UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 WASHINGTON,
        D.C. 20549
  Amendment
          No. 1
 to
 FORM
        10-QSB
  (Mark
        One)
 
 [X]
              QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 
 For
        the
        quarterly period ended: March 31, 2005
 
 or
 
 [_]
              TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 
 For
        the
        transition period from ___________ to ___________
 
 Commission
        File Number: 0-31039
 
 C&D
        PRODUCTION INC.
 (Exact
        name of small business issuer as specified in its charter)
  Nevada
              88-0438869(State
                  or other jurisdiction or incorporation or organization)
              (I.R.S.
                  Employer Identification No)
 
 
 8F,
        No. 268 Kwang-Fu South Road, Taipei, Taiwan ROC
 (Address
        of principal executive offices) (Zip Code)
 
 011-886-2-2705-9051
 (Issuer’s
        telephone number)
 
 N/A
 (Former
        name, former address and former fiscal year, if changed since last
        report)
 
 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 issuer was required to file such reports), and (2) has been subject
        to
        such filing requirements for the past 90 days. Yes x No o
  Indicate
            by check mark whether the registrant is a shell company (as defined in
            Rule
            12b-2 of the Exchange Act). Yes o No x
 The
        number of shares outstanding of the issuer’s Common Stock, $0.001 par value, as
        of the close of business on May 16, 2005 was 30,000,000.
  Transitional
        Small Business Disclosure Format (Check One): Yes o No x
  
  C&D
        PRODUCTION INC. AND SUBSIDIARIES
  PART
                  I -
              
              Financial
                  Statements
              1Item
                  1.
              
              Consolidated
                  Financial Statements
              1Consolidated
                  Statements of Financial Position
              1Consolidated
                  Statements of Operations (Unaudited)
              2Consolidated
                  Statements of Cash Flows (Unaudited)
              3Consolidated
                  Statements of Changes in Stockholders’ Equity
              4Notes
                  To Condensed Consolidated Financial Statements March 31, 2005 And
                  2004
              5Item
                  2.
              
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              11Item
                  3.
              
              Controls
                  and Procedures
              13PART
                  II -
              
              Other
                  Information
              14Item
                  1.
              
              Legal
                  Proceedings
              14Item
                  2.
              
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              14Item
                  3.
              
              Defaults
                  Upon Senior Securities
              14Item
                  4.
              
              Submission
                  of Matters to a Vote of Security Holders
              14Item
                  5.
              
              Other
                  Information
              14Item
                  6.
              
              Exhibits
              14Signatures
              15
  
  PART
        I -
        FINANCIAL STATEMENTS
 
 Item
        1.Consolidated
        Financial Statements
 
 C&D
        PRODUCTION INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF FINANCIAL POSITION
  ASSETSMarch
                  31, 2005
              
              December
                  31,(Unaudited)
              
              2004Current
                  AssetsCash
                  and cash equivalents
              
              $
              345,748
              
              $
              282,988Accounts
                  receivable, net
              
              
              167,884
              
              
              220,354Other
                  receivables
              
              
              2,434,239
              
              
              2,562,954Prepaid
                  expenses
              
              
              36,651
              
              
              1,331,343Total
                  Current Assets
              
              
              2,984,522
              
              
              4,397,639Fixed
                  Assets, net
              
              
              338,795
              
              
              350,741Total
                  Fixed Assets
              
              
              338,795
              
              
              350,741Other
                  AssetsDeposits
              
              
              6,143
              
              
              5,986Production
                  in progress
              
              
              2,126,845
              
              
              707,129Intangible
                  assets, net
              
              
              567,417
              
              
              588,560Total
                  Other Assets
              
              
              2,700,405
              
              
              1,301,675Total
                  Assets
              
              $
              6,023,722
              
              $
              6,050,055LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCurrent
                  LiabilitiesAccounts
                  payable and accrued expenses
              
              $
              1,154,248
              
              $
              1,332,882Due
                  to related party
              
              
              265,907
              
              
              12,292Short
                  term note payable
              
              
              627,700
              
              
              563,040Total
                  Current Liabilities
              
              
              2,047,855
              
              
              1,908,214Stockholders’
                  EquityCommon
                  stock, $.001 par value, 100,000,000 shares authorized,30,000,000
                  issued and outstanding
              
              
              30,000
              
              
              30,000Additional
                  paid in capital
              
              
              4,932,698
              
              
              4,932,698Cumulative
                  foreign-exchange translation adjustment
              
              
              208,445
              
              
              203,693Retained
                  earnings (deficit)
              
              
              (1,195,276
              )
              
