Attached files
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EX-32.1 - CERTIFICATION - ODYSSEY PICTURES CORP | odyssey_10q-ex3201.htm |
EX-31.1 - CERTIFICATION - ODYSSEY PICTURES CORP | odyssey_10q-ex3101.htm |
SECURITIESAND
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 December 31, 2009
o 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 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 (§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 o No
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer (Do not check if a smaller reporting company) o | Smaller reporting company x |
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o No x
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 65,985,388 outstanding
shares as of December 31, 2009.
ODYSSEY
PICTURES CORPORATION
Page | ||
Part I - FINANCIAL INFORMATION | 3 | |
Item 1. | Financial Statements-unaudited | 3 |
Balance Sheets as of December 31, 2009 and June 30, 2009 | 3 | |
Statements of Operations for the Three Month Periods Ended December 31, 2008 and 2009 and Statement of Operations for the Six Month Periods Ended December 31, 2008 and 2009 | 4 | |
Statements of Cash Flows for the Six Month Periods Ended December 31, 2008 and 2009 | 5 | |
Statement of Stockholders’ Deficiency for the period ended December 31, 2009 | 6 | |
Notes to Interim Financial Statements | 7 | |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 8 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 9 |
Item 4. | Controls and Procedures | 9 |
PART II – OTHER INFORMATION | 10 | |
Item 1. | Legal Proceedings | 10 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 10 |
Item 3. | Defaults Upon Senior Securities | 11 |
Item 4. | Submission of Matters to a Vote of Security Holders | 11 |
Item 5. | Other Information | 11 |
Item 6. | Exhibits | 11 |
Signatures | 12 |
2
Item
1. Financial
Statements
Balance
Sheet
|
||||||||
Assets
|
December
31,
2009
|
June
30,
2009
|
||||||
(unaudited)
|
||||||||
Current
Assets
|
||||||||
Cash
& cash equivalent's
|
$ | 6,900 | $ | 2,500 | ||||
Accounts
receivable
|
4,200 | 0 | ||||||
Total
current assets
|
11,100 | 2,500 | ||||||
Intangible
assets, net
|
6,500 | 6,500 | ||||||
Other
|
2,600 | 2,600 | ||||||
Total
assets
|
$ | 20,200 | $ | 11,600 | ||||
Liabilities
and Stockholders' Deficiency
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 30,800 | $ | 166,500 | ||||
Accounts
payable-related parties
|
354,300 | 401,400 | ||||||
Accrued
interest
|
796,500 | 716,900 | ||||||
Other
accrued expenses
|
760,900 | 761,300 | ||||||
Legal
settlements & judgments
|
250,000 | 324,900 | ||||||
Debt
obligations in default
|
577,300 | 755,500 | ||||||
Deferred
income
|
505,000 | 445,000 | ||||||
Total
current liabilities
|
3,274,800 | 3,571,500 | ||||||
Related
parties
|
156,100 | 156,100 | ||||||
Reserve
for loss contingencies
|
110,000 | 110,000 | ||||||
Stockholders'
Deficiency:
|
||||||||
common
stock-110,000,000 authorized $0.01 par value 65,985,388 issued
& outstanding
|
659,900 | 650,800 | ||||||
Additional
paid in capital
|
38,638,700 | 38,482,100 | ||||||
Accumulated
deficit
|
(42,819,300 | ) | (42,958,900 | ) | ||||
Total
Stockholders' Deficiency
|
(3,520,700 | ) | (3,826,000 | ) | ||||
Total
Liabilities and Stockholders' Deficiency
|
$ | 20,200 | $ | 11,600 |
See notes
to unaudited interim financial statements.
