U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to _______________
Commission file number 0-50164
DOLPHIN PRODUCTIONS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0618756
------------------------------------- --------------------------------------
(State or other jurisdiction of Employer Identification No.)
incorporation or organization)
2068 Haun Avenue, Salt Lake City, Utah 84121
(Address of principal executive offices)
(801) 450-0716
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ( )
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 770,000 as of March 31,
2005.
DOLPHIN PRODUCTIONS, INC.
INDEX TO FORM 10-QSB
PAGE
PART I FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements for DOLPHIN PRODUCTIONS, INC. 3-10
Unaudited Condensed Balance Sheets
March 31, 2005 and September 30, 2004
Unaudited Condensed Statements of Operations - Three and
Six Months Ended March 31, 2005 and 2004 and From Inception
on June 26, 1998 through March 31, 2005
Unaudited Condensed Statements of Cash Flows -
Six Months Ended March 31, 2005 and 2004 and
From Inception on June 26, 1998, through March 31, 2005
Notes to Unaudited Condensed Financial Statements
Item 2. Management's Discussion and Analysis of 11
Financial Condition and Results of Operation
Item 3. Controls and Procedures 12
PART II OTHER INFORMATION 12
SIGNATURE 13
Item 1. Financial Statements for DOLPHIN PRODUCTIONS, INC.
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Unaudited Condensed Balance Sheets,
March 31, 2005 and September 30, 2004 4
- Unaudited Condensed Statements of Operations,
for the three and six months ended March 31,
2005 and 2004 and from inception on June 26,
1998 through March 31, 2005 5
- Unaudited Condensed Statements of Cash Flows,
for the six months ended March 31, 2005
and 2004 and from inception on June 26, 1998
through March 31, 2005 6
- Notes to Unaudited Condensed Financial
Statements 7 - 10
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
March 31, September 30,
2005 2004
___________ ___________
CURRENT ASSETS:
Cash $ 13,069 $ 21,002
Income taxes receivable 730 730
___________ ___________
Total Current Assets 13,799 21,732
___________ ___________
$ 13,799 $ 21,732
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 352 $ 1,709
Accrued payroll taxes - 2,994
Utah Sales Tax Payable 45 -
___________ ___________
Total Current Liabilities 397 4,703
___________ ___________
STOCKHOLDERS' EQUITY :
Common stock, $.001 par value,
50,000,000 shares authorized,
770,000 shares issued and
outstanding 770 770
Capital in excess of par value 55,230 55,230
Deficit accumulated during the
development stage (42,598) (38,971)
___________ ___________
Total Stockholders' Equity 13,402 17,029
___________ ___________
$ 13,799 $ 21,732
___________ ___________
Note: The balance sheet at September 30, 2004 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-4-
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three For the Six From Inception
Months Ended Months Ended on June 26,
March 31, March 31, 1998 Through
_________________ _________________ March 31,
2005 2004 2005 2004 2005
________ ________ ________ ________ ______________
REVENUE $ 675 $ - $ 675 $ - $ 38,565
EXPENSES:
Selling - - - - 4,561
General and
administrative 1,863 798 4,302 2,098 76,283
________ ________ ________ ________ ______________
Total Expenses 1,863 798 4,302 2,098 80,844
________ ________ ________ ________ ______________
LOSS BEFORE OTHER
INCOME (EXPENSE) (1,188) (798) (3,627) (2,098) (42,279)
OTHER INCOME (EXPENSE)
Interest expense - - - - (25)
________ ________ ________ ________ ______________
LOSS BEFORE INCOME
TAXES (1,188) (798) (3,627) (2,098) (42,304)
CURRENT TAX EXPENSE
(BENEFIT) - - - - 294
DEFERRED TAX EXPENSE
(BENEFIT) - - - - -
________ ________ ________ ________ ______________
NET LOSS $(1,188) $ (798) $(3,627) $(2,098) $ (42,598)
________ ________ ________ ________ ______________
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.08)
________ ________ ________ ________ ______________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-5-
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Six From Inception
Months Ended on June 26,
March 31, 1998 Through
______________________ March 31,
2005 2004 2005
__________ __________ ______________
Cash Flows from Operating Activities:
Net loss $ (3,627) $ ( 2,098) $ (42,598)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Non-cash expense for services
rendered - - 5,000
Changes in assets and liabilities:
(Increase) in income taxes
receivable - - (730)
Increase (decease) in accounts
payable (1,357) (270) 352
(Decrease) in Accrued Payroll
Taxes (2,994) - -
Increase in Utah sales tax
payable 45 - 45
__________ __________ ______________
Net Cash (Used) by
Operating Activities (7,933) (2,368) (37,931)
__________ __________ ______________
Cash Flows from Investing Activities - - -
__________ __________ ______________
Net Cash Provided by
Investing Activities - - -
__________ __________ ______________
Cash Flows from Financing Activities:
Proceeds from issuance of common
stock - - 51,000
__________ __________ ______________
Net Cash Provided by
Financing Activities - - 51,000
__________ __________ ______________
Net Increase (Decrease) in Cash and
Cash Equivalents (7,933) (2,368) 13,069
Cash and Cash Equivalents at
Beginning of Period 21,002 2,995 -
__________ __________ ______________
Cash and Cash Equivalents at End of
Period $ 13,069 $ 627 $ 13,069
__________ __________ ______________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ 1,024
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the six months ended March 31, 2005:
None
For the six months ended March 31, 2004:
None
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-6-
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Dolphin Productions, Inc. ("the Company") was organized
under the laws of the State of Nevada on June 26, 1998. The Company
markets original recorded music through the Internet. The Company
formerly produced live musical concerts. The Company has not yet
generated significant revenues from its Internet marketing operations and
is considered a development stage company as defined in Statement of
Financial Accounting Standards No. 7. The Company has, at the present
time, not paid any dividends and any dividends that may be paid in the
future will depend upon the financial requirements of the Company and
other relevant factors.
