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EX-32 - ODYSSEY PICTURES CORP | OPIX10Q321.htm |
EX-31 - ODYSSEY PICTURES CORP | OPIX10Q311.htm |
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2011
[ ] TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From_______ to _______
0-18954 |
|
Commission file number |
ODYSSEY PICTURES CORPORATION |
|
(Exact name of small business issuer as specified in its charter) |
Nevada | 95-4269048 | |
|
| |
(State of incorporation) | (IRS Employer Identification Number) |
2321 Coit Rd. Suite E, Plano, TX 75075 |
|
(Address of principal executive office) |
(972) 867-0055 |
|
(Issuer's telephone number) |
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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes ¨ No
Large accelerated filer o Accelerated filer ¨
Non-accelerated filer (Do not check if a smaller reporting company)o Smaller reporting company ý
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
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 72,850,888
outstanding shares as of September 30, 2011.
ODYSSEY PICTURES CORPORATION
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements-unaudited
Balance Sheets as of September 30, 2011 and June 30, 2011
Statements of Operations for the Three Month Periods Ended
September 30, 2011 and 2010 and Statements of Cash Flows for the Three Month Periods Ended September 30, 2011 and 2010
Statement of Stockholders’ Deficiency for the period
ended September 30, 2011
Notes to Interim Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities
Item 4. Other Information
Item 5. Exhibits
Signatures
Item 1. Financial Statements
Odyssey Pictures Corporation | ||
Consolidated Balance Sheet | ||
Assets | Sept 30, 2011 | June 30, 2011 |
(unaudited) | ||
Current Assets | ||
Cash & cash equivalent's | $2,300 | $6,500 |
Accounts receivable | 12,600 | 12,100 |
Prepaid expenses | 64,800 | 57,100 |
Total current assets | 79,700 | 75,700 |
Property & equipment (net) | 2,500 | 1,200 |
Capitalized production costs | 338,500 | 274,300 |
Other | 2,600 | 2,600 |
Total assets | $423,300 | $353,800 |
Liabilities and Stockholders' Deficiency | ||
Current Liabilities: | ||
Accounts payable | $97,000 | $52,800 |
Accounts payable-related parties | 54,200 | 104,500 |
Accrued interest | 386,900 | 377,900 |
Other accrued expenses | 662,000 | 672,100 |
Legal settlements & judgments | 155,000 | 155,000 |
Current debt obligations due within one year | 136,000 | 112,000 |
Debt obligations in default | 97,900 | 97,900 |
Liability to issue common stock | 250,000 | 250,000 |
Deferred income | 365,000 | 225,200 |
Total current liabilities | 2,204,000 | 2,047,400 |
Related parties | 985,900 | 987,000 |
Reserve for loss contingencies | 110,000 | 110,000 |
Stockholders' Deficiency: | ||
common stock-110,000,000 authorized $0.01 par value | ||
72,850,888 issued & outstanding | 728,500 | 728,500 |
Additional paid in capital | 39,509,300 | 39,509,300 |
Unamortized deferred compensation | (165,600) | (181,600) |
Accumulated deficit | (42,948,800) | (42,846,800) |
Total Stockholders' Deficiency | (2,876,600) | (2,790,600) |
Total Liabilities and Stockholders' Deficiency | $423,300 | $353,800 |
See notes to unaudited interim financial statements. |
Odyssey Pictures Corporation | ||
Consolidated Statement of Operations | ||
(unaudited) | ||
Three Months Ended Sept 30, | ||
2011 | 2010 | |
Net Sales of services | $248,400 | $450,000 |
Costs Applicable to Sales & Revenue | 130,100 | 91,000 |
Gross Profit | 118,300 | 359,000 |
Selling, General & Administrative Expenses | 195,100 | 121,200 |
Settlements, net | 200 | 200 |
Total Operating Expenses | 211,300 | 121,400 |
Income (Loss) Before Other Income & Income Taxes | (93,000) | 237,600 |
Other Income (Expense) | ||
Excess carrying value of renegotiated payables | 0 | 56,700 |
Interest (Expense) | (9,000) | (17,400) |
Income (Loss) from continuing operation before income taxes | (102,000) | 276,900 |
Income Taxes | 0 | 0 |
Earnings (Loss) from continuing operations | (102,000) | 276,900 |
Net Income (Loss) to Odyssey | ($102,000) | $276,900 |
Basic and Diluted Net Income Per Common Share | Nil | Nil |
Weighted Average Common Shares Outstanding (Basic) | 72,850,888 | 68,150,888 |
See notes to unaudited interim financial statements. |
Odyssey Pictures Corporation | ||
Consolidated Statement of Cash Flows | ||
(unaudited) | ||
Three Months Ended Sept 30, | ||
2011 | 2010 | |
Cash Flows from Operating Activities: | ||
Net Loss | ($102,000) | $276,900 |
Adjustments required to reconcile net loss to cash flows | ||
from operating activities: | ||
Excess carrying value of renegotiated payables | 0 | (56,600) |
Amortization of deferred compensation | 16,000 | 0 |
Depreciation & impairment | 500 | 200 |
