SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From _______ to _______
Commission File No. 0-18954
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ODYSSEY PICTURES CORPORATION
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(Exact name of registrant as specified in charter)
Nevada 95-4269048
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(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
16910 DALLAS PARKWAY, SUITE 104, DALLAS, TEXAS 75248
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone No., including area code: (972) 818-7990
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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 the filing
requirement for at least the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value $.01 per share 29,932,664outstanding shares as of
December 31, 2002.
ODYSSEY PICTURES CORPORATION
INDEX
Page
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
December 31, 2002, June 30, 2002, 2001 2
Consolidated Statements of Operations
for the Six and Three Month Period Ended
December 31, 2002, 2001 3
Consolidated Statements of Cash Flows
for the Six and Three Month Period Ended
December 31, 2002 and 2001 4
Notes to Consolidated Financial Statements 5-7
Item 2. Management's discussion and analysis of
Financial Condition and Results of Operations 8-9
Item 4. Controls and Procedures 9
PART II - OTHER INFORMATION 10-12
1. Legal proceedings.
2. Changes in securities and use of proceeds.
3. Defaults upon senior securities
4. Submission of matters to a vote of security holders
5. Certain relationships and related transactions
6. Events subsequent to the fiscal quarter
7. Exhibits and report
Signatures 13
ODYSSEY PICTURES CORPORATION
Consolidated Balance Sheets
December 31 June 30, June 30,
Assets 2002 2002 2001
------------- ------------ -------------
Cash $ 321 $ 3,675 $ 1,163
Accounts receivable 297,655 272,087 87,406
Notes receivable - - -
Film costs, net 3,623,865 3,637,896 3,923,405
Prepaid expenses and other 422,206 422,206 409,705
Investments 584,916 584,916 1,374,517
------------- ------------ -------------
TOTAL ASSETS $ 4,928,964 $4,920,780 $ 5,796,196
============= ============ =============
Liabilities and Shareholders' Equity (Deficit)
Liabilities
Accounts payable and accrued expenses $ 1,000,035 1,300,769 $ 674,997
Accrued management contracts and structured payments 1,009,092 847,061 1,074,930
Accrued interest 234,421 228,021 226,414
Due to producers and participants 235,584 230,584 250,000
Deferred revenues - 0 -
Notes and loans payable 1,763,632 1,118,851 1,517,134
------------- ------------ -------------
Total Liabilities 4,242,763 $3,725,286 3,743,475
------------- ============ -------------
Shareholders' Equity (Deficit)
Preferred stock, Series A, par value $.10;
Authorized - 10,000,000 shares
Issued - 500,000 shares - - -
Preferred stock, Series B, par value $.10
Authorized - 10,000,000 shares
Issued - 4,500,000 shares - - -
Common stock, par value $.01;
Authorized - 40,000,000 shares
Issued and outstanding -
8,284,728 and 5,029,285 298,038 298,038 211,743
Capital in excess of par value 36,600,743 36,597,743 35,624,038
Accumulated deficit (36,212,581) (35,700,287) (33,783,060)
Total shareholders' equity (deficit) 686,200 1,195,494 2,052,721
------------- ------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 4,928,964 $4,920,780 $ 5,796,196
============= ============ =============
The accompanying notes are an integral part of these financial statements.
2
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Operations
For the Three Months Ended For the Six Months Ended
December 31: December 31:
2002 2001 2002 2001
-------------- ------------- ------------- ---------------
Revenue $ 6,147 $ 420 $ 62,201 $ 915
Expenses
Costs related to revenues 4,753 25,820 14,422 51,566
Selling, general and
administrative expenses 308,516 371,087 566,156 457,240
-------------- ------------- ------------- ---------------
313,269 396,907 580,578 508,806
-------------- ------------- ------------- ---------------
Operating income (loss) (307,122) (396,487) (518,378) (507,891)
Other income (expenses)
Other income - -
Interest income - -
Interest expense (17,682) (19,009) (39,820) (46,018)
Litigation settlements (2,209) (77,950) (2,209) (77,950)
Other income - - - -
-------------- ------------- ------------- ---------------
Income (loss) from operations
before provision for income taxes (327,013) (493,446) (560,406) (631,859)
Provision / Benefit for income taxes - -
NET INCOME (LOSS) $ (327,013) $ (493,446) $(560,406) $ (631,859)
============== ============= ============= ===============
Basic income (loss) per share $ (0.01) $ (0.02) $ (0.02) $ (0.03)
Weighted average common
shares outstanding 27,538,051 21,622,499 27,538,051 21,415,978
============== ============= ============= ===============
Diluted income (loss) per share $ (0.01) $ (0.02) $ (0.02) $ (0.03)
Weighted average common
shares outstanding 27,538,051 21,622,499 27,538,051 21,415,978
============== ============= ============= ===============
The accompanying notes are an integral part of these financial statements.
