SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended May 31, 2006
- -OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission File Number 333-131043
DULCIN IZMIR CORPORATION
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(Exact name of registrant as specified in its charter)
FLORIDA 20-2710793
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(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization
P.O. Box 331916, Miami, FL 33233-1916
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(Address of principal executive offices, Zip Code)
(305) 586-4167
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(Registrant's telephone number, including area code)
Check whether the registrant (1) 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.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ x ]
The number of outstanding shares of the registrant's common stock,
May 31, 2006: Common Stock - 12,000,000
2
Part I Financial Information Page
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
May 31, 2006 (unaudited) and August 31, 2005 3
Unaudited Condensed Consolidated Statements of Operations
for the three and nine months ended May 31, 2006, and
cumulative from inception on April 11, 2005 through
May 31, 2006 4
Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended May 31, 2006, from April 11, 2005
(inception) to May 31, 2005,and cumulative from inception on
April 11, 2005 through May 31, 2006 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Plan of operation 8
3
DULCIN IZMIR CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED BALANCE SHEETS
May 31, August 31,
2006 2005
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(unaudited)
ASSETS
------
Current Assets
Cash $ 82,154 $ 19,772
Advances 2,901 6,906
Advances - related party 9,069 3,885
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Total Current Assets $ 94,125 $ 30,563
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 49,911 $ 20,785
Accounts payable - related party 6,130 4,137
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Total Current Liabilities 56,041 24,922
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STOCKHOLDERS' EQUITY
Common stock, par value $.0001, 100,000,000
shares authorized, 12,000,000 issued and
outstanding-2006, 7,474,000 issued and
outstanding-2005 1,200 747
Paid in capital 254,845 36,792
(Deficit) accumulated during the
development stage (217,961) (31,898)
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Total Stockholders' Equity 38,084 5,641
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$ 94,125 $ 30,563
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SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4
DULCIN IZMIR CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Cumulative
from
Three April 11, Nine April 11, April 11,
Months 2005 Months 2005 2005
Ended (Inception) Ended (Inception) (Inception)
May 31, to May 31, May 31, to May 31, to May 31,
2006 2005 2006 2005 2006
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REVENUES $ - $ - $ - $ - $ -
---------- ---------- ---------- ---------- ----------
EXPENSES
General and administrative
Consulting Fees 12,000 - 36,500 - 37,100
Legal Fees 2,100 - 24,646
- - 30,122
Other 10,250 750 46,734 750 57,694
Research & Development 13,300 - 78,183 - 93,045
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Total expenses 37,650 750 186,063 750 217,961
---------- ---------- ---------- ---------- ----------
NET (LOSS) $ (37,650) $ (750) $ (186,063) $ (750) $ (217,961)
========== ========== ========== ========== ==========
NET (LOSS) PER SHARE * * $ (0.02) *
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 12,000,000 6,000,000 11,960,000 6,000,000
========== ========== ========== ==========
* less than $.01 per share
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
DULCIN IZMIR CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Cumulative
from
Nine April 11, April 11,
Months 2005 2005
Ended (Inception) (Inception)
May 31, to May 31, to May 31,
2006 2005 2006
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<s> <c> <c> <c>
OPERATING ACTIVITIES
Net (loss) from operations $ (186,063) $ (750) $ (217,961)
Adjustments to reconcile net (loss) to net
cash provided (used) by operating activities:
Common Stock issued for Services - - 600
Contributions to capital 2,500 417 3,739
Changes in operating assets and liabilities:
Increase in accounts payable-related party 6,024 333 10,161
Increase in accounts payable 25,095 - 45,880
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Total adjustments 33,619 750 60,380
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NET CASH (USED) BY OPERATING ACTIVITIES (152,444) - (157,581)
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INVESTING ACTIVITIES
(Increase)/decrease in advances 4,005 - (2,901)
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NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES 4,005 - (2,901)
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FINANCING ACTIVITIES
(Increase) in advances-related party (5,184) - (9,069)
Proceeds from sale of common stock,
net of offering costs 216,006 - 251,706
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NET CASH PROVIDED BY FINANCING ACTIVITIES 210,822 - 242,637
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NET INCREASE IN CASH 62,382 - 82,154
CASH, BEGINNING OF PERIOD 19,772 - -
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CASH, END OF PERIOD $ 82,154 $ - $ 82,154
========== ========== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
6
DULCIN IZMIR COPORATION
Notes to Consolidated Financial Statements
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair
presentation of the Company?s financial position as of May 31, 2006 and
the results of its operations and cash flows for the three and nine
months ended May 31, 2006 have been made. Operating results for the
nine months ended May 31, 2006 are not necessarily indicative of the
results that may be expected for the year ended August 31, 2006.
These condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto contained
in the Company?s Form SB-2 which became effective on March 31, 2006.
NOTE 2 ? PRIVATE PLACEMENT OF COMMON STOCK
Commencing in September 2005, the Company sold, in a private placement,
4,526,000 shares of common stock at $.05 per share, for gross proceeds
of $226,300, all of which was received by October 26, 2005.
NOTE 3 ? PUBLIC OFFERING OF COMMON STOCK
The Company registered on form SB-2 10,000,000 shares of common stock
at $.25 per share, of which 6,000,000 shares are for present
shareholders. Form SB-2 became effective on March 31, 2006. As of May
31, 2006, total stock offering costs of $48,294 were incurred and have
been classified as a reduction of paid in capital in the consolidated
statement of stockholders? equity.
NOTE 4 ? RESEARCH AND DEVELOPMENT
Research and development costs were substantially reduced in the
quarter ending May 31, 2006. This reduction is considered temporary
while the Company redirects and redefines its strategic plan. However,
the Company has continued to record the consulting compensation under a
consulting agreement for research and development of approximately
$13,000, for the current quarter.
7
NOTE 5 ?Accounting Irregularity
The Company?s internal controls were compromised by its bookkeeper
wherein she paid herself $11,000 more than she had earned since the
last audit. This amount was subsequently reduced to $9,000 by an
offset of time she had earned, and the reduced balance was repaid in
full in July 2006 by which date she was terminated.
This irregularity resulted in an overstated accounting expense during
the first and second quarters of the current fiscal year of $1,000 and
$2,000 respectively. Accordingly, as of May 31, 2006, the entire
$9,000, which included $6,000 overpaid in the third quarter was
classified as shareholder advances as of May 31, 2006.
During the review process for the quarter ended May 31, 2006, this
matter was brought to the attention of management, resulting in the
termination of the bookkeeper, the hiring of a new one, a complete
review of the accounting transactions for the current fiscal year by
management, and a change in internal controls to preclude the issuance
of any further pre-signed checks. In the opinion of management, no
other accounting irregularities were noted.
NOTE 6 ? SUBSEQUENT EVENT
Dulcin Izmir signed a Memorandum of Understanding on August 15, 2005
with Deleo Ltd., a Delaware Corporation, whereby Dulcin Izmir can earn
up to a 70 percent interest in Blue Sky International, Ltd. Despite
its ongoing efforts, Dulcin Izmir has been unable to formalize a
definitive agreement with Deleo, Ltd. as of August 11, 2006. As a
result, Dulcin Izmir is exploring other business opportunities.
The financial statements presented herein as of May 31, 2006, are those
of Dulcin consolidated with Blue Sky, since Blue Sky is considered to
be a variable interest entity in which Dulcin is considered the primary
beneficiary based on the expected future residual returns and/or
losses. Blue Sky?s fiscal year end is August 31.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion of Dulcin Izmir Corporation includes the
financial results of its wholly owned subsidiary, Blue Sky.
Trends and Uncertainties.
Dulcin Izmir is in the development stage, has not commenced operations
and has sustained a loss to date. The demand for our products would be
negatively affected if current engines are redesigned.
Dulcin Izmir signed a Memorandum of Understanding on August 15, 2005
with Deleo Ltd., a Delaware Corporation, whereby Dulcin Izmir can earn
up to a 70 percent interest in Blue Sky International, Ltd. Despite
its ongoing efforts, Dulcin Izmir has been unable to formalize a
definitive agreement with Deleo, Ltd. as of August 11, 2006. As a
result, Dulcin Izmir is exploring other business opportunities.