              (1,024,550
              )Total
                  Stockholders’ Equity
              
              
              3,975,867
              
              
              4,141,841Total
                  Liabilities and Stockholders’ Equity
              
              $
              6,023,722
              
              $
              6,050,055
  Please
        see the notes to these condensed consolidated financial statements.
  1
  C&D
        PRODUCTION INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF OPERATIONS
 (UNAUDITED)
  Three
                  Months EndedMarch
                  31, 2005
              
              March
                  31, 2004Sales,
                  net
              
              $
              581,964
              
              $
              738,884Cost
                  of sales
              
              
              464,059
              
              
              628,774Gross
                  profit
              
              
              117,905
              
              
              110,110General
                  and administrative expenses
              
              
              273,776
              
              
              217,794Income
                  (loss) from operations
              
              
              (155,871
              )
              
              (107,684
              )Other
                  (Income) ExpenseInterest
                  income
              
              
              0
              
              
              (1
              )Other
                  income
              
              
              (1,430
              )
              
              0Miscellaneous
                  expense
              
              
              18
              
              
              0Interest
                  expense
              
              
              16,267
              
              
              4,582Total
                  Other (Income) Expense
              
              
              14,855
              
              
              4,581Income
                  (loss) before income taxes
              
              
              (170,726
              )
              
              (112,265
              )Provision
                  for income taxes
              
              
              0
              
              
              0Income
                  (loss)
              
              
              ($170,726
              )
              
              ($112,265
              )Net
                  income (loss) per share (basic and diluted)Basic
              
              
              ($0.005
              )
              
              ($0.004
              )Diluted
              
              
              ($0.005
              )
              
              ($0.004
              )Weighted
                  average number of sharesBasic
              
              
              30,000,000
              
              
              25,000,000Diluted
              
              
              30,000,000
              
              
              25,000,000
  Please
        see the notes to these condensed consolidated financial statements.
  2
  C&D
        PRODUCTION INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 
 Three
                  Months EndedMarch
                  31, 2005
              
              March
                  31, 2004CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  Income (loss)
              
              
              ($170,726
              )
              
              ($112,265
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
              
              
              19,549
              
              
              18,764Amortization
              
              
              21,143
              
              
              30,071Bad
                  Debt
              
              
              4,067
              
              
              0Decrease
                  (Increase) in receivables
              
              
              52,470
              
              
              (274,994
              )Decrease
                  (Increase) in other receivables
              
              
              128,715
              
              
              0Decrease
                  (Increase) in prepaid expenses
              
              
              1,294,692
              
              
              263,753Decrease
                  (Increase) in production in progress
              
              
              (1,419,716
              )
              
              (158,608
              )(Decrease)
                  Increase in accounts payable and accrued expenses
              
              
              (178,634
              )
              
              14,214(Decrease)
                  Increase in deferred revenue
              
              
              0
              
              
              (292,925
              )Total
                  Adjustments
              
              
              (77,714
              )
              
              (399,725
              )Net
                  cash used in operations
              
              
              (248,440
              )
              
              (511,990
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESPurchase
                  of furniture and equipment
              
              
              (7,603
              )
              
              (11,071
              )Net
                  cash (used in) investing activities
              
              
              (7,603
              )
              
              (11,071
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESPayment
                  on current portion debt
              
              
              (250,240
              )
              
              (202,219
              )Proceeds
                  from issuance of loans
              
              
              314,900
              
              
              (738,359
              )(Decrease)
                  Increase in due to related party
              
              
              253,615
              
              
              (96,634
              )Sale
                  of common stock
              
              
              0
              
              
              738,359Net
                  cash provided by (used in) financing activities
              
              
              318,275
              
              
              (298,853
              )Effect
                  of exchange rate change on cash
              
              
              528
              
              
              (3,668
              )Net
                  change in cash and cash equivalents
              
              
              62,760
              
              
              (825,582
              )Cash
                  and cash equivalents at beginning of year
              
              
              282,988
              
              
              922,421Cash
                  and cash equivalents at end of period
              
              $
              345,748
              
              $
              96,839Supplemental
                  cash flows disclosures:Interest
                  payments
              
              $
              16,267
              
              $
              3,991
 
 Please
        see the notes to these condensed consolidated financial
        statements.
  3
  C&D
        PRODUCTION INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
  March
                  31, 2005
              
              December
                  31,(Unaudited)
              
              2004Common
                  stock, number of shares outstandingBalance
                  at beginning of period
              
              
              30,000,000
              
              
              23,047,500Stock
                  issued
              
              
              0
              
              
              6,952,500Balance
                  at end of period
              
              
              30,000,000
              
              
              30,000,000Common
                  stock, par value $.001Balance
                  at beginning of year
              