3
ODYSSEY PICTURES CORPORATION
Consolidated Statements of Cash Flows
For the Six Months Ended
December 31,
2002 2001
-------------- -------------
Cash Flows From Operating Activities:
Net income (loss) $ (560,407) $(631,859)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Amortization of film costs 51,492 51,492
Additions to film costs (72,753) -
Other depreciation and amortization 49,998 -
Changes in assets and liabilities:
Accounts receivable, net (30,068) (4,586)
Notes receivable and advances (27,972) -
Prepaid expenses and other - (3,501)
Accounts payable and accrued expenses 277,196 220,533
Due to producers and participants 57,162 -
Deferred revenues 74,250 -
Accrued management contracts and structured payments (7,000) (63,973)
Accrued interest/intercompany 6,400 -
-------------- -------------
Net cash provided (used) in operating activities $ (181,702) $(431,894)
-------------- -------------
Cash Flows From Investing Activities:
Investment in Odyssey Ventures Online - (8,246)
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Net cash (used) in investing activities $ - $ (8,246)
-------------- -------------
Cash Flows From Financing Activities:
Issuance of shares of common stock for services - 125,000
Net proceeds/payments - notes and loans payable 88,348 78,961
Issuance of shares of preferred stock to equity investors - -
Issuance of shares of common stock to equity investors 90,000 250,000
-------------- -------------
Net cash provided by financing activities $ 178,348 $453,961
-------------- -------------
Net increase (decrease) in cash $ (3,354) $ 13,821
-------------- -------------
Cash at beginning of period 3,675 1,163
Cash at end of period $ 321 $ 14,984
============== =============
The accompanying notes are an integral part of these financial statements.
4
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements
December 31, 2002
1. Basis of Financial Statement Preparation
The Consolidated Financial Statements for Odyssey Pictures Corporation and
subsidiaries (collectively the "Company"), included herein, have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the consolidated audited financial statements and the
notes thereto included in the Company's Report on Form 10-K for the period
ended June 30, 2002.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly (a) the financial position as of
December 31, 2002, (b) the results of operations for the six and three
month periods ended December 31, 2002, 2001 and 2000 (c) cash flows for the
six and three periods ended December 31, 2002, 2001, and 2000 and (d)
statements of changes in shareholders' equity (deficit) for the six and
three month periods ended December 31, 2002.
2. General Management Overview and Summary
The company, although it has begun collecting from exploitation and sales
of its films, has not yet achieved sufficient cash flow to accommodate its
past nor current needs. There are benefits that have been recognized in the
past year of redeveloping the company and its position in the market,
however, the company will still be in need of additional capital in order
to maintain its business direction for the near future.
Of the company's needs, there are critical accounts that need to be
maintained with an additional input of capital. These are mainly company
payments for repeating costs as well as results of legal settlements from
past issues.
Product that the company has begun marketing is of independent producers
and the success of the exploitation of these films cannot be readily
determined and only based upon actual performance, The company believes
that the market impact of both its selling efforts plus the new releases
forthcoming will achieve a renewed interest in the product and fulfillment
services Odyssey offers. Some of the product information is as follows:
"Trance" in the New York Film Festival and won an award for best fantasy
feature. Odyssey has recreated its own motion logo for the credit
presentation of each of its films and has begun selling this film
worldwide. Odyssey estimates commission income will be in the range of
350,000 USD.
"Liars Club" had its first theatrical venue in Chicago, where it played
well and received very good reviews. Odyssey has begun selling this film
worldwide. Odyssey estimates commission will be in the range of 275,000
USD.
"Certain Guys" in a recent local festival and received an award for story
originality. Odyssey has begun selling this film worldwide. Odyssey
estimates commission will be in the range of 250,000 USD.