Changes in Operating Assets & Liabilities: | ||
Accounts Receivable | (600) | 0 |
Prepaid expenses | (7,600) | (30,400) |
Increase in deferred income | 139,800 | (100,000) |
Decrease in payables to affiliates | (51,500) | (22,900) |
Accounts Payable & Other | 43,100 | (66,100) |
Net cash generated by operating activities | 37,700 | 1,100 |
Cash Flows from Investing Activities: | ||
Investment in production inventory | (64,100) | 0 |
Purchase of fixed assets | (1,800) | 0 |
Net cash used by investing activities | (65,900) | 0 |
Cash Flows from Financing Activities: | ||
Loan proceeds | 25,000 | 0 |
Payments made on long term debt | (1,000) | (14,000) |
Payments made on settlements & judgments | 0 | (4,000) |
Net cash used by financing activities | 24,000 | (18,000) |
Net Change In Cash | (4,200) | (16,900) |
Cash-Beginning | 6,500 | 19,900 |
Cash-Ending | $2,300 | $3,000 |
See notes to unaudited interim financial statements. |
ODYSSEY PICTURES CORP
Notes To UNAUDITED CONSOLIDATED INTERIM Financial Statements
SEPTEMBER 30, 2011
1. | Basis of Presentation |
The Consolidated Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our June 30, 2011 Annual Report on Form 10-K and should be read in conjunction with the notes to financial statements which appear in that report.
The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on going basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.
In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three-month periods ended September 30, 2011 and 2010. All such adjustments are of a normal recurring nature. The Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform to annual reporting requirements.
2. | Earnings/Loss Per Share |
Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share assume that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.
3. Revenues & Economic Dependency:
Our “Branding & Services” agreements with Unilistings BV resulted in $225,167 in revenue in 2011 ($450,000 from Unilistings UK in 2010). Unilistings are companies owned or controlled by current and former directors of the company..
4. Equity Based Compensation
Effective January 1, 2011 and retroactive to January 1, 2010, the Company granted John Foster, the Company’s President and CEO, an option to purchase 4 million shares of common stock. The compensation cost that has been charged against income for options was $16,000 for the three-month period ended September 30, 2011 based on the requisite service period for unvested options as of that date as well as options granted during the period. As of September 30, 2011, there was approximately $165,600 of unrecognized compensation cost related to non-vested options. The Company expects to recognize the cost over a weighted average period of 1.21 years.
5. Related Party Transactions not Disclosed Elsewhere:
Due Related Parties: Amounts due related parties consist of corporate operating expenses and advances paid by affiliates. Such items totaled $164,000 at September 30, 2011. We also continue to owe $657,000 in accrued compensation to John Foster, our current CEO.
In January, 2011 the company executed a long term employment agreement with Mr. Foster. The term of the agreement is four years beginning retroactively at January 1, 2010 and requires an annual salary of $250,000 throughout its term. In addition to the salary component the agreement entitles Mr. Foster to receive 5 million shares of common stock immediately and 4 million options vesting in equal annual amounts at the successive anniversary dates of the agreement. Mr. Foster has, to date, received 1,700,000 shares of the 5 million share entitlement.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our consolidated financial statements and the notes presented herein. In addition to historical information, the following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed in this Form 10-Q.
Overview
During all periods included in this Annual Report, the Company has maintained consistent operations. As of the date of this report, the Company has had limited ongoing operations catering to a single client with services consisting of: creating brand marketing, web site design and development services, Internet broadcast development specialized graphics and online business presentation services to Company’s client and a limited numbers of its companies. These projects are managed by the Company and are completed using principally third party contract services. The revenue derived from these services has assisted the company with capital to pay legal fees to settle claims and expenditures to maintain the Company in compliance with Securities and Exchange Commission regulations such as accounting and auditing and other costs related to financial disclosure obligations.
