Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2010
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 333-162589
Audience Productions, Inc.
(Exact name of registrant as specified in its charter)
Washington | 26-3071343 | |||
(State or other jurisdiction of | (I.R.S. Employer Identification Number) | |||
incorporation or organization) |
2311 N. 45th St., Ste. 310
Seattle, WA 98103
(Address of principal executive offices)
(888) 463-4308
(Registrants telephone number including area code)
[ X ] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.
[ ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a [ ] large accelerated filer, an [ ] accelerated filer, a [ ] non-accelerated filer, or a [X] smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
[ X ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
At February 14, 2011 there were three shares of common stock outstanding.
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The financial statements required by Item 1 are presented in the following order:
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(A Development Stage Company)
BALANCE SHEET
December 31, 2010
AND
September 30, 2010
12/31/10 (Reviewed) |
9/30/10 (Audited) | ||||||
ASSETS | |||||||
Current Assets |
|||||||
Cash |
$ | 542 | $ | 1,640 | |||
Total Current Assets |
542 | 1,640 | |||||
Other Assets |
| | |||||
TOTAL ASSETS |
$ | 542 | $ | 1,640 | |||
LIABILITIES AND SHAREHOLDERS EQUITY | |||||||
Current Liabilities |
|||||||
Accounts Payable Trade |
$ | 85,600 | $ | 82,100 | Accounts Payable Related Party |
237 | 234 |
Total Current Liabilities |
85,837 | 82,334 | |||||
Long-Term Liabilities |
|||||||
Loans from Common Shareholders |
$ | 24,000 | $ | 24,000 | |||
Accrued Interest, Shareholder Loans |
1,105 | 787 | |||||
Total Long-Term Liabilities |
25,105 | 24,787 | |||||
TOTAL LIABILITIES |
$ | 110,943 | $ | 107,120 | |||
SHAREHOLDERS EQUITY |
|||||||
Common Shares |
$ | | | ||||
(non-voting, 100,000,000 shares authorized, three shares issued, and outstanding, no par value) |
|||||||
Preferred Shares |
| | |||||
(voting, 200,000,000 shares authorized, none issued or outstanding, no par value) |
|||||||
Paid-in-Capital |
30 | 30 | |||||
Deficit Accumulated During Development Stage |
(110,431 | ) | (105,510 | ) | |||
TOTAL SHAREHOLDERS EQUITY |
$ | (110,401 | ) | (105,480 | ) | ||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 542 | $ | 1,640 | |||
The accompanying notes are an integral part of these financial statements.
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(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period October 1, 2010 to December 31, 2010
AND
For the Period October 1, 2009 to December 31, 2009
AND
For the Period July 6, 2009 (inception) to December 31, 2010
10/1/10- 12/31/10 (Reviewed) |
10/1/09- 12/31/09 | 7/6/09 (inception) - 12/31/10 |
||||||
Revenues |
$ | | $ | | $ | | ||
Expenses |
||||||||
Securities Registration Fees |
| 446 | 11,210 | |||||
Marketing |
| | 449 | |||||
General and Administrative |
902 | 364 | 7,307 | |||||
Accounting and Legal |
3,600 | 4,575 | 89,759 | |||||
Interest Expense |
319 | 94 | 1,105 | |||||
Story and Other Rights |
100 | | 600 | |||||
4,921 | 5,480 | 110,431 | ||||||
Net Loss |
$ | (4,921) | $ (5,480 | ) | $ (110,431 | ) | ||
|
$ | (1,640 | ) | $ (1,827 | ) | $ (36,810 | ) | |
|
3 | 3 | 3 | |||||
The accompanying notes are an integral part of these financial statements.
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(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
For the Period July 6, 2009 (date of inception) to September 30, 2009
AND
For the Period October 1, 2009 to September 30, 2010
AND
For the Period October 1, 2010 to December 31, 2010
Common Shares |
Preferred Shares | Paid in Capital | Deficit Accumulated During the Developmental Stage |
TOTAL | |||||||||||||||||
Number | $ | Number | $ | ||||||||||||||||||
Balance, July 6, 2009 |
| $ | | | $ | | $ | | $ | | $ | | |||||||||
Issuance of Common Stock for Cash |
3 | 3 | 27 | 30 | |||||||||||||||||
Net Profit (Loss) |
(83,573 | ) | (83,573 | ) | |||||||||||||||||
Balance, September 30, 2009 (Audited) |
3 | 3 | | | 27 | (83,573 | ) | (83,543 | ) | ||||||||||||
Elimination of Par Value of Common Stock |
(3 | ) | 3 | ||||||||||||||||||
Net Profit (Loss) |
(21,937 | ) | (21,937 | ) | |||||||||||||||||
Balance, September 30, 2010 (Audited) |
3 | | | | 30 | (105,510 | ) | (105,480 | ) | Net Profit (Loss) |
(4,921 | ) | (4,921 | ) | |||||||
Balance, December 31, 2010 (Reviewed) |
3 | $ | | | $ | | $ | 30 | $ | (110,431 | ) | $ | (110,401 | ) | |||||||
The accompanying notes are an integral part of these financial statements.
