IMK GROUP, INC. - FORM 10-Q - October 13, 2010

Attached files

file	filename
EX-32.1 - IMK GROUP, INC.	exh32-1c.htm
EX-31.1 - IMK GROUP, INC.	exh31-1c.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X]

Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended August 31, 2010

[ ]

Transition Report under Section 13 or 15(d) of the Exchange Act for the Transition Period from ________ to ___________

Commission File Number: 333-123611

FUTURA PICTURES, INC.

(Exact name of small business issuer as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

56-2495218

(I.R.S. Employer Identification No.)

17337 Ventura Boulevard, Suite 305

Encino, California 91316

Issuer's Telephone Number: (818) 784-0040

(Address and phone number of principal executive offices)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or 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 [X] No [_]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [_] No [_]

Indicate by check mark whether the registrant 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.

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o (Do not check if smaller reporting company)	Smaller reporting company x

Check whether the issuer is a “shell company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934. Yes [_] No [X ]

As of August 31, 2010 the issuer had 1,599,750 shares of common stock outstanding.

Traditional Small Business Disclosure Format (check one) Yes [_] No [X]

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

PART I	FINANCIAL INFORMATION	Page

Item 1.	Financial Statements (Unaudited)	3
	Condensed Balance Sheets August 31, 2010 and February 28, 2010	4
	Condensed Statements of Operations For the Three- and Six-Month Periods Ended August 31, 2010 and 2009	5
	Condensed Statements of Stockholders’ Deficit For the Six Months Ended August 31, 2010	6
	Condensed Statements of Cash Flows For the Six Months Ended August 31, 2010 and 2009	7
	Notes to Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4T.	Controls and Procedures	16

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 3.	Defaults upon Senior Securities	17

Item 4.	Submission of Matters to a Vote of Security Holders	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

Signatures		18

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

(Financial Statements Commence on Following Page)

FUTURA PICTURES, INC.

CONDENSED BALANCE SHEETS

	August 31,			February 28,
	2010			2010
	(Unaudited)
ASSETS

Cash	$	1,918		$	1,344
Accounts receivable		-			2,054
Prepaid expenses		867			1,111

TOTAL ASSETS	$	2,785		$	4,509



LIABILITIES

Accrued expenses	$	3,214		$	2,813
Unearned revenue		15,000			15,000
Accrued interest – related party		8,613			5,799
Loan payable – related party		67,857			73,357

TOTAL LIABILITIES		94,684			96,969

STOCKHOLDERS’ EQUITY (DEFICIT)

Common stock, par value $0.0001 per share
Authorized – 100,000,000 shares
Issued and outstanding – 1,599,750 shares		160			160
Additional paid-in capital		317,540			296,740
Retained deficit		(409,599	)		(389,360	)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(91,899	)		(92,460	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	2,785		$	4,509

The accompanying notes are an integral part of these financial statements.

FUTURA PICTURES, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2010 AND 2009

(UNAUDITED)

	For the Three Months Ended August 31, 2010			For the Three Months Ended August 31, 2009			For the Six Months Ended August 31, 2010			For the Six Months Ended August 31, 2009

REVENUE	$	6,006		$	681		$	15,420		$	5,141

COST OF REVENUE		905			48			1,952			719

GROSS PROFIT		5,101			633			13,468			4,422

OPERATING EXPENSES

Selling, general and administrative		15,157			17,195			30,092			42,918

TOTAL OPERATING EXPENSES		15,157			17,195			30,092			42,918

(LOSS) FROM OPERATIONS		(10,056	)		(16,562	)		(16,624	)		(38,496	)

INTEREST EXPENSE		1,369			1,513			2,815			2,658

(LOSS) BEFORE INCOME TAXES		(11,425	)		(18,075	)		(19,439	)		(41,154	)

Income tax expense		-			800			800			800

NET (LOSS)	$	(11,425	)	$	(18,875	)	$	(20,239	)	$	(41,954	)

NET (LOSS) PER COMMON SHARE

Basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.03	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING

Basic and diluted		1,599,750			1,599,750			1,599,750			1,599,750

The accompanying notes are an integral part of these financial statements.

FUTURA PICTURES, INC.

CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED AUGUST 31, 2010

(UNAUDITED)

	Common Stock
	Shares		Amount		Additional Paid-in Capital		Retained Deficit			Total Stockholders’ Equity (Deficit)
Balance, March 1, 2010		1,599,750	$	160	$	296,740	$	(389,360	)	$	(92,460	)

Contributed services		-		-		20,800		-			20,800

Net (loss) for the six months ended August 31, 2010		-		-		-		(20,239	)		(20,239	)

Balance, August 31, 2010		1,599,750	$	160	$	317,540	$	(409,599	)	$	(91,899	)

The accompanying notes are an integral part of these financial statements.

