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 June 30, 2004
[ ] 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 June 30,
2004.
Item 1. Financial Statements for DOLPHIN PRODUCTIONS, INC.
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
June 30, September 30,
2004 2003
___________ ___________
CURRENT ASSETS:
Cash $ 993 $ 2,995
Income taxes receivable 730 730
___________ ___________
Total Current Assets 1,723 3,725
___________ ___________
$ 1,723 $ 3,725
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 1,525 $ 1,060
Accrued expenses - related party 21,500 21,500
Note payable - related party 1,000 -
___________ ___________
Total Current Liabilities 24,025 22,560
___________ ___________
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.001 par value,
50,000,000 shares authorized,
520,000 shares issued and
outstanding 520 520
Capital in excess of par value 5,480 5,480
Deficit accumulated during the
development stage (28,302) (24,835)
___________ ___________
Total Stockholders'
Equity (Deficit) (22,302) (18,835)
___________ ___________
$ 1,723 $ 3,725
___________ ___________
Note: The balance sheet at September 30, 2003 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.
-3-
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three For the Nine From Inception
Months Ended Months Ended on June 26,
June 30, June 30, 1998 Through
_____________________________________ June 30,
2004 2003 2004 2003 2004
_______ _______ _______ _______ _______
REVENUE $ - $ - $ - $ 2,000 $ 37,890
EXPENSES:
Selling - - - - 4,561
General and administrative 1,369 1,876 3,467 24,812 61,337
_______ _______ _______ _______ _______
Total Expenses 1,369 1,876 3,467 24,812 65,898
_______ _______ _______ _______ _______
LOSS BEFORE INCOME
TAXES (1,369) (1,876) (3,467) (22,812) (28,008)
CURRENT TAX EXPENSE
(BENEFIT) - - - (730) 294
DEFERRED TAX EXPENSE
(BENEFIT) - 3,161 - 750 -
_______ _______ _______ _______ _______
NET LOSS $ (1,369) $ (5,037) $ (3,467) $(22,832) $(28,302)
_______ _______ _______ _______ _______
LOSS PER COMMON SHARE $ (.00) $ (.01) $ (.01) $ (.04) $ (.05)
_______ _______ _______ _______ _______
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 CASH FLOWS
For the Nine From Inception
Months Ended on June 26,
June 30, 1998 Through
____________________ June 30,
2004 2003 2004
_____________________________
Cash Flows from Operating Activities:
Net loss $ (3,467) $(22,832) $(28,302)
Adjustments to reconcile net loss to
net cash used by operating activities:
Changes in assets and liabilities:
(Increase) in income taxes receivable - (730) (730)
(Increase) decrease in taxes receivable - 410 -
Increase in deferred tax assets - 750 -
Increase in accounts payable 465 1,156 1,525
Increase in accrued expenses - related party - 16,000 21,500
(Decrease) in income taxes payable - (1,024) -
Increase (decrease) in accrued expenses - (464) -
_______ _______ _______
Net Cash (Used) by
Operating Activities (3,002) (6,734) (6,007)
_______ _______ _______
Cash Flows from Investing Activities - - -
_______ _______ _______
Net Cash Provided by
Investing Activities - - -
_______ _______ _______
Cash Flows from Financing Activities:
Proceeds from note payable - related party 1,000 - 1,000
Proceeds from issuance of common stock - - 6,000
_______ _______ _______
Net Cash Provided by
Financing Activities 1,000 - 7,000
_______ _______ _______
Net Increase (Decrease)
in Cash and Cash Equivalents (2,002) (6,734) 993
Cash and Cash Equivalents
at Beginning of Period 2,995 10,920 -
_______ _______ _______
Cash and Cash Equivalents at End of Period $ 993 $ 4,186 $ 993
_______ _______ _______
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 nine months ended June 30, 2004:
None
For the nine months ended June 30, 2003:
None
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-5-
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
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 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 June 30, 2004 and 2003 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, 2003 audited financial statements.
The results of operations for the periods ended June 30, 2004 and 2003 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 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.
-6-
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 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 nine months ended June 30, 2004 and 2003, 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. 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. 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 periods prior to June 30,
2004 have been reclassified to conform to the headings and classifications
used in the June 30, 2004 financial statements.
-7-
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).
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
Note Payable - On June 29, 2004, the Company signed a $1,000 note payable
to an entity owned by a shareholder of the Company. The note accrues
interest at 8% per annum and is due on February 15, 2005. For the nine
months ended June 30, 2004 and 2003, interest expense amounted to $0 and
$0. At June 30, 2004, accrued interest amounted to $0.
Management Compensation and Accrued Expenses - Salary expense to the
President for the nine months ended June 30, 2004 and 2003 amounted to $0
and $500, respectively. At June 30, 2004, the Company owes a total of
$6,500 in accrued salary to the President.
