Notes to Unaudited Condensed Financial Statements
Note 1 – Nature of Business
Big Sky Productions, Inc. (the “Company”) was incorporated in the State of Nevada on February 28, 2008. Big Sky Productions, Inc. is developing a business plan as a producer of radio advertisements for small businesses. To date, our business activities have been limited to organizational matters, reselling of advertising time, developing our website and the preparation and filing of the registration statement. The Company has elected a fiscal year end of June 30.
Note 2 - 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 December 31, 2012, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted 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 June 30, 2012 audited financial statements. The results of operations for the periods ended December 31, 2012 and 2011 are not necessarily indicative of the operating results for the full year.
Note 3 – Significant Accounting Policies
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas requiring the use of estimates include impairment of long lived assets, valuation allowance applied to deferred tax assets and useful lives used in the depreciation of equipment. Actual results could differ from those estimates.
Cash and Cash Equivalents
All highly liquid investments with maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2012.
Earnings per Share
FASB ASC 260, “
Earnings Per Share”
provides for calculation of "basic" and "diluted" earnings (loss) per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Basic and diluted loss per share were the same, at the reporting dates, as there were no common stock equivalents outstanding.
BIG SKY PRODUCTIONS, INC.
(A Development Stage Enterprise)
Notes to Unaudited Condensed Financial Statements
Note 3 - Significant Accounting Policies (continued)
Share Based Expenses
ASC 718
"Compensation - Stock Compensation"
codified SFAS No. 123 prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. , may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (
a
) the option to settle by issuing equity instruments lacks commercial substance or (
b
) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50
"Equity - Based Payments to Non-Employees"
which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"),
"Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services".
Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (
a
) the goods or services received; or (
b
) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.
Going concern
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses, and (2) as a last resort, seeking out and completing a merger with an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
BIG SKY PRODUCTIONS, INC.
(A Development Stage Enterprise)
Notes to Unaudited Condensed Financial Statements
Note 3 - Significant Accounting Policies (continued)
Revenue Recognition
The Company's financial statements are prepared under the accrual method of accounting. Revenues are recognized when evidence of an agreement exists, the price is fixed or determinable, collectability is reasonably assured and goods have been delivered or services performed.
The Company derives revenues from the sale of advertising space on its radio program “The Ellis Martin Report.” “The Ellis Martin Report” is a paid news magazine airing on select AM radio stations in the United States. Clients and/or guests compensate the Company for time on this program to expose their business or stories to the listening audience.
Advertising contracts are structured to run for a time period between 30 and 120 days. Accordingly, revenues are recognized on a pro-rata basis resulting in recognized revenue and deferred revenue of $7,808 and $4,405 respectively for and as of the six months ended December 31, 2012.
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.
Property and Equipment
Property and equipment are carried at cost. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period.
Depreciation is computed for financial statement purposes on a straight-line basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:
|
|
Estimated Useful Lives
|
|
Furniture and Fixtures
|
5 - 10 years
|
|
Computer Equipment
|
2 - 5 years
|
|
Vehicles
|
5 - 10 years
|
For federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. For audit purposes, depreciation is computed under the straight-line method. At December 31 and June 30, 2012, the Company had the following property and equipment:
|
|
|
December 31, 2012
|
|
|
June 30, 2012
|
|
|
Leasehold improvements
|
|
$
|
2,795
|
|
|
$
|
2,795
|
|
|
Computer and video equipment
|
|
|
10,064
|
|
|
|
10,064
|
|
|
Sub Total
|
|
$
|
12,859
|
|
|
$
|
12,859
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
(10,595
|
)
|
|
|
(7,380
|
)
|
|
Total
|
|
$
|
2,264
|
|
|
$
|
5,479
|
|
BIG SKY PRODUCTIONS, INC.
(A Development Stage Enterprise)
Notes to Unaudited Condensed Financial Statements
Note 4 – Related Party Transactions
During the six months ended December 31, 2012, the Company received loans totaling $3,351 from a related party to fund operations. There was a total of $11,851 due to related parties as of December 31, 2012.
Notes payable consisted of the following at December 31:
|
|
|
December 31, 2012
|
|
|
June 30, 2012
|
|
|
Related Party payable
|
|
$
|
11,851
|
|
|
$
|
8,500
|
|
|
Discount on note
|
|
|
(1,200
|
)
|
|
|
(767
|
)
|
|
Net Total
|
|
$
|
10,651
|
|
|
$
|
7,733
|
|
The loans are non-interest bearing, due on demand and as such are included in current liabilities.
The Company has imputed interest at a rate of approximately 5% for each of the aforementioned notes, which has been recorded as a discount to each note with an increase in paid in capital. Imputed interest expense for the six month ended December 31, 2012 and 2011 was $229 and $185, respectively.
During the six months ended December 31, 2012, the Company paid $0 (2011 - $48,715) in commissions to a director and officer of the Company related to advertising sales during the period. As of December 31, 2012, $2,019 has been deferred and recorded as an other current asset on the balance sheet.
During the six months ended December 31, 2012, the Company incurred $0 (2011 - $1,500) in transcription and administrative services to an officer of the Company.
During the six months ended December 31, 2012, the Company incurred $0 (2011 - $30,000) in management fees to a director and officer of the Company.
Note 5 – Stockholders’ Equity
Common Stock
On February 28, 2008, the Company was formed with one class of common stock, par value $0.001. The Company authorized 75,000,000 shares of common stock.
At December 31, 2012, the Company had 12,063,381 common shares issued and outstanding. There are no preferred shares authorized, issued or outstanding. The Company has no stock option plan, warrants or other dilutive securities.
Net loss per common share
Net loss per share is calculated in accordance with FASB ASC 260, “
Earnings Per Share.
” The weighted-average number of common shares outstanding during each period is used to compute basic loss per share. Diluted loss per share is computed using the weighted average number of shares and dilutive potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.
Note 6 – Subsequent Events
The Company has evaluated subsequent events through the date of this filing and determined there are none to disclose
