U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2003
[ ] 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: 520,000 as of September
30, 2003.
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
------------------ -----------------------------------------
Securities registered pursuant to section 12(g) of the Act:
None
---------------
(Title of class)
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $2,000
State the aggregate market value of the voting and nonvoting common equity
held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked prices of such
common equity, as of a specified date within the past 60 days: There is
no active market for the Companys securities and, to the best of the
Companys knowledge, there have been no transfers of any of the Companys
securities within the last year.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY AND ORGANIZATION
Dolphin Productions, Inc., (the Company) was organized under the laws of
the state of Nevada on June 26, 1998. The Company has provided musical
and other performance services for concerts and public events. During
2003, the Company determined to shift its emphasis away from the
presentation of concerts and toward the acquisition and Internet marketing
of musical properties. The Company has acquired rights to the domain name
dolphinproductions.net and is in the process of laying the legal and
financial groundwork for the transition to the new business emphasis. The
Company has not generated any revenues from Internet marketing of musical
properties.
ITEM 2. DESCRIPTION OF PROPERTIES
Dolphin Productions, Inc., conducts limited operations from a business
office at 39 Exchange Place in Salt Lake City, Utah. The space is
adequate for its daily operations. During the transition of its business
to an Internet marketing enterprise, the Companys principle place of
business will be through its executive offices.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock is not quoted or traded on any network or exchange.
There is no active market for the Common Stock. The Company is aware of
no sales or transfers of the Common Stock during the last two years.
RECENT SALES OF UNREGISTERED SECURITIES
There have been no sales of the Companys Common Stock in the last two
years.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital resources
Total assets of the Company at September 30, 2003, were $3,725, consisting
of cash in the amount of $2,995 and income taxes receivable of $730. As
of September 30, 2002, the Company had a cash balance of $10,920, for a
net reduction in cash balance of $7,925 during the year. At September 30,
2003, the Company has available unused operating loss carryforwards of
approximately $3,000 which may be applied against future taxable income
and which expire in 2023.
Liabilities at September 30, 2003, consisted of $1,060 that was owed to
the Companys independent CPA firm, Pritchett, Siler & Hardy. The amount
was paid in October of 2003. During the fiscal year ended September 30,
2003, the Company incurred a liability to Richard H. Casper, the Companys
Chairman and President, for legal and consulting fees. The fees were
charged primarily for work done in connection with the filing of the
registration of the Companys securities during 2003. No legal fees were
incurred in the previous fiscal year ended September 30, 2002.
As of September 30, 2003, had a working capital deficit of ($18,835),
after giving effect to a decrease of $7,925 in cash and cash equivalents
during the fiscal year.
Results of Operations
Revenues for the fiscal year 2003 were $2000, compared to revenues of
$7,520 during the previous fiscal year. The result reflects the winding
down of the Companys concert business and the beginning of its new
concentration on the Internet sale of original recorded music. No
revenues have been generated from the Companys new business.
The Net Loss for the year 2003 was ($24,427) ($0.05 per share) compared to
a Net Loss of ($519) in 2002 ($0.00 per share).
The Company faces a short-term liquidity problem in connection with its
transition from a producer of concerts to a new emphasis on Internet
marketing of music. It has yet to generate any revenues from Internet
marketing. In order to continue operations, the Company will likely be
required to raise additional capital during the next six months.
Cautionary Statement Regarding Forward-Looking Statements
Statements made in this document that express the Company's or
management's
Intentions, plans, beliefs, expectations or predictions of future events,
are "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and are made pursuant to and in
reliance on the safe harbor provisions of such sections. The words
"believe", "expect","intend", "estimate", "anticipate", "will" and similar
expressions are intended to further identify such forward-looking
statements, although not all forward-looking statements contain these
identifying words. Those statements are based on many assumptions and
are subject to many known and unknown risks, uncertainties and other
factors that could cause the Company's actual activities, results or
performance to differ materially from those anticipated or projected in
such forward-looking statements, including risk factors summarized below.
The Company cannot guarantee future results, levels of activity,
performance or achievements and investors should not place undue reliance
on the Company's forward-looking statements. The forward-looking
statements contained herein represent the judgment of the Company as of
the date of this document, and the Company expressly disclaims any
intent, obligation or undertaking to update or revise such forward-
looking statements to reflect any change in the Company's expectations
with regard thereto or any changes in events, conditions or circumstances
on which any such statements are based.