5
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements
December 31, 2002
3. Litigation - Accrued Settlements - Structured Payments
Included in structured payments and accrued liabilities are agreed amounts
for the settlements with Ian Jessel, Dennis Morgan, and some Pfannebecker
related settlements, and other reserves for additional litigation-related
settlements.
4. Private Placement Information
During the quarter ended December 31, 2002, the Company did not raise any
funds through private placement(s) of the Company's common stock.
5. Related Transactions and Majority Owned Subsidiary
During the quarter ended June 30, 2001, the Company capitalized a venture
capital company domiciled in Luxembourg, named Odyssey Ventures Online
Holding, S.A. (OVO) with an issuance of 2 million shares of restricted
Odyssey Pictures Corporation stock. The Company then made cash available
for OVO's investments and expenses in excess of one million dollars in
replacement of its stock capitalization. Since the formation of OVO in
March, 2000, the Company made the following investments: (i)an investment
of $500,000 for a 6.25% equity interest in PurchasePooling.com, Inc., a
web-based demand aggregating service developed to enable government
entities and businesses to realize significant cost savings by combining
their purchasing power on large-ticket capital equipment, as well as other
goods and services; (ii) an investment of $136,668 for a 25% equity
interest in Webtelemarketing.com, an Internet-based company specializing in
online recruiting by linking the supply and demand sides of the employment
industry; (iii)an investment of $25,000 for a 1% equity interest in
Exchange Enterprises, Inc., a privately-held company that has developed a
patent-pending internet cash card that allows consumers to purchase
products and services online without the use of credit cards or bank
accounts. In September, 2000, OVO sold 30% of its investment in Purchase
Pooling to Edge Technology Group, Inc. (OTC Bulletin Board: EDGE) in return
for 264,000 shares of the company. During the course of the fourth quarter
of the fiscal year ending June 30, 2001, management determined that the
maintenance and costs of overseeing the assets of OVO, with the long term
benefits in technology business having to be revised significantly, require
a change in the earlier plans to pursue added investments in related
technological ("Tech") companies. Recent down-grades of outside investments
have affected the growth plans of many companies. The fact that the Company
has had numerous difficulties in securing its long term investment capital
and has had little or no financial activity, the prospects of future
investments and growth plans of subsidiary operations have been
discontinued. It is the intention of the Company to liquidate the assets of
the subsidiary in an orderly manner.
6
ODYSSEY PICTURES CORPORATION
Notes to Consolidated Financial Statements
December 31, 2002
On April 19, 2002 the Company entered in a Joint Venture with a private
company, Kasstech, Inc., to exclusively sell its patent-pending
digitization services for a period of ten years. These services are
believed to be technically the most efficient available service for
transmission of picture and sound through normal phone lines with a
possible 900 to 1 compression ratio. The Company is the managing partner of
the Joint Venture with all administrative and sales duties. Originally
Odyssey agreed to reserve shares of stock for possible funding into the
Joint Venture and to pay Kasstech and its owner for some of the rights and
services. On October 9th Odyssey and Kasstech agreed to discontinue the
share contribution and reserves of stock.
The company signed an arrangement with Orpheus Entertainment, a
manufacturer of Video, DVD product and a distributor for all North American
markets. In this arrangement, the company shall pay a number of registered
shares for the consultation and advice of marketing and placement of
product into all markets. The result of this type of stock arrangement will
allow the Company to have a higher margin on product it delivers to the
market from the retail level for video and DVD sales in North America on a
direct basis. In addition, the Company also signed an arrangement for
distribution of its soundtracks and original audio works with the same
company for international distribution. Most of the assets that will be
acquired or distributed through this arrangement are from JL Media Services
LLC, from a related party transaction entered into in November 2001 (The
Master Distribution Agreement).
6. Capital
In September of 2002, the company borrowed $50,000 for working capital
needs in a sixty-day note at 12% per annum. The loan also re-priced certain
warrants already outstanding to a price of six cents per share. The total
warrants affected 306,666 shares and extended the final exercise date of
all certificates to September 23, 2005. Additional warrants could be
required if the loan is not paid per its terms.
The company also borrowed funds from an Officer during the course of this
current quarter on terms to be repaid as anticipated funds are received.
From October to December, the company borrowed additional capital from
private sources in order to accommodate certain necessary expenses and
overheads. These short term amounts total $51,000 and carry an interest of
12% per annum.
