Attached files
| file | filename |
|---|---|
| EX-31.1 - CERTIFICATION - Total Sports Media, Inc. | lux_ex311.htm |
| EX-32.1 - CERTIFICATION - Total Sports Media, Inc. | lux_ex321.htm |
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
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x
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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 February 28, 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
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 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 x
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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 x
As of April 12, 2011 the Company’s stock has a bid price of $.001 and an ask price of $.0042 per share.
At April 12, 2011, there were 51,539,223 shares outstanding of the Company’s common stock and 2,500,000 of the Company’s preferred stock.
LUX DIGITAL PICTURES, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED February 28, 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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Balance Sheets as of February 28, 2011 and August 31, 2010 (Unaudited)
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F-1
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Statements of Operations for the three and six months ended February 28, 2011 and 2010 (Unaudited)
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F-2
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Statement of Stockholders’ Equity as of February 28, 2011 (Unaudited)
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F-3
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Statements of Cash Flows for the six months ended February 28, 2011 and 2010 (Unaudited)
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F-4
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Notes to Financial Statements
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F-5
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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5
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| Item 3. |
Controls and Procedures
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6
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| PART II. OTHER INFORMATION | ||
| Item 1. |
Legal Proceedings
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8
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| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
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8
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| Item 3. |
Defaults upon senior securities
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8
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| Item 4. |
Submissions of matters to a vote of securities holders
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8
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| Item 5. |
Other Information
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8
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| tem 6. |
Exhibits
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8
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Exhibit 31.1
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Exhibit 32.1
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2
ITEM 1. FINANCIAL STATEMENTS
LUX DIGITAL PICTURES, INC.
FINANCIAL STATEMENTS
FEBRUARY 28, 2011
3
LUX DIGITAL PICTURES, INC.
TABLE OF CONTENTS
FEBRUARY 28, 2011
CONTENTS
| Balance Sheets as of February 28, 2011 and August 31, 2010 (Unaudited) | F-1 | |||
| Statements of Operations for the three and six months ended February 28, 2011 and 2010 (Unaudited) | F-2 | |||
| Statement of Stockholders’ Equity as of February 28, 2011 (Unaudited) | F-3 | |||
| Statements of Cash Flows for the six months ended February 28, 2011 and 2010 (Unaudited) | F-4 | |||
| Notes to the Financial Statements | F-5 to F-9 | |||
4
LUX DIGITAL PICTURES, INC.
BALANCE SHEETS (UNAUDITED)
AS OF FEBRUARY 28, 2011 AND AUGUST 31, 2010
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February 28, 2011
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August 31, 2010
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ASSETS
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Current Assets
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Cash
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$ | 57,972 | $ | 133,537 | ||||
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Accounts receivable
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110,437 | 64,500 | ||||||
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Prepaid advertising
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100,000 | 100,000 | ||||||
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Prepaid consulting
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3,500 | 11,542 | ||||||
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Deferred tax asset
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62,465 | 63,285 | ||||||
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Total Current Assets
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334,374 | 372,864 | ||||||
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Other Assets
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Unamortized film costs, net
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441,077 | 406,150 | ||||||
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TOTAL ASSETS
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$ | 775,451 | $ | 779,014 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Liabilities
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Current Liabilities
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Accounts payable
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$ | 6,679 | $ | 11,621 | ||||
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Accrued taxes
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9,700 | 9,700 | ||||||
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Accrued interest
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11,932 | 7,811 | ||||||
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Estimated costs to complete films
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42,500 | 42,500 | ||||||
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Note payable – stockholder
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15,050 | 15,050 | ||||||
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Convertible note payable
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60,000 | 70,000 | ||||||
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Total Current Liabilities
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145,861 | 156,682 | ||||||
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STOCKHOLDERS’ EQUITY
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Common stock (1,000,000,000 shares authorized; $.001 par value; 51,539,223 and 50,273,400 shares issued and outstanding, respectively)
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51,539 | 50,273 | ||||||
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Preferred stock (10,000,000 shares authorized; $.001 par value; 2,500,000 shares issued and outstanding)
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2,500 | 2,500 | ||||||
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Paid in capital
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682,237 | 673,503 | ||||||
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Treasury stock
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400 | 400 | ||||||
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Accumulated deficit
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(107,086 | ) | (104,344 | ) | ||||
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Total Stockholders’ Equity
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629,590 | 622,332 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 775,451 | $ | 779,014 | ||||
The accompanying notes are an integral part of the financial statements.