Risk Factors
Factors that could cause the Company's actual activities and results of
performance to differ materially from the Company's or management's
intentions, plans, beliefs, expectations or predictions of future events
include risks and uncertainties relating to the following:
The Company has lost money historically and is about to embark upon an
enterprise in which it has no experience or operating history. The
Company had net losses for the years ended September 30, 2003 and 2002.
The Company's future operations may not be profitable. If the Company is
not profitable in the future, the value of the Company's common stock may
fall and the Company could have difficulty obtaining funds to continue
its operations. The Company's balance sheet is weak. The Company lacks
the capital to compete aggressively. The Company's ability to grow and
to compete is constrained by its lack of capital.
The Company may not generate sufficient cash flow from operations to meet
its current and future obligations. The Company may not be able to
generate sufficient free cash flow from its operations to meet all of its
current and future payments obligations. Any debt incurred to finance the
transition of the Companys business will increase the Company's future
payment obligations.
The Company needs to raise additional capital, which capital may not be
available on acceptable terms or at all. The Company needs to raise
additional funds, both for operating capital and for the development of
its acquisition and marketing of music through the Internet. The Company
may not be able to obtain the needed additional financing on favorable
terms or at all. If the Company cannot raise capital on acceptable terms,
the Company may not be able to: meet all of its current and future
payment obligations; develop its Internet marketing business; pursue
acquisition opportunities; enhance its infrastructure; hire, train and
retain employees; or respond to competitive pressures or unanticipated
requirements. The Company's failure to do any of these things could
seriously harm the Company and the Company's stock.
The Company may seek to acquire with stock companies or assets that
complement and/or enhance the Companys transition into the Internet
marketing business. The Company may not be able to negotiate, finance or
close such acquisitions. The Company may not be able to negotiate such
acquisitions on acceptable terms or at all. If such acquisitions are
successfully negotiated, the terms thereof may require the Company to
incur additional indebtedness or issue equity. The Company may not be
able to obtain such financing on acceptable terms or at all.
The terms and conditions of acquiring businesses or assets could adversely
affect the value of the Company's stock. In order to consummate
acquisitions, the Company may be required to take action that could
adversely affect the value of the Company's stock, such as issuing common
stock, convertible preferred stock, convertible subordinated debt, or
other equity-linked securities, potentially resulting in the dilution of
existing shareholder interests or in other adverse effects upon existing
shareholders; undertaking a reverse stock split; changing the name, Board
of Directors, or officers of the Company; entering into new lines of
business; forming business combinations or strategic alliances with
potential business partners; or taking other actions. Any one or more of
these actions may adversely affect the Company and the Company's common
stock.
The Company may experience difficulty in handling growth. The Company
expects to grow both by hiring new employees and by servicing new business
and markets. Growth will place a significant strain on the Company's
management and on the Company's operating and financial systems. The
Company's personnel, systems, procedures and controls may be inadequate to
support the Company's future operations. In order to accommodate the
increased size of the Company's operations, the Company will need to hire,
train and retain appropriate personnel to manage the Company's operations.
The Company will also need to improve its financial and management
personnel, controls, reporting systems and operating systems.
The Company's growth will depend on its ability to attract and retain key
personnel who are capable of managing growth in the e-commerce.
Weak general economic and business conditions may adversely affect the
Company's revenues and operating margins. Weak general economic and
business conditions, international tensions and wars, globally,
nationally, regionally or locally, may have a significant adverse effect
on the Company's revenues and operating margins.
The Company faces competition from competitors that are larger, more
established and better capitalized. Competition in the Internet marketing
and music industries is intense. If the Company fails to compete
successfully against current or future competitors, the Company's
business, financial condition and operating results would be seriously
harmed.
Because relatively low barriers to entry characterize the Company's
current and many prospective markets, the Company expects other companies
to enter its
markets. In addition, some of the Company's competitors may develop
technologies, markets and inventories that are superior to, or have
greater market acceptance than, the technologies and inventory that the
Company may offer.
The Company currently holds a very small number of enforceable
intellectual property rights with only a few relatively unknown artists.
The Company's revenues may be uncertain and difficult to predict.
