Attached files
| file | filename |
|---|---|
| EX-32.1 - CERTIFICATION - Total Sports Media, Inc. | lux_ex321.htm |
| EX-31.1 - CERTIFICATION - Total Sports Media, Inc. | lux_ex311.htm |
| EXCEL - IDEA: XBRL DOCUMENT - Total Sports Media, Inc. | Financial_Report.xls |
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended November 30, 2011
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 333-153502
LUX DIGITAL PICTURES, INC.
(Exact name of registrant as specified in its charter)
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Wyoming
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22-2589503
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(State or other jurisdiction of
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(IRS Employer Identification No.)
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incorporation or organization)
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For correspondence, please contact:
12021 Wilshire Blvd. #450
Los Angeles, CA. 90025
510-948-4000
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
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 such filing requirements for the past 90 days. Yes þ No o
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 (Section 232.405) during the preceding 12 months. Yes o No o
Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
As of January 5, 2012 the Company’s stock has a bid price of $.0018 and an ask price of $.0022 per share.
At January 5, 2012, there were 128,391,023 shares outstanding of the Company’s common stock.
LUX DIGITAL PICTURES, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED November 30, 2011
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Page
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Number
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|||||
| PART I. FINANCIAL INFORMATION | |||||
| Item 1. |
Financial Statements
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||||
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Balance Sheets as of November 30, 2011 and August 31, 2011 (Unaudited)
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F-1 | ||||
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Statements of Operations for the three months ended November 30, 2011 and 2010 (Unaudited)
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F-2 | ||||
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Statement of Stockholders’ Equity as of November 30, 2011 (Unaudited)
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F-3 | ||||
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Statements of Cash Flows for the three months ended November 30, 2011 and 2010 (Unaudited)
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F-4 | ||||
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Notes to the Financial Statements
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F-5 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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5 | |||
| Item 3. |
Controls and Procedures
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6 | |||
| PART II. OTHER INFORMATION | |||||
| Item 1. |
Legal Proceedings
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8 | |||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 8 | |||
| Item 3. | Defaults upon senior securities | 8 | |||
| Item 4. |
Submissions of matters to a vote of securities holders
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8 | |||
| Item 5. |
Other Information
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8 | |||
| Item 6. |
Exhibits
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9 | |||
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Exhibit 31.1
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Exhibit 32.1
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2
PART I — FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
LUX DIGITAL PICTURES, INC.
FINANCIAL STATEMENTS
NOVEMBER 30, 2011
3
LUX DIGITAL PICTURES, INC.
TABLE OF CONTENTS
NOVEMBER 30, 2011
CONTENTS
| PAGE | ||||
| Balance Sheets as of November 30, 2011 and August 31, 2011 (Unaudited) | F-1 | |||
| Statements of Operations for the three months ended November 30, 2011 and 2010 (Unaudited) | F-2 | |||
| Statement of Stockholders’ Equity as of November 30, 201 (Unaudited) | F-3 | |||
| Statements of Cash Flows for the three months ended November 30, 2011 and 2010 (Unaudited) | F-4 | |||
| Notes to the Financial Statements | F-5 - F-11 | |||
4
LUX DIGITAL PICTURES, INC.
BALANCE SHEETS (UNAUDITED)
AS OF NOVEMBER 30, 2011 AND AUGUST 31, 2011
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November 30,
2011
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August 31,
2011
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|||||||
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ASSETS
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||||||||
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Current Assets
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||||||||
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Cash
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$ | 98,655 | $ | 34,928 | ||||
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Accounts receivable
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211,900 | 248,700 | ||||||
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Total Current Assets
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310,555 | 283,628 | ||||||
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Property and equipment, net
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6,526 | 6,810 | ||||||
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Other Assets
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||||||||
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Unamortized film costs, net
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311,076 | 295,414 | ||||||
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TOTAL ASSETS
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$ | 628,157 | $ | 585,852 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||
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Liabilities
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||||||||
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Current Liabilities
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||||||||
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Accounts payable
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$ | 14,960 | $ | 22,020 | ||||
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Accrued interest
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12,657 | 15,573 | ||||||
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Estimated costs to complete films
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15,000 | 15,000 | ||||||
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Note payable – legal
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17,997 | 17,997 | ||||||
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Note payable – shareholder
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13,500 | 13,500 | ||||||
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Note payable – shareholder
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15,050 | 15,050 | ||||||
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Convertible note payable
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78,500 | 28,500 | ||||||
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Total Current Liabilities
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167,664 | 127,640 | ||||||
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STOCKHOLDERS’ EQUITY
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Common stock (1,000,000,000 shares authorized; $.001 par value; 128,391,023 and 61,268,701 shares issued and outstanding, respectively)
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128,390 | 61,268 | ||||||
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Preferred stock (10,000,000 shares authorized; $.001 par value; 0 and 2,500,000 shares issued and outstanding, respectively)
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0 | 2,500 | ||||||
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Paid in capital
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689,729 | 704,008 | ||||||
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Treasury stock
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400 | 400 | ||||||
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Accumulated deficit
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(358,026 | ) | (309,964 | ) | ||||
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Total Stockholders’ Equity
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460,493 | 458,212 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 628,157 | $ | 585,852 | ||||
The accompanying notes are an integral part of the financial statements.