7. Contingent Liabilities
In September of 2002, the company entered into an arrangement to
post-produce and distribute the project entitled "FREE", a feature length
motion picture. In the agreement for this film, the company has the right
to acquire the asset for a sum of money and may obtain further rights
through the exercise of an option.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months Ended December 31, 2002 and 2001
Revenues for the six and three months ended December 31, 2002 increased to
$62,201 from $915 for the comparable three month period ended December 31, 2001.
This decrease is due to more aggressive exploitation of the film library and
more activity in the acquisition of additional film product, several of which
are in final stages of production. In addition, the Company has been in
development for its business plan and market entry strategy in order to fully
exploit its library and new product effectively. Three new films became
available for delivery during this period and they are being marketed at
present.
Costs related to revenues decreased to $14,422 for the six and three month
period ended December 31, 2002 from $51,516 for the comparable six and three
months ended December 31, 2001. This is mainly due to the adjustment of
expensing the depreciation of the Kimon library assets acquired in 1998 within
operations. The company made this change to state its margins on new sales more
fairly.
Selling, general and administrative expenses increased significantly by
$108,916 to $566,156 for the three month period ended December 31, 2002, from
$457,240 for the comparable three month period in 2001. The increase in costs is
primarily attributed to the increase in officer salaries as well as a higher
amortization costs for the assets of Filmzone and the Kimon library being
recorded. In addition, the company has experienced a significant expense for its
legal costs, mainly due to the settlement efforts underway as well as costs
related to seeking alternate financing resources.
Interest expense decreased to $39,820 for three month period ended December
31, 2002, from $46,018 for the comparable three month period ending December 31,
2001. This is due to the addition of interest on settlements and interim notes
that were used for adherence to certain settlements.
The Company did not recognize any tax benefits related to its losses from
operations for either period due to its inability to carry-back such losses to
prior years.
As of December 31, 2002, the Company had a net operating loss carryforward
of approximately $36,212,581 expiring through 2014, some that may be available
to be used to reduce future tax liability. Due to limitations imposed by the
Internal Revenue Service, the utilization of approximately $4,900,000 of these
net operating losses will be limited to approximately $350,000 per year.
The Company's principal activities have been the acquisition of rights in
either completed or incomplete motion pictures and the licensing of these rights
to sub-distributors in foreign countries. As of December 31, 2002, the Company
had no agreements with sub-distributors relating to distribution commitments or
guarantees that had not been recognized in the statement of operations.
Liquidity and Capital Resources
At December 31, 2002, the Company had a cash position of 321.
The Company had no material commitments for capital expenditures as of
December 31, 2002.
Compensation Committee Report and Compensation Committee Interlocks
and Insider Participation
Executive officer compensation is determined by the entire Board of Directors.
Subsequent to the period ending June 30, 2002, the Board appointed a separate
compensation committee to determine or set future executive compensation. The
Board's executive compensation policy is intended to attract and retain key
executives, compensate them at appropriate levels and provide them with both
cash and equity incentives to enhance the Company's value for all of its
stockholders.
Item 4. CONTROLS AND PROCEDURES
a. Evaluation of Disclosure Controls and Procedures: Based upon the evaluation
of disclosure controls and procedures as of November 19, 2002, the
evaluation date, the Company's Chief Executive Officer indicates that
controls and procedures of the Registrant designed to ensure that
information required to be disclosed by it in this report filed pursuant to
the Securities Exchange Act of 1934 as amended, are in place.
b. Changes in Internal Controls: In order to facilitate the control of
information through the Company's Chief Executive Officer, its certifying
officer under this Item, additional restrictions on changes to existing
relationships, new relationships and flow of funds have been instituted as
of the evaluation date.
8
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Lawsuit - Ian Jessel v. Odyssey Pictures Corp., Johan Schotte and Does 1 through
5 - Los Angeles Superior Court, State of California - Filed November 9, 2000.
Complaint for alleged breach of employment contract, fraud and fraudulent
conveyance - Plaintiff alleges breach of an employment contact where Plantiff
sought unspecified compensatory damages. Although the company was advised that
there are substantial defenses to this action, in December of 2001, the Company
entered into mediation talks for a settlement, which was later entered into and
accepted in February of 2001. In June of 2001, the first payment was made with
subsequent payments thereafter.