Condensed Financial Statements - The accompanying financial statements
have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results
of operations and cash flows at March 31, 2005 and 2004 and for the
periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles in the United States of America have been condensed
or omitted. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and notes thereto
included in the Company's September 30, 2004 audited financial statements.
The results of operations for the periods ended March 31, 2005 and 2004
are not necessarily indicative of the operating results for the full year.
Fiscal Year - The Company's fiscal year-end is September 30th.
Cash and Cash Equivalents - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
Accounts Receivable - The Company records accounts receivable at the lower
of cost or fair value. The Company recognizes interest income on an
account receivable based on the stated interest rate for past-due accounts
over the period that the account is past due. The Company accumulates and
defers fees and costs associated with establishing a receivable to be
amortized over the estimated life of the related receivable. The Company
estimates allowances for doubtful accounts based on the aged receivable
balances and historical losses. The Company records interest income on
delinquent accounts receivable only when payment is received. The Company
first applies payments received on delinquent accounts receivable to
eliminate the outstanding principal. The Company charges off
uncollectible accounts receivable when management estimates no possibility
of collecting the related receivable. The Company considers accounts
receivable to be past due or delinquent based on contractual terms.
-7-
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Revenue Recognition - The Company recognizes revenue from providing
musical and other performances for concerts and other events for a
negotiated fee in the period when the services are provided. The Company
records only its fee from a concert performance and reflects the Company's
expenses related to the performance as general and administrative expense.
The Company recognizes revenue from the sale of recorded music when the
product is delivered.
Advertising Costs - Advertising costs, except for costs associated with
direct-response advertising, are charged to operations when incurred. The
costs of direct-response advertising are capitalized and amortized over
the period during which future benefits are expected to be received.
During the six months ended March 31, 2005 and 2004, advertising costs
amounted to $0 and $0, respectively.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" [See Note 4].
Loss Per Share - The computation of loss per share is based on the
weighted average number of shares outstanding during the period presented
in accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" [See Note 6].
Accounting 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 effect the reported amounts of assets and liabilities, the
disclosures 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
estimated by management.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 151, "Inventory Costs - an amendment of ARB No. 43,
Chapter 4", SFAS No. 152, "Accounting for Real Estate Time-Sharing
Transactions - an amendment of FASB Statements No. 66 and 67", SFAS No.
153, "Exchanges of Nonmonetary Assets - an amendment of APB Opinion No.
29", and SFAS No. 123 (revised 2004), "Share-Based Payment", were recently
issued. SFAS No. 151, 152, 153 and 123 (revised 2004) have no current
applicability to the Company or their effect on the financial statements
would not have been significant.
Restatement - On January 15, 1999, the Company effected a 5-for-2 forward
stock split. The financial statements have been restated, for all periods
presented, to reflect the stock split [See Note 2].
Reclassification - The financial statements for periods prior to March 31,
2005 have been reclassified to conform to the headings and classifications
used in the March 31, 2005 financial statements.
-8-
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 - CAPITAL STOCK
Common Stock - During June 1998, the Company issued 500,000 shares of its
previously authorized but unissued common stock for cash of $2,000 (or
$.004 per share).
During January 1999, the Company issued 20,000 shares of its previously
authorized but unissued common stock for cash of $4,000 (or $.20 per
share).
During September 2004, the Company issued 225,000 shares of its previously
authorized but unissued common stock for cash of $45,000 (or $.20 per
share).
During September 2004, the Company issued 25,000 shares of its previously
authorized but unissued common stock to certain officers and directors of
the Company for services valued at $5,000 (or $.20 per share). The
Company issued 7,500 shares to its president/chairman of the board, 5,000
shares to a vice-president/director, 5,000 shares to the chief financial
officer/director, 5,000 shares to the director who chairs the audit
committee, and 2,500 shares to two other officers.
Stock Split - On January 15, 1999, the Company effected a five for two
common stock split. The financial statements, for all periods presented,
have been restated to reflect the stock split.