The Company's success depends upon the continued use of the Internet as a
means for marketing original music and the ability of the Company to
compete against larger and better capitalized companies that have an
existing presence in the marketplace.
Increasing government regulations or taxation could adversely affect the
Company's business. The Company is affected not only by regulations
applicable to businesses generally, but also by laws, regulations and
taxes directly applicable to e-commerce. Although there are currently
few such laws, regulations and taxes, state, federal and foreign
governments may adopt laws, regulations and taxes. Any such legislation,
regulation or tax could dampen the growth of the Internet and decrease its
acceptance as a
commercial medium. If such a decline occurs, companies may decide in the
future not to use the Company's services. This decrease in the demand for
the Company's services would seriously harm the Company's business and
operating results. Any new laws, regulation and taxes may govern,
restrict, tax or affect any of the following issues: user privacy, the
pricing and taxation of goods and services offered over the Internet;
the content of web sites; consumer protection; and the characteristics
and quality of products and services offered over the Internet.
Inability to protect the Company's intellectual property. The Company
intends to acquire intellectual property rights to music and other
creations. The Company cannot guarantee that it can safeguard or deter
misappropriation of the Company's inventory of intellectual property
rights. In addition, the Company may not be able to detect unauthorized
use of the Company's intellectual property and take appropriate steps to
enforce the Company's rights. If third parties infringe or
misappropriate the Company's copyrights, or other proprietary information
or intellectual property, the Company's
business could be seriously harmed. In addition, although the Company
believes that their proprietary rights do not infringe the intellectual
property rights of others, other parties may assert infringement claims
against the Company or claim that the Company has violated their
intellectual property rights. Such claims, even if not true, could
result in significant legal and other costs and may be a distraction to
the Company's management.
The Company's stock is illiquid. The Company's stock is not currently
traded by any market-makers or on any exchange. Consequently,
shareholders may find it difficult to sell their common stock in the
Company, and the owners of potential acquisition target companies may find
the Company's common stock to be unacceptable consideration in any
proposed transaction.
A significant portion of the Company's stock is owned by insiders. The
current directors and officers of the Company beneficially own a
significant percentage of the Company's outstanding shares of common
stock. Accordingly, these stockholders will have substantial influence
over the Company's policies and management.
The Company has not paid dividends and does not expect to do so in the
foreseeable future. The Company has not paid dividends since its
inception and does not expect to in the foreseeable future, so the
Company's stockholders will not be able to receive any return on their
investment without selling their shares. The Company presently
anticipates that all earnings, if any, will be retained for development of
the Company's business. Any future dividends will be subject to the
discretion of the Board of Directors and will depend on, among other
things, the Company's future earnings, operating and financial condition,
capital requirements, and general business conditions.
SEGMENT ANALYSIS
All of the Company's operations are conducted within a single operating
segment.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are set forth immediately
following the signature page to this form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth the executive officers, directors and
significant employees of the Company:
Name Age and Office
Richard H. Casper: Age 58, President, Director and Chairman of
the Board of Directors.
Scott S. Summerhays: Age 40, Vice President and Director.
David Schuder: Age 53, Vice President and Director.
Kristy Chambers: Age 40, Director and Secretary.
Jared Ryde Casper: Age 35, Vice President and general counsel.
Jerry C. Carter: Age 58. Director.
Pamela Lindquist: Age 34. Director, vice-president and
assistant secretary.
The following are biographical summaries of the experience of the
officers and directors of the Company:
Richard H. Casper: Attorney since 1982. Member of the Utah State Bar.
Masters degree in Business Administration (MBA) from
University of Utah (1975); practiced as CPA in
California, Idaho and Utah between 1970 and 1982.
Executive vice president of trucking company from 1974-
1979. For the last five years, Mr. Casper has been a
self-employed attorney and business consultant. He
has been president and chairman of the board of
directors of the Company since its inception.
Scott S. Summerhays: B.S. Degree from University of Utah (1989).
Masters degree in Business Administration (MBA) from
University of Utah (1991). Honors Graduate, Deans
Scholar. President and Chief Operating Officer of
Summerhays Music Centers, the largest dealer of music
instruments in Utah. For the last five years, Mr.
Summerhays has been employed by Summerhays Music
Centers, Inc. He has been a director since December
of 2002. Does not own stock in the Company.
David L. Schuder: Talent and booking agent in Nashville, Tennessee.