F-1
LUX DIGITAL PICTURES, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2011 AND 2010
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Three months ended
November 30,
2011
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Three months ended
November 30,
2010
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GROSS REVENUES
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$ | 10,884 | $ | 18,226 | ||||
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OPERATING EXPENSES
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Bank fees
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93 | 65 | ||||||
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Consulting fees
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12,500 | 4,021 | ||||||
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Depreciation
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284 | 0 | ||||||
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Filing fees
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759 | (130 | ) | |||||
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General administrative expenses
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3,080 | 2,065 | ||||||
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Insurance
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3,085 | 4,171 | ||||||
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Office expenses
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0 | 2,286 | ||||||
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Professional fees/Compensation
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11,220 | 4,550 | ||||||
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Travel
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580 | 3,481 | ||||||
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Utilities
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994 | 988 | ||||||
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Amortization of film costs
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23,934 | 7,500 | ||||||
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TOTAL OPERATING EXPENSES
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56,529 | 28,997 | ||||||
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LOSS FROM OPERATIONS
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(45,645 | ) | (10,771 | ) | ||||
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OTHER INCOME (EXPENSE)
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Interest income
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10 | 94 | ||||||
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Interest expense
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(2,427 | ) | (2,072 | ) | ||||
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TOTAL OTHER INCOME (EXPENSE)
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(2,417 | ) | (1,978 | ) | ||||
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LOSS BEFORE PROVISION FOR INCOME TAXES
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(48,062 | ) | (12,749 | ) | ||||
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(PROVISION) BENEFIT FOR INCOME TAX EXPENSE
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0 | 4,335 | ||||||
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NET LOSS
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$ | (48,062 | ) | $ | (8,414 | ) | ||
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING FOR THE PERIOD
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70,450,766 | 50,273,400 | ||||||
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NET LOSS PER SHARE
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$ | (0.00 | ) | $ | (0.00 | ) | ||
The accompanying notes are an integral part of the financial statements.
F-2
LUX DIGITAL PICTURES, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
AS OF NOVEMBER 30, 2011
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Common Stock
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Preferred Stock
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Additional | Retained | |||||||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Paid
in Capital
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Treasury
Stock
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Earnings (Deficit)
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Total
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|||||||||||||||||||||||||
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Balance, August 31, 2010
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50,273,400 | $ | 50,273 | 2,500,000 | $ | 2,500 | $ | 673,503 | $ | 400 | $ | (104,344 | ) | $ | 622,332 | |||||||||||||||||
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Issuance of common stock in exchange for convertible debt
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10,995,301 | 10,995 | - | - | 30,505 | - | - | 41,500 | ||||||||||||||||||||||||
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Net loss for the year ended August 31, 2011
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- | - | - | - | - | - | (205,620 | ) | (205,620 | ) | ||||||||||||||||||||||
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Balance, August 31, 2011
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61,268,701 | 61,268 | 2,500,000 | 2,500 | 704,008 | 400 | (309,964 | ) | 458,212 | |||||||||||||||||||||||
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Issuance of common stock in exchange for convertible debt
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6,272,322 | 6,272 | - | - | 27,571 | - | - | 33,843 | ||||||||||||||||||||||||
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Issuance of common stock for services at $.01 per share
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1,650,000 | 1,650 | - | - | 14,850 | - | - | 16,500 | ||||||||||||||||||||||||
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Conversion of preferred shares for common
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25,000,000 | 25,000 | (2,500,000 | ) | (2,500 | ) | (22,500 | ) | - | - | - | |||||||||||||||||||||
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Issuance of anti-dilution common shares
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34,200,000 | 34,200 | - | - | (34,200 | ) | - | - | - | |||||||||||||||||||||||
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Net loss for the three months ended November 30, 2011
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- | - | - | - | - | - | (48,062 | ) | (48,062 | ) | ||||||||||||||||||||||
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Balance November 30, 2011
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128,391,023 | $ | 128,390 | 0 | $ | - | $ | 689,729 | $ | 400 | $ | (358,026 | ) | $ | 460,493 | |||||||||||||||||
The accompanying notes are an integral part of the financial statements.
