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, 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:
770,000 shares of the issuer's common stock were outstanding as
of September 30, 2004, the issuer's most recent fiscal year end.
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:
520,000 shares of $.001 par, common stock
Registered by Form 10-SB
---------------
(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: $ 0
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
Company's securities and, to the best of the Company's knowledge,
there have been no transfers of any of the Company's 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 the fiscal year ended September 30,
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 ceased
presenting live musical concerts. The Company owns the rights to
the domain name "dolphinproductions.net." The Company has
encountered substantial competitive, legal, technological and
financial obstacles to its entry into the Internet marketing
business. The Company has not generated any revenues from
Internet marketing of musical properties.
ITEM 2. DESCRIPTION OF PROPERTIES
In order to conserve cash, the Company closed its business office
at 39 Exchange Place in Salt Lake City, Utah. The Company
conducts limited operations out of its president's legal office.
The space is adequate for the Company's limited operations.
During the transition of its business to an Internet marketing
enterprise, the Company's 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. Other
than the recent sale of unregistered securities described in the
next paragraph, the Company is aware of no sales or transfers of
the Company's common Stock during the last four years.
RECENT SALES OF UNREGISTERED SECURITIES
The Company sold 225,000 shares of its common stock in a private
placement transaction in September of 2004 at $.20 per share. In
addition, the Company issued 25,000 shares of stock as
compensation to certain officers of the Company. See Notes to
Financial Statements.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Liquidity and Capital resources
Total assets of the Company at September 30, 2004, were $21,732,
consisting of cash in the amount of $21,002 and income taxes
receivable of $730. As of September 30, 2003, the Company had a
cash balance of $2,995, for a net increase in cash of $18,007
during the year. Substantially all of the cash was generated by
the private placement of 225,000 shares of the Company's common
stock at $.20 per share in September of 2004. The principal
purpose for the issuance of stock through the private placement,
and the principal use of cash during the fiscal year ended
September 30, 2004, was to pay the Company's obligations to the
Company's president. See Notes 2 and 3 to the Financial
Statements. At September 30, 2004, the Company had available
unused operating loss carryforwards of approximately $38,700
which may be applied against future taxable income and which
expire in 2024. See Note 4 to Financial Statements.
Current Liabilities as of September 30, 2004, totaled $4,703.
See Balance Sheet.
Results of Operations
The Company generated no revenues during the fiscal year ended
September 30, 2004. No revenues have been generated from the
Internet marketing of music. The Company has encountered
significant competitive, technological, legal and financial
barriers to its entry into the Internet marketing business. The
Company has no assurance that its entry into the Internet
marketing business will be successful or that it will be able to
generate revenues.
The Net Loss for the year 2004 was ($14,136) (a loss of $0.03 per
share) compared to a Net Loss of ($24,427) in 2003 (a loss of
$0.05 per share).
The Company has yet to generate any revenues from Internet
marketing. The Company has no assurance that its present cash
reserves will be sufficient to carry out a successful business
plan.
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 has embarked upon an
enterprise in which it has no experience or operating history.
The Company had net losses for the years ended September 30, 2004
and 2003. The Company's future operations may not be profitable.
If the Company is not profitable in the near future, the Company
will likely have difficulty sustaining its operations or
obtaining funds to continue its operations. The Company will
compete against other companies that are far better capitalized.
The Company's ability to grow and to compete will likely be
constrained by its lack of capital.
The Company may not generate or acquire sufficient cash flow from
operations to meet its future obligations or to implement a
business plan.
The Company may seek to acquire assets that complement and/or
enhance the Company's 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's success may depend on its ability to attract and
retain key personnel who are capable of managing growth in 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 are 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 value of such properties is impossible to
predict and the Company has, therefore, assigned no value to such
properties. The Company has assumed that the value of its
inventory is $0.
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.
With limited financial resources, the Company may be unable to
protect the Company's intellectual property rights, if any. 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 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 59, President, Director and Chairman of
the Board of Directors.
Scott S. Summerhays: Age 41, Vice President and Director.
Kristy Chambers: Age 41, Director, Secretary and Chair of
Audit Committee.
Jared Ryde Casper: Age 37, Vice President and general counsel.
Pamela Lindquist: Age 35. Director, vice-president, chief
financial officer 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. Master's 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). Master's 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. Owns
5,000 shares of stock, acquired in
September, 2004, as compensation.
Kristy Chambers: Bachelor of Arts degree from UCLA;
master's 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 6,000
shares of the Company's stock, including
5,000 shares acquired in September of 2004 as
compensation.
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. Owns 500 shares
of the Company's stock, acquired as
compensation in September of 2004.
Pamela Lindquist: Musician and private investigator. She
holds a bachelor's 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 20,000 shares of the Company's
stock, including 5,000 shares obtained as
compensation in September, 2004, and 10,000
shares purchased as part of the Company's
private placement of stock in September of
2004.