              $
              30,000
              
              $
              23,048Common
                  stock issued
              
              
              0
              
              
              6,952Balance
                  at end of period
              
              
              30,000
              
              
              30,000Additional
                  paid in capitalBalance
                  at beginning of year
              
              
              4,932,698
              
              
              2,356,779Stock
                  cancellation
              
              
              0
              
              
              2,575,919Balance
                  at end of period
              
              
              4,932,698
              
              
              4,932,698Cumulative
                  foreign-exchange translation adjustmentBalance
                  at beginning of year
              
              
              203,693
              
              
              (25,286
              )Foreign
                  currency translation
              
              
              4,752
              
              
              228,979Balance
                  at end of period
              
              
              208,445
              
              
              203,693Retained
                  (deficits)Balance
                  at beginning of year
              
              
              (1,024,550
              )
              
              (140,218
              )Net
                  income (loss)
              
              
              (170,726
              )
              
              (884,332
              )Balance
                  at end of period
              
              
              (1,195,276
              )
              
              (1,024,550
              )Total
                  stockholders’ equity at end of period
              
              $
              3,975,867
              
              $
              4,141,641
 
 
 Please
        see the notes to these condensed consolidated financial statements.
  4
  NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
        31,
        2005 AND 2004
 
 NOTE
        1 -
        NATURE OF OPERATIONS
 
 C&D
        Production, Inc., formerly Huile’ Oil & Gas, Inc., was incorporated on
        October 24, 1997 under the laws of the State of Nevada. C&D Production
        Group, Inc. was incorporated on May 23, 2003 under the laws of the British
        Virgin Islands. C&D Production International was incorporated on November 6,
        1998 under the laws of the Peoples Republic of China. C&D Production, Inc.
        owns 100% of the outstanding stock of C&D Production Group, Inc. C&D
        Production Group, Inc. owns 100% of the capital stock of C&D Production
        International. Collectively the three corporations are referred to herein
        as the
“Company”.
 
 On
        September 4, 2003, C&D Production Group, Inc. became a wholly owned
        subsidiary of C&D Production, Inc. through an Exchange Agreement, whereby
        C&D Production, Inc. acquired all of the issued and outstanding capital
        stock of C&D Production Group, Inc. in exchange for 13,828,500 shares of
        C&D Production, Inc.
 
 The
        Company is a full-service advertising and creative film production agency
        using
        ideas and technology to extend concepts across multiple mediums. The Company
        is
        also currently involved in the creation of feature films and documentaries
        focusing on mainland China.
 
 The
        Company operates in an industry characterized by significant competition
        and
        rapid technological changes. They will need additional investments and funding
        in order to complete the development and improvements necessary for growth
        and
        planned operations.
 
 NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Unaudited
        Interim Financial Information - The accompanying financial statements have
        been
        prepared by C&D Production, Inc., pursuant to the rules and regulations of
        the Securities and Exchange Commission (the “SEC”) Form 10-QSB and Item 310 of
        Regulation S-B, and U.S. generally accepted accounting principles for interim
        financial reporting. These financial statements are unaudited and, in the
        opinion of management, include all adjustments (consisting of normal recurring
        adjustments and accruals) necessary for a fair presentation of the statement
        of
        financial position, operations, and cash flows for the periods presented.
        Operating results for the three months ended March 31, 2005 and 2004 are
        not
        necessarily indicative of the results that may be expected for the year ending
        December 31, 2005, or any future period, due to seasonal and other factors.
        Certain information and footnote disclosures normally included in financial
        statements prepared in accordance with generally accepted accounting policies
        have been omitted in accordance with the rules and regulations of the SEC.
        These
        financial statements should be read in conjunction with the audited financial
        statements and accompanying notes, included in the Company’s Annual Report for
        the year ended December 31, 2004.
 
 Basis
        of
        Consolidation - The condensed consolidated financial statements for the first
        quarter of 2005 include the accounts of C&D Production, Inc. and its wholly
        owned subsidiaries, C&D Production Group, Inc. and C&D Production
        International. All references herein to the Company are included in the
        consolidated results. All significant intercompany accounts and transactions
        have been eliminated upon consolidation.
 
 5
  NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Financial
        Statement Presentation - Certain changes to the 2004 financial statements
        have
        been made to conform to the 2005 financial statement format.
 
 Revenue
        Recognition - Revenue from production of advertising is recognized upon
        completion of the project, and is recorded net of discounts and
        allowances.
 
 The
        Company will recognize film revenue from the distribution of Featured Films
        and
        related products when earned and reasonably estimable in accordance with
        Statement of Position 00-2 “Accounting by Producers or Distributors of Films”
(SOP 00-2).
 