F-3
LUX DIGITAL PICTURES, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2011 AND 2010
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Three months ended
November 30,
2011
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Three months ended
November 30,
2010
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Cash Flows from Operating Activities:
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Net loss for the period
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$ | (48,062 | ) | $ | (8,414 | ) | ||
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Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities:
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Depreciation
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284 | 0 | ||||||
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Stock issued for services
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4,000 | 0 | ||||||
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Stock issued for accrued interest in convertible loan
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5,343 | 0 | ||||||
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Stock issued as compensation
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12,500 | 0 | ||||||
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Amortization of film assets
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23,934 | 7,500 | ||||||
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Deferred tax provision
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0 | (4,335 | ) | |||||
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Changes in Assets and Liabilities
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(Increase) decrease in accounts receivable
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36,800 | (18,200 | ) | |||||
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Decrease in prepaid consulting
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0 | 4,021 | ||||||
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Decrease) in accounts payable
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(7,060 | ) | (4,346 | ) | ||||
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Increase (decrease) in accrued interest – related parties
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(2,916 | ) | 2,072 | |||||
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Net Cash Provided by (Used in) Operating Activities
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24,823 | (21,702 | ) | |||||
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Cash Flows from Investing Activities:
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Investment in new films
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(39,596 | ) | (17,957 | ) | ||||
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Net Cash Used in Investing Activities
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(39,596 | ) | (17,957 | ) | ||||
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Cash Flows from Financing Activities:
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||||||||
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Proceeds (repayment) convertible note payable – related party
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78,500 | 0 | ||||||
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Net Cash Provided by Financing Activities
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78,500 | 0 | ||||||
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Net Increase (Decrease) in Cash and Cash Equivalents
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63,727 | (39,659 | ) | |||||
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Cash and Cash Equivalents – Beginning
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34,928 | 133,537 | ||||||
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Cash and Cash Equivalents – Ending
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$ | 98,655 | $ | 93,878 | ||||
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Supplemental Cash Flow Information:
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Cash Paid for Interest
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$ | 0 | $ | 0 | ||||
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Cash Paid for Income Taxes
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$ | 0 | $ | 0 | ||||
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Supplemental Non-Cash Investing and Financing Transactions
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||||||||
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Conversion of debt to common stock
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$ | 33,843 | $ | 0 | ||||
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Reclassification of accounts receivable to unamortized film costs
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$ | 0 | $ | 0 | ||||
The accompanying notes are an integral part of the financial statements.
F-4
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2011
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
The Company
Lux Digital Pictures, Inc. was incorporated on May 6, 2008 under the laws of the State of Wyoming. Lux Digital Pictures, Inc. is referred to herein as the "Company". The Company operates in the entertainment industry; specifically, in connection with the development, production, marketing and distribution of digital films.
Basis of Presentation
The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed with the SEC as of and for the period ended August 31, 2011. In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.
Cash Equivalents
For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents.
Property and Equipment
The capital assets are being depreciated over their estimated useful lives using the straight-line method of depreciation for book purposes.
Revenue Recognition
Revenue consists substantially of fees earned from movies and videos that we have interests in. We recognize revenue from a sale or licensing arrangement of a film when all of the following conditions are met: persuasive evidence of a sale or licensing arrangement with a customer exists; the film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery; the license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale; the arrangement fee is fixed or determinable; and collection of the arrangement fee is reasonably assured.
Advertising
The Company reports the costs of future economic benefits that it expects will result from some or all advertising as assets when the costs are incurred and amortizes the costs to expense in the current and subsequent periods, as the advertising takes place. If it determined that advertising that has been paid for will not be used, then expense is recorded at the time of that determination. See Note 4.
