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EX-31 - ODYSSEY PICTURES CORP | opix_10q311.htm |
EX-32 - ODYSSEY PICTURES CORP | opix_10q322.htm |
EXCEL - IDEA: XBRL DOCUMENT - ODYSSEY PICTURES CORP | Financial_Report.xls |
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, 2011
[ ] 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 [ ]
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 ¨ No
Large accelerated filer o Accelerated filer ¨
Non-accelerated filer (Do not check if a smaller reporting company)o Smaller reporting company ý
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
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 72,850,888 outstanding shares as of December 31, 2011.
ODYSSEY PICTURES CORPORATION
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements-unaudited
Balance Sheets as of December 31, 2011 and June 30, 2011
Statements of Operations for the Three Month Periods Ended December
31, 2010 and 2011 and Statement of Operations for the Six Month Periods Ended December 31, 2010 and 2011
Statements of Cash Flows for the Six Month Periods Ended December
31, 2010 and 2011
Notes to Interim Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities
Item 4. Other Information
Item 5. Exhibits
Signatures
Item 1. Financial Statements
Odyssey Pictures Corporation | ||
Consolidated Balance Sheet | ||
Assets | Dec 31, 2011 | June 30, 2011 |
(unaudited) | ||
Current Assets | ||
Cash & cash equivalent's | $14,000 | $6,500 |
Accounts receivable | 34,100 | 12,100 |
Prepaid expenses | 47,200 | 57,100 |
Total current assets | 95,300 | 75,700 |
Property & equipment (net) | 6,800 | 1,200 |
Capitalized production costs | 548,300 | 274,300 |
Other | 2,600 | 2,600 |
Total assets | $653,000 | $353,800 |
Liabilities and Stockholders' Deficiency | ||
Current Liabilities: | ||
Accounts payable | $183,500 | $52,800 |
Accounts payable-related parties | 47,700 | 104,500 |
Accrued interest | 419,400 | 377,900 |
Other accrued expenses | 782,600 | 672,100 |
Legal settlements & judgments | 155,000 | 155,000 |
Current debt obligations due within one year | 109,000 | 112,000 |
Debt obligations in default | 97,900 | 97,900 |
Liability to issue common stock | 250,000 | 250,000 |
Deferred income | 182,500 | 225,200 |
Convertible debt derivative liability | 147,400 | 0 |
Total current liabilities | 2,375,000 | 2,047,400 |
Related parties | 985,800 | 987,000 |
Reserve for loss contingencies | 110,000 | 110,000 |
Stockholders' Deficiency: | ||
common stock-110,000,000 authorized $0.01 par value | ||
72,850,888 issued & outstanding | 728,500 | 728,500 |
Additional paid in capital | 39,509,300 | 39,509,300 |
Unamortized deferred compensation | (149,500) | (181,600) |
Accumulated deficit | (42,906,100) | (42,846,800) |
Total Stockholders' Deficiency | (2,817,800) | (2,790,600) |
Total Liabilities and Stockholders' Deficiency | $653,000 | $353,800 |
See notes to unaudited interim financial statements. |
Odyssey Pictures Corporation | |||||
Consolidated Statement of Operations | |||||
(unaudited) | |||||
Quarter Ended Dec 31, | Six Months Ended Dec 31, | ||||
2011 | 2010 | 2011 | 2010 | ||
Net Sales of services | $450,400 | $751,300 | $698,800 | $1,201,300 | |
Costs Applicable to Sales & Revenue | 103,900 | 149,800 | 234,000 | 240,800 | |
Gross Profit | 346,500 | 601,500 | 464,800 | 960,500 | |
Selling, General & Administrative Expenses | 209,400 | 658,900 | 420,600 | 780,100 | |
Settlements, net | 0 | 0 | 200 | 200 | |
Derivative valuation charges | 61,900 | 0 | 61,900 | 0 | |
Total Operating Expenses | 271,300 | 658,900 | 482,700 | 780,300 | |
Income (Loss) Before Other Income & Income Taxes | 75,200 | (57,400) | (17,900) | 180,200 | |
Other Income (Expense) | |||||
Excess carrying value of renegotiated payables | 0 | 0 | 0 | 56,700 | |
Interest (Expense) | (32,400) | (17,200) | (41,400) | (34,600) | |
Income (Loss) from continuing operation before income taxes | 42,800 | (74,600) | (59,300) | 202,300 | |
Income Taxes | 0 | 0 | 0 | 0 | |
Net Income (Loss) | $42,800 | ($74,600) | ($59,300) | $202,300 | |
Basic and Diluted Net Income Per Common Share | Nil | Nil | Nil | Nil | |
Weighted Average Common Shares Outstanding (Basic) | 72,850,888 | 65,150,888 | 72,850,888 | 68,150,888 | |
See notes to unaudited interim financial statements. |
Odyssey Pictures Corporation | ||
Consolidated Statement of Cash Flows | ||
(unaudited) | ||
Six Months Ended Dec 31, | ||
2011 | 2010 | |
Cash Flows from Operating Activities: | ||
Net Loss | ($59,300) | $202,300 |
Adjustments required to reconcile net loss to cash flows | ||