FUTURA PICTURES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED AUGUST 31, 2010 AND 2009

(UNAUDITED)

	2010			2009

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)	$	(20,239	)	$	(41,954	)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Amortization expense		240			-
Contributed services		20,800			20,800
Changes in operating assets and liabilities:
Accounts receivable		2,054			-
Prepaid expenses		4			(219	)
Inventories		-			44
Accrued expenses		3,215			(41,314	)

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES		6,074			(62,643	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft		-			1,471
Proceeds from loan payable – related party		500			58,500
Repayment of loan payable – related party		(6,000	)		-

NET CASH PROVIDED BY FINANCING ACTIVITIES		(5,500	)		59,971

NET INCREASE (DECREASE) IN CASH		574			(2,672	)

CASH AT THE BEGINNING OF THE PERIOD		1,344			2,672

CASH AT THE END OF THE PERIOD	$	1,918		$	-


SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION

Interest paid	$	-		$	-
Taxes paid	$	800		$	800

The accompanying notes are an integral part of these financial statements.

FUTURA PICTURES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

AUGUST 31, 2010

(UNAUDITED)

NOTE 1

BACKGROUND AND PRESENTATION

Organization and Nature of Business

Futura Pictures, Inc. (the “Company”) was incorporated under the laws of the state of Delaware on December 10, 2003. The Company was formed to engage in the production and the co-financing of films, documentaries and similar products produced solely for the distribution directly to the domestic and international home video markets.

Presentation

The interim financial statements of the Company are condensed and do not include some of the information necessary to obtain a complete understanding of the financial data. Management believes that all adjustments (consisting of only normal recurring adjustments, unless otherwise noted) necessary for a fair presentation of results have been included in the unaudited financial statements for the interim period presented. Operating results for the six months ended August 31, 2010 are not necessarily indicative of the results that may be expected for the year ended February 28, 2011. Accordingly, your attention is directed to footnote disclosures found in the February 28, 2010 Annual Report and particularly to Note 1, which includes a summary of significant accounting policies.

The Company has evaluated subsequent events through the date these financial statements were issued.

Unclassified Balance Sheet

As required by ASC Topic 926, the Company has elected to present an unclassified balance sheet.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company’s historical results as well as management’s future expectations. The Company’s actual results could vary materially from management’s estimates and assumptions.

Disclosure About Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at August 31, 2010 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

Recent Pronouncements

There are no recently issued accounting standards with pending adoptions that the Company’s management currently anticipates will have any material impact upon its financial statements.

NOTE 2

SIGNIFICANT UNCERTAINTY REGARDING THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN AND MANAGEMENT PLANS

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's current financial resources are not considered adequate to fund its planned operations. This condition raises substantial doubt about its ability to continue as a going concern.

The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company's continuation as a going concern currently is dependent upon timely procuring significant external debt and/or equity financing to fund its immediate and near-term operations, and subsequently realizing operating cash flows from sales of its film products sufficient to sustain its longer-term operations and growth initiatives, including its desired marketing and new potential film screenplays.

NOTE 3

UNEARNED REVENUE

On August 12, 2009, the Company signed an agreement with Gaiam America, licensing them the distribution rights to "The Five Secrets of Communication That Swept Obama to the Presidency." Under the terms of the agreement, Gaiam America will distribute the DVD throughout the world to the non-educational market. Further, pursuant to the agreement the Company received the $15,000 advance on September 14, 2009. Sales of the DVD under the Gaiam America distribution agreement commenced during the last quarter of fiscal 2010 with no significant revenue realized as of August 31, 2010.

NOTE 4

RELATED PARTY TRANSACTION

Prepaid Loan Commitment

On February 16, 2005, the Company’s President, Buddy Young, accepted an unsecured promissory note from the Company and agreed to lend up to $100,000 to the Company to fund any cash shortfalls through December 31, 2010. The note bears interest at 8% and is due upon demand, no later than June 30, 2011. The outstanding balance was $67,857 as of August 31, 2010.