3
Odyssey
Pictures Corporation
|
||||||||||||||||
Statement
of Operations
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
|
Quarter
Ended Dec. 31,
|
Six
Months Ended Dec. 31,
|
||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Net
Sales of services
|
$ | 325,000 | $ | 371,900 | $ | 626,900 | $ | 699,500 | ||||||||
Costs
Applicable to Sales & Revenue
|
81,800 | 32,500 | 160,100 | 77,500 | ||||||||||||
Gross
Profit
|
243,200 | 339,400 | 466,800 | 622,000 | ||||||||||||
Selling,
General & Administrative Expenses
|
163,300 | 149,500 | 288,900 | 270,800 | ||||||||||||
Settlements,
net
|
4,900 | 35,900 | 8,400 | 46,800 | ||||||||||||
Total
Operating Expenses
|
168,200 | 185,400 | 297,300 | 317,600 | ||||||||||||
Income
(Loss) Before Other Income & Income Taxes
|
75,000 | 154,000 | 169,500 | 304,400 | ||||||||||||
Other
Income (Expense)
|
||||||||||||||||
Excess
carrying value of renegotiated payables
|
28,700 | 27,000 | 36,500 | 89,500 | ||||||||||||
Interest
(Expense)
|
(33,200 | ) | (47,500 | ) | (66,400 | ) | (115,000 | ) | ||||||||
Income
(Loss) Before Income Taxes
|
70,500 | 133,500 | 139,600 | 278,900 | ||||||||||||
Income
Taxes
|
0 | 0 | 0 | 0 | ||||||||||||
Net
Income(Loss) available to common shareholders
|
$ | 70,500 | $ | 133,500 | $ | 139,600 | $ | 278,900 | ||||||||
Basic
and Diluted Net Income Per Common Share
|
Nil
|
Nil
|
Nil
|
Nil
|
||||||||||||
Weighted
Average Common Shares Outstanding (Basic)
|
65,952,990 | 99,688,873 | 65,516,001 | 99,580,178 |
See notes
to unaudited interim financial statements.
4
Odyssey
Pictures Corporation
|
||||||||
Statement
of Cash Flows
|
||||||||
(unaudited)
|
||||||||
|
Six
Months Ended Dec. 31,
|
|||||||
|
2009
|
2008
|
||||||
|
||||||||
Cash
Flows from Operating Activities:
|
|
|||||||
Net
Income
|
$ | 139,600 | $ | 278,900 | ||||
Adjustments
required to reconcile net loss to cash flows from operating
activities:
|
||||||||
Excess
carrying value of renegotiated payables
|
0 | (89,500 | ) | |||||
Changes
in Operating Assets & Liabilities:
|
||||||||
Increase
in deferred income
|
60,000 | 0 | ||||||
Increase
in payables to affiliates
|
(47,000 | ) | (58,000 | ) | ||||
Accounts
Payable & Other
|
(400 | ) | 72,800 | |||||
Net
cash generated by operating activities
|
148,000 | 204,200 | ||||||
Cash
Flows from Financing Activities:
|
||||||||
Proceeds
from sale of common stock
|
0 | 125,000 | ||||||
Acquisition
of treasury stock
|
0 | (105,000 | ) | |||||
Payments
made on long term debt
|
(19,100 | ) | (40,000 | ) | ||||
Payments
made on settlements & judgments
|
(124,500 | ) | (116,800 | ) | ||||
Net
cash used by financing activities
|
(143,600 | ) | (136,800 | ) | ||||
Net
Change In Cash
|
4,400 | 67,400 | ||||||
Cash-Beginning
|
2,500 | 0 | ||||||
Cash-Ending
|
$ | 6,900 | $ | 67,400 |
See notes
to unaudited interim financial statements.