from operating activities: | ||
Excess carrying value of renegotiated payables | 0 | (56,700) |
Amortization of deferred compensation | 32,000 | 34,000 |
Depreciation & impairment | 900 | 500 |
Expenses paid by the issuance of common stock | 0 | 495,000 |
Change in value of derivatives | 61,900 | 0 |
Changes in Operating Assets & Liabilities: | ||
Accounts Receivable | (22,100) | (34,100) |
Prepaid expenses | 9,900 | (5,600) |
Increase in deferred income | (42,700) | (400,000) |
Decrease in payables to affiliates | (58,000) | (76,300) |
Accounts Payable & Other | 283,000 | 11,900 |
Net cash generated by operating activities | 205,600 | 171,000 |
Cash Flows from Investing Activities: | ||
Investment in production inventory | (274,000) | (143,400) |
Purchase of fixed assets | (6,600) | 0 |
Net cash used by investing activities | (280,600) | (143,400) |
Cash Flows from Financing Activities: | ||
Loan proceeds | 85,500 | 0 |
Payments made on long term debt | (3,000) | (23,000) |
Payments made on settlements & judgments | 0 | (23,500) |
Net cash used by financing activities | 82,500 | (46,500) |
Net Change In Cash | 7,500 | (18,900) |
Cash-Beginning | 6,500 | 19,900 |
Cash-Ending | $14,000 | $1,000 |
See notes to unaudited interim financial statements. |
ODYSSEY PICTURES CORP
Notes To UNAUDITED CONSOLIDATED INTERIM Financial Statements
DECEMBER 31, 2011
1. | Basis of Presentation |
The Consolidated Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our June 30, 2011 Annual Report on Form 10-K 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, 2011 and 2010. 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:
Our “Branding & Services” agreements with Unilistings BV resulted in $407,000 in revenue in 2011 ($1,200,000 from Unilistings UK in 2010). Unilistings are companies owned or controlled by current and former directors of the company..
4. Equity Based Compensation
Effective January 1, 2011 and retroactive to January 1, 2010, the Company granted John Foster option to purchase 4 million shares of common stock. The compensation cost that has been charged against income for options was $32,000 for the six-month period ended December 31, 2011 based on the requisite service period for unvested options as of that date as well as options granted during the period. As of December 31, 2011, there was approximately $149,500 of unrecognized compensation cost related to non-vested options. The Company expects to recognize the cost over a weighted average period of .95 years.
5. 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 $157,000 at December 31, 2011. We also continue to owe $657,000 in accrued compensation to John Foster, our current CEO.
In June, 2011 we became sole member and manager of FilmZone, LLC and agreed to repay distributions received from FilmZone in excess of our allocable portion of 2011 profits. The total due under this agreement is $876,226 and is recorded as a note payable to related parties. The note accrues interest at 3% and is due in full by June 30, 2013.
In January, 2011 the company executed a long term employment agreement with Mr. Foster. The term of the agreement is four years beginning retroactively at January 1, 2010 and requires an annual salary of $250,000 throughout its term. In addition to the salary component the agreement entitles Mr. Foster to receive 5 million shares of common stock immediately and 4 million options vesting in equal annual amounts at the successive anniversary dates of the agreement. Odyssey remains obligated to issue an additional 3.3 million shares to Mr. Foster and has accrued the $250,000 fair value of these additional shares as a current liability. The new agreement continues in effect until January 1, 2014.
6. New Notes and Loans Payable:
Convertible Debt treated as a Derivative Instrument:
In October and November, 2011 we issued an aggregate of $85,500 in convertible promissory notes. The notes bear interest at 8% per annum until paid or converted. $53,000 is due July 19, 2012 and $32,500 becomes due August 28, 2012. The notes were classified as derivative instruments due to a 42% discount to fair value conversion rate formula. The conversion formula results in a potential conversion to a number of shares of common stock that is not fixed or determinate. Accordingly, the convertible debt instruments have been accounted for as derivative instruments and recorded at fair value. As of December 31, 2011 the fair value exceeded the face value of the notes by $61,900 and resulted in a carrying value of $147,400.