NOTE 3 - RELATED PARTY TRANSACTIONS
Management Compensation and Accrued Expenses - Salary expense to the
President for the six months ended March 31, 2005 and 2004 amounted to $0
and $0, respectively.
Legal Services and Accrued Expenses - During the six months ended March
31, 2005 and 2004, the Company's President provided legal services of $0
and $0, respectively, to the Company.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
SFAS No. 109 requires the Company to provide a net deferred tax
asset/liability equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax accounting methods
and any available operating loss or tax credit carryforwards. At March
31, 2005, the Company has available unused operating loss carryforwards of
approximately $42,300, which may be applied against future taxable income
and which expire in various years through 2025.
-9-
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 - INCOME TAXES (continued)
The amount of and ultimate realization of the benefits from the deferred
tax assets for income tax purposes is dependent, in part, upon the tax
laws in effect, the future earnings of the Company, and other future
events, the effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the deferred tax assets, the
Company has established a valuation allowance equal to their tax effect
and, therefore, no deferred tax asset has been recognized for the deferred
tax assets. The net deferred tax assets, which consist mainly of net
operating loss carryforwards, are approximately $6,300 and $5,800 as of
March 31, 2005 and September 30, 2004, respectively, with an offsetting
valuation allowance of the same amount, resulting in a change in the
valuation allowance of approximately $500 during the six months ended
March 31, 2005.
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of
America which contemplate continuation of the Company as a going concern.
However, the Company has not yet been successful in establishing
profitable operations and has incurred significant losses in recent years.
These factors raise substantial doubt about the ability of the Company to
continue as a going concern. In this regard, management is proposing to
raise any necessary additional funds through loans or through additional
sales of its common stock or through the possible acquisition of other
companies. There is no assurance that the Company will be successful in
raising this additional capital or in achieving profitable operations.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share:
For the Three For the Six From Inception
Months Ended Months Ended on June 26,
March 31, March 31, 1998 Through
_________________ _________________ March 31,
2005 2004 2005 2004 2005
________ ________ ________ ________ ______________
Net loss available to
common shareholders
(numerator) $(1,188) $ (798) $(3,627) $(2,098) $ (42,598)
________ ________ ________ ________ ______________
Weighted average
number of common
shares outstanding
used in loss per
share for the period
(denominator) 770,000 520,000 770,000 520,000 537,081
________ ________ ________ ________ ______________
Dilutive loss per share was not presented, as the Company had no common
stock equivalent shares for all periods presented that would affect the
computation of diluted loss per share.
-10-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors that have affected the Company's financial condition and operating
results for the period included in the accompanying financial statements. The
accompanying Unaudited Condensed Financial Statements as of March 31, 2005,
including the Notes to Unaudited Condensed Financial Statements, are, by this
reference, included in this Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004:
DOLPHIN PRODUCTIONS, INC. (the "Company"), generated revenues of $675 during the
quarter ended March 31, 2005, compared to revenues of $ 0 for the comparable
quarter of 2004. The revenues came from sales of recorded music through a
promotional event in March of 2005. The promotional event took place in
connection with the opening of the Company's web site in March of 2005.
The Company recorded a net loss of $1,188 for the quarter ending March 31, 2005,
compared to a net loss of $798 for the comparable quarter ending March 31, 2004.
Six Months Ended March 31, 2005 Compared to Six Months Ended March 31, 2004:
The Company recorded a net loss of $3,627 for the six month ending March 31,
2005, compared to a net loss of $2,098 for the comparable six months ending
March 31, 2004.
General:
The Company launched a trial run of its web site under the domain name
"dolphinproductions.net" in March of 2005. Two recording artists have allowed
the Company to market their original music through the web site during the trial
run. Both artists are shareholders of the Company; one is a vice president and
director of the Company.
The Company is evaluating alternative technologies that are available for
the downloading and sale of recorded music from the web site. The Company is
also negotiating with other artists for the inclusion of additional recorded
music to that now available through the Company's web site.
In connection with the launching of the web site, the Company conducted a
promotional event at which the Company generated revenues of $675.
The magnitude of future revenues, if any, from the Company's web site will
depend upon many factors, including the Company's ability to compete with better
capitalized distributors of recorded music.
Liquidity and Capital Resources
As of March 31, 2005, the Company had on hand cash of $13,069. It had current
liabilities of $ 397.
Item 3. Controls and Procedures
As of April 15, 2005, an informal evaluation was performed under the
supervision and with the participation of the Company's management, including
the CEO, the CFO, and the Chair of the Company's Audit Committee, as to the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on that evaluation, the Company's management concluded
that the Company's disclosure controls and procedures were effective as of
April 15, 2005. There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect
internal controls subsequent to April 15, 2005.
PART II-OTHER INFORMATION
None
SIGNATURE
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.
DOLPHIN PRODUCTIONS, INC.
Date: May 12, 2005 /s/ Richard H. Casper
--------------------------------
Richard H. Casper, President