F-1
LUX DIGITAL PICTURES, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2011 AND 2010
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Three months ended February 28, 2011
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Six months ended February 28, 2011
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Three months ended February 28, 2010
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Six months ended February 28, 2010
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GROSS REVENUES
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$ | 43,021 | $ | 61,247 | $ | 38,112 | $ | 53,399 | ||||||||
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OPERATING EXPENSES
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General and administrative
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18,166 | 39,660 | 14,642 | 30,425 | ||||||||||||
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Amortization of film costs
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12,000 | 19,500 | 4,500 | 9,000 | ||||||||||||
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TOTAL OPERATING EXPENSES
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30,166 | 59,160 | 19,142 | 39,425 | ||||||||||||
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NET OPERATING INCOME
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12,855 | 2,087 | 18,970 | 13,974 | ||||||||||||
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OTHER INCOME (EXPENSE)
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Interest income
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18 | 112 | 146 | 303 | ||||||||||||
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Interest expense
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(2,049 | ) | (4,121 | ) | 0 | 0 | ||||||||||
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Recovery of bad debt
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0 | 0 | 0 | 18,000 | ||||||||||||
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Bad debt expense
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0 | 0 | (942 | ) | (942 | ) | ||||||||||
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TOTAL OTHER INCOME (EXPENSE)
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(2,031 | ) | (4,009 | ) | (796 | ) | 17,361 | |||||||||
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NET INCOME BEFORE PROVISION FOR INCOME TAXES
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10,824 | (1,922 | ) | 18,174 | 31,335 | |||||||||||
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PROVISION FOR INCOME TAX EXPENSE
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5,155 | 820 | 4,000 | 7,000 | ||||||||||||
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NET INCOME (LOSS)
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$ | 5,669 | $ | (2,742 | ) | $ | 14,174 | $ | 24,335 | |||||||
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING FOR THE PERIOD
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50,554,694 | 50,413,270 | 47,990,000 | 47,990,000 | ||||||||||||
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NET INCOME (LOSS) PER SHARE
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$ | 0.00 | $ | (0.00 | ) | $ | 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 FEBRUARY 28, 2011
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Common Stock
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Preferred Stock
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Additional Paid |
Treasury
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Retained Earnings | ||||||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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in Capital
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Stock
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(Deficit)
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Total
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Balance, August 31, 2008
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47,990,000 | $ | 47,990 | 2,500,000 | $ | 2,500 | $ | 644,352 | $ | 0 | $ | 33,569 | $ | 728,411 | ||||||||||||||||||
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Net loss for the year ended August 31, 2009
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- | - | - | - | - | - | (28,680 | ) | (28,680 | ) | ||||||||||||||||||||||
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Balance, August 31, 2009
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47,990,000 | 47,990 | 2,500,000 | 2,500 | 644,352 | 0 | 4,889 | 699,731 | ||||||||||||||||||||||||
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Issuance of common stock as compensation
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500,000 | 500 | - | - | 9,500 | - | - | 10,000 | ||||||||||||||||||||||||
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Issuance of common stock for services at $0.01 per share
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2,183,400 | 2,183 | - | - | 19,651 | - | - | 21,834 | ||||||||||||||||||||||||
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Shares returned to treasury
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(400,000 | ) | (400 | ) | - | - | - | 400 | - | 0 | ||||||||||||||||||||||
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Net loss for the year ended August 31, 2010
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- | - | - | - | - | (109,233 | ) | (109,233 | ) | |||||||||||||||||||||||
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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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1,265,823 | 1,266 | - | - | 8,734 | - | - | 10,000 | ||||||||||||||||||||||||
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Net loss for the six months ended February 28, 2011
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- | - | - | - | - | - | (2,742 | ) | (2,742 | ) | ||||||||||||||||||||||
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Balance, February 28, 2011
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51,539,223 | $ | 51,539 | 2,500,000 | $ | 2,500 | $ | 682,237 | $ | 400 | $ | (107,086 | ) | $ | 629,590 | |||||||||||||||||
The accompanying notes are an integral part of the financial statements.