5
Odyssey
Pictures Corporation
Statement
of Stockholders' Deficiency
(unaudited)
Stockholders'
Deficiency
|
||||||||||||||||||||
Common
Stock
|
|
|||||||||||||||||||
Shares
|
Common
Stock
Amount
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||||||
Balance
at June 30, 2008
|
99,471,482 | $ | 994,700 | $ | 38,047,200 | $ | (45,896,700 | ) | $ | (6,854,800 | ) | |||||||||
Acquisition
& retirement of treasury stock
|
(41,840,469 | ) | (418,400 | ) | 313,400 | (105,000 | ) | |||||||||||||
Fair
value of stock returned as part of settlement
agreements
|
(3,050,000 | ) | (30,500 | ) | (22,000 | ) | (52,500 | ) | ||||||||||||
Stock
issued for cash
|
2,500,000 | 25,000 | 100,000 | 125,000 | ||||||||||||||||
Derivatives
reclassified as permanent equity
|
17,400 | 17,400 | ||||||||||||||||||
Fair
value of other warrants issued
|
26,100 | 26,100 | ||||||||||||||||||
Stock
issued to Redcliffe upon conversion of debt
|
8,000,000 | 80,000 | 80,000 | |||||||||||||||||
Net
Income
|
2,937,800 | 2,937,800 | ||||||||||||||||||
Balance
at June 30, 2009
|
65,081,013 | $ | 650,800 | $ | 38,482,100 | $ | (42,958,900 | ) | $ | (3,826,000 | ) | |||||||||
Stock
issued to Redcliffe upon conversion of debt
|
904,375 | 9,100 | 156,600 | 165,700 | ||||||||||||||||
Net
Income
|
139,600 | 139,600 | ||||||||||||||||||
Balance
at December 31, 2009
|
65,985,388 | $ | 659,900 | $ | 38,638,700 | $ | (42,819,300 | ) | $ | (3,520,700 | ) |
See
Summary of Significant Accounting Policies and Notes to Financial
Statements.
6
ODYSSEY
PICTURES CORP
NOTES
TO UNAUDITED INTERIM FINANCIAL STATEMENTS
DECEMBER
31, 2009
1.
|
Basis
of Presentation
|
The
Financial Statements presented herein have been prepared by us in accordance
with the accounting policies described in our June 30, 2009 Annual Report on
Form 10-KSB 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 and six-month periods ended
December 31, 2009 and 2008. 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:
|
We earn
revenue under a three year “Branding & Services” agreement that provides for
a monthly licensing fee. Revenue is recognized monthly on a straight line basis
over the term of the agreement. The Revenues recognized under this agreement
were $625,000 and $699,000 through December 31, 2009 and 2008 respectively, and
represented 99% of all revenue through those interim periods.
4.
|
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 $510,400 at December 31, 2009. We also continue
to owe $757,000 in accrued compensation to John Foster, our current
CEO.
7
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
and Financial Condition
During
the six months ended December 31, 2009, the Company realized revenues from the
sale of branding and image design products and media placement services. As
of the date of this report, the Company’s ongoing operations have consisted of
the sale of these branding and image design products and raising
capital to pay legal fees, to settle claims and for accounting and auditing and
other expenditures related to financial disclosure
obligations.
Results
of Operations for the six months ended December 31, 2009 and 2008
The
Company had revenues for the six months ended December 31, 2009 of
$626,900 down from $699,500 for the period ended December 31, 2008. During
the six months ended December 31, 2009, 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 $288,900 for the six month period ended December 31,
2009, up from $270,800 for the comparable period in 2008. Net
Income per common share remains nil in six months ended December 31,
2009 and for the same period the prior year.
As of
December 31, 2009, the Company had no agreements with sub-distributors relating
to distribution commitments or guarantees that had not been recognized in the
statement of operations.
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 limited revenues are
anticipated. Accordingly, we must raise cash from sources other than
operations.
Liquidity
and Capital Resources
The
Company generated $148,000 in cash from operating activities for the six months
ended December 31, 2009 compared with $204,200 for the same period
the previous year. The Company funds operations 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 situations where the stock is
acceptable by the counter party.