F-5
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2011
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, prepaid consulting, prepaid advertising, deferred tax assets, accounts payable, accrued taxes, accrued interest, note payable and convertible note payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Unamortized Film Costs
Unamortized film costs consist of investments in films which include the costs of completed films which have been produced by the Company. The costs include all direct production and financing costs and production overhead. Costs of acquiring and producing films are amortized using the individual-film-forecast method, whereby these costs are amortized and participation and residual costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films.
Ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release. Unamortized film costs are stated at the lower of amortized cost or estimated fair value on an individual film basis. The valuation of investment in films is reviewed on a title-by-title basis, when an event or changes in circumstances indicates that the fair value of a film is less than its unamortized cost. The fair value of the film is determined using management’s future revenue and cost estimates. Additional amortization is recorded in the amount by which the unamortized costs exceed the estimated fair value of the film. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films may be required as a consequence of changes in management’s future revenue estimates. See Note 3.
Income Taxes
The Company uses the asset and liability method of accounting of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of 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. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. To the extent we believe that realization is not likely, we establish a valuation allowance. See Note 9.
Comprehensive Income
The Company established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholder’s Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any transactions that are required to be reported in other comprehensive income.
F-6
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2011
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic and Diluted Income (Loss) Per Share
Basic earnings (loss) per common share is computed by dividing net income or (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per common share is computed similar to basic earnings per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At November 30, 2011 the Company had no stock equivalents that were anti-dilutive and excluded in the earnings per share computation.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the results of its operations, financial position or cash flow.
NOTE 2: PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of November 30, 2011 and August 31, 2011:
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November 30,
2011
|
August 31,
2011
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|||||||
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Furniture and fixtures
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$ | 7,945 | $ | 7,945 | ||||
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Less: accumulated depreciation
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(1,419 | ) | (1,135 | ) | ||||
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Property and equipment, net
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$ | 6,526 | $ | 6,810 | ||||
NOTE 3: UNAMORTIZED FILM COSTS
Unamortized Film Costs included the following:
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November 30,
2011
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August 31,
2011
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|||||||
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Night of the Living Dead 3D
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$ | 59,221 | $ | 59,221 | ||||
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Nightmares in Red, White and Blue , American Grindhouse and
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138,376 | 138,181 | ||||||
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Area 51: The Alien Interview film assets
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200,000 | 200,000 | ||||||
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Acquisition of remaining 50% of Alien film
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33,400 | 33,400 | ||||||
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Production contracts
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26,000 | 26,000 | ||||||
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Media insurance and legal opinion
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38,771 | 38,771 | ||||||
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SAG residuals
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7,500 | 7,500 | ||||||
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Films of Fury
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119,867 | 119,847 | ||||||
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Gameplay
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52,900 | 45,304 | ||||||
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Money for Nothing
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70,492 | 51,135 | ||||||
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Night of the Living Dead 3D Prequel
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88,300 | 76,386 | ||||||
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New Project
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514 | 0 | ||||||
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Total Unamortized Film Costs
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835,341 | 795,745 | ||||||
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Less: amortization
|
(132,621 | ) | (108,687 | ) | ||||
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Less: impairment charges
|
(391,644 | ) | (391,644 | ) | ||||
|
Unamortized Film Costs, net
|
$ | 311,076 | $ | 295,414 | ||||
F-7
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2011
NOTE 3: UNAMORTIZED FILM COSTS (CONTINUED)
Unamortized film costs assigned to film asset purchases and film production and marketing expenses include costs for completed motion pictures “Night of the Living Dead 3D”, “Nightmares in Red, White and Blue”, “American Grindhouse” and “Area 51: The Alien Interview”, all of which remain in worldwide distribution, and recently completed motion pictures “Films of Fury” and the ‘prequel’ to “Night of the Living Dead 3D”, “Night of the Living Dead 3D:Reanimation”, as well as two films still in production “Gameplay” and “Money For Nothing”, a development project “Fanime” and certain production contracts, media insurance and legal costs.
