 1350 Certification - Chief Executive Officer. 32.1 Section 1350 Certification - Chief Financial Officer. 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: December 21, 2009 BELLTOWER ENTERTAINMENT CORP. By: /s/ DONALD K. BELL _________________________________________ Donald K. Bell Director and President (Principal Executive) and Financial and Accounting Officer 9

BELLTOWER ENTERTAINMENT CORP. 10-Q