Legal Services and Accrued Expenses - During the nine months ended June
30, 2004 and 2003, respectively, the President provided legal services of
$0 and $15,000 to the Company. At June 30, 2004, the Company owes a total
of $15,000 in accrued legal fees to the 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 June 30,
2004, the Company has available unused operating loss carryforwards of
approximately $6,500, which may be applied against future taxable income
and which expire in 2024.
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 $4,200
and $3,700 as of June 30, 2004 and September 30, 2003, respectively, with
an offsetting valuation allowance of the same amount, resulting in a
change in the valuation allowance of approximately $500 during the nine
months ended June 30, 2004.
-8-
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share:
For the Three For the Nine From Inception
Months Ended Months Ended on June 26,
June 30, June 30, 1998 Through
_____________________________________ June 30,
2004 2003 2004 2003 2004
_______ _______ _______ _______ _______
Net loss available to
common shareholders
(numerator) $ (1,369) $ (5,037) $ (3,467) $(22,832) $(28,302)
_______ _______ _______ _______ _______
Weighted average number of
common shares outstanding
used in loss per share for
the period (denominator) 520,000 520,000 520,000 520,000 518,151
_______ _______ _______ _______ _______
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.
-9-
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 June 30, 2004, 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 June 30, 2003 Compared
to Three Months Ended June 30, 2002
DOLPHIN PRODUCTIONS, INC., did not generate revenues of any kind
during the quarters ended June 30, 2004, and June 30, 2003,
respectively. No concerts were presented by the Company during
either period and no revenues were generated by the Company. All
revenues generated in 2003 came from a single event. The Company
has no plans to produce concerts or to provide concert services.
The Company is in the process of exploring the feasibility of its
entry into the business of marketing original music through e-
commerce.
DOLPHIN PRODUCTIONS, INC. recorded a net loss of $1,369 for the
third quarter of fiscal year 2004 compared to a net loss of
$5,037 for the third quarter of fiscal year 2003. In prior
periods, the Company has reflected in its financial statements
certain potential tax benefits which may be available to the
Company in the form of tax-loss carryforwards. However, because
of the uncertainty that the Company will be able to take
advantage of those carryforwards, the Company has partially
offset the carryforward amount with a "valuation allowance" that
reflects that uncertainty. The net effect of the offsetting
"valuation allowance" and the loss carryforward for the third
quarter of 2003 was a net cost of $3,161. The Company made no
additional "valuation allowance" for the current quarter.
DOLPHIN PRODUCTIONS, INC. has no plans to produce concerts or to
provide concert-related services in the future, except as such
services may be ancillary to the Company's development and
promotion of its web site and the Internet marketing of recorded
music.
DOLPHIN PRODUCTIONS, INC., has no prospects for generating
revenues from its operations during the foreseeable future. The
magnitude of the revenues, if any, will depend upon the Company's
ability to implement an unproved process for generating revenues
from making recorded music available to the public on the
Internet.
Nine Months Ended June 30, 2004 Compared to Nine Months Ended
June 30, 2003
For the nine month period ended June 30, 2004, DOLPHIN
PRODUCTIONS, INC., experienced a net lost of $3,467 as compared
with a loss for the nine months ended June 30, 2003, of $22,832.
The greater loss in 2003 was largely the result of the costs
associated with the registration of the Company's common stock.
The Company's General and Administrative expenses declined from
$24,812 for the nine month ended June 30, 2003, to $3,467 for the
comparable quarter of 2004. The higher figure in 2003 reflected
the professional costs and fees associated with the registration
of the Company's stock through the filing of a Form 10-SB
registration statement in the second quarter of fiscal 2003.
Liquidity and Capital Resources
As of June 30, 2004, the Company had on hand cash of $993. It
owed $1,525 accounts payable, and an accrued liability of $21,500
for professional services payable to the Company's President and
Chairman and Chief Executive Officer, Richard H. Casper. The
liability to the Company's President is not evidenced by a
writing and does not currently bear interest. It is due upon
demand.
In addition, the Company borrowed $1,000 from Richard H. Casper
under a promissory note on June 29, 2004. The note is not
secured, bears interest at 8% per annum and is due on February
15, 2005.
The Company's current liabilities of $24,025 exceed the cash of
$993 that it had on hand as of June 30, 2004, by $23,032.
The Company currently has no prospects or commitments from any
parties to provide additional capital, cash or resources to the
Company.
Item 3. Controls and Procedures
As of February 29, 2004, an informal evaluation was performed
under the supervision and with the participation of the Company's
management, including the CEO and CFO, of the effectiveness of
the design and operation of the Company's disclosure controls and
procedures. Based on that evaluation, the Company's management,
including the CEO and CFO, concluded that the Company's
disclosure controls and procedures were effective as of February
29, 2004. There have been no significant changes in the Company's
internal controls or in other factors that could significantly
affect internal controls subsequent to February 29, 2004.
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: August 13, 2004 /s/ Richard H. Casper
--------------------------------
Richard H. Casper, President