Mr. Schuder holds a bachelor of fine arts degree from
Purdue University. He is general manager of ACTS, a
talent and booking agency in Nashville, Tennessee.
Since 1998, Mr. Schuder has held similar positions
with Entertainment Artists, Inc., and with Pacific
Music Group in Nashville. He has been vice-president
and a director of the Company since its inception in
1998. Owns 2500 shares of the Companys stock.
Kristy Chambers: Bachelor of Arts degree from UCLA; masters degree
in taxation from Washington School of Law. Certified
Public Accountant (CPA) licensed in California and
Utah. Currently Chief Financial Officer of Planned
Parenthood of Utah (PPU). During the last five years,
she has been comptroller and chief financial officer
of PPU, of McCall Management and of Summerhays Music
Centers, Inc. She has been an officer of the Company
from its inception in 1998. Owns 1,000 shares of the
Companys stock.
Jared R. Casper: Attorney practicing with the firm of Ivie and
Young in Provo, Utah. Graduate of Gonzaga University
College of Law. During the last five years, he has
practiced law in Utah. He has been an officer of the
Company since December of 2002. Jared R. Casper is
the nephew of Richard H. Casper, President and
Charirman of the Board. Does not own any shares of
the Companys stock.
Jerry C. Carter: President and Chief operating officer of Carter
Enterprises of St. Anthony, Idaho, a manufacturer and
international exporter of archery equipment. He has
held that position for the past fifteen years. He
has been a director of the Company since December of
2002. Owns 1,000 shares of the Companys stock.
Pamela Lindquist: Musician and private investigator. She holds a
bachelors degree from Brigham Young University. For
the last five years, she has been a self-employed
musician and private investigator. She has been an
officer and director of the Company since its
inception in 1998, with the exception of a two-month
hiatus between November of 2002 and January of 2003.
Owns 5,000 shares of the Companys stock.
Audit Committee: At the meeting of the board of directors held on
March 18, 2003, the Company formed an Audit and Compensation Committee
chaired by Kristy Chambers, CPA. She is a licensed CPA and is the audit
committee financial expert. As an officer of the Company, she is not
independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A under
the Exchange Act.
All officers and directors devote full-time to other professional
pursuits. No officer or director devotes, on average, more than four hours
per month to the business of the Company.
The Company currently has no plan or commitment to pay any officers
or directors in cash or stock. However, the Companys Audit and
Compensation Committee will determine levels of future compensation that
are commensurate with the contributions of each officer and director.
All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and
qualified. There are no agreements with respect to the election of
directors. The Company does not have any standing committees.
To the knowledge of management, during the past five years, no present or
former director or executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years
before the time of such filing, or any corporation or business association
of which such person was an executive officer at or within two years
before the time of such filing;
(2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining such person from or otherwise
limiting, the following activities:
(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, associated person of any of the foregoing, or as an
investment advisor, underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment company, or
engaging in or continuing any conduct or practice in connection with such
activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of federal
or statesecurities laws or federal commodities laws;
(4) was the subject of any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority
barring, suspending, or otherwise limiting for more than 60 days the right
of such personto engage in any activity described above, or to be
associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action or by
the Securities and Exchange Commission to have violated any federal or
state securities law, and the judgment in such civil action or finding by
the Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.
(6) was found by a court of competent jurisdiction in a civil action or
by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company is not subject to the requirements of Section 16(a) of
the
Exchange Act.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
During the fiscal year ended September 30, 2003, the Company accrued a
liability of $16,500 for unpaid fees and compensation payable to Richard
H. Casper, the Companys president and chairman. No other compensation has
been paid or accrued. No compensation has been paid to any member of the
Board or to any member of management.
Bonuses and Deferred Compensation
None
Compensation Pursuant to Plans.
None.
Pension Table
None.
Other Compensation
None.
Compensation of Directors.
None.
Employment Contracts and Termination of Employment, and Change-in-Control
Arrangements.
There are no compensatory plans or arrangements, including payments
to be received from the Company, with respect to any person named in the
Cash Compensation section set out above which would in any way result in
payments to any such person because of his resignation, retirement, or
other termination of such person's employment with the Company or its
subsidiaries, or any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Companys Common Stock as of September 30, 2003 by: (i)
each person who is known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each of the named executives and (iv) all directors and
executive officers of the Company as a group. At September 30, 2003,
there were 520,000 shares of Common Stock issued and outstanding.
