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EX-32.1 - CERTIFICATION - ODYSSEY PICTURES CORPodyssey_10q-ex3201.htm
EX-31.1 - CERTIFICATION - ODYSSEY PICTURES CORPodyssey_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
 
Odyssey Pictures Corporation
 
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.  
 
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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
 
 

 
 

 
 
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