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, 2011, the Company realized revenues from production fees and producer representation services from new production projects such as Hank the Cow Dog as well as from recognition of deferred income from branding and image design contracts. As of the date of this report, the Company’s ongoing operations have consisted production fees and from the sale of these branding and image design products and increasing media inventory and development of IPTV technology and related services.
Results of Operations for the six months ended December 31, 2011 and 2010
The Company had revenues for the six months ended December 31, 2011 of $698,800 down from $1,201,300 for the period ended December 31, 2010. The revenues in the comparable 2010 period included $550,000 in revenues from FilmZone, LLC, a limited liability company in which Odyssey holds a non-operating 50% interest. During the six months ended December 31, 2011, 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 decreased to $420,600 for the six month period ended December 31, 2011, down from $780,100 for the comparable period in 2010. The additional expenses included $495,000 paid by the issuance of common stock. Net Income per common share remains nil in six months ended December 31, 2011 and for the same period the prior year.
Results of Operations for the Three months ended December 30, 2011 and 2010
The Company had revenues for the three months ended December 31, 2011 of $450,400 down from $751,300 for the same period ended December 31, 2010. During the three months ended December 31, 2011, 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 decreased to $209,400 for the three months ended December 31, 2011, down from $658,900 for the comparable period in 2010. This number included $495,000 of additional expenses paid by the issuance of common stock during the comparable 2010 period.
As of December 31, 2011, 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.
Convertible Debt treated as a Derivative Instrument:
In October and November, 2011 we issued an aggregate of $85,500 in convertible promissory notes. The notes bear interest at 8% per annum until paid or converted. $53,000 is due July 19, 2012 and $32,500 becomes due August 28, 2012. The notes were classified as derivative instruments due to a 42% discount to fair value conversion rate formula. The conversion formula results in a potential conversion to a number of shares of common stock that is not fixed or determinate. Accordingly, the convertible debt instruments have been accounted for as derivative instruments and recorded at fair value. As of December 31, 2011 the fair value exceeded the face value of the notes by $61,900 and resulted in a carrying value of $147,400
Cash Flows
Six Months Ended
December 31, 2010 December 31, 2010
Net Cash Generated by Operating Activities $205,600 $171,000
Net Cash Used by financing Activities ($82,500) $46,500
Cash Ending $14,000 $1,000
The Company generated $205,600 in cash from operating activities for the six months ended December 31, 2011 compared with $171,000 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 has been 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.
Financing Activities:
As of October 26, 2011, Odyssey Pictures Corporation finalized a Securities Purchase Agreement dated October 17, 2011 (the “Agreement”), in connection with the issuance of an 8% convertible note of the Corporation, in the aggregate principal amount of $53,000.00 (the “Note”), convertible into shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note, along with an irrevocable letter agreement with Interwest Transfer Co., Inc., the Corporation’s transfer agent, with respect to the reserve of shares of common stock of the Corporation to be issued upon any conversion of the Note; the issuance of such shares of common stock in connection with a conversion of the Note; and the indemnification of Interwest Transfer Co., Inc. for all loss, liability, or expense in carrying out the authority and direction contained in the irrevocable letter agreement (the “Letter Agreement”);
Commitments and Capital Expenditures
The Company had no material commitments for capital expenditures. During this period, the Company obtained $205,600 cash through revenues. During the previous fiscal year, the company executed a long term employment agreement with it CEO, Mr. Foster. The term of the agreement is four years beginning retroactively at January 1, 2010 and requires an annual salary of $250,000 throughout its term. In addition to the salary component the agreement entitles Mr. Foster to receive 5 million shares of common stock immediately and 4 million options vesting in equal annual amounts at the successive anniversary dates of the agreement.
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 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. John Foster, our Chief Executive Officer and our Principal Accounting Officer, is responsible for establishing and maintaining disclosure controls and procedures for our company.
Our management has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2011 (under the supervision and with the participation of the Chief Executive Officer and the Principal Accounting Officer), pursuant to Rule13a-15(b) promulgated under the Exchange Act. As part of such evaluation, management considered the matters discussed below relating to internal control over financial reporting. Based on this evaluation, our Company's Chief Executive Officer and Principal Accounting Officer have concluded that our Company's disclosure controls and procedures were not effective as of December 31, 2011 due to the lack of sufficient personnel to assure segregation of duties and lack of a GAAP accounting professional on staff. Management with the assistance of its Securities Counsel will closely monitor all future filings to ensure completeness of all company filings.
The term "internal control over financial reporting" is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, 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 and includes those policies and procedures that:
· pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;
· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and
· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant's assets that could have a material effect on the financial statements.
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.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
There was no activity regarding any legal proceedings involving the Company during the reported period.
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
There were no sales of equity securities by the company completed during the six months ended December 31, 2011.
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 six months ending December 31, 2011.
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 |
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