Name and Address of Amount and Nature Percent of Class (1)
Beneficial Owner of Beneficial
Ownership
Richard H. Casper 481,500 shares held 92.596 %
President, Director as Personal
and Holdings (199,000
Chairman of the shares) and by
Board rules of
2068 Haun Avenue attribution for
Salt Lake City, Utah beneficial
84121 interests held by
Casper Partners,
LC, (282,500
shares) a Utah
limited liability
company controlled
by Mr. Casper
Scott S. Summerhays 0 0.00%
Director
David L. Schuder 2500 0.48%
Director
Kristy Chambers 1000 0.19%
Secretary, Director
Jared R. Casper 0 0.00%
Vice-President
Jerry C. Carter 1000 0.19%
Director
Pamela Lindquist 5000 1.00%
Director, Vice-
President
(1) Based on 520,000 shares of common stock outstanding as of September
30, 2002, as of December 31, 2002, and as of the date of this statement.
Common Directors and Officers as a Group:
491,000 shares 94.42%
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During the fiscal year ended September 30, 2003, Richard H. Casper, the
Chairman and CEO, provided legal and management services to the Company,
including legal services in connection with the registration of the
Companys Common Stock. The Company accrued a liability of $16,500 for
those services.
Since June, the Company has utilized a portion of Mr. Caspers office,
without rent, at 39 Exchange Place, Salt Lake City, Utah.
TRANSACTIONS WITH PROMOTERS
Not applicable.
ITEM 13. EXHIBITS AND REPORTS
(a)(1)FINANCIAL STATEMENTS. The following financial statements are filed
as part of this report:
Title of Document
-----------------
Report of Pritchett, Siler & Hardy, Certified Public Accountants
Independent Auditors Report
Balance Sheet, September 30, 2003
Statements of Operations, for the years ended September 30, 2003, and
2002, and from inception on June 26, 1998, through September 30, 2003.
Statement of Stockholders' Equity from inception on June 26, 1998, through
September 30, 2003.
Statements of Cash Flows for the years ended September 30, 2003, and 2002
and from inception on June 26, 1998 through September 30, 2003.
Notes to Financial Statements
(a)(2)FINANCIAL STATEMENT SCHEDULES. The following financial statement
schedules are included as part of this report:
None.
(a)(3)EXHIBITS. The following exhibits are filed as part of this report:
NONE
(b) REPORTS ON FORM 8-K.
None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on this 23rd day of December, 2003.
Dolphin Productions, Inc.
By: /s/ Richard H. Casper
----------------------------------
Richard H. Casper
President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
and on the dates indicated on this 30th day of December, 2003.
Signature Title
/s/ Richard H. Casper Chairman and President
------------------------
Richard H. Casper
/s/ Pamela Lindquist Director and Chief Financial Officer
------------------------
Pamela Lindquist
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: December 30, 2003 /s/ Richard H. Casper
-----------------------
Richard H.Casper, President
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Independent Auditors' Report 1
- Balance Sheet, September 30, 2003 2
- Statements of Operations, for the years ended
September 30, 2003 and 2002 and from
inception on June 26, 1998 through
September 30, 2003 3
- Statement of Stockholders' Equity (Deficit),
from inception on June 26, 1998 through
September 30, 2003 4
- Statements of Cash Flows, for the years ended
September 30, 2003 and 2002 and from
inception on June 26, 1998 through
September 30, 2003 5
- Notes to Financial Statements 6 - 9
INDEPENDENT AUDITORS' REPORT
Board of Directors
DOLPHIN PRODUCTIONS, INC.
Salt Lake City, Utah
We have audited the Balance Sheet of Dolphin Productions, Inc. [a
development stage company] as of September 30, 2003, and the related
statements of operations, stockholders' equity (deficit) and cash flows
for the years ended September 30, 2003 and 2002 and from inception on June
26, 1998 through September 30, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dolphin Productions,
Inc. [a development stage company] as of September 30, 2003, and the
results of its operations and its cash flows for the years ended September
30, 2003 and 2002 and for the period from inception on June 26, 1998
through September 30, 2003, in conformity with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed Note 5 to the
financial statements, the Company has not yet been successful in
establishing profitable operation and has current liabilities in excess of
current assets. These factors raise substantial doubt about the ability
of the Company to continue as a going concern. Management's plans in
regard to these matters are also described in Note 5. The financial
statements do not include any adjustments that might result from the
outcome of these uncertainties.