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(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period October 1, 2010 to December 31, 2010
AND
For the Period October 1, 2009 to December 31, 2009
AND
For the Period July 6, 2009 (inception) to December 31, 2010
10/1/10 - 12/31/10 (Reviewed) |
10/1/09 - 12/31/09 |
7/6/09 (inception) - 12/31/10 |
||||||
Cash from Operating Activities |
||||||||
Net Loss |
$ | (4,921) | $ | (5,480) | $ | (110,431) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
Changes in operating assets and liabilities: |
||||||||
Accounts Payable Trade |
3,500 | | 85,600 | |||||
Accounts Payable Related Party |
4 | | 237 | |||||
Accrued Interest, Shareholder Loans |
319 | 94 | 1,105 | |||||
Net Cash from Operating Activities |
(1,098) | (5,386) | (23,488) | |||||
Cash from Financing Activities |
||||||||
Loans from Common Shareholders |
| 6,000 | 24,000 | |||||
Sale of Common Shares |
| | 30 | |||||
Net Cash from Financing Activities |
| 6,000 | 24,030 | |||||
Net Change in Cash |
(1,098 | ) | 614 | 542 | ||||
Cash at Beginning of Period |
1,640 | 1,457 | | |||||
Cash at End of Period |
$ | 542 | $ | 2,072 | $ | 542 | ||
The accompanying notes are an integral part of these financial statements.
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(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1: Organization and Significant Accounting Policies
Nature of Operations
Audience Productions, Inc. (API) is a Washington corporation formed in July 2009 to engage in the business of developing, financing, producing, marketing, and selling the full length motion picture, Lydia Slotnick Unplugged. The Film tells the story of a hip, thirty-something music executive who has to prove she still has an edge. So, she digs up dirt on a has-been rocker, but uncovers a bigger story. We anticipate that the film will be sold to a distributor; however, there are no plans or arrangements with any distributors currently in place. The film will be financed by the sale of 800,000 Series A Preferred Shares for $10.00 per share. Upon sale of the film and any distribution to the shareholders, the Series A Preferred Shares will be redeemed.
API is currently wholly-owned and managed by Jay T. Schwartz, Julie Chase, and George Brumder.
Use of Estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions.
Basis of Presentation
APIs financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America. API has year end of September 30.
Basic and Diluted Earnings per Share
In February 1997, the FSAB issued ASC No. 260, Earnings Per Share, which specifies the computation, presentation, and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. ASC No. 260 supersedes the provisions of APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. API has adopted the provisions of ASC No. 260 effective July 6, 2009 (inception).
Cash and Cash Equivalents
Cash includes cash and highly liquid investments with original maturities of three months or less.
Note 2: Going Concern
As shown in the accompanying financial statements, API incurred substantial net losses for the periods ended September 30, 2009 and December 31, 2010 and has no revenue stream to support itself. This raises doubt about APIs ability to continue as a going concern.
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Note 3: Series A Preferred Shares
Priority Return
When the Series A Preferred Shares are issued, Series A Preferred Shareholders will be entitled to a priority return equal to the amount of their investment plus 7%. Until the Series A Preferred priority return has been paid, all cash available for distribution will be distributed 100% to the Series A Preferred Shareholders, pro-rata amongst the class.
Note 4: Accounts Payable
A/P, Trade: API has retained Beacon Law Advisors for securities-related legal services. Under the terms of the agreement with Beacon, Beacon has charged API $82,000 for services associated with the preparation and filing of APIs registration statement. This amount is due in full upon the successful closing of the offering associated with the financing of Lydia Slotnick Unplugged.
Also payable under this account is $3,600 to our certified public accountants.
A/P, Related Parties: On June 30, 2010, API entered in to an Intellectual Property and Technology License with Jay T. Schwartz, Julie Chase, and George Brumder (collectively, the Licensor) in exchange for $100 payable by API to Licensor.
Also payable under this account are various expenses due to company management totaling $137.