NOTE 5

STOCKHOLDERS’ DEFICIT

For the six months ended August 31, 2010 and 2009, the Company’s President devoted time to the development process of the Company. Compensation expense totaling $20,800 has been recorded in each period. Of this amount, the President was paid $-0- during the six months ended August 31, 2010 and 2009. The President has waived reimbursement of $20,800 during the six months ended August 31, 2010 and 2009, and accordingly, the amounts have been recorded as a contribution to capital.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

You should read this section together with our financial statements and related notes thereto included elsewhere in this report. In addition to the historical information contained herein, this report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are not based on historical information but relate to future operations, strategies, financial results or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. Certain statements contained in this Form 10, including, without limitation, statements containing the words "believe," "anticipate," "estimate," "expect," "are of the opinion that" and words of similar import, constitute "forward-looking statements." You should not place any undue reliance on these forward-looking statements.

You should be aware that our results from operations could materially be effected by a number of factors, which include, but are not limited to the following: economic and business conditions specific to the motion picture, television, and home video industries; competition from other producers of home video content; and television documentaries, our ability to control costs and expenses, access to capital, and our ability to meet contractual obligations. There may be other factors not mentioned above or included elsewhere in this report that may cause actual results to differ materially from any forward-looking information.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our Board of Directors, we have identified two accounting policies that we believe are key to an understanding of our financial statements. These are important accounting policies that require management's most difficult, subjective judgment.

Going Concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's current financial resources are not considered adequate to fund its planned operations. This condition raises substantial doubt about its ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Non-Cash Equity Issuances. We periodically issue shares of our common stock in exchange for, or in settlement of, services. Our management values the shares issued in such transactions at either the then market value of our common stock, as determined by the Board of Directors and after taking into consideration factors such as the volume of shares issued or trading restrictions, or the value of the services received, whichever is more readily determinable.

General

In November 2008, the Company commenced production on a 47 minute “self-improvement” DVD entitled, “The 5 Secrets of Communication That Swept Obama to the Presidency.”

The DVD uses video examples of President Barack Obama’s most memorable speeches to illustrate five essential secrets of effective public and personal communication. International communication analyst and coach Richard Greene hosts the DVD and instructs in the system of communication techniques he created. The DVD was completed in February 2009, and is being sold via the internet and through distributors specializing in the sale of product to the educational market, i.e. libraries, universities etc., and to organizations for employee training.

Additionally, On August 12, 2009, the Company signed an agreement with Gaiam America, licensing them the distribution rights to "The Five Secrets of Communication That Swept Obama to the Presidency." Under the terms of the agreement, Gaiam America will distribute the DVD throughout the world to the non-educational market. Further, pursuant to the agreement the Company received the $15,000 advance on September 14, 2009. Sales of the DVD under the Gaiam America distribution agreement commenced during the last quarter of fiscal 2010 with no significant revenue realized as of August 31, 2010.

Three-Month Period Ended August 31, 2010 Compared to Three-Month Period Ended August 31, 2009

Revenues

Our revenues for the three months ended August 31, 2010 were $6,006. These revenues were a result of the sales of “The 5 Communication Secrets That Swept Obama To The Presidency” DVD and related royalties. Revenues during the three months ended August 31, 2009 were $681. This increase in revenue resulted from the sales income and royalty earned from the marketing and distribution of "The Five Secrets of Communication That Swept Obama to the Presidency."

The cost of revenues during the three months ended August 31, 2010, was $905. The cost of revenues during the three months ended August 31, 2009, was $48.

General and Administrative

To date, our expenses have consisted mainly of selling, general and administrative expenses. The main components being compensation to the Company’s President, Buddy Young, in the amount of $10,400 per quarter, Mr. Young has waived reimbursement and the amount has been applied to additional paid-in capital, professional services and the amortization of our loan commitment fee.

During the three months ended August 31, 2010, we incurred a total of $15,157 selling, general and administrative expenses, compared to a total of $17,195 during the three months ended August 31, 2009. This represents a decrease of $2,038. This decrease is mainly the result of a decrease in our professional fees of about $3,000 offset by increase in commission expense.

Interest Expense

We incurred $1,369 and $1,513 in interest expense during the three months ended August 31, 2010 and 2009, respectively. This is related to the interest charges we incur on our loan from Buddy Young.

While we cannot guarantee the level of our expenses in the future, we anticipate them to increase as we develop new educational/self improvement DVDs.

Six-Month Period Ended August 31, 2010 Compared to Six-Month Period Ended August 31, 2009

Revenues

Our revenues for the six months ended August 31, 2010 were $15,420. These revenues were a result of the initial sales of “The 5 Communication Secrets That Swept Obama To The Presidency” DVD and related royalties. Revenues during the six months ended August 31, 2009, were $5,141. This increase in revenue resulted from the sales income and royalty earned from the marketing and distribution of "The Five Secrets of Communication That Swept Obama to the Presidency."