 Cash
        and
        Cash Equivalents - Cash equivalents are stated at cost. Cash equivalents
        are
        highly liquid investments readily convertible into cash with an original
        maturity of three months or less and consist of time deposits with commercial
        banks.
 
 Allowance
        for Doubtful Accounts - The Company establishes an allowance for doubtful
        accounts on a case-by-case basis when it believes the required payment of
        specific amounts owed is unlikely to occur after a review of historical
        collection experience, subsequent collections and management’s evaluation of
        existing economic conditions.
 
 Fixed
        Assets - Property and equipment are stated at cost less accumulated
        depreciation. Expenditures for major additions and improvements are capitalized
        and minor replacements, maintenance and repairs are charged to expense as
        incurred. Whenever an asset is retired or disposed of, its cost and accumulated
        depreciation or amortization is removed from the respective accounts and
        the
        resulting gain or loss is credited or charged to income.
 
 Depreciation
        is computed using the straight-line and declining-balance methods over the
        following estimated useful lives:
 
 Furniture
                  and Fixtures
              5
                  -
                  8 yearsAutomobile
              5
                  yearsOffice
                  Equipments
              3
                  -
                  8 yearsBuilding
                  and Improvements
              30
                  years
  6
 
 NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Intangible
        Assets - Effective July 2002, the Company adopted Statement of Financial
        Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.”
The adoption of SFAS No. 142 required an initial impairment assessment involving
        a comparison of the fair value of trademarks, patents and other intangible
        assets to current carrying value. No impairment loss was
        recognized.
 
 Trademarks
        and other intangible assets determined to have indefinite useful lives are
        not
        amortized. We test such trademarks and other intangible assets with indefinite
        useful lives for impairment annually, or more frequently if events or
        circumstances indicate that an asset might be impaired. Trademarks and other
        intangible assets determined to have definite lives are amortized over their
        useful lives or the life of the trademark and other intangible asset, whichever
        is less.
 
 Advertising
        - Advertising costs are expensed in the year incurred.
 
 Estimates
        - The preparation of financial statements in conformity with U.S. generally
        accepted accounting principles requires management to make certain 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. Actual results could differ from those estimates. Significant
        estimates include collectibility of accounts receivable, accounts payable,
        sales
        returns and recoverability of long-term assets.
 
 Concentration
        of Credit Risk - Financial instruments, which subject the Company to credit
        risk, consist primarily of cash equivalents and trade accounts receivable
        arising from its normal business activities. The Company places its cash
        in what
        it believes to be credit-worthy financial institutions, however, cash balances
        have exceeded the FDIC insured levels at various times during the year.
        Concentration of credit risk with respect to trade accounts receivable is
        primarily from related parties located in Asia. The Company actively evaluates
        the creditworthiness of the customers with which it conducts business through
        credit approvals, credit limits and monitoring procedures.
 
 Impairment
        of Long-Lived Assets - On January 1, 2002 the Company adopted SFAS 144
“Accounting for the Impairment or Disposal of Long-Lived Assets”. The Company
        evaluates long-lived assets for impairment whenever events or changes in
        circumstances indicate that the carrying value of an asset may not be
        recoverable. If the estimated future cash flows (undiscounted and without
        interest charges) from the use of an asset is less than the carrying value,
        a
        write-down would be recorded to reduce the related asset to its estimated
        fair
        value. There have been no such impairments to date.
 
 Earnings
        Per Share - Earnings per share are based on the weighted-average number of
        shares of common stock and common stock equivalents outstanding during each
        period. Earnings per share are computed using the treasury stock method.
        The
        options to purchase common shares are considered to be outstanding for all
        periods presented but are not calculated as part of the earnings per
        share.
 
 Income
        Taxes - Income taxes have been provided based upon the tax laws and rates
        in the
        countries in which operations are conducted and income is earned. The income
        tax
        rates imposed by the taxing authorities vary. Taxable income may vary from
        pre-tax income for financial accounting purposes. There is no expected
        relationship between the provision for income taxes and income before income
        taxes because the countries have different taxation rules, which vary not
        only
        to nominal rates but also in terms of available deductions, credits and other
        benefits. Deferred tax assets and liabilities are recognized for the anticipated
        future tax effects of temporary differences between the financial statement
        basis and the tax basis of the Company’s assets and liabilities using the
        applicable tax rates in effect at year end as prescribed by SFAS 109 “Accounting
        for Income Taxes”.
 