/s/ PRITCHETT, SILER & HARDY, P.C.
November 10, 2003
Salt Lake City, Utah
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
September 30,
2003
____________
CURRENT ASSETS:
Cash $ 2,995
Income taxes receivable 730
____________
Total Current Assets 3,725
____________
$ 3,725
____________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 1,060
Accrued expenses - related party 21,500
____________
Total Current Liabilities 22,560
____________
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.001 par value,
50,000,000 shares authorized,
520,000 shares issued and
outstanding 520
Capital in excess of par value 5,480
Deficit accumulated during the
development stage (24,835)
____________
Total Stockholders' Equity (Deficit) (18,835)
____________
$ 3,725
____________
The accompanying notes are an integral part of this financial statement.
2
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
For the From Inception
Year Ended on June 26,
September 30, 1998 Through
______________________ September 30,
2003 2002 2003
__________ __________ ____________
REVENUE $ 2,000 $ 7,520 $ 37,890
EXPENSES:
Selling - - 4,561
General and administrative 26,407 8,037 57,870
__________ __________ ____________
Total Expenses 26,407 8,037 62,431
__________ __________ ____________
LOSS BEFORE INCOME TAXES (24,407) (517) (24,541)
CURRENT TAX EXPENSE (BENEFIT) (730) 227 294
DEFERRED TAX EXPENSE (BENEFIT) 750 (225) -
__________ __________ ____________
NET INCOME (LOSS) $ (24,427) $ (519) $ (24,835)
__________ __________ ____________
EARNINGS (LOSS) PER
COMMON SHARE $ (.05) $ (.00) $ (.05)
__________ __________ ____________
The accompanying notes are an integral part of these financial statements.
3
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION ON JUNE 26, 1998
THROUGH SEPTEMBER 30, 2003
Deficit
Accumulated
Common Stock Capital in During the
_________________ Excess of Development
Shares Amount Par Value Stage
________ ________ __________ _____________
BALANCE, June 26, 1998 - $ - $ - $ -
Issuance of 500,000 shares of common
stock for cash of $2,000, or $.004
per share, June 1998 500,000 500 1,500 -
Net income (loss) for the period
ended September 30, 1998 - - - -
________ ________ __________ _____________
BALANCE, September 30, 1998 500,000 500 1,500 -
Issuance of 20,000 shares of common
stock for cash of $4,000, or $.20
per share, January 1999 20,000 20 3,980 -
Net (loss) for the year ended
September 30, 1999 - - - (6,404)
________ ________ __________ _____________
BALANCE, September 30, 1999 520,000 520 5,480 (6,404)
Net income for the year ended
September 30, 2000 - - - 2,184
________ ________ __________ _____________
BALANCE, September 30, 2000 520,000 520 5,480 (4,220)
Net income for the year ended
September 30, 2001 - - - 4,331
________ ________ __________ _____________
BALANCE, September 30, 2001 520,000 520 5,480 111
Net (loss) for the year ended
September 30, 2002 - - - (519)
________ ________ __________ _____________
BALANCE, September 30, 2002 520,000 520 5,480 (408)
Net (loss) for the year ended
September 30, 2003 - - - (24,427)
________ ________ __________ _____________
BALANCE, September 30, 2003 520,000 $ 520 $ 5,480 $ (24,835)
________ ________ __________ _____________
The accompanying notes are an integral part of this financial statement.