Note 5: Long Term Liabilities
On August 19, 2009, API entered into a loan agreement with Jay T. Schwartz, George Brumder, and Julie Chase (company management and the common shareholders, collectively, the Lenders) for the sum of three thousand dollars ($3,000), with an interest rate of five percent (5%) per annum. The loan and all accrued interest shall become immediately due and payable upon the successful closing of the offering associated with the financing of Lydia Slotnick Unplugged. Repayment of the loan will not represent a taxable dividend or distribution of cash from API. Under the terms of the agreement, additional loans may be made as requested by API, to fund ongoing operations of the company, up to a total of $100,000, though management does not believe API will require more than $50,000 in loans to fund its operations prior to the successful closing of the offering associated with the financing of Lydia Slotnick Unplugged.
Between October 1, 2009 and December 31, 2010, API borrowed an additional $21,000 from the Lenders with the same interest rate of five percent (5%) per annum. Total accrued interest on all borrowings, through December 31, 2010, is $1,105. The loans are to be repaid with proceeds of the offering.
Note 6: Income Taxes
Deferred Tax Assets: |
As of December 31, 2010 | As of September 30, 2010 | ||
Net Operating Loss Carryforwards |
$ 110,431 | $ 105,510 | ||
Other |
0 | 0 | ||
Gross Deferred Tax Assets |
37,547 | 35,873 | ||
Valuation Allowance |
(37,547) | (35,873) | ||
Net Deferred Tax Assets |
0 | 0 |
Note 7: Common Stock Transactions
API is authorized to issue a total of 100,000,000 shares of common stock with no par value per share.
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Note 8: Recent Accounting Pronouncements In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140, to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, Accounting for the Impairment of Disposal of Long-Lived Assets, to allow a qualifying special purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on APIs future reported financial position or results of operations.
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Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with, and is qualified in its entirety by reference to our reviewed (and audited as applicable) financial statements and accompanying notes contained herein. Except for historical information, the discussions in this section contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains statements relating to expected future results and business trends that are based upon our current estimate, expectations, and projections about the industry, and upon our beliefs, and certain assumptions we have made that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as anticipates, guidance, expects, intends, plans, believes, seeks, estimates, may, will, prospects, outlook, forecast, and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results may differ materially and adversely from those expressed in any forward-looking statement as a result of various factors. These factors include, but are not limited to: our ability to raise $8,000,000 in our public offering for 800,000 shares of Series A Preferred Stock, our ability to secure actors, actresses, directors, and other filmmaking professionals, our ability to produce the film, Lydia Slotnick Unplugged as planned, our ability secure a favorable distribution deal during or upon completion of the film, other trends in the motion picture market, including consumer tastes and preferences, consumers disposable income, and changes involving the technology used to watch films, as well as other risks detailed from time to time in our SEC filings. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Overview Audience Productions, Inc. (API) is a Washington corporation formed in July 2009 to engage in the business of developing, financing, producing, marketing, and selling the full length motion picture, Lydia Slotnick Unplugged (the Film). The Film tells the story of a hip, thirty-something music executive that has to prove she still has an edge. So, she digs up dirt on a has-been rocker, but uncovers a bigger story. We will attempt to sell the Film to a distributor, however, there are no plans or arrangements with any distributors currently in place. API is in the development stage; from our inception to December 31, 2010, the company has earned no revenue, has a net loss of $110,431, and has total assets of $542 consisting solely of cash.