 7
  NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Exchange
        Gain (Loss) - As of March 31, 2005 and 2004, the transactions of C&D
        Production, Inc. - Taiwan denominated in foreign currency is recorded in
        New
        Taiwan dollars at the rates of exchange in effect when the transactions occur.
        Exchange gains and losses are recognized for the different foreign exchange
        rates applied when the foreign currency assets and liabilities are
        settled.
 
 Translation
        Adjustments - As of March 31, 2005 and 2004, the accounts of C&D Production,
        Inc. - Taiwan were maintained, and its financial statements were expressed,
        in
        New Taiwan Dollars (NTD). Such financial statements were translated into
        U.S.
        Dollars (USD) in accordance with Statement of Financial Accounts Standards
        (“SFAS”) No. 52, “Foreign Currency Translation”, with the NTD as the functional
        currency. According to the Statement, all assets and liabilities were translated
        at the current exchange rate, stockholder’s equity are translated at the
        historical rates and income statement items are translated at the
        weighted-average exchange rate for the period. The resulting translation
        adjustments are reported under other comprehensive income in accordance with
        SFAS No. 130, “Reporting Comprehensive Income”.
 
 As
        of
        March 31, 2005 and 2004 the exchange rates between NTD and the USD was
        NTD$1=USD$0.03149 and NTD$1=USD$0.03014, respectively. The weighted-average
        rate
        of exchange between NTD and USD was NTD$1 = USD$0.03178 and NTD$1=USD$0.02990,
        respectively. Total translation adjustment recognized for the three months
        ended
        March 31, 2005 and 2004 is $203,693 and ($28,263), respectively.
 
 NOTE
        3 -
        CONCENTRATION
 
 The
        Company had five major customer during the three months ended March 31, 2005.
        Of
        the five customers referred to herein, one customer comprised 58.2% of the
        total
        sales during the three months ended March 31, 2005. Sales to this customer
        were
        approximately $358,978. Included in accounts receivable is $62,102 from this
        customer as of March 31, 2005.
 
 NOTE
        4 -
        CASH
 
 The
        Company maintains its cash balances at various banks in Taiwan and Hong Kong.
        All balances are insured by the Central Deposit Insurance Corporation (CDIC).
        As
        of March 31, 2005, there were no uninsured portions of the balances held
        at the
        banks.
 
 NOTE
        5 -
        FIXED ASSETS
 
 Fixed
                  assets consist of the following:March
                  31, 2005
              
              December
                  31, 2004Land
              
              $
              52,670
              
              $
              52,670Building
              
              
              55,898
              
              
              55,898Office
                  equipment
              
              
              472,886
              
              
              465,283Automobile
              
              
              161,282
              
              
              161,282742,736
              
              
              735,133Accumulated
                  depreciation
              
              
              (403,941
              )
              
              (384,392
              )$
              338,795
              
              $
              350,741
 
 8
 
 
 NOTE
        6 -
        INTANGIBLE ASSETS
 
 A
                summary is as follows:March
                    31, 2005
              
              December
                  31, 2004Patents
                  and Trademark costs
              
              $
              1,182,093
              
              $
              1,182,093Less
                  accumulated amortization
              
              
              (614,676
              )
              
              (593,533
              )$
              567,417
              
              $
              588,560
 
 NOTE
        7 -
        COMPENSATED ABSENCES
 
 Employees
        can earn annual vacation leave at the rate of seven (7) days per year for
        the
        first three years. Upon completion of the third year of employment, employees
        earn annual vacation leave at the rate of ten (10) days per year for years
        four
        through five. Upon completion of the fifth year of employment, employees
        earn
        annual vacation leave at the rate of fourteen (14) days per year for years
        six
        through ten. Upon completion of the tenth year of employment, one (1) additional
        day for each additional year, until it reaches thirty (30) days per year.
        At
        termination, employees are paid for any accumulated annual vacation leave.
        As of
        March 31, 2005 and 2004 vacation liability exists in the amount of $8,675
        and
        $0, respectively.
 
 NOTE
        8 -
        RELATED PARTY TRANSACTIONS
 
 Throughout
        the history of the Company, certain members of the Board of Directors, and
        general management have made loans to the Company to cover operating expenses
        or
        operating deficiencies.
 
 As
        of
        March 31, 2005, the Company has a non interest-bearing loan from Chin-Ping
        Chou,
        the Company’s Director, in the amount of $12,292.
 
 As
        of
        March 31, 2005, the Company has a non interest-bearing loan from Michael
        Chou,
        the Company’s Director and Chief Executive Officer, in the amount of
        $253,615.
 