The Company originally issued shares of its stock in 2008 valued at $397,402 to acquire films assets including “Night of the Living Dead 3D”, two films in developments and an interest in “Area 51; The Alien Interview” and, subsequently, forgave an additional $33,400 in debt to acquire full ownership of “Area 51: The Alien Interview”. In its fiscal year ended August 31, 2010 the Company, in addition to its customary amortization of these capitalized expenses, recognized a $195,411 impairment charge to “Area 51:The Alien Interview” based on conservative estimates of future revenues. The other original films and projects continue to meet revenue forecasts and the Company has amortized an additional $31,500 for these films for the fiscal year ended August 31, 2011.
The Company has secured both domestic and international distribution for its recently completed motion picture “Films of Fury” and has entered into licensing contracts which provide for advance guarantees. The Company is conservatively estimating that this film will not, likely, earn revenues beyond the contracted guarantees, during the next two years, so it is electing to fully impair the $119,847 in costs accrued in connection with the production and marketing of this film in its fiscal year ended August 31, 2011.
As of November 30, 2011 the Company’s motion picture “Night of the Living Dead 3D: Reanimation” had completed production and the Company has contracted for its worldwide distribution, which provides for an advance guarantee payable to the Company for these rights and had delivered the motion picture. The Company estimates that it will not collect additional revenues beyond the advance guarantee, within the next two years, so it has, elected to impair the aggregate of $88,300 of its investment in this film as of November 30, 2011.
The Company’s motion pictures “Gameplay” and “Money For Nothing” continue to progress in production and are expected to be completed in early 2012. The Company will begin to amortize those capitalized expenses once the films have been delivered and distribution is determined.
NOTE 4: PREPAID EXPENSES
Prepaid consulting
The Company entered into two consulting agreements during the year ended August 31, 2010. In exchange for consulting services, 208,400 and 1,400,000 shares of common stock were issued at a total value of $16,084. The consulting services are being expensed over the term of the contracts which is one year in both cases. The remaining balance of prepaid consulting was $0 as of November 30, 2011.
F-8
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2011
NOTE 5: NOTE PAYABLE – LEGAL
The Company entered into negotiations, during the year ended August 31, 2011. After careful due diligence it was determined that the prospective merger candidate misrepresented itself and its financial position thus ending the reverse merger. The prospective merger candidate had a written contract to assume all legal costs in connection with the transaction however they failed to pay the debts. The Company has assumed the legal costs believing that it may have use for the work product in the future. The Company entered into an unsecured note with a law firm as means of paying these legal fees. The terms of the note are 7.5% interest with full payment due on or before July 31, 2012. The balance of the note payable at November 30, 2011 is $17,997, with interest for the three months ending November 30, 2011 of $337.
NOTE 6: NOTES PAYABLE – SHAREHOLDERS
The Company’s principal shareholder, Lux Digital Pictures GmbH Partners loaned the Company $15,050 on May 29, 2008. The loan is unsecured, bears 18% interest and is due on demand. Interest expense of $675 and $675 was recorded on this loan during the three months ended November 30, 2011 and 2010, respectively.
The Company’s CEO loaned the Company $13,500 on March 30, 2011. The loan is unsecured and bears no interest if the balance is paid in full by February 29, 2012. If unpaid at that date the Company agrees to pay 10% interest and the loan becomes due on demand. Interest expense of $0 was recorded on this loan during the three months ended November 30, 2011.
NOTE 7: CONVERTIBLE NOTE PAYABLE
The Company issued a convertible note for $70,000 to an unrelated party on May 14, 2010. The note bore interest at 8% and matured on February 14, 2011. The note was fully converted into common shares of the Company as follows:
On February 9, 2011, the Company converted $10,000 of the loan to 1,265,823 shares of common stock.
On August 10, 2011, the Company converted $31,500 of the loan to 9,729,478 shares of common stock.
On September 6, 2011 the Company converted $9,878 of the loan to 2,173,913 shares of common stock.
On September 9, 2011 the Company converted $6,955 of the loan to 1,530,612 shares of common stock.
On September 14, 2011 the Company converted $6,816 of the loan to 1,500,000 shares of common stock.
On September 20, 2011 the Company converted $4,851 of the loan to 1,067,797 shares of common stock.
The Company, subsequently, issued a convertible note for $78,500 to the same unrelated party on September 27, 2011. The note bears 8% interest and will mature on May 27, 2012. The note is convertible into shares of common stock of the Company beginning 120 days after the issuance and up until the note comes due (or later if extended). The note is convertible into shares of common stock at a rate of 61% of the market price on the date of conversion. The investor will be limited to convert no more than 4.99% of the issued and outstanding common stock at time of conversion at any one time. Interest expense of $1,290 was recorded on this loan for the three months ended November 30, 2011.