As of the period ending December 31, 2002, The "Jessel Agreement" (the lawsuit
filed in 1999 by Ian Jessel) has been settled and is required to have a payment
arrangement adhered to as well as a continuing consulting agreement. The prompt
payment of this agreement will keep a judgment of over $500,000 being filed
against the company (and former officers of the company).
Lawsuit - Dennis Morgan v. Odyssey Pictures Corp., Johan Schotte, Johan Schotte
Productions, Inc., Red Sun Productions, Inc., Media Trust, S.A. and Does 1
through 100 - Complaint filed December 15, 2000, Los Angeles Superior Court,
State of California.
Plaintiff alleged unspecified damages for alleged breach of oral contract,
breach of written contract, breach of implied contract, fraud, and negligent
misrepresentation of conveyance. The action had been served and the company
filed a demurrer to the Complaint. Although the company advised previously that
Mr. Morgan was not an employee of the company and there were substantial
defenses to the action, as of the end of October 2001, the company entered into
a settlement agreement to satisfy all outstanding complaints.
In the "Morgan Settlement" (the lawsuit filed in 1999 by Dennis Morgan), the
Parties have reached a settlement and have constructed a payment arrangement.
The prompt payment of this agreement will keep a judgment of over $250,000 being
filed against the company (and former officers of the company).
Lawsuit - Watson, Farley and Williams v. Odyssey Pictures Corp., Gold Leaf
Pictures, Belgium, Johan Schotte, Chardonnay Enterprise Ltd, and A Hero From
Zero N.V. Complaint filed April 30, 2001, New York Supreme Court, New York
County.
Complaint for balance owing of services rendered from the period beginning 1997
through to April of 2001. Odyssey has answered this complaint, although it was
not notified until August 10, 2001 denying its position in the named defendants.
Odyssey contends that it did, in fact, pay any and all outstanding related legal
bills related to the Plaintiff's corporate involvement. Odyssey has offered a
settlement on behalf of the remaining defendants. No response has been made from
the Plaintiff on this matter as of the close of business on December 31, 2002.
Lawsuit - The "Pfannebecker Case" (lawsuit filed in 1996 seeking class action
status) has been dismissed. This lawsuit was the reason for the auditor's note
in their certification letter of Odyssey's past financials stating "all
liabilities cannot be known" for the company since this was ongoing and its
status a threat to the company. Odyssey is released from this claim in full with
the final declarations being distributed in court in January 2003.
The "Mortman Settlement" (claim for indemnification and reimbursement of legal
fees regarding the Pfannebecker Case) has been settled and Odyssey was released
from any claims Mortman would purport to have with respect to reimbursement of
legal fees from the company.
The "Muller & Smith Case" (lawsuit filled for indemnification and reimbursement
of legal fees regarding the Pfannebecker Case) is, at the close of business on
December 31, 2002, still an outstanding litigation and discovery is underway.
Odyssey plans to file a motion against the Plaintiffs on specific grounds and is
vigorously defending its position. Odyssey contends that Muller and Smith are
not entitled to indemnification arising out of the Pfannebecker case.
9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In March of 2001 the Board of Directors approved a $5 million US dollar
denominated Senior Secured debt issue (the "Senior Debt") with convertible
rights to common stock at maturity and in certain circumstances (such as
bankruptcy and/or financial defaults on other significant debt). Reserves of
shares for the potential conversion have been made. The Senior Debt requires
that the company not pledge any significant assets and gives the bondholders a
pledge on the "Kimon Library" assets. The Senior Debt carries an 8% interest
rate and matures on April 15, 2006. The Senior Debt is not registered in the
United States and is only available to non-US citizens. The Trustee received the
first subscription on August 29, 2001 for $160,000. The funds after financing
expenses of $14,364 were used to pay off two loans of 4 million Belgian francs
and some rent expenses of an office recently closed in Luxembourg. A previous
officer used the remaining funds for claimed expenses.