 NOTE
        9 -
        COMMITMENTS AND CONTINGENCIES
 
 Operating
        Leases
 
 The
        Company leases three office facilities under operating leases that terminate
        on
        various dates. Rental expense for these leases consisted of $15,164 for the
        three months ended March 31, 2005. The Company has future minimum lease
        obligations of $19,675 for 2005.
 
 9
 
 
 
 NOTE
        10 -
        DEBT
 
 At
        March
        31, 2005 and 2004, the Company had notes payable outstanding in the aggregate
        amount of $627,700 and $120,551, respectively. Payable as follows:
  March
                  31, 2005
              
              
              
              March
                  31, 2004Unsecured
                  notes payable to a bank in Taiwan, Interest at 5.69% per annum,
                  due by May
                  10, 2005
              
              $
              187,680
              
              
              Unsecured
                  notes payable to a bank in Taiwan, Interest at 7.145% per annum,
                  due by
                  April 7, 2004
              
              $
              120,551Unsecured
                  notes payable to a bank in Taiwan, Interest at 5.69% per annum,
                  due by May
                  19, 2005
              
              
              78,200Unsecured
                  notes payable to a bank in Taiwan, Interest at 5.69% per annum,
                  due by
                  June 21, 2005
              
              
              31,280Unsecured
                  notes payable to a bank in Taiwan, Interest at 5.69% per annum,
                  due by
                  June 30, 2005
              
              
              15,640Unsecured
                  notes payable to a bank in Taiwan, Interest at 5.69% per annum,
                  due by
                  July 10, 2005
              
              
              62,980Unsecured
                  notes payable to a bank in Taiwan, Interest at 5.69% per annum,
                  due by
                  September 29, 2005
              
              
              251,920Total
              
              $
              627,700
              
              
              Total
              
              $
              120,551
  10
  
 Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
 
 The
        following discussion of the financial condition and results of operations
        should
        be read in conjunction with the consolidated financial statements and related
        notes thereto and in conjunction with the Management’s Discussion and Analysis
        set forth in the Company’s Annual Report on Form 10-KSB for the year ended
        December 31, 2004.
 
 The
        following discussion contains certain forward-looking statements that involve
        risk and uncertainties. Our actual results could differ materially from those
        discussed herein. Factors that could cause or contribute to such differences
        include, but are not limited to, risks and uncertainties related to the need
        for
        additional funds, global economic conditions, particularly in Asia, and
        decreasing advertising budgets of companies in general.
 
 General
 
 On
        September 4, 2003, C&D Production Inc. (the “Company”) acquired all of the
        issued and outstanding capital stock of C&D Production Group, Inc. (“C&D
        Group”), which holds all of the issued and outstanding capital stock of C&D
        Production International (the “Acquisition”). The Acquisition was accounted for
        using the purchase method of accounting. C&D Group was founded in 1998 and
        is currently one of the largest professional advertisement production company
        in
        Taiwan. We primarily produce and distribute commercial advertisements for
        large-scale multinational companies such as Ford, Honda, Toyota, Mazda, Jaguar,
        Wrigley’s, 7-11 Convenience Stores, Republic of China, Mild Seven Times, Sony,
        Ericsson, Gillette, Makoto Bank, China Airlines, Yamaha and the Government
        of
        Thailand. We also offer a broad range of services including video and film
        production, motion graphic design, 3-D computer design and animation. We
        also
        plan to aggressively expand our business to the Mainland Chinese
        Market.
 
 Critical
        Accounting Policies and Estimates
 
 This
        discussion and analysis of our financial condition and results of operations
        are
        based on our financial statements that have been prepared under accounting
        principles generally accepted in the United States of America. The preparation
        of financial statements in conformity with accounting principles generally
        accepted in the United States of America requires our management to make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and the disclosure of contingent assets and liabilities at the
        date
        of the financial statements and the reported amounts of revenue and expenses
        during the reporting period. Actual results could materially differ from
        those
        estimates. We have disclosed all significant accounting policies in Note
        2 to
        the consolidated financial statements included in this Form 10-QSB. The
        consolidated financial statements and the related notes thereto should be
        read
        in conjunction with the following discussion of our critical accounting
        policy:
 
 Revenue
        recognition
 
 Revenue
        from production of advertising is recognized upon completion of the project,
        and
        is recorded net of discounts and allowances.
 
 Results
        of Operations
 
 THREE
        MONTHS ENDED MARCH 31, 2005 AND MARCH 31, 2004
  NET
          SALES. Net sales for the Company for the three months ended March 31, 2005
          were
          $581,964 compared to $738,884 for the three months ended March 31, 2004.
          The
          decrease in net sales for the three months ended March 31, 2005 was due
          to the
          overall market reduction in demand for film productions, decrease in the
          demand
          for commercial production by existing clients of C&D International and a
          freeze in prices charged due to competitive pricing pressure.
 
