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, 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 June 30, 2003.
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
June 30, 2003 and September 30, 2002
Consolidated Statements of Operations -
Three Months Ended June 30, 2003 and June 30, 2002
Nine Months Ended June 30, 2003 and June 30, 2002
Consolidated Statements of Cash Flows -
Nine Months Ended June 30, 2003 and June 30, 2002
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,
June 30, 2003 and September 30, 2002 4
- Unaudited Condensed Statements of Operations,
for the three and nine months ended June 30, 2003
and 2002 and from inception on June 26, 1998
through June 30, 2003 5
- Unaudited Condensed Statements of Cash Flows,
for the nine months ended June 30, 2003
and 2002 and from inception on June 26, 1998
through June 30, 2003 6
- Notes to Unaudited Condensed Financial Statements 7 - 10
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
June 30, September 30,
2003 2002
___________ ___________
CURRENT ASSETS:
Cash $ 4,186 $ 10,920
Income taxes receivable 730 -
Prepaid expenses - 410
Deferred tax assets - 750
___________ ___________
Total Current Assets 4,916 12,080
___________ ___________
$ 4,916 $ 12,080
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 1,156 $ -
Income taxes payable - 1,024
Accrued expenses - 464
Accrued expenses - related party 21,000 5,000
___________ ___________
Total Current Liabilities 22,156 6,488
___________ ___________
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 (23,240) (408)
___________ ___________
Total Stockholders' Equity (Deficit) (17,240) 5,592
___________ ___________
$ 4,916 $ 12,080
___________ ___________
Note: The balance sheet at September 30, 2002 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 Nine From Inception
Months Ended Months Ended on June 26,
June 30, June 30, 1998 Through
__________________ ____________________ June 30,
2003 2002 2003 2002 2003
_________ _______ _________ _________ ________
REVENUE $ - $ - $ 2,000 $ - $ 37,890
EXPENSES:
Selling - - - - 4,561
General and
administrative 1,876 617 24,812 2,526 56,275
_________ _______ _________ _________ ________
Total Expenses 1,876 617 24,812 2,526 60,836
_________ _______ _________ _________ ________
LOSS BEFORE INCOME
TAXES (1,876) (617) (22,812) (2,526) (22,946)
CURRENT TAX EXPENSE
(BENEFIT) - (1) (730) (179) 294
DEFERRED TAX EXPENSE
(BENEFIT) 3,161 (75) 750 (150) -
_________ _______ _________ _________ ________
NET LOSS $ (5,037) $ (541) $(22,832) $ (2,197) $(23,240)
_________ _______ _________ _________ ________
LOSS PER COMMON SHARE $ (.01) $ (.00) $ (.04) $ (.00) $ (.04)
_________ _______ _________ _________ ________
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 Nine From Inception
Months Ended on June 26,
June 30, 1998 Through
____________________ June 30,
2003 2002 2003
__________ _________ _________
Cash Flows from Operating Activities:
Net loss $(22,832) $ (2,197) $(23,240)
Adjustments to reconcile net
loss to net cash provided (used)
by operating activities:
Changes in assets and liabilities:
(Increase) in income taxes
receivable (730) - (730)
(Increase) decrease in
prepaid expenses 410 (670) -
(Increase) in deferred tax assets 750 (150) -
Increase in accounts payable 1,156 - 1,156
Increase in accrued expenses
- related party 16,000 1,000 21,000
(Decrease) in income taxes
payable (1,024) (179) -
Increase (decrease) in
accrued expenses (464) 333 -
__________ _________ _________
Net Cash (Used) by
Operating Activities (6,734) (1,863) (1,814)
__________ _________ _________
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 (Decrease) in Cash
and Cash Equivalents (6,734) (1,863) 4,186
Cash and Cash Equivalents
at Beginning of Period 10,920 9,883 -
__________ _________ _________
Cash and Cash Equivalents
at End of Period $ 4,186 $ 8,020 $ 4,186
__________ _________ _________
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, 2003:
None
For the nine months ended June 30, 2002:
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
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.
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, 2003 and 2002 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, 2002 audited financial statements.
The results of operations for the periods ended June 30, 2003 and 2002 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 nonmortgage 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 balance 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.
-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 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, 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].
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 periods prior to June 30,
2003 have been reclassified to conform to the headings and classifications
used in the June 30, 2003 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).
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 nine months ended June 30, 2003 and 2002 amounted to
$1,000 and $1,000, respectively. At June 30, 2003, the Company owes a
total of $6,000 in accrued salary to the President.
Legal Services and Accrued Expenses - During the nine months ended June
30, 2003 and 2002, respectively, the President provided legal services of
$15,000 and $0 to the Company. At June 30, 2003, 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,
2003, the Company has available unused operating loss carryforwards of
approximately $1,900, 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, are approximately $3,400 and $750 as of June 30, 2003 and
September 30, 2002, respectively, with an offsetting valuation allowance
of the same amount, resulting in a change in the valuation allowance of
approximately $3,400 during the nine months ended June 30, 2003.
-9-
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 current liabilities in excess of current assets,
raising 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.
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,
2003 2002 2003 2002 2003
________ _______ ________ ________ ________
Net loss available
to common shareholders
(numerator) $(5,037) $ (541) $(22,832) $(2,197) $(23,240)
________ _______ ________ ________ ________
Weighted average
number of common
shares outstanding
used in loss per
share for the period
(denominator) 520,000 520,000 520,000 520,000 517,781
________ _______ ________ ________ ________
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 June 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 nine months ended June 30, 2003,
all of the Company's revenues were generated by services rendered at only
one concert.
-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 June 30, 2003,
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, 2003, and June 30, 2002, respectively. No concerts
were presented by the Company during either period. All revenues generated in
2003 came from the 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 $5,037 for the third quarter
of fiscal year 2003 compared to a net loss of $541 for the third quarter of
fiscal year 2002. 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 was a net cost of $3,161. The Company also incurred higher
professional fees associated with the Company's quarterly reporting
requirements in connection 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.
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.
11
Nine Months Ended June 30, 2003 Compared to Nine Months Ended June 30, 2002
For the nine month period ended June 30, 2003, DOLPHIN PRODUCTIONS, INC.,
experienced a net lost of $22,832, after giving effect to estimated net tax
costs of $750 as compared with a loss for the nine months ended June 30, 2002,
of $2,197. Again, the increase in the magnitude of the losses from 2002 to
2003 was largely the result of the costs associated with the registration of
the Company's common stock.
Liquidity and Capital Resources
As of June 30, 2003, the Company had on hand cash of $4,186. It owed $1,156
to the CPA firm of Pritchett, Siler & Hardy and owed $21,000 in accrued
liabilities payable to the Company's President and Chairman, Richard H.
Casper. The Company's current liabilities of $22,156 exceed the cash ($4,186)
that it had on hand as of June 30, 2003, by $17,970.
The liability to the Company's President is not evidenced by a writing and
does not currently bear interest. It is due upon demand.
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 28, 2003, 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 28, 2003.
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 28, 2003.
PART II-OTHER INFORMATION
None
12
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 12, 2003 /s/ Richard H. Casper
---------------------------
Richard H. Casper, President
13