Audit Committee: At a 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 CPA licensed
to practice within the state of Utah 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 issued 25,000 shares of stock to current
officers in September, 2004, but the Company currently has no
plan or commitment to pay any officers or directors in cash or
stock. However, the Company's 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, 2004, the Company
issued 25,000 shares of stock as compensation to the following
officers and/or consultants:
Scott Summerhays V.P., Director
5,000 shares
Kristy Chambers V.P., Director
5,000 shares
Richard H. Casper Pres., Director
7,500 shares
Jared R. Casper V.P.
500 shares
Benjamin R. Casper Consultant
2,000 shares
During the year ended September 30, 2004, the Company paid
to its President, Richard H. Casper, accrued compensation of
$6,500, and paid to Richard H. Casper, P.C., an accrued
obligation of $15,000 for legal fees.
Bonuses and Deferred Compensation
None
Compensation Pursuant to Plans.
None.
Pension Table
None.
Other Compensation
None.
Compensation of Directors.
See Summary above.
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 Company's Common Stock as of
September 30, 2004 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, 2004, there
were 770,000 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 489,000 shares held 63.506 %
President, Director as Personal
and Holdings (206,500
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 5000 0.65%
Director
Kristy Chambers
Secretary, Director 6000 0.780%
Jared R. Casper
Vice-President 500 0.065%
Pamela Lindquist
Director, Vice- 20000 2.597%
President
(1) Based on 770,000 shares of common stock outstanding as of
September 30, 2004.
Common Directors and Officers as a Group:
520,500 shares 67.60%
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During the fiscal year ended September 30, 2004, the Company paid
to Richard H. Casper, the Chairman and CEO, accrued compensation
of $6,500. The Company also paid to Mr. Casper $15,000 of legal
fees that had been accrued by the Company in a previous year.
During the fiscal year ended September 30, 2004, the Company has
utilized a portion of Mr. Casper's office, without rent, at 5450
Green Street, Murray, 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 Auditor's Report
Balance Sheet, September 30, 2004
Statements of Operations, for the years ended September 30, 2004,
and 2003, and from inception on June 26, 1998, through September
30, 2004.
Statement of Stockholders' Equity from inception on June 26,
1998, through September 30, 2004.
Statements of Cash Flows for the years ended September 30, 2004,
and 2003 and from inception on June 26, 1998 through September
30, 2004.
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, 2004.
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 23rd day of
December, 2004.
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 23, 2004 /s/ Richard H. Casper
----------------------------
Richard H. Casper, President
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
CONTENTS
PAGE
Report of Independent Registered Public
Accounting Firm 1
Balance Sheet, September 30, 2004 2
Statements of Operations, for the years ended
September 30, 2004 and 2003 and from
inception on June 26, 1998 through
September 30, 2004 3
Statement of Stockholders' Equity (Deficit),
from inception on June 26, 1998 through
September 30, 2004 4
Statements of Cash Flows, for the years ended
September 30, 2004 and 2003 and from
inception on June 26, 1998 through
September 30, 2004 5
Notes to Financial Statements 6 - 9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
DOLPHIN PRODUCTIONS, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Dolphin
Productions, Inc. [a development stage company] as of September
30, 2004 and the related statements of operations, stockholders'
equity (deficit) and cash flows for the years ended September 30,
2004 and 2003 and for the period from inception on June 26, 1998
through September 30, 2004. 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 the standards of the
Public Company Accounting Oversight Board (United States). 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, 2004 and the results of its operations and its cash
flows for the years ended September 30, 2004 and 2003 and for the
period from inception on June 26, 1998 through September 30,
2004, in conformity with accounting principles generally accepted
in the United States of America.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 5 to the financial statements, the Company has incurred
losses since its inception and has not yet been successful in
establishing profitable operations. These factors raise
substantial doubt about the ability of the Company to continue as
a going concern. Management's plans in regards 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.