 COST
          OF
          SALES. Cost of sales for the three months ended March 31, 2005 was $464,059,
          or
          79.7% of net sales, as compared to $628,774, or 85.1% of net sales, during
          the
          three months ended March 31, 2004. The decrease in cost of sales was due
          to a
          decrease in overall sales. The decrease in cost of sales as a percentage
          of net
          sales for the three months ended March 31, 2005 was due to the decrease
          in labor
          and overall production costs.
  GENERAL
          AND ADMINISTRATIVE EXPENSES. General and administrative expenses were $273,776
          or 47.0% of net sales, for the three months ended March 31, 2005, as compared
          to $217,794, or 29.5% of net sales, for the three months ended March 31,
          2004.
          The increase in general and administrative expenses was caused by the payment
          of
          a year-end bonus and the hiring of new and more skilled
          employees.
  11
 INCOME
        (LOSS) FROM OPERATIONS. Income (loss) from operations for the three months
        ended
        March 31, 2005 was ($155,871), compared to income (loss) from operations
        for the
        three months ended March 31, 2004 of ($107,684). The increase in loss was
        due to
        the decrease in sales and the increase in general and administrative
        expenses.
  OTHER
        (INCOME) EXPENSE. Total other (income) expense was $14,855 for the three
        months
        ended March 31, 2005, as compared to $4,581 for the three months ended March
        31,
        2004. The increase in other expense was due to an increase in interest expense
        of approximately $11,700, partially offset by an increase in other income
        by
        approximately $1,400. The increase in interest expense was caused by an increase
        in borrowings from the company’s lender to offset reduction in overall
        revenues.
 
 NET
          INCOME (LOSS). Net income (loss) for the three months ended March 31, 2005
          was
          ($170,726) compared to net income (loss) of ($112,265) for the three months
          ended March 31, 2004. The increase in net loss was due to the reasons primarily
          described above. In addition, in order to offset the overall reduction
          in the
          domestic market for commercial film production, the Company is pursuing
          business
          opportunities outside Taiwan, including establishing a shopping channel
          in
          Mainland China. However, the establishment of the shopping channel remains
          in
          the preliminary stages of development.
  Liquidity
        and Capital Resources
 
 Cash
        and
        cash equivalents were $345,748 at March 31, 2005 and $282,988 at December
        31,
        2004. The Company’s total current assets were $2,984,522 at March 31, 2005 as
        compared to $4,397,639 at December 31, 2004. The Company’s total current
        liabilities were $2,047,855 at March 31, 2005 as compared to $1,908,214 at
        December 31, 2004. Working capital at March 31, 2005 was $936,667 and $2,489,425
        at December 31, 2004. During the three months ended March 31, 2005, net cash
        used in operations was ($248,440) as compared to net cash used in operations
        of
        ($511,990) during the same period in 2004. The decrease in net cash used
        in
        operations was resulted from an increase in the cash provided by receivables
        and
        the decrease in cash used for deferred revenues. Net cash provided by financing
        activities was $318,275, which consisted of the issuance of loans and the
        increase of amounts due to a related party, as compared with net cash used
        in
        financing activities of ($298,853) during the three months ended March 31,
        2004.
        Net change in cash and cash equivalents was $62,760 and ($825,582) for the
        first
        quarter of 2005 and 2004, respectively.
 
 Total
        capital expenditures during the three months ended March 31, 2005 and 2004
        were
        $7,603 and $11,071, respectively. The expenditures for three months ended
        March
        31 2005 related to the acquisition of office equipment. The Company funded
        its
        operations principally through revenues and financing sources in the first
        quarter of fiscal 2005.
 
 The
        Company’s operations and short term financing currently meets the cash needs of
        the Company. However, if the Company decides to invest in another company
        to
        produce films in the overseas markets, the Company will have to raise additional
        funds. The Company believes it will be able to generate revenues from production
        fees and raise capital through private placement offerings of its equity
        securities to provide the necessary cash flow to meet anticipated working
        capital requirements. The Company’s daily operations are, from time to time,
        supported by advances from the Company’s officers. However, the Company’s actual
        working capital needs for the long and short term will depend upon numerous
        factors, including the Company’s operating results, competition, and the
        availability of credit facilities, none of which can be predicted with
        certainty. Future expansion of the Company will be limited by the availability
        of financing products and raising capital.
 