Description of Our Revenue, Cost of Revenue and Expenses We had no revenue during the period, as we currently conduct no revenue-generating activities. We do not anticipate producing any revenue if and until we raise the $8,000,000 in our public offering and produce and sell the Film. Expenses consisted primarily of general and administrative costs ($4,502). 12
Critical Accounting Policies Other than those referenced in Note 8 to our financial statement above, we have no accounting policies we consider to be critical. Our statements are prepared in conformity with accounting principles generally accepted in the United States. Results of Operations For the three months ended December 31, 2010, continued expenses from development stage activities resulted in a net loss of $4,921. We had no revenue during the period, as we currently conduct no revenue-generating activities. Borrowing remained flat at $24,000 and at December 31, 2010, we had $542 in cash, $110,943 in total liabilities (of which $25,342 is due to the Officers and $82,000 is due to our counsel, Beacon Law Advisors), and negative shareholders equity of $110,401. Comparison to Prior Periods Total expenses during the period were relatively flat from the prior period ($4,921 compared to $5,480 for the 3-month period from October 1 to December 31, 2010 and 2009, respectively) and both amounts were largely made up of auditing expenses of $3,600. As the nature of our operations up to this point has been non-revenue generating, each quarters financial activity continues to consist of start-up expenses. Liquidity and Capital Resources Since our inception, we have financed our development exclusively with loans made to us from our Officers. At December 31, 2010, these loans totaled $24,000 and accrued interest of $1,105 at a rate of 5% per annum. We anticipate that the total cost to fund our operations prior to and throughout the offering period will not exceed $50,000. However, the agreement we have in place with our Officers allows for a total loan amount of up to $100,000. We currently do not have any other source of liquidity. However, we are in the process of raising $8,000,000 in a public offering of 800,000 shares of Series A Preferred stock at $10 per share. If we are successful in this offering, we will repay the loans to the Officers and commence the production of the Film. Contractual Obligations In addition to the $82,000 due to our attorneys as shown on our balance sheet under Accounts Payable - Trade and the $25,342 (including accrued interest) due to our Officers as shown on our balance sheet under Loans from Common Shareholders, we currently have three contractual obligations, none of which will take effect unless and until we raise the entire $8,000,000 now being offered via public offering. Upon raising the funds, we will begin making a series of payments totaling $200,000 each to Jay Schwartz, George Brumder, and Julie Chase as production managers for the film. These payments are more fully described in our prospectus and the applicable exhibits thereto. We also have in place an option purchase agreement with the writers of the film (detailed in the prospectus and applicable exhibit) under which we will owe them the purchase price of the film ($200,000 less any previously paid option fees). Finally, we have an contract in place under which we are obligated to use Bridge Productions, Inc. to produce the film. Compensation under this agreement is detailed in the prospectus and applicable exhibit. Off-Balance Sheet Arrangements We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships that would be expected to have a material current or future effect upon our financial condition or results of operations. 13
Recent Accounting Pronouncements See Note 8 in the attached, reviewed financial statements in Item 1 above. Item 3 Quantitative and Qualitative Disclosures About Market Risk Liquid assets are in the form of cash on deposit at a state chartered commercial bank and are fully insured by the FDIC. Item 4 Controls and Procedures Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer performed an evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)), which have been designed to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. They concluded that the controls and procedures were effective as of December 31, 2010 to provide reasonable assurance of the achievement of these objectives.
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None. Not Applicable Item 2 Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3 Defaults Upon Senior Securities None. None. The exhibits required by Item 6
are included herewith as follows: Description Filing Date 15
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized. AUDIENCE PRODUCTIONS, INC. /s/ JAY T. SCHWARTZ /s/ GEORGE R. BRUMDER Date: February 14, 2011 16
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On July 6, 2009, API, by unanimous written consent, issued a total of three shares of common stock to the founders (directors and officers). These shares were issued at par value of $1.00 in consideration only for cash. On June 30, 2010, APIs Board of Directors and Shareholders approved an amendment and restatement to APIs Articles that eliminated the par value of these shares.
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In April 2009, the FASB issued FASB Staff Position 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, (FSP 157-4). FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. FSP 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. API adopted FSP 157-4 in the second quarter of 2009. FSP 157-4 did not have a material impact on the financial statements.
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API has three officers, Jay T. Schwartz (President), George Brumder (Treasurer), and Julie Chase (Secretary), together known as the Officers. API is currently offering 800,000 Series A Preferred Shares, at $10.00 per share, to raise the Films $8,000,000 production budget. The shares became available for sale to the public on April 23, 2010, though we did not begin to sell shares via our website until January 10, 2011. The initial sales period ended on October 19, 2010. However, API elected to extend the offering period for two of six available, consecutive, 3-month periods and the Offering Period will now end on April 19, 2011. In the event that all of the Series A Preferred Shares are not sold by April 19, 2011, API reserves the right to extend the Offering Period for up to four additional, consecutive, 3-month periods.
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Changes in internal controls. There was no change in our internal control over financial reporting during the quarter ended December 31, 2010, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Exhibit No.
31.1
Rule 13a-14(a) Certification of Chief Executive Officer.
February 14, 2011
31.2
Rule 13a-14(a) Certification of Chief Financial Officer.
February 14, 2011
32.1
Section 1350 Certification of Chief Executive Officer.
February 14, 2011
32.2
Section 1350 Certification of Chief Financial Officer.
February 14, 2011
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By:
Name:
Jay T. Schwartz
Title:
Director and Chief Executive Officer
(Principal Executive Officer)
By:
Name:
George R. Brumder
Title:
Director and Chief Financial Officer
(Principal Financial and Accounting Officer)