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
December 7, 2004
DOLPHIN PRODUCTIONS, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
September 30,
2004
___________
CURRENT ASSETS:
Cash $ 21,002
Income taxes receivable 730
___________
Total Current Assets 21,732
___________
$ 21,732
___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 1,709
Accrued expenses - related party -
Accrued payroll taxes 2,994
___________
Total Current Liabilities 4,703
___________
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.001 par value,
50,000,000 shares authorized,
770,000 shares issued and
outstanding 770
Capital in excess of par value 55,230
Deficit accumulated during the
development stage (38,971)
___________
Total Stockholders' Equity (Deficit) 17,029
___________
$ 21,732
___________
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,
2004 2003 2004
___________ __________ _______________
REVENUE $ - $ 2,000 $ 37,890
EXPENSES:
Selling - - 4,561
General and administrative 14,111 26,407 71,981
___________ __________ _______________
Total Expenses 14,111 26,407 76,542
___________ __________ _______________
LOSS FROM OPERATIONS (14,111) (24,407) (38,652)
___________ __________ _______________
OTHER INCOME (EXPENSE)
Interest expense (25) - (25)
___________ __________ _______________
LOSS BEFORE INCOME TAXES (14,136) (24,407) (38,677)
CURRENT TAX EXPENSE (BENEFIT) - (730) 294
DEFERRED TAX EXPENSE (BENEFIT) - 750 -
___________ __________ _______________
NET INCOME (LOSS) $ (14,136) $ (24,427) $ (38,971)
___________ __________ _______________
EARNINGS (LOSS) PER
COMMON SHARE $ (.03) $ (.05) $ (.08)
___________ __________ _______________
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, 2004
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)
Issuance of 225,000 shares of
common stock for cash of $45,000,
or $.20 per share, September 2004 225,000 225 44,775 -
Issuance of 25,000 shares of
common stock for services valued
at $5,000, or $.20 per share,
September 2004 25,000 25 4,975 -
Net (loss) for the year ended
September 30, 2004 - - - (14,136)
________ ________ __________ ____________
BALANCE, September 30, 2004 770,000 $ 770 $ 55,230 $ (38,971)
________ ________ __________ ____________
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,
2004 2003 2004
_________ _________ ___________
Cash Flows from Operating Activities:
Net income (loss) $ (14,136) $ (24,427) $ (38,971)
Adjustments to reconcile net income to
net cash provided by operating
activities:
Non-cash expense for services rendered 5,000 - 5,000
Changes in assets and liabilities:
(Increase) decrease in income
taxes receivable - (730) (730)
(Increase) decrease in prepaid expenses - 410 -
(Increase) decrease in deferred
tax assets - 750 -
Increase in accounts payable 649 1,060 1,709
Increase (decrease) in accrued expenses -
related party (21,500) 16,500 -
Increase in accrued payroll taxes 2,994 - 2,994
Increase (decrease) in income
taxes payable - (1,024) -
Increase (decrease) in accrued expenses - (464) -
_________ _________ ___________
Net Cash Provided (Used) by
Operating Activities (26,993) (7,925) (29,998)
_________ _________ ___________
Cash Flows from Investing Activities - - -
_________ _________ ___________
Net Cash Provided by Investing
Activities - - -
_________ _________ ___________
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 45,000 - 51,000
_________ _________ ___________
Net Cash Provided by
Financing Activities 45,000 - 51,000
_________ _________ ___________
Net Increase in Cash and Cash Equivalents 18,007 (7,925) 21,002
Cash and Cash Equivalents at
Beginning of Period 2,995 10,920 -
_________ _________ ___________
Cash and Cash Equivalents at
End of Period $ 21,002 $ 2,995 $ 21,002
_________ _________ ___________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 25 $ - $ 25
Income taxes $ - $ 1,024 $ 1,024
Supplemental Schedule of Non-cash Investing and Financing
Activities:
For the year ended September 30, 2004:
In September 2004, the Company issued 25,000 shares of common
stock for services rendered valued at $5,000.
For the year ended September 30, 2003:
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, 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].
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. 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 years prior to
September 30, 2004 have been reclassified to conform to the
headings and classifications used in the September 30, 2004
financial statements.
NOTE 2 - CAPITAL STOCK
Common Stock - During September 2004, the Company issued 225,000
shares of its previously authorized but unissued common stock for
cash of $45,000 (or $.20 per share).
During September 2004, the Company issued 25,000 shares of its
previously authorized but unissued common stock for services
rendered valued at $5,000 (or $.20 per share).
During January 1999, the Company issued 20,000 shares of its
previously authorized but unissued common stock for cash of
$4,000 (or $.20 per share).
During 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).
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, 2004
and 2003 amounted to $2,320 and $1,500, respectively. At
September 30, 2004, the Company owes a total of $0 in accrued
salary to the Company's President.
Legal Services and Accrued Expenses - During the years ended
September 30, 2004 and 2003, respectively, the Company's
President provided legal services of $0 and $15,000 to the
Company. At September 30, 2004, the Company owes a total of $0
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, 2004, the Company
has available unused operating loss carryforwards of
approximately $38,700, 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 $5,800 and $3,700 as of September
30, 2004 and 2003, respectively, with an offsetting valuation
allowance of the same amount, resulting in a change in the
valuation allowance of approximately $2,100 during the year ended
September 30, 2004.
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. 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,
2004 2003 2004
__________ __________ _____________
Net loss available to common
shareholders(numerator) $ (14,136) $ (24,427) $ (38,971)
__________ __________ _____________
Weighted average number of
common shares outstanding
used in loss per share for
the period (denominator) 522,049 520,000 518,553
__________ __________ _____________
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 9 - SUBSEQUENT EVENT
In November 2004, a shareholder of the Company advanced the
Company $2,995 to pay expenses.
9