F-9
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2011
NOTE 8: STOCKHOLDERS’ EQUITY
On February 9, 2011, the Company issued 1,265,823 shares of common stock in exchange for $10,000 of the convertible note payable.
On August 10, 2011, the Company issued 9,729,478 shares of common stock in exchange for $31,500 of the convertible note payable.
On September 6, 2011 the Company issued 2,173,913 shares of common stock in conversion of $9,878 of convertible debt.
On September 9, 2011 the Company issued 1,530,612 shares of common stock in conversion of $6,955 of convertible debt.
On September 13, 2011 the Company issued 1,250,000 shares of common stock as a result of a Management Agreement with its CEO to provide him 1,250,000 shares of common stock each quarter, for a year, in lieu of any cash compensation. The Company has booked an expense of $12,500 for these shares for the period ending November 30, 2011. The Company filed a Form S-8 Registration Statement No. 333-177311 which was declared effective October 14, 2011.
On September 14, 2011 the Company issued 1,500,000 shares of common stock in conversion of $6,816 of convertible debt.
On September 20, 2011 the Company issued 1,067,797 shares of common stock in conversion of $4,851 of convertible debt.
On November 21, 2011 the Company issued 400,000 shares of common stock as payment for legal services received valued at $4,000.
On November 28, 2011 the Company issued 25,000,000 shares of common stock in conversion of 2,500,000 shares of its own preferred stock.
On November 28, 2011 the Company issued 34,200,000 shares of common stock to its principal shareholder in resolution of an anti-dilution provision.
The Company had 128,391,023 shares of common stock issued as of November 30, 2011.
NOTE 9 – INCOME TAXES
The components of the provision for income tax expense (benefit) are as follows for the periods ended November 30, 2011 and 2010:
|
2011
|
2010
|
|||||||
|
Current:
|
||||||||
|
Federal corporate income tax (20%)
|
$ | 0 | $ | (2,640 | ) | |||
|
State corporate income tax (13%)
|
0 | (1,695 | ) | |||||
|
Total
|
0 | (4,335 | ) | |||||
|
Total Provision (Benefit) for Income Taxes
|
$ | 0 | $ | (4,335 | ) | |||
F-10
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2011
NOTE 10 – COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases any real or personal property. An officer has provided office services without charge. There is no obligation for this arrangement to continue. Such costs are immaterial to the financial statements and accordingly are not reflected herein.
NOTE 11 – SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to November 30, 2011 to January 9, 2012, the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements.
F-11
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in this report and those in our Registration Statement effective with the Securities and Exchange Commission on May 21, 2009 and all subsequent filings. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in such forward-looking statements as a result of certain factors, including but not limited to, those described under “Risk Factors” included in Part II, Item IA of this report.
Overview
We were incorporated on May 6, 2008. Under the Securities Act of 1933, our registration statement was deemed effective by the Securities and Exchange Commission and declared effective on May 21, 2009.
We were formed to develop businesses, assets and opportunities in the digital motion picture production and distribution industry and some related fields. Lux Digital Pictures, Inc. (“Lux” or the “Company”) operates its businesses under several names and divisions (“brands”) and the Company believes it will be able to compete in today’s entertainment industry marketplace by controlling production costs and by limiting its distribution expenses using, primarily, online marketing tools to promote its products and to further develop its digital strategies. The Company has only been able to raise limited amounts of new capital, at this point, to grow and expand its businesses and it is actively seeking opportunities to capitalize, re-capitalize the Company, acquire affiliated and unaffiliated businesses and assets or combine or sell the Company in a manner that will be beneficial to shareholders. The Company hired an outside advisor in December 2011 to help it develop strategies, review opportunities and evaluate affiliate assets.
The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Results of Operations for the Quarter ending November 3, 2011
Assets
As of the three months ending November 30, 2011 the Company had Total Assets of $628,157, Total Current Liabilities of $167,664 and Total Stockholders’ Equity of $460,493 compared with Total Assets of $585,852, Total Current Liabilities of $127,640 and Total Stockholders’ Equity of $458,212 for the Company’s prior fiscal year ending August 31, 2011. The increase in Company assets in the current three month period is, principally, attributable to the conversion of a third party Note into equity, increased capitalized production expense and to receiving cash from a new Convertible Note.