Results of Operations for the Three months ended September 30, 2011 and 2010
The Company had revenues for the three months ended September 30, 2011 of $248,400 down from $450,000 for the same period ended September 30, 2010. During the three months ended September 30, 2011, the Company derived revenues from the sale of branding and image design products and media placement services. The Company has traditionally derived revenues from license renewals and residual payments received, the timing of which are typically paid at the discretion of the counter party and are outside the control of the Company.
Amortizable capitalized film costs related to revenues on licensees and the receipt of payments on residuals have been fully amortized or impaired in prior periods. We expense all current costs as incurred.
Selling, general and administrative expenses increased to $195,100 for the three months ended September 30, 2011, up from $121,200 for the comparable period in 2010. This is mainly due to the fact that the Company has attended numerous trade shows and film markets and was required to advance funds for these expenses as well as in support of its newly-launched affiliate sales program consisting of four third-party companies.
Liabilities for Legal Settlements and Judgments for the three months ended September 30, 2011 remained at $155,000, from the three months ended September 30, 2010.
Earnings for the three months ended September 30, 2011 were ($102,000) with operating expenses of $211,300 compared to earnings of $276,900 with operating expenses of $121,400 for the three months ended September 30, 2010. The Earnings for the three months ended September 30, 2011 included an entry for Excess Carrying Value of Renegotiated Payables of $0.00 compared to $59,700 for the same period the prior year. This resulted in Earnings per Share of Nil for the three months ended September 30, 2011, compared to Nil for the year ended September 30, 2010.
We also continue to owe $657,000 in accrued compensation to John Foster, our current CEO. In January, 2011 the company executed a long term employment agreement with Mr. Foster. The term of the agreement is four years beginning retroactively at January 1, 2010 and requires an annual salary of $250,000 throughout its term. In addition to the salary component the agreement entitles Mr. Foster to receive 5 million shares of common stock immediately and 4 million options vesting in equal annual amounts at the successive anniversary dates of the agreement. Mr. Foster has, to date, received 1,700,000 shares of the 5 million share entitlement.
As of September 30, 2011, the Company had no agreements with sub-distributors relating to distribution commitments or guarantees that had not been recognized in the statement of operations.
In 2011, the Company became sole member and manager of FilmZone LLC. Its operations consisted of its ownership of web based domain properties. By June 30, 2011, all of the assets of FilmZone had been sold to two entities controlled by Stefan Drakelid, a member of the Corporation’s Board of Directors. The bulk sale of all of these assets was reported on a consolidated basis as discontinued operations. Gross proceeds from the sale were $600,452. FilmZone has ceased this portion of its business but continues its licensing of film and TV rights.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated material revenues and sufficient revenues may not be forthcoming. Accordingly, we must raise cash from sources other than operations.
There is substantial doubt about the company's ability to continue as an ongoing business due to a continued working capital deficiency as substantiated by the financial statements in this report. It should be noted that this working capital deficiency is 50% comprised of debt to related parties. Whereas the Company has been consistently profitable with positive cash flows during these past twelve fiscal quarters, and we continue to expand into other markets, we cannot guarantee or ensure present activity as a future trend. Should the Company experience an interruption in the current services that it provides its captive client, or our market activity does not result in expanded revenue resources, we would be required to seek alternative financing and raise additional funds to finance operations in order to remain a going concern. If this were the case, we might not be able to timely and effectively receive positive response to new capital needs and, if we do, we are not assured that the terms of any financing would be affordable or advantageous to continued operations.
To offset this uncertain element, the company has recently embarked on new avenues of business in building strategic relationships with other successful sales agencies, production companies and prospective clients. If we were required to afford operations and accommodate our working capital deficiency without the necessary timeliness or our proposed business elements in place, we would be unable to assert that our current cash and cash equivalents would be sufficient and, as a result, there would be substantial doubt as to our ability to continue as a going concern.
Liquidity and Capital Resources
During the three months ending September 30, 2011 we issued 1,000,000 shares of our common stock as consideration in the settlement of existing obligations. The shares were valued at $107,250 or about $0.1072 per share and reflect the market value at the grant date.
As of September 30, 2011 we owe $209,502 to approximately 16 unsecured note holders. The notes vary in amounts and interest rates and range from $3,000 to $72,000. Interest rates average about 8%. We are within terms on two notes aggregating $112,000 and remain in default on notes aggregating $97,502.