F-3
LUX DIGITAL PICTURES, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2011 AND 2010
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Six months ended February 28, 2011
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Six months ended February 28, 2010
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Cash Flows from Operating Activities:
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Net income (loss) for the period
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$ | (2,742 | ) | $ | 24,335 | |||
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Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
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Amortization of film assets
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19,500 | 9,000 | ||||||
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Changes in Assets and Liabilities
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(Increase) in accounts receivable
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(45,937 | ) | (44,482 | ) | ||||
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Decrease in prepaid consulting
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8,042 | 0 | ||||||
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Decrease in deferred tax asset
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820 | 0 | ||||||
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(Decrease) in accounts payable
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(4,942 | ) | (6,074 | ) | ||||
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Increase in accrued taxes
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0 | 7,000 | ||||||
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Increase in accrued interest
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4,121 | |||||||
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(Decrease) in estimated costs to complete films
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0 | (2,500 | ) | |||||
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(Decrease) in reserve for residuals and participants
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0 | (2,500 | ) | |||||
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Net Cash Used by Operating Activities
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(21,138 | ) | (15,221 | ) | ||||
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Cash Flows from Investing Activities:
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Investment in new films
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(54,427 | ) | (33,829 | ) | ||||
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Net Cash Used in Investing Activities
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(54,427 | ) | (33,829 | ) | ||||
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Net Decrease in Cash and Cash Equivalents
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(75,565 | ) | (49,050 | ) | ||||
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Cash and Cash Equivalents – Beginning
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133,537 | 122,018 | ||||||
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Cash and Cash Equivalents – Ending
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$ | 57,972 | $ | 72,968 | ||||
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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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Conversion of debt to common stock
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$ | 10,000 | $ | 0 | ||||
The accompanying notes are an integral part of the financial statements.
F-4
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 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.
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.
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.
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, 2010. 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.
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.
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.
F-5
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2011
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
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 2.
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 6.
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.
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 February 28, 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.
F-6
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2011
NOTE 2: UNAMORTIZED FILM COSTS
Unamortized Film Costs include:
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February 28, 2011
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August 31, 2010
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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 and American Grindhouse film assets
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138,181 | 138,181 | ||||||
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50% of Area 51: The Alien Interview film asset
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200,000 | 200,000 | ||||||
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Subtotal – initial film asset purchases
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397,402 | 397,402 | ||||||
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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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38,000 | 38,000 | ||||||
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SAG residuals
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7,500 | 7,500 | ||||||
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New film projects
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218,874 | 164,447 | ||||||
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Total Unamortized Film Costs
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721,176 | 666,749 | ||||||
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Less: amortization expense
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(84,688 | ) | (65,188 | ) | ||||
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Less: impairment charges
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(195,411 | ) | (195,411 | ) | ||||
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Unamortized Film Costs, net
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$ | 441,077 | $ | 406,150 | ||||
Unamortized film costs assigned to film asset purchases include costs for the completed films Night of the Living Dead 3D, Nightmares in Red, White and Blue and American Grindhouse, and a 50% interest in Vega 7 Entertainment’s documentary motion picture entitled “Area 51: The Alien Interview”.
The $397,402 for film asset purchases arose from common and preferred stock issued in exchange for these assets and cash paid by the principal Company shareholder to acquire Night of the Living Dead 3D and the two films in production. We acquired our original 50% interest in Area 51: The Alien Interview for 2,000,000 shares of our common stock valued at $.10 per share. This $200,000 cost of acquisition is included in the $397,402 for film asset purchases. During the year ended August 31, 2010, the Company forgave an outstanding receivable from Vega 7 Entertainment totaling $33,400 for the remaining 50% ownership in “Area 51: The Alien Interview”. The $33,400 was capitalized in the unamortized film costs. The Company estimates the remaining revenues on that film to be approximately $36,000 over the next three years. Due to this, we have impaired the Area 51 film by $195,411 leaving the remaining net cost for “Area 51: The Alien Interview” at $36,000 as of August 31, 2010. The Company recognized $6,000 of amortization on this film during the six months ended February 28, 2011.