8
Financing
Activities:
The
company settled certain debt obligations during the period, entering into a
transaction with Amarillo Entertainment, Inc for the purchase of
234,375 shares of the Company’s common stock in exchange for the satisfaction of
both principal and interest from a promissory note in the amount of
$25,000 which had been given by the Company for $25,000 in
cash advanced in 2004, and by entering into a transaction with Redcliffe Svenska
S.A. for the purchase of 670,000 shares of the Company’s common stock in
exchange for the satisfaction of both principal and interest in the amount of
$134,000 from a promissory note which had been given by
the Company for cash advanced in 2005.
Commitments
and Capital Expenditures
The
Company had no material commitments for capital expenditures. During
this period, the Company obtained $148,000 cash through revenues. The
Company also has a long-term employment agreement with our President which was
approximately $200,000 per year. This agreement has been extended and renewed
from time to time.
The
Company's continued existence is dependent upon its ability to resolve
its liquidity problems. The Company must achieve and sustain a
profitable level of operations with positive cash flows
and must continue to obtain financing at terms acceptable to
adequately to meet its ongoing operational requirements. We
have no assurance that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be unable to
continue, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
Off-Balance
Sheet Arrangements
Odyssey
does not have any relationships with 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
We
maintain "disclosure controls and procedures," as such term is defined in Rule
13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that
are designed to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission rules and forms, and
that such information is accumulated and communicated to our management,
including our Principal Executive Officer and Principal Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure. We
conducted an evaluation under the supervision and with the participation of our
Principal Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report pursuant to Rule
13a-15 of the Exchange Act. Based on this Evaluation, our Principal Executive
Officer and Principal Financial Officer concluded that our Disclosure Controls
were not effective as of the end of the period covered by this
report.
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.
9
PART
II - OTHER INFORMATION
ITEM
1. Legal
Proceedings
Ian
Jessel v. Odyssey Pictures Corp. A settlement of this breach of contract matter
had been negotiated prior to November 2001 for payment of a sum certain over
time. The Company failed to perform and a judgment of $369,160 was entered by
stipulation on May 13, 2004. This matter has been settled subsequent
to the reported period and the Company was making payments against a settlement
agreement with a final payment being made September 15, 2009.
Dennis
Morgan v. Odyssey Pictures Corp. A settlement of this breach of contract matter
had been negotiated prior to 2003 for payment of a sum certain over time. The
Company failed to perform and a judgment of $229,875 was entered by stipulation
on April 11, 2003. Final payment on settlement of this
judgment was made September 15, 2009.
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, 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
had offered a settlement on behalf of the
remaining defendants. No response has been made from the
Plaintiff on this matter as of the date of this report.
In August
of 2003. the Company received notice of a federal tax lien being filed in the
amount of $27,210 for non-payment of federal payroll tax deposits.
The Company has been making payments against this obligation.
On March
22, 2005 a judgment was entered against the Company in favor of Distinct Web
Creations, Inc. and Denise K. Houston in the amount of $32,000 plus pre judgment
interest in the amount of $6,291.50, plus attorneys fees in the Circuit Court in
Volusia County, Florida. On April 25, 2006, a judgment was entered in
favor of the Carlton Fields law firm in the amount of $21,848.12 in the Circuit
Court in and for Hillsborough County, Florida for legal services in representing
the Company in the Distinct Web Creations, Inc. matter.
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
During
the period the Company entered into a transaction with Amarillo Entertainment,
Inc for the purchase of 234,375 shares of the Company’s common stock
in exchange for the satisfaction of both principal and interest from a
promissory note in the amount of $25,000 which had been
given by the Company for $25,000 in cash advanced in 2004.
10
During
the period the Company entered into a transaction with Redcliffe Svenska S.A.
for the purchase of 670,000 shares of the Company’s common stock in exchange for
the satisfaction of both principal and interest in the amount of $134,000 from a
promissory note in the amount of $80,000 which had been
given by the Company for cash advanced in 2005.
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
December 31, 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
|
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
/s/
John W.
Foster
John W.
Foster
Chairman
and CEO
12