 Forward-Looking
        Statements
 
 Certain
        statements in this Quarterly Report on Form 10-QSB, under the section
“Management’s Discussion and Analysis of Financial Condition and Results of
        Operations,” and elsewhere relate to future events and expectations and as such
        constitute “forward-looking statements” within the meaning of the Private
        Securities Litigation Reform Act of 1995. The words “believes,”
 “anticipates,”  “plans,”  “expects,” and similar expressions are
        intended to identify forward-looking statements. Such forward-looking statements
        involve known and unknown risks, uncertainties, and other factors which may
        cause the actual results, performance or achievements of us to be materially
        different from any future results, performance or achievements expressed
        or
        implied by such forward-looking statements and to vary significantly from
        reporting period to reporting period. These forward-looking statements were
        based on various factors
  12
 and
        were
        derived utilizing numerous important assumptions and other factors that could
        cause actual results to differ materially from those in the forward-looking
        statements, including, but not limited to: uncertainty as to our future
        profitability and our ability to develop and implement operational and financial
        systems to manage rapidly growing operations, competition in our existing
        and
        potential future business, and other factors. Other factors and assumptions
        not
        identified above were also involved in the derivation of these forward-looking
        statements, and the failure of such other assumptions to be realized, as
        well as
        other factors, may also cause actual results to differ materially from those
        projected. We assume no obligation to update these forward- looking statements
        to reflect actual results, changes in assumptions or changes in other factors
        affecting such forward-looking statements.
  Item
        3.
        Controls and Procedures
 
 Controls
        and Procedures
  Disclosure
        controls and procedures are designed to ensure that information required
        to be
        disclosed in the reports filed or submitted under the Exchange Act is recorded,
        processed, summarized and reported, within the time periods specified in
        the
        SEC’s rules and forms. Disclosure controls and procedures include, without
        limitation, controls and procedures designed to ensure that information required
        to be disclosed in the reports filed under the Exchange Act is accumulated
        and
        communicated to management, including the Chief Executive Officer and Chief
        Financial Officer, as appropriate, to allow timely decisions regarding required
        disclosure. We carried out an evaluation as of March 31, 2005, under the
        supervision and with the participation of our management, including our Chief
        Executive Officer and Chief Financial Officer, of the effectiveness of the
        design and operation of our disclosure controls and procedures. Based upon
        and
        as of the date of that evaluation, the Chief Executive Officer and Chief
        Financial Officer concluded that our disclosure controls and procedures are
        effective.
 
 During
          the quarter ended March 31, 2005, there has been no change in internal
          controls
          over financial reporting that has materially affected, or is reasonably
          likely
          to materially affect, the small business issuer’s internal controls over
          financial reporting.
 
 13
  PART
        II -
        OTHER INFORMATION
 
 Item
        1.
        Legal Proceedings
 
 None.
 
 Item
        2.
        Unregistered Sales of Equity Securities and Use of Proceeds
 
 None.
 
 Item
        3.
        Defaults Upon Senior Securities
 
 None.
 
 Item
        4.
        Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item
        5.
        Other Information
 
 None.
 
 Item
        6.
        Exhibits
  ExhibitNumber
              
              Description31.1
              
              Certification
                  of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
                  of the
                  Securities Exchange Act of 1934, as adopted pursuant to Section
                  302 of the
                  Sarbanes-Oxley Act of 2002.31.2
              
              Certification
                  of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
                  of the
                  Securities Exchange Act of 1934, as adopted pursuant to Section
                  302 of the
                  Sarbanes-Oxley Act of 2002.32
              
              Certifications
                  of the Chief Executive Officer and Chief Financial Officer pursuant
                  to 18
                  U.S.C Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.
 
 14
 
 
 SIGNATURES
 
 In
        accordance with 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.
  C&D
                  PRODUCTION INC.Date:
                  January 27, 2006
                By:
                /s/ Michael
                  ChouMichael
                  ChouChairman
                    of the Board, Chief Executive Officer and
                    Secretary
                  (Principal
                    Executive Officer)
  Date:
                  January 27, 2006
                By:
                /s/ Chien-Te
                  ChouChien-Te
                  ChouChief
                    Financial Officer and Administrative and Financial
                    Manager
                  (Principal
                    Financial Officer)
  15
  EXHIBIT
        INDEX
 
 ExhibitNumber
              
              Description31.1
              
              Certification
                  of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
                  of the
                  Securities Exchange Act of 1934, as adopted pursuant to Section
                  302 of the
                  Sarbanes-Oxley Act of 2002.31.2
              
              Certification
                  of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
                  of the
                  Securities Exchange Act of 1934, as adopted pursuant to Section
                  302 of the
                  Sarbanes-Oxley Act of 2002.32
              
              Certifications
                  of the Chief Executive Officer and Chief Financial Officer pursuant
                  to 18
                  U.S.C Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.






16