Night of the Living Dead 3D has provided the majority of all Company revenues to date, and our total cost of this film was $59,221. We began amortization of the Night of the Living Dead 3D film costs in the period ended August 31, 2008, and recorded amortization totaling $18,000 and $23,688 during the periods ended August 31, 2009 and 2008, respectively. The remaining $17,533 was amortized during the year ended August 31, 2010. We began amortizing the costs of American Grindhouse, Nightmares in Red, White and Blue and Area 51: The Alien Interview during the year ended August 31, 2010. Amortization of $5,967 was recorded on these three films during the year ended August 31, 2010. An additional $13,000 of amortization was recorded for these films during the six months ended February 28, 2011.
The Company has four (4) new documentary feature films “Films of Fury: The Kung Fu Movie Movie”, “Gameplay”, “Money For Nothing” and “Fanime” and a prequel to “Night of the Living Dead 3D” in various stages of production. During the year ended August 31, 2010, the Company capitalized $111,770 of costs associated with these films. An additional $54,427 of costs associated with these films were capitalized during the six months ended February 28, 2011. The total amount of unamortized film costs related to these new projects was $218,874 as of February 28, 2011 and no amortization has been recorded on these films as of that date.
F-7
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2011
NOTE 3: PREPAID EXPENSES
Prepaid advertising
The Company acquired rights to radio media from RTV Media Corp. on June 1, 2008 in exchange for 2,000,000 shares of common stock, which we valued at $.10 per share. The Company was assigned rights to receive certain radio media, approximately 1,000 sixty second ads or 2,000 thirty second ads, or some combination of both on a national radio network. At August 31, 2008 we estimated that only $100,000 of the media rights would be used in the future, and due to this, the asset has been determined to be impaired and an expense of $100,000 has been recognized. Management believes that this impairment adjustment is a one-time charge and will not be recurring in subsequent periods. The carrying value of the prepaid advertising is $100,000 at February 28, 2011.
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 $3,500 as of February 28, 2011.
NOTE 4: NOTE PAYABLE – SHAREHOLDER
The Company’s principal shareholder, Lux Digital Pictures GmbH loaned the Company $15,050 on May 29, 2008. The loan is unsecured, bears 18% interest and is due on demand. Interest expense of $1,336 was recorded on this loan during the six months ended February 28, 2011.
NOTE 5: CONVERTIBLE NOTE PAYABLE
The Company issued a convertible note for $70,000 to an unrelated party on May 14, 2010. The note bears 8% interest and matured on February 14, 2011. Payment has not been demanded and we have verbally agreed to extend the conversion period. 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 $1,688 was recorded on this loan during the year ended August 31, 2010.
On February 9, 2011, the Company converted $10,000 of the loan to 1,265,823 share of common stock.
Interest expense of $2,785 was recorded on this loan for the six months ended February 28, 2011. The balance due on the convertible note payable was $60,000 as of February 28, 2011.
NOTE 6: STOCKHOLDERS’ EQUITY
The Company issued both common and preferred stock during the period ended August 31, 2008. 2,000,000 shares of common stock were issued in exchange for future radio media initially valued at $200,000. Another 2,000,000 shares of common stock were issued in exchange for a completed but unexploited film valued at $200,000. Also, 990,000 shares of common stock were issued in a private placement for total proceeds of $97,440. The remaining 43,000,000 shares of common stock and 2,500,000 shares of preferred stock were issued to the founders of the Company in exchange for the rights to film assets, a number of "brands", domain names and other assets valued at $197,402, which was the historical cost of these assets to the founders, and for future consulting services. The amount of shares issued for these assets was arrived at through negotiations and management believes the fair values of these assets are equal to or greater than the values assigned.
F-8
LUX DIGITAL PICTURES, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2011
NOTE 6: STOCKHOLDERS’ EQUITY (CONTINUED)
The 2,500,000 shares of preferred stock are convertible to common shares, at the holder's election, at a rate of 10 common shares for each preferred share, provided they have been held for at least two years.