4
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
For the From Inception
Year Ended on June 26,
September 30, 1998 Through
______________________ September 30,
2003 2002 2003
__________ __________ ____________
Cash Flows from Operating Activities:
Net income (loss) $ (24,427) $ (519) $ (24,835)
Adjustments to reconcile net income to
net cash provided by operating
activities:
Changes in assets and liabilities:
(Increase) in income taxes receivable (730) - (730)
(Increase) decrease in prepaid expenses 410 (410) -
(Increase) decrease in deferred tax
assets 750 (225) -
Increase in accounts payable 1,060 - 1,060
Increase in accrued expenses - related
party 16,500 1,500 21,500
Increase (decrease) in income taxes
payable (1,024) 227 -
Increase (decrease) in accrued expenses (464) 464 -
__________ __________ ____________
Net Cash Provided (Used) by Operating
Activities (7,925) 1,037 (3,005)
__________ __________ ____________
Cash Flows from Investing Activities - - -
__________ __________ ____________
Net Cash Provided by Investing
Activities - - -
__________ __________ ____________
Cash Flows from Financing Activities:
Proceeds from issuance of common stock - - 6,000
__________ __________ ____________
Net Cash Provided by Financing
Activities - - 6,000
__________ __________ ____________
Net Increase in Cash and Cash Equivalents (7,925) 1,037 2,995
Cash and Cash Equivalents at Beginning of
Period 10,920 9,883 -
__________ __________ ____________
Cash and Cash Equivalents at End of
Period $ 2,995 $ 10,920 $ 2,995
__________ __________ ____________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ 1,024 $ - $ 1,024
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the year ended September 30, 2003:
None
For the year ended September 30, 2002:
None
The accompanying notes are an integral part of these financial statements.
5
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO 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
provides musical and other performance services for concerts and other
events. The Company has not yet generated significant revenues from its
planned principal operations and is considered a development stage company
as defined in Statement of Financial Accounting Standards No. 7. The
Company, at the present time, has 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.
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 and Loans Receivable - The Company records accounts and loans
receivable at the lower of cost or fair value. The Company determines the
lower of cost or fair value of non-mortgage loans on an individual asset
basis. 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 recognizes interest income on a
loan receivable based on the stated interest rate over the term of the
loan. 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 and loan losses based on the aged receivable balances and
historical losses. The Company records interest income on delinquent
accounts and loans receivable only when payment is received. The Company
first applies payments received on delinquent accounts and loans
receivable to eliminate the outstanding principal. The Company charges
off uncollectible accounts and loans receivable when management estimates
no possibility of collecting the related receivable. The Company
considers accounts and loans receivable to be past due or delinquent based
on contractual terms.
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 compact discs 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 years ended September 30, 2003 and 2002, 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].
6
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
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. 146, "Accounting for Costs Associated with Exit or
Disposal Activities", SFAS No. 147, "Acquisitions of Certain Financial
Institutions - an Amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9", SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment of FASB Statement
No. 123", SFAS No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities", and SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity", were recently issued. SFAS No. 146, 147, 148, 149 and 150 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 years prior to September
30, 2003 have been reclassified to conform to the headings and
classifications used in the September 30, 2003 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).
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.
7
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - RELATED PARTY TRANSACTIONS
Management Compensation and Accrued Expenses - Salary expense to the
Company's President for the years ended September 30, 2003 and 2002
amounted to $1,500 and $1,500, respectively. At September 30, 2003, the
Company owes a total of $6,500 in accrued salary to the Company's
President.
Legal Services and Accrued Expenses - During the years ended September 30,
2003 and 2002, respectively, the Company's President provided legal
services of $15,000 and $0 to the Company. At September 30, 2003, the
Company owes a total of $15,000 in accrued legal fees to the Company's
President.
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
September 30, 2003, the Company has available unused operating loss
carryforwards of approximately $3,000, which may be applied against future
taxable income and which expire in 2023.
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 accrued
compensation and net operating loss carryforward, are approximately $3,700
and $750 as of September 30, 2003 and 2002, respectively, with an
offsetting valuation allowance of the same amount, resulting in a change
in the valuation allowance of approximately $3,700 during the year ended
September 30, 2003.
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 current liabilities in excess of current
assets. 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.
8
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share:
For the From Inception
Year Ended on June 26,
September 30, 1998 Through
______________________ September 30,
2003 2002 2003
__________ __________ ____________
Net loss available to common
shareholders (numerator) $ (24,427) $ (519) $ (24,835)
__________ __________ ____________
Weighted average number of common
shares outstanding used in loss per
share for the period (denominator) 520,000 520,000 517,888
__________ __________ ____________
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.
NOTE 7 - CONCENTRATION
Geographic Region - During the nine months ended September 30, 2003, all
of the Company's sales and operations were located in and around Salt Lake
City, Utah.
Limited Source of Revenues - During the year ended September 30, 2003, all
of the Company's revenues were generated by services rendered at only one
concert.
9