Odyssey is pursuing additional subscriptions to this Bond and expects to
renew its offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
An interest payment was due on April 12, 2002 and was made by a third
party, therefore the Senior Secured Bond was in compliance with its
requirements. The company did not have sufficient cash to make its next
semi-annual payment (due October 15, 2002) and therefore, risks the Bond being
placed in default. The company has received demand from its - agent (Investment
Bank Luxembourg) for immediate payment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 5. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On July 6th of 2001, the Board voted on the assignment of Mr. Foster to CEO
and Chairman of the Board of Odyssey Pictures Corporation. Mr. Schotte resigned
as CEO and Chairman and was appointed the position of Executive Vice Chairman on
the Board. This change was due to the approved transition by the Board for the
further growth plans of Odyssey. On December 9, 2001 Mr. Schotte resigned from
the board of directors to focus on the Company's two related entities and other
interests. Mr. Schotte lives in Luxembourg and was the managing director of the
Company's 99% subsidiary that is headquartered there, Odyssey Ventures Online
Holding, S.A. He is also the controlling shareholder and director general of
Media Trust, S.A. of which the Company owns 18%. Recently the company held a
shareholders' election for the removal of its three directors, which included
Media Trust, SA. The Company demanded documentation of disbursements and
expenses previously reported in the accounts of the Company. The Company pursued
the control of the subsidiary and a settlement of all accounts underway. The
Company has offset all undocumented expenses from prior management contracts and
the resulting amounts were booked as part of extraordinary gains and losses.
While the Company expects full recovery, a reserve for losses has been taken.
The Company in March gave notice to the Managing Director of its 99% owned
Luxembourg subsidiary, Odyssey Ventures Online Holdings, S.A ("OVO")., that it
was removing all Directors and replacing them with members of the Odyssey
Pictures Corporation Board. The Company has hired legal counsel in Brussels to
recover the assets of the subsidiary for orderly liquidation. While the Company
was advised that the action in March was legally binding, the Company's legal
counsel delivered formal notice to further formalize the actions taken in July
of 2002. The Company is in the process of exploring all avenues for full
recovery of these assets. A reserve has been taken against any potential losses
although the Company expects full recovery.
10
ITEM 6. EVENTS SUBSEQUENT TO THE FISCAL QUARTER
An affiliate of the Company's CEO, JL Media advanced substantial funds for the
overhead and operations of the Company from January to October of 2001. The
Company began repaying these non-interest accruing advances in October of 2001.
The company reversed some expenses claimed by a previous officer due to lack of
documentation. The Company seeks the recoupment of an advance on a film project
made. If no recoupment is made, the company will write off this prior entry. The
item is carried as a prepaid asset. This item will appear in Non-recurring items
if a write-off is taken.
Extraordinary costs associated with the litigation settlements, including legal
fees and interest on legal fees, were $52,600 for the period ending December 31,
2002.
The Company expensed $16,000 in consulting fees tied to current film packaging
and marketing services. The contract for services extends to the end of the year
2002 and has a ninety day termination clause.
The Company, as of June 30, 2002, reserved an additional amount of funds for
possible settlement of past disputes referring to various lawsuits.
The company added an accelerated depreciation amount for Filmzone due to its
development and reposturing of the sales purpose for the website.
The company, as of June 30, 2002, reduced is valuation of the OVO assets mainly
due to their determination of liquidity. In addition, the company wrote off all
of the development expense relating to the OVO initial startup.
The company, as of June 30, 2002, reduced its valuation of the Media Trust SA
investment and note receivable due to undeterminable recovery.
The company, as of June 30, 2002, wrote off its loan to the Geckos Soccer team,
a once partially owned affiliate of E3 Sports New Mexico, Inc., due to its
unexpected recovery.
Odyssey has had to make numerous changes in its business, and to its own
structure of board members, while launching new business. As of October of 2002,
one board member (Jean-Marie Carrara) has been removed by unanimous vote and
another member (Gordon Guiry, a well experienced person in international sales)
has been appointed.
ITEM 7. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits. None
Reports on Form 8-K. None
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ODYSSEY PICTURES CORPORATION
By: /s/ John W. Foster
------------------------
John W. Foster
CEO and Chairman
DATED: February 19, 2003
CERTIFICATION PURSUANT TO
18 USC, SECTION 1350, AS ADOPTED PURSUANT TO
SECTIONS 302 AND 906 OF THE SARBANES-OXLEY ACT OF 2002
I, John W. Foster, certify that,
1. I have reviewed this quarterly report on Form 10-Q of Odyssey Pictures
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: February 19, 2003 /s/ John W. Foster
----------------------------
John W. Foster
Chief Executive Officer
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