Revenue and Operating Expense and Net Income
For the three months ending November 30, 2011 the Company had a Net Loss of $48,062, Gross Revenues of $10,884, and Total Operating Expenses of $56,529 compared with a Net Loss of $8,414, Gross Revenues of $18,226 and Total operating Expenses of $28,997 for the Company’s three month period ending November 30, 2010. The larger Net Loss in this period is due, primarily, to the Company amortizing more of its film costs, increased professional and consulting fees and collecting less film product revenue. Revenues decline in the period, primarily, due to older film product producing less domestic revenue and the Operating Expenses increased, primarily, due to incurring more professional and consulting fees during the period.
5
Liquidity and Capital Resources
As of the period ending November 30, 2011 the Company had $98,655 in cash, $211,900 in Accounts Receivable and $311,076 in net unamortized film costs. As of August 31, 2011 the Company had $34,928 in cash, $248,700 in Accounts Receivable and $295,414 in net unamortized film costs. The Company’s cash was, primarily, generated from its motion picture distribution and a new Convertible Note for $78,500. The increase in cash is due, primarily, to the receipt of the funds from the Convertible Note. The Company believes it has sufficient cash resources available to fund its primary operations for the next twelve (12) months subject to the timely collection of its Account Receivables. The Company cannot, however, fully fund its prospective digital online business concepts or grow the Company in any material way until it is able to raise additional monies. The Company has no, current, off balance sheet arrangements and does not anticipate entering into any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition. The Company has no agreements in place with its shareholders, officer and director or with any third parties to fund operations. The Company has not negotiated nor has available to it any other third party sources of liquidity.
Critical Accounting Policies and Estimates
Our critical accounting policies are disclosed in our S-1 accepted by the SEC on May 21, 2009. During the three months ending November 30, 2011 there have been no significant changes in our critical accounting policies.
Recent Accounting Pronouncements
During the three months ending November 30, 2011 there have been no new accounting pronouncements which are expected to significantly impact our consolidated financial statements.
Plan of Operation and Liquidity
As of November 30, 2011 the Company believes it has sufficient cash resources available to fund its primary operations for the next twelve (12) months. In order to fund the further development of its Assets the Company intends to attempt to raise additional Equity through the sale of common shares of its stock and via the conversion of Notes, however, as of January 5, 2012 the Company has not entered into any negotiations to sell any shares. The Company has no current off balance sheet arrangements and no agreements with its shareholders, officer or director to provide funds for operations in the future.
Item 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of November 30, 2011. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure controls and procedures are currently effective to ensure that all material information required to be filed in the quarterly report on Form 10-Q has been made known to them.
For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seg.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure, controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by in our reports filed under the Securities Exchange Act of 1934, as amended (the "Act") is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
6
Based upon an evaluation conducted for the period ended November 30, 2011, our Chief Executive Officer and Chief Financial Officer as of November 30, 2011, and as of the date of this Report, have concluded that as of the end of the periods covered by this report, they have identified no material weakness of Company internal controls.
Corporate expenses incurred are processed and paid by the officers of the Company. The current number of transactions is not sufficient to justify the retaining of additional accounting personnel.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed 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 in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on its evaluation, our management concluded that, as of November 30, 2011, our internal control over financial reporting was effective.
This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to the attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this quarterly report.
Changes in Internal Controls over Financial Reporting
We have not yet made any changes in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
7
Item 1. LEGAL PROCEEDINGS
The Company is not, currently, party to any legal proceeding.
None
None
None
None
8
Item 6. EXHIBITS
(a) Exhibits:
|
Number
|
Description
|
|
|
31.1
|
Certification of Chief Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
|
|
|
32.1
|
Certification of Chief Executive and Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
|
|
101.INS **
|
XBRL Instance Document
|
|
|
101.SCH **
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL **
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF **
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB **
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE **
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
________
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| LUX DIGITAL PICTURES, INC. | |||
|
Date: January 13, 2012
|
By:
|
/s/ Ingo Jucht | |
| Name: Ingo Jucht | |||
| Title: President, Chief Financial Officer and Director | |||
| (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | |||
|
Date: January 13, 2012
|
By:
|
/s/ Ingo Jucht | |
| Name: Ingo Jucht | |||
| Title: Director |
10