The cost of revenues during the six months ended August 31, 2010, was $1,952. The cost of revenues during the six months ended August 31, 2009, was $719

General and Administrative

To date, our expenses have consisted mainly of selling, general and administrative expenses. The main components being compensation to the Company’s President, Buddy Young, in the amount of $20,800, Mr. Young has waived reimbursement and the amount has been applied to additional paid-in capital, professional services and the amortization of our loan commitment fee.

During the six months ended August 31, 2010, we incurred a total of $30,092 selling, general and administrative expenses, compared to a total of $42,918 during the six months ended August 31, 2009. This represents a decrease of $12,826. This decrease is mainly the result of decreases in our professional fees of about $4,600 and in our website and writing costs of about $5,600.

Interest Expense

We incurred $2,815 and $2,658 in interest expense during the six months ended August 31, 2010 and 2009, respectively. This is related to the interest charges we incur on our loan from Buddy Young.

Plan of Operation

During the past twelve months we produced an educational/self-improvement DVD entitled, “The Five Communication Secrets That Swept Obama to the Presidency.” Additionally, we established a domestic and international distribution network to handle the sales and marketing of the DVD. Given our inability to date to raise the necessary capital to implement our initial business plan as described above, management has decided to put that element of the plan on hold, and to focus its efforts during the next 12 months on producing educational/self-improvement DVDs whose production budgets range between fifty and one hundred thousand dollars. Additionally, we will continue to work to maximize the DVD’s revenue potential by attempting to secure more distribution channels.

Through August 31, 2010,“The Five Secrets of Communication That Swept Obama to the Presidency,” has generated $28,528 in revenue. We anticipate that cash resulting from the further sales and licensing of “The Five Communication Secrets That Swept Obama to the Presidency.” or funds provided to us by our president and principal shareholder, under a promissory note dated February 16, 2005, as amended, will be sufficient to fund our cash requirements to continue our efforts through February 2011.

If during the next twelve months our revenue is insufficient to continue operations, and we are unable to raise funds through the sale of additional equity, or from traditional borrowing sources, we may be required to scale back our planned operations, or be forced to totally abandon our business plan and seek other business opportunities in a related or unrelated industry. Such opportunities may include a reverse merger with a privately held company. The result of which could cause the existing shareholders to be severely diluted.

Employees

Due to our very limited financial resources, the Company’s President, Buddy Young, along with Joseph Adelman, and Mel Powell, our Director of acquisitions, work on a part-time basis. No employee has received cash compensation from the Company other than the $16,050 paid to Mr. Young during the year ended February 28, 2009. We have no other full-time or part-time employees. Additionally, we regularly utilize the services of independent firms to handle our accounting and certain administrative matters. If and when our capital resource permits, we will hire full-time professional and administrative employees.

Liquidity and Capital Resources

We had a cash balance of $1,918 on August 31, 2010. Other than funds received from the sale of “The Five Communication Secrets That Swept Obama to the Presidency,” at this time, our only other known cash resource comes from an agreement with our President and majority shareholder to fund any shortfall in cash flow up to $100,000 at 8% interest through December 31, 2010. As of August 31, 2010 the balance owing on this agreement is $67,857. Payment of principal and interest is due on this loan on June 30, 2011.

We believe that revenue derived from the sale of the above mentioned DVD, and further borrowings from our President will be sufficient to satisfy our budgeted cash requirement through February 28, 2011.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Based on the nature of our current operations, we have not identified any issues of market risk at this time.

ITEM 4T. CONTROLS AND PROCEDURES

The principal executive officer and principal financial officer of the Company, who are the same person (“the Certifying Officer”) with the assistance of advisors, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in section 240.13a-14(c) and 240.15d-14(c) under the Exchange Act) within 90 days prior to the filing of this report. Based upon the evaluation, the Certifying Officer concludes that the Company’s disclosure controls and procedures are not effective in timely alerting management to material information relative to the Company which is required to be disclosed in its periodic filings with the SEC.

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II

OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS None.

ITEM 2.	CHANGES IN SECURITIES AND USE OF PROCEEDS None.

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES None.

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	During the quarter ended August 31, 2010, no matters were submitted to the Company's security holders.

ITEM 5.	OTHER INFORMATION None.

ITEM 6.	EXHIBITS

	31.1	Certification of CEO Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FUTURA PICTURES, INC. (Registrant)
Dated: October 13, 2010	/s/ Buddy Young Buddy Young, President and Chief Executive Officer

IMK GROUP, INC. - FORM 10-Q - October 13, 2010

Attached files

IMK GROUP, INC. Reports