The financial statements presented herein as of May 31, 2006, are those
of Dulcin consolidated with Blue Sky, since Blue Sky is considered to
be a variable interest entity in which Dulcin is considered the primary
beneficiary based on the expected future residual returns and/or
losses. Blue Sky?s fiscal year end is August 31.
Financing Activities.
For the nine months ended May 31, 2006, Dulcin Izmir had a decrease in
advances ?related party of $5,184 and received proceeds from the sale
of common stock, net of offering costs of $216,006. As a result,
Dulcin Izmir had net cash provided by financing activities of $210,822
for the nine months ended May 31, 2006.
Investing Activities.
For the nine months ended May 31, 2006, Dulcin Izmir had a decrease in
advances of $4,005 resulting in net cash provided by investing
activities of $4,005.
Results of Operations.
For the three months ended May 31, 2006, Dulcin Izmir did not receive
any revenues and incurred general and administrative expenses of
$24,350 including operating expenses relating to normal business
operations of $10,250, consulting fees of $12,000, and legal fees of
$2,100. Research and development costs of $13,300 were directly
attributable to the activities of Blue Sky. Comparatively, for the
period from inception (April 11, 2005) to May 31, 2005, Dulcin Izmir
did not receive any revenues and incurred general and administrative
expenses of $750.
The increases for general and administrative expenses were due to the
costs associated with the operations of the Company while Blue Sky was
consolidated with it.
For the nine months ended May 31, 2006, Dulcin Izmir did not receive
any revenues and incurred general and administrative expenses of
$107,880 including operating expenses relating to normal business
operations of $46,734, consulting fees of $36,500, and legal fees of
$24,646 relating to its patents costs, and research and development
costs of $78,183. Research and development costs were substantially
increased in the quarter ended May 31, 2006. Additionally, Dulcin
Izmir has continued to record the consulting compensation under a
consulting agreement for research and development of approximately
$13,300, for the current quarter.
9
Plan of Operation. Our ability to continue in existence is dependent
on our ability to develop additional sources of capital and complete
the following:
Milestones: Steps Timeline
<s> <c> <c>
1. Develop additional Prepare Business Plan 2 months
sources of capital
Going Concern. The accompanying financial statements have been
prepared assuming that Dulcin Izmir will continue as a going concern.
Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a
reasonable length of time. Dulcin Izmir is in the development stage
and has incurred $217,961 in consolidated losses since inception and
has negative cash flows from operations of $157,581. The future of
Dulcin Izmir is now dependent upon our ability to locate and
development other business opportunities.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our
chief executive officer, conducted an evaluation of our "disclosure
controls and procedures" (as defined in Securities Exchange Act of 1934
(the "Exchange Act") Rules 13a-14(c)). Based on his evaluation, our
chief executive officer and chief financial officer have concluded that
as of the Evaluation Date, our disclosure controls and procedures are
effective to ensure that all material information required to be filed
in this quarterly report on Form 10QSB has been made known to him in a
timely fashion.
Changes in Internal Controls
Dulcin Izmir?s internal controls were compromised by its bookkeeper
wherein she paid herself $11,000 more than she had earned since the
last audit. This amount was subsequently reduced to $9,000 by an
offset of time she had earned, and the reduced balance was repaid in
full in July 2006 by which date she was terminated.
This irregularity resulted in an overstated accounting expense during
the first and second quarters of the current fiscal year of $1,000 and
$2,000 respectively. Accordingly, as of May 31, 2006, the entire
$9,000, which included $6,000 overpaid in the third quarter was
classified as shareholder advances as of May 31, 2006.
During the review process for the quarter ended May 31, 2006, this
matter was brought to the attention of management, resulting in the
termination of the bookkeeper, the hiring of a new one, a complete
review of the accounting transactions for the current fiscal year by
10
management, and a change in internal controls to preclude the issuance
of any further pre-signed checks. In the opinion of management, no
other accounting irregularities were noted.
11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. not applicable.
Item 2. Changes in Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
not applicable.
Item 5. Other Information. not applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K. none
(b) Exhibits. none
SIGNATURES
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.
Dated: August 14, 2006
Dulcin Izmir Corporation
/s/Maria Camila Maz
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By: Maria Camila Maz, President/CEO