The Company issued 500,000 shares of common stock to an officer of the company during the year ended August 31, 2010. The shares were valued $0.02 per share for a total expense of $10,000.
The Company also issued 2,183,400 shares of common stock for services during the year ended August 31, 2010. These shares were valued at $0.01 per share for a total expense of $21,834.
Also during the year ended August 31, 2010, the Company returned 400,000 shares of common stock to its treasury.
On February 9, 2011, the Company issued 1,265,823 shares of common stock in exchange for $10,000 of the convertible note payable.
The Company had 51,539,223 shares of common stock issued as of February 28, 2011.
NOTE 7 – INCOME TAXES
The components of the provision for income tax expense (benefit) are as follows:
|
February 28, 2011
|
August 31, 2010
|
|||||||
|
Current:
|
||||||||
|
Federal corporate income tax
|
$ | 500 | $ | (33,500 | ) | |||
|
State corporate income tax
|
320 | (21,500 | ) | |||||
|
Total
|
820 | (55,000 | ) | |||||
|
Deferred:
|
||||||||
|
Federal corporate income tax
|
0 | 0 | ||||||
|
State corporate income tax
|
0 | 0 | ||||||
|
Total
|
0 | 0 | ||||||
|
Total Provision (Benefit) for Income Taxes
|
$ | 820 | $ | (55,000 | ) | |||
NOTE 8 – 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 9 – SUBSEQUENT EVENTS
Management has evaluated subsequent events through April 12, 2011, the date these financial statements were issued, and has determined it does not have any material subsequent events to disclose.
F-9
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, some acquired and contributed from third parties and our founding shareholders, in the 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 not been able to raise any new capital, at this point, to grow and expand its businesses and it is actively seeking opportunities to capitalize, re-capitalize the Company or combine or sell the Company in a manner that will be beneficial to shareholders.
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 February 28, 2011
Assets
As of the three months ending February 28, 2011 the Company had Total Assets of $775,451, Total Current Liabilities of $145,861 and Total Stockholders’ Equity of $629,590 compared with Total Assets of $779,014, Total Current Liabilities of $156,682 and Total Stockholders’ Equity of $622,332 for the Company’s prior fiscal year ending August 31, 2010. The increase in Company assets in the current three month period is, principally, attributable to increased capitalized production expenses.
Revenue and Operating Expense and Net Income
For the three months ending February 28, 2011 the Company had Net Income of $5,669, Gross Revenues of $43,021, and Total Operating Expenses of $30,166 compared with a Net Income of $14,174, Gross Revenues of $38,112 and Total operating Expenses of $18,970 for the Company’s three month period ending February 28, 2010. The decrease in Net Income from the prior year’s Quarter is, primarily, attributable to increased general and administrative expenses in the current period.
5
Liquidity and Capital Resources
As of the period ending February 28, 2011 the Company had $57,972 in cash, $110,437 in Accounts Receivable and $441,077 in net unamortized film costs. As of August 31, 2010 the Company had $133,537 in cash, $64,500 in Accounts Receivable and $406,150 in net unamortized film costs. The Company’s cash was, primarily, generated from its motion picture distribution and licensing. The decrease in cash is due, primarily, to the Company expending more funds on production of its product and increased general expenses. The Company believes it has sufficient cash resources available to fund its primary operations for the next twelve (12) months. The Company cannot, however, begin to fund its digital online business concepts or grow the Company in any material way until it is able to raise additional monies and provide for any prospective extraordinary charges. 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 10-K for the year ended August 31, 2010. During the three months ending February 28, 2011 there have been no significant changes in our critical accounting policies.
Recent Accounting Pronouncements
During the three months ending February 28, 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 February 28, 2011 the Company believes it has sufficient cash resources available to fund its primary operations for the next twelve (12) months absent any extraordinary events. 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; however, as of April 12, 2011 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 February 28, 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.
6
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.
Based upon an evaluation conducted for the period ended February 28, 2011, our Chief Executive Officer and Chief Financial Officer as of February 28, 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 February 28, 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
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.)
|
8
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: April 12, 2011
|
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: April 12, 2011
|
By: |
/s/ Ingo Jucht
|
|
|
Name: Ingo Jucht
|
|||
|
Title: Director
|
|||
9