Cash Flows | Cash Flows | ||||||||
Year Ended | Year Ended | ||||||||
9/30/2010 | 9/30/2011 | ||||||||
Net Cash Generated by Operating Activities | $1,100 | $37,700 | |||||||
Net Cash Used by financing Activities | ($18,000) | $24,000 | |||||||
Cash Ending | $3,000 | $2,300 |
The Company had Net Cash Generated from Operating Activities of $37,700 after operating expenses for the three months ended September 30, 2011 up from $1,100 for the same period the prior year. The Company had $2300.00 in cash as of September 30, 2011.
The Company continues to fund operation through revenues, trade payables, the issuance of stock and the proceeds of short-term borrowings.
Our access to capital resources is limited to obtaining small loans with short-term maturities and to use the value of our common stock as currency to settle existing obligations in such situation where the stock is acceptable by the counter party.
Commitments and Capital Expenditures
The Company had no material commitments for capital expenditures as of September 30, 2011.
Critical Accounting Policies Involving Management Estimates and Assumptions
Our discussion and analysis of our financial condition and results of operations is based on our financial statements. In preparing our financial statements in conformity with accounting principles generally accepted in the United States of America, we must make a variety of estimates that affect the reported amounts and related disclosures.
Revenue Recognition. The Company recognizes revenue in accordance with the provisions of Statement of Financial Accounting Standards No. 139 and American Institute of Certified Public Accountants Statement of Position 00-2 (collectively referred to as "SOP 00-2"). Revenues from licensing contracts are recognized when the project is completed and delivered or is available for exhibition by the licensee or client and when certain other conditions are met. All revenues for the periods presented were derived principally from royalty and services contract and, in some cases, the foreign distribution rights and continuing ancillary revenues from media products that the Company has had in circulation, such as foreign income from soundtracks or other revenue not previously accounted for (known as residuals") relating thereto.
Stock Based Compensation. We will account for employee stock-based compensation costs in accordance with ASC 718, Share-Based Payments , which requires all share-based payments to employees, including grants of employee stock options, to be recognized in our statements of operations based on their fair values. We will utilize the Black-Scholes option pricing model to estimate the fair value of employee stock based compensation at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our stock-based compensation.
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Deferred Tax Valuation Allowance. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. Income tax expense is the total of tax payable for the period and the change during the period in deferred tax assets and liabilities.
Accounting For Obligations And Instruments Potentially To Be Settled In The Company’s Own Stock: We account for obligations and instruments potentially to be settled in the Company s stock in accordance with FASB ASC 815, Accounting for Derivative Financial Instruments . This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company's own stock.
Off-Balance Sheet Arrangements
Odyssey does not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
ITEM 4T. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. John Foster, our Chief Executive Officer and our Principal Accounting Officer, is responsible for establishing and maintaining disclosure controls and procedures for our company.
Our management has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2011 (under the supervision and with the participation of the Chief Executive Officer and the Principal Accounting Officer), pursuant to Rule13a-15(b) promulgated under the Exchange Act. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation, our Company's Chief Executive Officer and Principal Accounting Officer have concluded that our Company's disclosure controls and procedures were not effective as of September 30, 2010 due to the lack of sufficient personnel to assure segregation of duties and lack of a GAAP accounting professional on staff. Management with the assistance of its Securities Counsel will closely monitor all future filings to ensure completeness of all company filings.
The term "internal control over financial reporting" is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
· pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;
· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and
· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant's assets that could have a material effect on the financial statements.
Changes in Internal Controls
We have also evaluated our internal control for financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
On June 30, 2006 the Company entered into a settlement agreement with ThorFilms, LLC. as to claims of each whereby the Company agreed to make payment of $100,000 to ThorFilms, LLC prior to December 30, 2006. As of the date of this filing the Company has not made payment under this settlement agreement.
The Company is subject to other legal proceedings that arise in the ordinary course of its business and from prior management activities. Other than that as disclosed above, in the opinion of present management, the aggregate liability, if any, with respect to these other actions will not materially adversely affect our financial position, results of operations or cash flows.
ITEM 1A. Risk Factors
Not required for smaller reporting companies.
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.
No matters were submitted to security holders for a vote during the period ending September 30, 2009.
ITEM 5. Other Information |
None.
ITEM 6. Exhibits
a) | Exhibits |
31.1 | Section 302 Certification By Chief Executive Officer and Principal Financial Officer | |
32.1 | Section 906 Certification of Principal Executive Officer and Principal Financial Officer |
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
/s/ John W. Foster
_____________________________________
John W. Foster
Chairman and CEO